ATC230512: Report of the Portfolio Committee on Trade, Industry and Competition on Budget Vote 39: Trade, Industry and Competition, dated 12 May 2023

Trade, Industry and Competition

Report of the Portfolio Committee on Trade, Industry and Competition on Budget Vote 39: Trade, Industry and Competition, dated 12 May 2023

The Portfolio Committee having considered Budget Vote 39: Trade, Industry and Competition, reports as follows:

Introduction

The Department of Trade, Industry and Competition’s (DTIC) 2023/24 Annual Performance Plan (APP) introduces a fundamental shift in setting targets from a focus on outputs within the DTIC’s control to a more dynamic, outcome focused approach. It continues to use the three succinct outcomes introduced in 2022, namely (i) industrialisation to promote jobs and rising incomes, (ii) transformation to build an inclusive economy, and (iii) a capable state to ensure improved impact of public policies. It then introduces ten core targets, among 45 output targets, which feed into these three overarching outcomes. Its nine programmes and 17 entities would contribute towards these to improve integration of their work. Each programme’s key performance indicators are therefore linked to at least one of these three outcomes.

This APP has been devised within the context of a sluggish domestic economy, exacerbated by South Africa’s energy challenges and slow global growth. However, the Minister highlighted that the African Continental Free Trade Area (AfCFTA) provided opportunities to increase trade with other African countries and to develop new sectors in the economy. In response to the ongoing energy challenges, the APP establishes eight key action plans to assist in overcoming these. This is expected to aid the economy by offering relief to businesses to mitigate the effects of loadshedding, facilitating private sector investment in electricity generation, and developing internal capacity to supply the renewable energy sector, among others.

The DTIC’s allocated budget remains under pressure due to fiscal constraints and the slow economic recovery. However, the three outcomes are expected to continue to focus its activities and ensure that non-financial policy tools and support measures across the DTIC are used effectively to maximise its impact. Furthermore, the DTIC will continue to leverage the balance sheets of its development finance institutions (DFIs) to expand off-budget financing opportunities and to increase resource efficiencies.

Constitutional Mandate of the Committee

Portfolio Committees exercise oversight over their respective departments and agencies in line with their Constitutional mandate set out in section 55(2) of the Constitution of the Republic of South Africa, 1996, and section 27(4) of the Public Finance Management Act (Act No. 1 of 1999). In addition, the Money Bills Amendment Procedure and Related Matters Act (Act No. 9 of 2009) also requires committees to consider and report on their department’s strategic plan and APP. Portfolio committees may also recommend possible amendments, within a budget vote, for the Standing Committee on Appropriations in the National Assembly consideration.

Purpose

The purpose of this report is for the Portfolio Committee on Trade, Industry and Competition to report on its deliberations and consideration of the DTIC’s 2023/24 APP and budget vote. Furthermore, to make recommendations regarding the approval, amendment or rejection of Budget Vote 39, as well as any other recommendation regarding the implementation of the APP of the DTIC.

Process

The Committee’s consideration of Budget Vote 39 involved an engagement with Mr E Patel, the Minister of Trade, Industry and Competition, on 21 April 2023. Mr Patel engaged the Committee on the 2023/24 Budget for the DTIC, and the DTIC’s APP.

Outline of the contents of the report

Section 1 of the report introduces it, and sets out the constitutional mandate within which the Committee is considering the Budget Vote and the process it used to consider this. Section 2 describes the policy priorities which the DTIC aims to fulfil. Section 3 then provides an overview of the DTIC’s mission, its output targets for its nine programmes, and its financial resources for the 2023/24 financial year. Section 4 summarises the key discussion points and responses from the DTIC on the Budget Vote and the APP. This is followed by sections 5 to 7, which capture the Committee’s conclusions, acknowledgements and recommendations.

Policy priorities for the 2023/24 financial year

The DTIC’s Strategic Plan for 2020 – 2025 and the APP for the 2023/24 financial year is informed by both the country’s imperatives to address high unemployment, poverty and inequality; and the urgent need to improve economic performance, and achieve inclusive growth. It centres on the three outcomes introduced in the 2022/23 financial year, namely: (i) industrialisation to promote jobs and improve incomes; (ii) transformation, to build an inclusive economy; and (iii) a capable state to ensure improved impact of public policies. The national, regional and international policy priorities that the DTIC contributes to are unpacked below.

