ATC180503: Report of the Portfolio Committee on Economic Development on Budget Vote 25 and Annual Performance Plans of the Economic Development Department and its entities for the 2015-16/2019-20 Medium Term Expenditure Framework period, dated 03 May 2018

Economic Development

Report of the Portfolio Committee on Economic Development on Budget Vote 25 and Annual Performance Plans of the Economic Development Department and its entities for the 2015-16/2019-20 Medium Term Expenditure Framework period, dated 03 May 2018.

The Portfolio Committee on Economic Development, having considered Budget Vote 25, the Strategic Plans (2015/16 – 2019/20) and the Annual Performance Plans (2018/19) of the Economic Development Department and its entities, reports as follows:

INTRODUCTION

The Portfolio Committee on Economic Development (the Committee) analysed the Strategic Plans, Annual Performance Plans (APPs) and the budgets of the Department and its four (4) entities up to 24 April 2018.

It is important for budget plans to be linked to strategic plans so as to ensure that key objectives and priorities are budgeted for and achieved. Thus, the purpose of the engagements was to assess and analyse the Strategic Plans, APPs and budgets of the Department with a view of ensuring that there is alignment of reporting between the Strategic Plans, APPs and budgets. The Annual Performance Plan, the fourth of a standing five-year strategic plan, sets annual targets and aims to enhance implementation and accountability.

These important annual engagements take place at a time when South Africa continues to work towards full economic recovery after a number of challenging years. South Africa has begun to see improvements on a number of fronts, including improved ratings by the agencies. Global growth has improved, which may assist domestic growth prospects. The core challenges however remain, and even greater effort will be needed to return the country back to the path of its own economic potential. Stakeholders across society will need to strengthen working relations to achieve the desired effect. Great efforts in the implementation of sound economic policies remain central going forward, and the Committee exercises its oversight role with this context in mind.

Our government has over time developed tools and instruments to tackle the challenges faced. These include the National Development Plan (NDP), the New Growth Path (NGP) (led by the Economic Development Department), the National Industrial Policy Framework and many others linked to them, all with a view of securing a better future for our people. These must be pursued by all so as to achieve a common goal of ensuring a better life for all our people, and most importantly, to build a better South Africa for future generations. The long term vision must always guide us in our individual and collective efforts for improved conditions.

The Economic Development Department has a crucial role to play in the economic activities of the country, especially the interpretation and implementation of the objectives of the policy instruments mentioned above. It has the responsibility to coordinate the formulation of cross sector policy programmes that will seek to improve the social capital of marginalised groups. It oversees one public financing institutions that fully participate in the new growth path and development. The policies led by the Department must also play a role in the creation of employment as per the call of the NDP, ensure a higher rate of investment, and the coordination of a more efficient and competitive infrastructure, amongst the many responsibilities. Together with partners in government and the private sector, the department must ensure the development of a prosperous and balanced regional economy in Southern Africa and the continent, based on the principles of equity and mutual benefit.

The Committee will continue to play its role of ensuring vigorous oversight, and will give legislative support to the Department. This report outlines the nature of the engagements that took place during the briefings, on the diverse issues affecting our economy, and the possible solutions that will be explored by the Department for the remainder of the Medium Term Expenditure Framework (MTEF).

The following entities report to the EDD:

Development Finance Institution – Industrial Development Corporation (IDC)
Economic Regulatory Bodies – Competition Commission, Competition Tribunal; and International Trade Administration Commission of South Africa (ITAC).

THE ECONOMIC DEVELOPMENT DEPARTMENT

BACKGROUND

The core mandate of the Department is to identify priorities for job creation, inclusive growth and industrialisation. Further to support the alignment of the state around implementation, oversee and provide strategic direction to development finance institutions, as well as the provision of strategic direction on competition policy and trade administrative matters through oversight of regulatory bodies.

The Economic Development Department is responsible for the monitoring and implementation of the action plans on the various job drivers in the New Growth Path (NGP). EDD is a key Department for the following outcomes of the Medium Term Strategic Framework;

Outcome 4: Decent Employment through Inclusive Growth.

Outcome 5: A skilled and capable workforce to support an inclusive growth path
Outcome 6: An efficient, competitive and responsive economic infrastructure network
Outcome 7: Vibrant, equitable, sustainable rural communities contributing towards food security for all

The Department provides technical support to the Presidential Infrastructure Coordinating Commission (PICC), whose Secretariat is chaired by the Minister of Economic Development. The Department plays an important role in the implementation of the Nine Point Plan as outlined in the 2015 State of the Nation Address. The priority areas of the plan are as follows:

Resolving the energy challenges
Revitalising the agriculture and agro-processing value chain
Advancing beneficiation and adding value to mineral wealth
More effective implementation of IPAP
Encouraging private sector investment
Moderating workplace conflict
Unlocking potential of SMMEs, co-operatives, township and rural enterprises
Cross cutting areas to reform, boost and diversify the economy, such as the water and sanitation infrastructure
Growing the ocean economy and tourism

The Department administers the following legislation:

Industrial Development Corporation Act (Act No. 22 of 1940);
Competition Act (Act No. 89 of 1998, as amended);
International Trade Administration Act (Act No 71 of 2002); and
Infrastructure Development Act (Act No. 23 of 2014).

The following policy frameworks, programmes and policy pronouncements guide the Annual Performance Plan (APP) of the Department:

State of the Nation Address (SONA) annually;
National Development Plan;
New Growth Path;
National Infrastructure Plan;
Industrial Policy Action Plan;
Delivery Agreement on Outcome 4: Decent Employment through inclusive economic growth;
Delivery Agreement on Outcome 5: Skilled and capable workforce to support inclusive growth;
Delivery Agreement on Outcome 6: Efficient, competitive and responsive infrastructure;
Delivery Agreement on Outcome 7: Vibrant, equitable, sustainable rural communities;
Framework for South Africa’s response to the international economic crisis.
Finance and fiscal policy framework;
Public Finance Management Act No. 1 of 1999;
Municipal Finance Management Act No. 56 of 2003 and related by-laws

The Department facilitated the signing of and monitors the implementation of the following Social Accords:

Basic Education Accord;
National Skills Accord;
Local Procurement Accord;
Green Economy Accord
Youth Employment Accord and;
October 2012 Social Accord.

2014 – 2019 STATEGIC PLAN OF THE ECONOMIC DEVELOPMENT DEPARTMENT

The Strategic Plan sets out the objectives of the Department for the duration of the current administration.

The Department has identified six strategic objectives which have been integrated into three programmes. The Department’s Strategic Objectives are the following;

PROGRAMMES	STRATEGIC OBJECTIVES
Programme 1: Administration	Strategic Objective 1: Provide strategic guidance to the Department; and technical and administrative support to the Ministry to achieve the rest of the Department’s strategic objectives.
Programme 2: Growth Path & Social Dialogue	Strategic Objective 2: Co-ordinate jobs drivers and the implementation of the New Growth Path economic strategy in support of the National Development Plan.
Programme 2: Growth Path & Social Dialogue	Strategic Objective 3: Facilitate Social Dialogue and implementation of Social Accords.
Programme 3: Investment, Competition & Trade	Strategic Objective 4: Coordinate infrastructure Development and strengthen its positive impact on the economy and citizens.
	Strategic Objective 5: Promote Investment, industrial financing and entrepreneurship for jobs and inclusive growth.
	Strategic Objective 6: Promote competition, trade and economic regulation in support of job creation and social inclusion.

4.POLICY PRIORITIES FOR 2017/18

Delivering the 2018 State of the Nation Address’ (SONA’s), the President of the Republic noted the main economic challenges facing the country, and outlined the plans to tackle them. Amongst these were the fact that poverty levels rose in 2015, unemployment has gone up and inequality has persisted. For several years the country’s economy has not grown at the pace needed to create enough jobs or lift sufficient numbers of South Africans out of poverty. The President highlighted that public finances have been constrained, limiting the ability of government to expand its investment in economic and social development.

Amongst the proposed plans are a few that tie in well with the Economic Development Department’s mandate of promoting the creation of decent employment and inclusive growth. These include the call that young people will be moved to the centre of the economic agenda, the planned launch of the Youth Employment Service Initiative, and a number of initiatives around infrastructure investment.

In the 2017 Budget Review, National Treasury noted that barriers to inclusive growth and broad-based transformation should be broken through the de-concentration of highly concentrated industries and those dominated by a few, accelerating the inclusion of millions of black South Africans into jobs and businesses, and returning to a path of rising per capita incomes for all.

According to National Treasury these obstacles can be overcome through the National Development Plan goals of:

Improving education and skills development, starting with a more effective basic education and early childhood development sector.
Strengthening competition laws to address skewed ownership and control, which is a barrier to business entry and the expansion of key markets that are essential for job creation.
Increasing private-sector participation in sectors dominated by public enterprises, and ensuring that effective regulatory authorities curb the power of monopolies.
Providing support and incentives for labour-intensive sectors, including agriculture, agro-processing and tourism.
Overcoming the spatial fragmentation of South Africa’s cities, so that people have easier access to jobs and infrastructure.

4.1 Amendments to Legislation

During discussions with the International Trade Administration Commission (ITAC), the Competition Commission and the Department on their 2017/18 APPs, there were indications of possible amendments to their respective legislation.

ITAC reported that it will make submissions to the Department on the possible changes to the International Trade Administration (ITA) Act No. 71 of 2002.
Amendments to the Competition Act No. 89 of 1998.

THE BUDGET OF THE DEPARTMENT AND ITS ANNUAL PERFORMANCE PLAN FOR 2017/18

The Department implements the aspirations of the National Development Plan, New Growth Path, Nine Point Plan, key focus areas and its objectives using three programmes namely Administration, Growth Path and Social Dialogue; and Investment Competition and Trade.

Table: Linking programmes with performance goals and budget

PROGRAMMES	STRATEGIC OBJECTIVES	KEY PERFORMANCE INDICATOR & PRODUCTS/OUTPUTS
Programme 1: Administration *Budget : R86.6 m***	Strategic Objective 1: Provide strategic guidance to the Department and Ministry.	2 KPIs (2 Products/)
Programme 2: Growth Path & Social Dialogue *Budget: R34.4 m*	Strategic Objective 2: Co-ordinate jobs drivers and the implementation of the New Growth Path.	3 KPIs (18 Products)
	Strategic Objective 3: Facilitate Social Dialogue and implementation of Social Accords.	3 KPIs (8 Products)
Programme 3: Investment, Competition & Trade *Budget: R951.7 m*	Strategic Objective 4: Coordinate infrastructure Development and strengthen its positive impact on the economy and citizens.	6 KPIs (114 Products)
	Strategic Objective 5: Promote Investment, industrial financing and entrepreneurship for jobs and inclusive growth.	5 KPIs (26 products)
	Strategic Objective 6: Promote competition, trade and economic regulation in support of job creation and social inclusion.	4 KPIs (14 products)
Total R 1 072.7m		23 KPIs (182 products/outputs)

5.1 DEPARTMENTAL BUDGET

The Economic Development Portfolio has been allocated nearly R1.1 billion, representing approximately 0.17 per cent of the national government budget. The Portfolio is one of the few for which the budget allocated increased for 2018/19.

The Portfolio budget is distributed as follows (figures are rounded):

Competition Commission R282m (26% of total budget)
Tirisano Fund (via IDC)** R240m (23% of total budget)
SEFA R229m (21% of total budget)
Economic Development Department R140m (13% of total budget)
ITAC R102m (10% of total budget)
Competition Tribunal R35m (3% of total budget)
Steel Development Fund (via IDC)# R30m (3% of total budget)
PICC (via IDC) R15m (1% of total budget)
Total R1 073m

** Funded from contributions by the construction industry

# Funded from the fine imposed on a steel producer

When the funds are represented by programme, the following table summarises the picture:

Programme	Budget		Nominal Increase / Decrease in 2018/19	Real Increase / Decrease in 2018/19	Nominal Percent change in 2018/19	Real Percent change in 2018/19
R million	2017/18	2018/19	Nominal Increase / Decrease in 2018/19	Real Increase / Decrease in 2018/19	Nominal Percent change in 2018/19	Real Percent change in 2018/19
Programme 1: Administration	86,5	86,6	0,1	- 4,4	0,12 per cent	-5,10 per cent
Programme 2: Growth Path and Social Dialogue	32,8	34,4	1,6	- 0,2	4,88 per cent	-0,59 per cent
Programme 3: Investment, Competition and Trade	795,0	951,7	156,7	107,1	19,71 per cent	13,47 per cent
TOTAL	914,3	1 072,7	158,4	102,5	17,3 per cent	11,21 per cent

Table: EDD’s BUDGET 2018-2019

5.2 Budget Allocation by Programme

The Portfolio’s budget has increased by R158.3 million from R914.3 million in 2017/18 to R1.0726 billion in 2018/19. The Investment, Competition and Trade programme was allocated R951.7 million or about 89 per cent of the budget. The Administration programme received R86.6 million or about 8 per cent of the total budget allocation and the smallest portion of R34.4 million representing approximately 3 per cent of the budget went to the Growth Path and Social Dialogue programme.

The total budget for the Administration programme has increased slightly by R100 thousand, representing a 0.1 per cent nominal while in real terms[1] the allocated amount has been reduced by R4.4 million or 5.1 per cent.

The total budget for the Growth and Social Dialogue Programme has increased by R1.6 million in nominal terms from R32.9 million to R34.5 million over the 2017/8-2018/19 financial years. When taking inflation into account, the budget for this programme has decreased slightly by less than one percent. The budget of the Growth Path and Social dialogue sub-programme was reduced by R2.1 million compared to the previous year. This sub-programme is aligned to the country’s economic strategy, the New Growth Path which focuses on jobs drivers and employment creation.