State of the Nation Address (SONA)

The 2023 SONA identified key priorities for the DTIC that will contribute to growing the economy, consequently creating jobs, and reducing poverty and inequality; namely:

Facilitating increased localisation;
Implementing Master Plans;
Creating inclusive economic growth and employment opportunities;
Attracting investment and leveraging investment opportunities; and
Increasing trade under the AfCFTA.

The President highlighted the following general priority areas:[1]

Localisation: There was a continued commitment to localisation. In line with this commitment, the President highlighted the production of pharmaceuticals, automotives and glass in South Africa which had been revived. Localisation remained a priority and social partners (government, private sector and labour) would continue to engage on a framework to improve localisation in key sectors of the economy.
Implementation of the Master Plans: The implementation of Master Plans in the automotives, clothing and textiles, poultry, sugar, agriculture, and global business services (GBS) sectors were key in promoting investment.
Creation of an inclusive economy: Efforts to create an inclusive economy continued. As a result, the President announced that R9 billion was earmarked by the Industrial Development Corporation (IDC) to invest in women-led businesses.
Attraction of investment and leverage of investment opportunities: South Africa aims to leverage investment opportunities with global trade partners and to attract investment and financing to South Africa through its participation in multilateral forums including the G20.
Trade under the AfCFTA: South Africa aimed to finalise its industrial trade offer, in partnership with the other member states of the Southern African Customs Union (SACU).

There was alignment between the DTIC’s and the SONA priorities as articulated above. The Department’s budget was focused on the implementation of policies, strategies, and programmes, aimed at providing industrial finance, developing industrial infrastructure, and enhancing industrial competitiveness and localisation.

Medium-term Strategic Framework

The Medium-term Strategic Framework for 2019 – 2024 outlines seven priorities of government for the five-year term which are anchored in three pillars, namely: (i) driving a strong and inclusive economy, (ii) building and strengthening capabilities of South Africans, and (iii) achieving a more capable developmental state[2]. These priorities were as follows[3]:

Priority 1: A capable, ethical and developmental state,
Priority 2: Economic transformation and job creation,
Priority 3: Education, skills and health,
Priority 4: Consolidating the social wage through reliable and quality basic services,
Priority 5: Spatial integration, human settlements and local government,
Priority 6: Social cohesion and safe communities, and
Priority 7: A better Africa and World.

The DTIC was very active in the implementation of a number of interventions under Priority 2: Economic Transformation and Job Creation and under Priority 7: A Better Africa and World. It is also implementing and contributing to Priority 1: A capable, ethical and developmental State, Priority 5: Spatial Integration, Human Settlements and Local Government, and Priority 6: Social cohesion and safe communities. These were priorities from which the mandate of the DTIC was derived, in particular; facilitating the creation of an inclusive economy, broadening economic participation, contributing to regional integration, and creating a fair regulatory environment that enables investment, trade, enterprise development, and competition.

Sustainable Development Goals

The DTIC would be primarily responsible for the second target of Sustainable Development Goal (SDG) 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation, namely to “promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries”[4]. In this regard, one of the DTIC’s core mandates is to facilitate structural transformation of the economy to promote dynamic industrial development, investment, competitiveness and employment creation. It develops industrial strategies and provides incentives to improve the competitiveness of the manufacturing sector and increase market access and demands for locally manufactured goods.

Furthermore, in terms of SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all[5], the DTIC supported the improved access of black women and youth to employment and entrepreneurial opportunities. In addition, in terms of SDG 10: Reduce inequality within and among countries[6], the DTIC through its trade negotiations, initiatives to promote and facilitate investment, and the role of the International Trade Administration Commission of South Africa’s (ITAC) tariff line investigations and determinations played a critical role to achieve this goal.

Agenda 2063

The work of the DTIC is aligned to aspiration 1 of the African Union’s (AU) Agenda 2063: “A prosperous Africa based on inclusive growth and sustainable development”[7]. In line with this aspiration, the African continent committed to “eradicating poverty in one generation and build shared prosperity through social and economic transformation….”[8]. One of the DTIC’s mandates was to facilitate structural transformation through broad-based economic participation and spatial industrial development. It implements this mainly through Programme 3: Investment and Spatial Industrial Development, Programme 6: Incentives, and Programme 8: Transformation and Competition. These Programmes work collaboratively for the development of Special Economic Zones (SEZs), industrial parks, and for black participation. Furthermore, the DTIC’s incentives have transformation criteria, which further facilitates this at a broader level.