This programme is the largest by budget allocation making up about 89 per cent of the total budget of the department. For the 2018/19 financial year, the programme has received R951.7 million and compared to 2017/18, this is an increase of R156.7 million. The budget for this programme is mainly for transfers to entities namely, the Competition Commission, Competition Tribunal, ITAC, Sefa and IDC - development finance institutions and economic regulatory bodies.

Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2016/17	2017/18	2018/19	2019/20	2016/17-2017/18		2016/17-2017/18
Programme 1: Administration	88,1	80,7	79,4	84,6	- 7,4	- 12,2	-8,40 per cent	-13,83 per cent
Programme 2: Growth Path and Social Dialogue	31,0	35,6	39,6	42,4	4,6	2,5	14,84 per cent	8,03 per cent
Programme 3: Investment Competition and Trade	546,9	681,0	725,8	777,2	134,1	93,7	24,52 per cent	17,14 per cent
TOTAL	666,0	797,3	844,8	904,2	131,3	84,0	19,71 per cent	12,62 per cent

Source: Economic Development Department

KEY PERFORMANCE AREAS FOR 2018/19

The following are the Key Performance Areas on which the budget for 2017/18 will be spent.

Key Performance Indicators	Output
1: Audit Opinion obtained in respect of the previous financial year	Unqualified Audit Opinion
2: Governance & Accountability (G &A) Monitoring Performance Assessment Tool (MPAT) level to be obtained	Level two obtained for G&A by MPAT
3: Number of analytical and public policy advocacy reports on socio-economic development and the NGP produced	4 Reports
4: Number of reports on NGP jobs drivers and coordination structures	4 Reports
5: Number of reports on the implementation of the Green Economy Accord	2 Reports
6: Number of reports on black women and youth with access to employment and entrepreneurship opportunities	3 Reports
7: Number of reports on support provided to provinces	10 Reports
8: Number of reports on social dialogue interventions to save and create jobs and reports on implementation of Social Accords	3 Reports
9: Number of quarterly Cabinet-level progress reports of infrastructure Strategic Integrated Projects (SIPs)	64 Reports
10: Number of infrastructure projects evaluated, unblocked, fast tracked or facilitated or project assessments completed	8 Action minutes
11: Number of Cabinet and PICC strategic decisions on infrastructure implemented	4 Action minutes
12: Number of PICC meetings held and facilitated	30 Records of meetings
13: Number of Coordination actions to drive implementation of SIP 5 of the National Infrastructure Plan	4 Records of Co-ordination actions
14: Number of reports on initiatives to increase localisation in the infrastructure and industrialisation programmes, including through the PPPFA, and local supplier development	4 Reports
15: Number of investment initiatives facilitated, fast-tracked and/ or unblocked	14 Action minutes
16: Number of reports produced on funding allocations on township enterprises by DFIs and government departments	3 Reports
17: Number of reports on the level and impact of industrial finance by DFIs and departments	4 Reports
18: Number of Ministerial or departmental oversight engagements with the IDC held	4 Records of engagement
19: Number of economic development opportunities identified through infrastructure projects	1 Action minute
20: Number of strategic initiatives to enhance the capacity, performance and outcomes of economic regulators held	3 Action minutes
21: Number of reports on initiatives on mergers & acquisitions, market inquiries or abuse of dominance	4 Reports
22: Number of initiatives to ensure trade authorities and policies support industrialisation and employment	2 Action minutes
23:Number of Ministerial/ departmental oversight engagements with trade and competition authorities held	5 Records of engagements

COMMITTEE OBSERVATIONS

Key issues and observations raised by the committee during its deliberations:

The Committee appreciated the work of the Ministry in coordinating the efforts of economic regulators, development finance institutions, the PICC and the Department. It drew attention to the excellent progress made with reorienting competition policy to employment and development outcomes, noting in particular the successes with the fight against cartels and the incorporation of public interest conditions in merger approvals following interventions by the `Minister in terms of the Competition Act; the developmental focus of trade policy that supported local manufacturers and increasingly required reciprocal investment and employment commitments to upgrade the competitiveness of industry; expansion in the level of industrial funding disbursed by the IDC over the past year, particularly to black industrialists; the greater support for an integrated infrastructure delivery programme and efforts to unblock obstacles to investment and to deeper localisation and industrialisation.

During its deliberations, the committee raised questions relating to the following;

The relevance of the KPIs to the Fourth Industrial Revolution and the need for cooperation between the EDD and relevant stakeholders in this regard

The world economy is evolving towards new global trends through not just another technological revolution, but a productivity revolution. Experts have said that these will bring benefits to people everywhere, make the planet more sustainable and provide opportunities for businesses of all kinds. South Africa’s fledgling economy needs to move with the times and become an active participant in the new order. While some work is being done by EDD (High-level Symposium held in December 2017), the IDC (new investment mandate), Competition Commission (impact of competition in new industries) and DST (resource commitments for R&D), the country’s current economic policies do not yet fully speak to this imperative, and definitive policy guidelines will be needed for better coordination of the way forward. The State of the Nation Address in February 2018 set out government’s approach that will provide a coherent institutional arrangement for coordination.

The role of local government (municipalities) in the quest to revive and transform rural and township economies

The Department has reported, now and in the past, that it continues to work with various stakeholders and different spheres of government in coordinating economic development. The Committee is of the view that this can be greatly improved by putting in place standard operating procedures and give more support to local government in the quest to revive and transform rural and township economies.

The appointment of a permanent Director General:

The Committee has for some time called for the appointment of a permanent Director General. The appointment will bring progressive stability and elevate administrative accountability for the Department.

Delays in amending the International Trade Administration (ITA) Act No.71 of 2002.

Despite the ever-changing economic and global trade environment, the ITA Act, has never been amended. Plans have been underway to start the process of amending the legislation The Department stated that amending certain parts of the ITA Act has implications for other Southern African Customs Union (SACU) member countries. ITAC was not ready to come forward with the amendments in previous years but expects to be able to do so soon.

Other expected pieces of legislative amendments for processing by Parliament

The Competition Commission alluded to a need to amend the Competition Act No. 89 of 1998 to make it possible to implement the criminalisation clauses of the Competition Amendment Act No.1 of 2009. The Committee notes that the processes to bring the amendments before it are underway.

The number of Key Performance Indicators on the Department’s Plans

The Strategic Plan had been revised and 23 KPIs.

Intra-Africa trade

The Committee noted and appreciated the commitment that trade studies would be undertaken on African regional integration. The successful implementation of sound strategies in this regard could see more South African businesses move into Africa, thus ensuring that the volume of exports increase. Local manufacturers, with sufficient support, would also stand to benefit from the plans.

RECOMMENDATIONS

The Department should;

Provide quarterly updates to the Committee, on progress in respect of the following staff related matters;
1. The filling of all posts in which staff are in acting positions, in particular that of the Accounting Officer. The Committee notes that the last fully-appointed Director-General of the Department left before the 2015/16 financial year.
2. The implementation of the Memorandums Of Understanding (MOUs) and Ministerial Expert Panels and other strategies for acquiring the requisite skills for the Department.
3. The reviewing of organisational structure
4. Drafting of the Employee Retention Strategy
Brief the Committee on the need for steps taken and timeframes for drafting of the amendments to the ITA Act.
Provide the Committee with quarterly updates on the funds that are administered by it (the Steel Development Fund, Tirisano Fund) and the entities, and the impact these have on the transformation of their respective industries.
Continue to ensure that the process to incorporate the National Empowerment Fund into the IDC is undertaken.
Report on the IDC compliance with BBBEE legislation in its investment operations annually.
Lead the process that will see the country readying itself for the Fourth Industrial Revolution. Policy guidelines in this regard may be necessary, beginning with conversations with the relevant stakeholders in and outside of government to encourage innovation.
Strengthen its capacity to monitor entities continually to ensure an effective implementation of the government’s transformation project.
Continue to engage National Treasury on the revenue allocation to the Competition Authorities in relation to the anticipated legislation and the additional responsibilities that will be placed on them.
Facilitate the design of a new collaborative model between it and the Small Business Development so as to ensure that effective support is given to Small, Medium and Micro-sized businesses.
Report on progress made in addressing spatial development and urbanisation challenges in the country. The report should be presented in the next six months.
Report on a quarterly basis, on the impact of the efforts to ensure alignment and integration of economic priorities at all spheres of government, particularly at provincial and municipal levels.

PART B: THE ENTITIES

INDUSTRIAL DEVELOPMENT CORPORATION (IDC)

Established in 1940, the IDC has been instrumental in implementing the country’s industrial policy, establishing some of the industries that are today cornerstones of South Africa’s manufacturing sector. Over its 75 years of existence, the IDC has driven growth by building partnerships, providing funding and other forms of support to companies and ensuring their long-term sustainability.

The Corporation reports that its priorities are aligned with government’s priorities of job creation, reducing inequalities and contributing to economic transformation. For the 2016/17 financial year, the IDC began the implementation of an internal restructuring initiative called Project Evolve. The IDC reports that the restructuring process, under new business heads, has grouped industries into related sectors. The aim is to ensure that the IDC is more effective in funding those sectors that will have the most beneficial effects on the economy.

In terms of Project Evolve priority industries have been classified into the following;

Value Chains – Metals, Chemicals and pharmaceuticals, Agro-processing and Agriculture
New Industries – Forward looking and innovation sectors,
Special high Impact sectors – Entertainment and clothing and textiles
High Impact Sectors – sectors which contribute to development goals
Industrial Infrastructure – utilities sector i.e. electricity, water and telecommunications and logistics.

IDC 2018/19-2022/23 CORPORATE PLAN

2017 Highlights: IDC approved funding for some notable projects such as the recently launched Beijing Automotive Industrial Corporation motor vehicle assembly project, a liquid petroleum gas storage project being implemented to address gas shortages and support for the AB Inbev initiative to eliminate barley imports by supporting emerging farmers’ production.

IDC reported that it planned to disburse between R97 billion and R123 billion over the 2017-2022 five-year period. IDC was targeting that between R15.9 billion and R23.5 billion of the funding that it provides over the three-year period (2017-2020) would go to the development of black industrialists. Funding for women and youth entrepreneurs would continue to be prioritised

2018-23 Plan. According to the current corporate plan, the IDC is planning to approve funds from R100 billion to R125 billion over the next five years. On transformation funding, the IDC is planning to set aside between R16.9 billion and R24 billion and a minimum of 15 percent or R2.5 billion of that amount will be for black woman industrialists. In addition, the IDC also has a funding programme for women-empowered businesses with a target of R4,6 billion.

There is a clear need to increase efforts to expand funding to black women particularly as industrialists and to increase the support to black South Africans. The Committee notes that the largest black industrialist project involved a black woman mine-owner. However, the overall profile of investment projects still need to be rebalanced and in this regard, the IDC must invest more in supporting the development of business plans by women, youth and black industrialists.

The IDC has developed the following Key Focus Areas for the 2018/19 to 2022/23 period:

1. Maintain Financial Sustainability

Diversify portfolio and sources of capital, grow returns and reduce costs and;
Effective performance management of subsidiaries.

2. Capitalise on Rest of Africa (RoA) opportunities

Increasing the RoA pipeline of deals aligned to IDC’s strategic priorities with emphasis on the development of regional value chains.

3. Gear up for the Fourth Industrial Revolution (4IR)

Developing a strategy for investments in 4IR in the broader economy, whilst exploring opportunities to implement 4IR in existing investments.

4. Increase Industrial Development

Effective implementation of value chain/priority sector strategies;
Developing a health projects pipeline;
Support sectors with immediate impact on production capacity and job creation and;
Support companies in distress and those affected by the current environment.

5. Establish a High Performance Organisation

Instilling a high performance culture and;
Enhancing operational efficiencies by improving systems, processes and IT, using technology.

Furthermore, the following Development Outcomes have been set for the next 3-year period to March 2021:

Base Target

Number of direct jobs to be created and saved 96 530 118 846
Value of funding to Black Industrialists R16.9 bn R24.6 bn
Value of funding to Black Woman Industrialists Minimum of R2.5 bn
Value of funding for Women-empowered businesses R3.7 bn R4.6 bn
Value of funding for Youth-empowered businesses R2.4 bn R3.1 bn
Value of funding to Black-owned Companies R21.2 bn R26.3 bn
Value of funding Localisation R14.8 bn R17.2 bn

Source: IDC

Table: IDC Strategy Pillars

Increasing Industrial Development Impact

Ensuring Long-Term Sustainability

Financial Capital

Human, Social, Natural and Manufactured Capital

Priority sector strategies where the IDC plays a proactive role
Strengthen IDC’s development objectives and strategies
Identify and develop new industries that can be drivers for growth and employment in the future
Increasing the level of empowerment, black industrialists and transformation through our investments
Support infrastructure projects that unlock industrial development
Align the IDC with the NDP, NGP, IPAP, APAP and NIP sector development objectives
Increase the number of projects under development and in implementation
Provide industrial finance to achieve sector development objectives
Increase regional industrial integration by developing value chains
Ensure that SMME’s through our subsidiaries are supported effectively and efficiently

Plan investment return and risk profile to ensure sufficient growth to replace existing cash generators
Structure investments to increase direct equity returns
Manage risks through appropriate investments, pricing and management of the portfolio
Implement measures to manage concentration risk in the IDC portfolio

Human resources

Ensure appropriately skilled and capacitated human resources
Entrench a culture of performance and development

Stakeholders

Improve customer service
Build partnerships with other financiers to leverage off different strengths and mandates.
Increase engagements with sector players to identify opportunities
Develop black industrialists
Strengthen IDC expertise to contribute to policy
Build strong communities around IDC funded projects