Re-imagined Industrial Strategy and the Southern African Development Community Industrialisation Strategy

The Southern African Development Community (SADC) Regional Infrastructure Development Master Plan (RIDMP) aims to “catalyze industrial development and reduce current high costs of doing business, including those related to Non-Tariff Barriers and local procurement of inputs for infrastructure development”[9]. As a Member of SADC, South Africa has to align its national policies and strategies to complement that of the regional community. The National Development Plan 2030 and the Re-imagined Industrial Strategy (RIS) therefore are broadly complementary policies to the SADC industrialisation strategy. The RIS involves the development of Master Plans for 12 priority sectors. This sets out commitments and actions by government, organised business and organised labour in these sectors. Similar to the SADC-RIDMP, the RIS aims to ensure industrialisation through its interventions, one of which is developmental tariff reform. In the current budget, the DTIC provides for the implementation of seven Master Plans and the development of the Medical Devices Master Plan that it is the lead on.

Department of Trade, Industry and Competition’s Strategic Plan, Annual Performance Plan and Budget

The DTIC, as the lead department on economic development in South Africa, is the custodian of economic development policy formulation and planning.[10] The DTIC’s mission is to[11]:

Promote structural transformation, towards a dynamic industrial and globally competitive economy;
Provide a predictable, competitive, equitable, and socially responsible environment, conducive to investment, trade, and enterprise development;
Broaden participation in the economy to strengthen economic development;
Continually improve the skills and capabilities of the Department to effectively deliver on its mandate and respond to the needs of South Africa’s economic citizens;
Coordinate the contributions of government departments, state entities, and civil society to affect economic development; and
Improve alignment between economic policies, plans of the state, its agencies, government’s political and economic objectives, and mandate.

In its 2023/24 APP, the DTIC has sought to consolidate the gains made over the past four financial years by realigning its programmes around a set of outputs that are measured in terms of the real impact they have on jobs, growth and transformation. In this regard, it is piloting an innovative new approach, in partnership with the Department of Planning, Monitoring and Evaluation. This approach moves away from purely targeted inputs and activities that are easier to audit, as it removes factors that are outside the DTIC’s control or influence, towards a set of targeted impact outcomes. These impact outcomes are based on a set of key assumptions outlined in the APP. Therefore, this approach requires the APP to become a dynamic document that can be updated in the light of experience and learnings based on the implementation of the new approach on the delivery of the DTIC Group’s services, as well as substantive changes in the underlying assumptions.

The APP introduces four target types. The first type is a core target to measure the performance and transformation of the economy and reflect some of the ultimate objectives. The second type is a programmatic target to help achieve the aims of the core targets, but directly measure the impact of specific activities, such as providing industrial finance. The third type is an enabling target to achieve the programmatic targets, by creating the systems and environment to enable its work. The fourth type is a contextual responsive target, which often involves work outside of the core programmes and is designed to respond to pressing needs in the economy, and to encourage the DTIC to be flexible and agile in its work.

In spite of the new approach, as mentioned above, the APP maintains the three all-encompassing Outcomes as defined in the 2022/23 APP within which the work of the DTIC and its entities have been placed, as well as six pillars to support these three outcomes, namely[12]:

To combine growth with transformation,
To boost local production,
To grow exports and expand African trade,
To increase investment,
To establish a more reliable and low cost energy system while greening the economy overall, and
To grow employment.

It further identifies 12 functional focus areas under which the DTIC’s 45 output targets (highlighted in the following sub-section) are clustered, namely:

Investment
Industrial production
Exports
Industrial support
Transformation
Jobs

Energy
Green economy
Stakeholder engagement and impacts
Addressing crime
Red tape and state capability
Improving the capacity and responsiveness of the state and social partnership

Each of the DTIC’s programmes’ targets are linked to at least one of the three outcomes and 12 functional focus areas to ensure greater coordination within the DTIC to effectively contribute to the achievement of the outcomes.