Natural environment

Improve IDC’s and industry’s environmental sustainability

Utilisation of resources

Improve efficiency through continuous improvement of systems

BUDGET AND FORECASTS

1.2.1 Key Financial Implications (IDC Mini-Group)

R million	Baseline		Target
Cash flows		2018/19 to 2022/2023
Advances (R'm)	92 989		122 838
Funding raised (borrowings and share sales) (R'm)	64 913		81 339
of which foreign borrowings	8 405		8 405
Balance sheet		end-2022/2023
Financing at market values (R'm)	175 348		152 569
Borrowings (R'm)	64 573		57 166
Debt/equity (%)	58%		59%
Impairments as % of portfolio at cost	24.2%		24.3%
Impairments as % of portfolio at market values	18.3%		21.6%
Income statement		Five years from 2018/19 to 2022/23
Dividend income	21 583		19 591
Interest and fee income	32 012		34 417
Borrowing costs	17 461		16 755
Impairments and bad debt write-offs	18 110		21 243
Net operating income before capital realisations	6 6663		4 396

Source: IDC

Additional Key Highlights

Net approvals increased by 26% year-on-year to a record level of R14.5 billion in 2015/16, as well disbursements by 4.6% year-on-year to R11.4 billion. The Industrial Development Corporation reported a profit amounting to R223 million in 2016. It was significantly low in comparison to the previous financial years’. IDC’s profits dropped by 87% from R1.65 billion in 2014/15 to R223 million in 2015/16. The Steel producer Scaw Metals, which is 74% owned by the IDC, recorded losses of R1.1 billion, while the agrochemicals group Foskor, which is 59% owned by the IDC posted a R568 million loss.

The impairment charge of R3.6 billion to the income statement for the year ended 31 March 2016 was double the figure for 2015. The impairment ratio as a percentage of IDC’s book at market value increased significantly from 8.8% to 10.1%.

Borrowing sources	Budgeted Borrowings for FY 2017/18	Actual Borrowings (01 April 2016 to 31 January 2017)	Budgeted Borrowings for FY 2017/18
(R' millions)
Domestic borrowings	8 750	5 070	8 333
Public bonds	2 900	730	2 000
Bank loans	3 850	2 340	2 333
Private placements bonds	2 000	2 000	4 000
Foreign borrowings	3 750	2 566	4 167
DFI’s/ Multilateral agencies	1 142	402	1 667
Bank loans and other	2 956	2 164	2 500
Total borrowings	12 500	7 636	500

1.2.2 Disbursement Targets vs. Borrowings

1.3 RECOMMENDATIONS

Following the deliberations, Portfolio Committee on Economic Development recommends that the Executive Authority and Accounting Officer (s) ensure that:

The IDC’s investment strategy puts more emphasis on local procurement of designated items so that the MTSF target of 75 per cent local procurement be reached by 2019. Equally, the strategy must ensure that local jobs are promoted so as to achieve the National Development Plan’s goals on job creation. Attention must be given to the BAIC project in Port Elizabeth in both these cases.
A monitoring strategy is developed to ensure that the Black Industrialists Programme meets its goal of inclusivity to reduce income inequalities in the country and contribute to rural economic growth.
The IDC increases investments in tourism infrastructure to support and increase the impact of the country’s tourism industry on economic growth and real transformation.
The IDC must develop strategy and guidelines for the funding of projects that will advance the country towards the Fourth Industrial Revolution.
Greater effort is made for the IDC to reach out to entrepreneurs with disabilities.
The IDC’s debt to equity ratio is maintained at a sustainable level, taking its development mandate into account;
The IDC increases its presence and funding support in the various provinces, as well as strengthening its business support unit to cover these areas. Emphasis is made on increased presence and support in rural provinces.
Mechanisms must be put in place to ensure that SEFA’s impairment levels are significantly reduced without losing its targeted constituency (market) is intended to serve.
The Committee receives quarterly progress report on Foskor and Scaw. The Committee will especially monitor the process of bringing in of private equity partners at these two institutions.

THE COMPETITION COMMISSION

The Competition Commission was established in terms of the Competition Act No 89 (as amended), as an investigative and enforcement agency. It is vested with powers to investigate and control restrictive business practices, abuse of dominance and mergers. The mandate of the Commission in terms of the Act is to promote and maintain competition in South Africa in order to:

Promote the efficiency, adaptability and development of the economy;
Provide consumers with competitive prices and product choices;
Promote employment and advance the social and economic welfare of South Africans;
Expand opportunities for South African participation in world markets and recognise the role of foreign competition in the Republic;
Ensure that small- and medium-sized enterprises have an equitable opportunity to participate in the economy; and
Promote a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged persons.

To this end, the Competition Commission carries out its work by

Investigating and prosecuting restrictive horizontal and vertical practices;
Investigating and prosecuting abuse of dominant positions;
Deciding on mergers and acquisitions applications;
Conducting formal inquiries in respect of the general state of competition in a particular market;
Granting or refusing applications for exemption from the application of the Act;
Conducting legislative reviews and;
Developing and communicating advocacy positions on specific competition issues.

2.1 STRATEGIC GOALS

The Commission has three strategic goals for the 2015-2020 period. These are;

Effective enforcement and merger control

Efficient and effective merger regulation.
Competitive markets through action against cartels and abuse of dominance.
Improved public interest outcomes in markets (relating to jobs, industrialisation, exports, development of black-owned businesses and SMMEs.
Increased competition compliance.
Improved understanding of market dynamics in priority sectors.

Strategic Collaboration and Advocacy

Improved co-ordination on the application of economic policy and competition policy.
Recognition of developmental perspectives in domestic and international competition law discourse.
Improved compliance and awareness.

High-performance Agency

Improved organisational efficiency.
Accountably managed resources.
Highly motivated and productive people.

2.2 Alignment to Government Outcomes

The Commission’s strategic response to Government’s policies and planning outcomes during the period 2015-2020 includes the following:

Considering socio-economic outcomes in case analysis, particularly in cases which have a large impact on the price of goods, public access to resources and market entry for small firms and historically disadvantaged individuals;
Designing conditions and remedies which address employment, market concentration and other socio-economic challenges, and monitoring compliance thereof;
Expanding the opportunities for South African participation in world markets, in line with the promotion of economic growth through the use of enforcement, exemptions and merger instruments;
Continuing advocacy and enforcement in regulated sectors to drive competitive conduct;
The Commission’s selection of its priority sectors to include those with high-growth and jobs potential;
Considering the linkages between trade policy and competition policy in its work. This includes ensuring alignment of the Commission’s priority sectors to IPAP-designated sectors and pursuing Market Inquires in economically-strategic sectors;
Pursuing collaborations and partnerships with other state actors on economic policy;
Continuing advocacy and training work with municipalities, trade unions and the general public, particularly on bid-rigging and competition awareness.

2.3 ANNUAL PLANS FOR 2018/19

Key features of the Commission’s 2018/19 Annual Performance Plan are reported as follows:

Mergers

The Commission has internal service standards for assessing mergers of varying complexities, guided by the timelines provided for in the Act.
The Commission will maintain efficiencies in the turnaround times of investigating Phase 13 mergers.
The Commission will ensure that more than 75% of merger cases that are litigated or taken upon review in the courts, are won.
It will continue monitoring the implementation of conditions imposed on parties.

Cartels

The Commission will initiate 8 new cartel investigations in 2018/19. This is a drop from the 2017/18 commitments of 25 initiations. The decline in initiations is due to resource constraints coupled by a high (increasing) and complex volume of cases.
The Commission foresees that it will take longer to complete on-going investigations. There are more demanding obligations to complete investigations in a shorter period of time as per the efficiency targets below. Such obligations need to be supported with resources:

– At least 50% within 12 months;

– At least 60% within 18 months; and

– At least 75% within 24 months.

Some key on-going cartel investigations include automotive components manufacturers, manufacturers of edible fats & oil, suppliers of set top boxes, fresh produce agents & beef producers.
The Commission aims to win more than 75% of cartel cases in the Tribunal or the courts.

Market Conduct

The Commission will complete more than 75% of abuse of dominance investigations within 24 months.
Some key on-going investigations include Transnet (Ports & Rail), School Uniform, Vodacom and Pharmaceutical drugs.
The Commission will further initiate 2 new abuse of dominance investigations in the priority sectors.
The Commission aims to win more than 70% of such cases in the Tribunal or the courts.
The Commission will further aim to complete (make a decision) more than 75% of exemption applications within 12 months.

Litigation

The Commission has 154 cases at various stages of prosecution in the Competition Tribunal and the courts, of which 121 are cartel cases.
Cases before the Constitutional Court are: Stanley’s Removals, Hosken Consolidated Investment Ltd/ Tsogo Sun, Media 24, Caxton & CTP Publishers and printers vs. Multichoice (Pty) Ltd and SABC.
Some key abuse of dominance cases before the Tribunal/ courts include: Computicket, SA Airlink (Johannesburg-Umtata route), Afrimat, Wesgro, Rooibos and potato seeds.
Some cartel cases currently on the Tribunal or court roll include: 2010 FIFA WC Stadia Tender, banks that manipulated the rand, furniture removal companies, waste management companies, media companies, fats & oils companies & suppliers of asphalt.

Market Inquiries and Economic Research

The Commission will initiate one market inquiry in 2018/19 and aim to complete two.
On-going market inquiries, all of which are at various stages, include private healthcare, grocery retail, data costs and public transport.
The Commission will also undertake one scoping study into markets wherein there may be competition challenges.
One Impact Assessment on previous interventions of the Commission will be undertaken.
The Commission also seeks to promote the teaching of competition law and economics in universities and will thus continue its partnerships with select universities.

Advocacy

The Commission commits to publish one guideline to stakeholders in 2018/19 on the application of the Act.
The Commission will also continue with outreach programs. Stakeholder groups targeted for engagement in 2018/19 include Government entities, Trade Unions and the Youth, among others. The aim of such engagements is education and awareness.
Important advocacy cases which will be continued include Automotive Aftermarkets and School Uniform.
The use of the media (print, radio, broadcasting and social media), is a strategic tool the Commission uses to reach varied types of audiences with its messages. There are targets developed in this regard.
The Commission will continue its partnerships with BRICS and African counterparts. Commitments on collaborative research and other projects will strengthen the sharing of expertise and mutual capacity-building amongst the partners.

Resourcing a High-performing Agency

Given the need for additional human capital, the Commission aims to put measures to retain its existing staff complement, with a targeted 90% retention rate.
The Commission will further invest one percent of its Human Resource spending into Learning & Development, as part of its strategy to insource and “grow its own timber”.
Further, the Commission aims to implement 70% of the approved organisational structure in 2018/19, in order to remove the capacity constraints currently experienced.
The Commission has assessed the need for a responsive and efficient Information Technology and knowledge management system (IMS) as part of its 5-year strategy. The implementation of a fully integrated, efficient and adequate ICT environment will be completed in 2018/19.

Priority sectors for the year will be:

Food and agro-processing;
Infrastructure and construction;
Healthcare;
Banking & Financial services;
Energy;
Intermediate industrial inputs and;
Information & communication technology.

BUDGET

According to the 2018 Estimates of National Expenditure, for 2018/19 the Commission has been allocated a budget of R281.8 million which falls short of the Commission’s own projected expenditure of R366.7million.

Table 25.13 Investment, Competition and Trade expenditure trends and estimates by subprogramme and economic classification
Subprogramme	Audited outcome			Adjusted appropriation	Average growth rate (%)	Average: Expen- diture/ Total (%)	Medium-term expenditure estimate			Average growth rate (%)	Average: Expen- diture/ Total (%)
R million	2014/15	2015/16	2016/17	2017/18	2014/15 - 2017/18		2018/19	2019/20	2020/21	2017/18 - 2020/21

Details of transfers and subsidies
Departmental agencies and accounts
Departmental agencies (non-business entities)
Current	296.4	338.8	315.7	387.5	9.3%	49.5%	419.1	450.5	475.3	7.0%	48.6%
Competition Commission	188.1	231.0	208.5	258.4	11.2%	32.8%	281.8	305.6	322.4	7.7%	32.8%
Competition Tribunal	19.9	19.1	20.1	30.0	14.7%	3.3%	35.1	37.1	39.1	9.2%	4.0%
International Trade Administration Commission	88.4	88.7	87.0	99.1	3.9%	13.4%	102.2	107.9	113.8	4.7%	11.9%

Source: National Treasury

The financial resources have been allocated to ensure that the Commission could focus on the identified strategic areas. As is customary, financial revisions are done during the financial year, and any adjustments are effected accordingly.

RECOMMENDATIONS

Following the deliberations, the Portfolio Committee on Economic Development recommends that the Executive Authority and Accounting Officer (s) ensure that:

The review of the organisational structure at the Commission is supported and prioritised as the work of the organisation increases, taking into consideration the additional responsibilities that will be brought about by the envisaged amendments to the Competition Act.
The focus on public interest issues, particularly employment, is intensified.
The Commission utilises the allocated funds to speed up the training and up skilling of existing personnel, the recruitment of requisite skills, so that the need for outsourcing is phased out eventually. The Commission must report on progress in this regard, bi-annually.
The Commission introduces a special internship programme for black law graduates who are not currently employed, to deepen the pool of skills in competition matters and develop partnerships with institutions of higher learning to strengthen the teaching of competition law.
Cost containment measures are in place when undertaking market inquiries so that they remain sustainable and beneficial to the South African economy.
The Commission collaborates with other regulators in the various sectors to ensure that small- and medium-sized enterprises have an equitable opportunity to participate in the economy.
The Commission continues with its commendable outreach plans to schools and universities in efforts to reach the previously disadvantaged, and encourage their entry into the field of competition law.
Bursaries and scholarships are made available to deserving students, especially in the previously disadvantaged institutions of higher learning, with the intention to recruit them on successful completion of their studies.
Greater efforts are made to educate the public about the work of the Commission.

The Committee noted that processes are underway to consult stakeholders on the amendments of the Competition Act. The amendments will be crucial in supporting the challenging work of the Commission, especially in such areas as the abuse of dominance. The Committee will await a timely report from the Minister in this regard.

COMPETITION TRIBUNAL

The Competition Tribunal adjudicates competition matters, in accordance with the act and has jurisdiction throughout South Africa. It is independent and subject to the constitution and the law. It must be impartial and perform its functions without fear, favour or prejudice. When a matter is referred to it in terms of the act the tribunal must:

Adjudicate complaints of prohibited conduct (Restrictive practice, Abuse of dominance)
Impose a remedy
Award costs
Grant an order for interim relief
Authorize or prohibit a large merger
Adjudicate appeals from Commission's decisions on:
1. Intermediate mergers
2. Exemption.

3.1 STRATEGIC FOCUS

The Competition Tribunal has three broad strategic objectives, namely;

Ensuring effective and efficient adjudication:

The Tribunal reports that matters brought before Tribunal were heard within adopted delivery time frames; which saw the expeditious conclusion of hearings, and an improved management of Information. On Large, Intermediate and smaller Merger Targets, 75% was the proportion of large mergers to be set down within 10 business days of filing (Merger Target).

Building and developing effective stakeholder relationships:

Includes having 95% of final merger decisions to be issued to the press within two business days of the order date, and 90% of the final prohibited practice decisions to be issued to the press within two business days of the order date. This objective also constituted of revamping the website; the implementation of a Youth Education drive, as well as a successful Learner Programme.

Adherence to good corporate governance and sound business practice: translates to the maintenance of an unqualified audit outcome year on year

3.2 Alignment of Tribunal’s strategic objectives National Strategic Outcomes (NSO) as follows

NSO 4: Decent employment through inclusive growth

NSO 6: Efficient, competitive and responsive infrastructure network

NSO 12: Efficient, effective and development orientated public service and an empowered, fair and inclusive citizenship.

3.3 FINANCIAL OVERVIEW

The table below presents the Competition Tribunal’s Financial Overview:

Year	Total budget requirement	Expected MTEF allocation	Expected filing fees from Commission	Other Income	Use of accumulated surplus	Additional funding requirements
Year	(in R’m)	(in R’ m)	(in R’ m)	(in R’ m)	(in R’ m)	(in R’ m)
2017/2018	52.22	30.04	13.44	0.91	7.83	0
2018/2019	56.27	35.09	18.57	0.88	1.73	0
2019/2020	60.44	37.05	18.57	0.00	2.99	1.83
2020/2021	63.19	39.09	18.57	0.00	0.00	6.03

Source: Competition Tribunal

3.4 FINANCIAL OVERVIEW PER STRATEGIC OBJECTIVES

The table below presents the Competition Tribunal’s financial overview per Strategic Objective:

Category	Objective	Amount
Timeous hearings and issuing of judgements	Adjudication process	R23 310 151.72
Effective business processes	Adjudication process	R2 346 999.58
Stakeholder awareness	Effective Stakeholder Communication	R1 152 965.92
Effective oversight and governance	Accountable, transparent and sustainable entity	R3 841 871.41
Effective financial management	Accountable, transparent and sustainable entity	R2 159 152.62
Sustainable capacity	Accountable, transparent and sustainable entity	R3 039 301.35
Administration (incl. depreciation)		R10 543 015.66
Administrating the Competition Appeal Court		R628 913.45
Capital expenditure		R1 184 098.32
TOTAL BUDGET		R48 206 470.03

Source: Competition Tribunal

RECOMMENDATIONS

Following the deliberations, the Portfolio Committee on Economic Development recommends that the Executive Authority and Accounting Officer (s) ensure that:

There is a review of the functioning and/or structure of the Tribunal (which may include the creation of new posts) so as to address capacity constraints, considering especially, the increasing workload of the Tribunal and the provisions of the Competition Act. A progress report must be submitted to the Committee on a six-monthly basis.
The Tribunal continues with its commendable outreach plans to schools and universities in efforts to reach the previously disadvantaged, and encourage their entry into the field of competition law.
Bursaries and scholarships are made available to deserving students, especially in the previously disadvantaged institutions of higher learning, with the intention to recruit them on successful completion of their studies.

THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION (ITAC)

The International Trade Administration Commission (ITAC) is a schedule 3A Public Entity. It was established in terms of the International Trade Administration (ITA) Act, No 71 of 2002, and came into force on 1 June 2003. ITAC replaced its predecessor, the Board of Tariffs and Trade (BTT) which was established in 1986. The predecessor of the BTT is the Board on Trade and Industries (BTI) which dated back to 1924. The aim of ITAC, as stated in the Act, is to;

Foster economic growth and development in order to raise incomes;
Promote investment and employment in South Africa; and
Promote investment and employment within the Common Customs Union Area by establishing an efficient and effective system for the administration of international trade subject to this Act and the Southern African Customs Union (SACU) Agreement.

The core functions of ITAC are:

Customs tariff investigations;
Trade remedies; and
Import and export control.

ITAC used to fall within the purview of the Department of Trade and Industry which is for trade and industrial policy. The administration of the ITA Act was transferred to the Minister of Economic Development (Policy and Oversight) in 2009, except for decision making powers on individual tariff and trade remedy investigations that have been retained by the Minister of Trade and Industry. ITAC now accounts to EDD on policy matters but the DTI considers recommendations on tariff applications.

The Commission is constituted of 2 Full- time Commissioners (Chief Commissioner and Deputy Chief Commissioner). The Chief Commissioner is supported by ten part-time Commissioners. There are four Senior Managers (Technical Advisory Services, Legal Services, Internal Audit and Policy and Research) one Chief Economist (Trade and Economic Analysis) and one General Manager (Corporate Services) who report directly to the Chief Commissioner.

There are various units within ITAC; the Tariff Investigations Unit, (tariff investigations are divided into two groups: agro-processing, chemicals, textiles, clothing and footwear), and motors, metals and machinery, Trade Remedies Unit and; Import and Export Control Unit.

4.1 STRATEGIC OBJECTIVES

The organisation’s Key Strategic Objectives are:

Ensure contribution to employment creating growth and development through effective delivery of international trade instruments;
Ensure strategic alignment and continued relevance with the Economic Development Department and national agenda;
Ensure organisational efficiency and effectiveness of ITAC.

4.2 KEY HIGHLIGHTS OF THE 2018/19 ANNUAL PERFOMANCE PLAN

The following are the priority projects for the 2018/19 financial year:

The review of the ITA Amendment Bill;
Finalising the Review of Anti-Dumping Regulations;
Strengthening Reciprocal Commitments and
Impact Assessments.

The following are key highlights of the update reports of Annual Performance Plan for the period:

Trade Remedy Investigations: There are three trade remedy instruments: anti-dumping duties, countervailing duties, and safeguard measures. Of these three, anti-dumping is the most frequently invoked, both globally and in South Africa.

Update on Steel Investigations:
- In the year 2015 ITAC conducted ten investigations to increase Most Favoured Nation (MFN) tariffs rates from zero to 10% based on applications by AMSA and one additional investigation by Evraz Highveld Steel and Vanadium.
- The ten tariff investigations in respect of AMSA covered:
- galvanised/coated and painted steel; tin plate; wire rod; rebar; semi-finished products of iron or non-alloy steel; steel plate; cold rolled; sections; other bars and rods; and hot rolled.
- The one tariff investigation with regards to Evraz was on structural steel.
- Two safeguard investigations were initiated on Hot Rolled & Cold Rolled steel.
- On 22 August 2016 an investigation was self-initiated by ITAC to look at a possible increase in tariffs on a number of downstream products.
- These investigations take place in the context of tough global and domestic economic conditions that have seen ITAC having to exercise flexibility and pragmatism in response to real economic needs.
- The guiding principle in these investigations has been to ensure economic viability, sustainability of production, investment and jobs in the whole steel industry value chain. In other words, SA needs both the upstream and the downstream.
Steel Committee

The Minister of Economic Development established the Committee of the Commission on Steel in terms of section 14 of the ITA Act, 2002, on 10 June 2016. The purpose is to monitor the impact of changes in import tariffs; reciprocal commitments made by the applicants; jobs in the whole value chain; and import and export trends. The Committee makes recommendations to the Commission. The Committee’s membership constitutes the commissioners and industry representatives. The Department of Trade and Industry and EDD officials attend and participate in the Committee. It is only the component of Commissioners that has decision-making powers. The Committee has been established for a period of five years.

The Committee shall report to the Commission at least by-annually and its first report to the Commission was made in December 2016.Its first meeting was held on 20th June 2016 in which among others presentations were made by the primary industry (and downstream and the second meeting was held on 28th July in which presentations were made by NUMSA and Solidarity and continues to meet and engage all the relevant stakeholders.

Poultry Tariff Regime: Import Tariffs on poultry meat were increased towards the end of 2013.The increases were based on an application brought by SAPA on behalf of: Rainbow Farms Ltd; Astral Operations Ltd; Sovereign Food Investments Ltd; AFGRI Poultry Ltd; and Supreme Poultry Ltd (Country Bird Holdings).

Import and Export Control: Minerals beneficiation has been identified as one of the areas where jobs will be created and this has meant an alignment of ITAC’s export control measures to give support to beneficiation.

Impact Assessments: To ensure continued relevance and alignment to both the dti and EDD, the Commission has begun to gauge the performance of the beneficiaries of its instruments against the policy objectives set out in the New Growth Path, Industrial Policy Action Plan as well as the Trade Policy Strategic Framework.
Judicial Reviews: In respect of court cases, ITAC appeared in domestic courts 28 times since its establishment in 2003.Out of the 28 cases, 20 were ruled in favour and 8 against ITAC (the eight were mostly in the early days of ITAC).

BUDGET

ITAC’s grant from National Treasury over the past 3 years increased (on average) by 4.7% annually, while employee related costs increased (on average) by 7% annually as per the previous multi-year salary adjustment agreement. Rental costs increased by 56% in 15/16, and by 10% annually from then. During the 2014 MTEF period, ITAC’s baseline budget for 2015/16 and 2016/17 financial years was reduced by R4.8 million and R7.3 million respectively, resulting in a total reduction of R12.1 million. The shortfall caused by that reduction was financed from ITAC’s accumulated surpluses, which are now depleted. ITAC’s budget allocation was further reduced during the 2018 MTEF period by R8.3 million. The total budget for the 2018/19 financial year amounts to R104 million. For the 2018/19 financial year, employee related costs account for 90% of the total budget and ITAC anticipates a shortfall of R3.3m. Over the past years, other operating expenditure such as office rent and legal fees have increased significantly.

Table 25.13 Investment, Competition and Trade expenditure trends and estimates by subprogramme and economic classification
Subprogramme	Audited outcome			Adjusted appropriation	Average growth rate (%)	Average: Expen- diture/ Total (%)	Medium-term expenditure estimate			Average growth rate (%)	Average: Expen- diture/ Total (%)
R million	2014/15	2015/16	2016/17	2017/18	2014/15 - 2017/18		2018/19	2019/20	2020/21	2017/18 - 2020/21

Details of transfers and subsidies
Departmental agencies and accounts
Departmental agencies (non-business entities)
Current	296.4	338.8	315.7	387.5	9.3%	49.5%	419.1	450.5	475.3	7.0%	48.6%
Competition Commission	188.1	231.0	208.5	258.4	11.2%	32.8%	281.8	305.6	322.4	7.7%	32.8%
Competition Tribunal	19.9	19.1	20.1	30.0	14.7%	3.3%	35.1	37.1	39.1	9.2%	4.0%
International Trade Administration Commission	88.4	88.7	87.0	99.1	3.9%	13.4%	102.2	107.9	113.8	4.7%	11.9%

Source: National Treasury

RECOMMENDATIONS

Following the deliberations, Portfolio Committee on Economic Development recommends that the Executive Authority and Accounting Officer (s) ensure that:

The presentation of the organisational plan is clearly understood both in context and content. The explanatory notes presented by the Commission to the Committee on 24 April 2018 are attached as an addendum to the official documents tabled by the Minister.
Reasonable progress is made with regards to the review of the organisation’s human resource structure, so as to cater for the increasing demands of the organisation’s work, taking into consideration the envisaged amendments to the ITA Act as well as the fiscal constraints in the National Budget.
The review of the Safeguard Guidelines in line with the relevant Economic Partnership Agreements (EPAs) and the impact study on the Price Preference System is prioritised by all stakeholders so as to ensure certainty in the sector. Progress reports must be sent to the Committee on a quarterly basis.
Intensify the process of designing mechanisms for the monitoring of all reciprocal commitments made in the steel and other industries.

CONCLUSION

The Portfolio Committee would like to thank Minister Patel and Deputy Minister Masuku; former Directors-General, the Acting Director-General Dr Monde Tom and the staff at the Department; the collective leadership of the entities in particular the board and Chief Executive Officer of the IDC for their sterling work, the Chairpersons, Chief Commissioners (their deputies and commissioners) of the competition authorities and ITAC, for their efforts in accelerating economic transformation for the betterment of the lives of our people.

The Committee thus recommends, that the National Assembly approves the following:

The implementation of the Strategic Plan and APP (2015/16 – 2019/20) of both the Economic Development Department and the entities
The budget as allocated and;
The observations and recommendations of the Committee.

Report to be considered.

Documents

No related documents

ATC180503: Report of the Portfolio Committee on Economic Development on Budget Vote 25 and Annual Performance Plans of the Economic Development Department and its entities for the 2015-16/2019-20 Medium Term Expenditure Framework period, dated 03 May 2018

Economic Development

4.POLICY PRIORITIES FOR 2017/18

Documents

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