The ten core targets were the apex priorities for the DTIC and all its programmes were expected to contribute to the achievement of these. These were as follows:

R200 billion in investment pledges secured across the state,
R40 billion in additional local output committed or achieved,
R700 billion in manufacturing exports,
R300 billion in manufacturing exports to other African countries,
R2,5 billion in exports of GBS,
R40 billion in black industrialist output achieved,
1 million jobs supported or covered by master plans,
100 000 jobs to be created (50 000 Social Employment Fund (SEF)[13] and 50 000 full time jobs),
23 000 jobs in black industrialist firms, and
20 000 additional workers with shares in their companies.

The DTIC’s nine programmes were collectively responsible for administering 45 pieces of legislation mainly in the areas of consumer protection, companies (corporate regulation), competition, industrial development, black economic empowerment, and international trade; and overseeing 17 entities, as well as the Broad-based Black Economic Empowerment (B-BBEE) Commission. The DTIC, its 17 entities and the B-BBEE Commission make up the DTIC Group.

Output targets for the 2023/24 financial year

The section below details the purpose of each programme and its planned outputs for the 2023/24 financial year as set out in its APP. For the 2023/24 financial year, the DTIC has a total of 45 Output Targets[14]. In the 2022/23 financial year, it had 151 Key Performance Indicators (KPIs). However, most of the targets set for the 2023/24 financial year were new. Therefore, it was difficult to compare targets across financial years.

Programme 1: Administration

The Programme seeks to provide strategic leadership, management and support services to the DTIC. In the 2022/23 financial year, the programme had set 26 indicators/targets. In the current financial year, the targets have been reduced to four targets as shown in the table below.

Table 1: Administration Programme Targets for the 2023/24 Financial Year (FY)

Output	Output Indicator	Programme contributions	Planned Performance
Output 8: R8 billion in financial support programmes to small, medium and micro enterprises (SMMEs), and women and youth- empowered businesses	Value of funding accessed, and support provided to SMMEs	% of procurement approved towards women, youth and people with disabilities (PWD) owned businesses	7% PWD 40% Women 30% Youth 100% eligible creditors payments made within 30 days
Output 32: 1 000 case studies of firms, workers, entrepreneurs, professionals or communities impacted by the DTIC measures; including 12 local films/documentaries telling the SA story	Number of the DTIC success stories profiled through case studies, advertising campaigns and social media platforms	Number of the DTIC success stories profiled through case studies, advertising campaigns and social media platforms	1 000
Output 33: 52 community outreach programmes by the DTIC group	Community outreach initiatives completed in 52 Districts	Community outreach initiatives completed in 52 Districts	52
Output 43: Promotion of a transparent and just adjudication process for Incentive Applications	Number of reports issued by the Incentives Adjudication Review Committee	Operationalisation of the Incentive Review Committee and appointment of panel	1 Annual Report

Source: Department of Trade, Industry and Competition (2023: 126)

Under this programme, targets for the implementation of transformation through Employment Equity and Black Economic Empowerments by ensuring 3,5 percent representation of people with disabilities; and 50 percent representation of women in senior management were no longer applicable.

Programme 2: Trade

The Programme had previously been known as the Trade Policy Programme, however, it has been renamed to the Trade Programme in this financial year. The purpose of the Programme was to facilitate the building of an equitable global trading system that facilitates development by strengthening trading and investment relations with key markets globally and fostering African development. The sub-programmes were International Trade Development (bilateral and multilateral trade relations and agreements) and African Multilateral Economic Development (multilateral African trade relations for deepening regional integration).

In the previous financial year, there had been 24 performance targets which were mainly reports. However, in the 2023/24 financial year, the 16 targets were more tangible. Planned targets for the year are shown in the table below.

Table 2: Trade Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 1: R200 billion in investment pledges secured across the state	Value of investment facilitated	Value of investment facilitated through reciprocal commitments	R30 million
Output 2: R40 billion in additional local output committed or achieved	Value of additional local output committed or achieved	Value of additional local industrial output as a result of the utilisation of rebates	R20 billion
Output 3: R700 billion in manufacturing exports	Value of exports in manufacturing sectors	Value of manufacturing exports facilitated under rebates, non- proliferation export permits and the Automotive Production and Development Programme (APDP)	R249 billion
Output 4: R300 billion in manufacturing exports to other African countries	Value of exports in manufacturing sectors to Africa	Value of manufactured exports to other African countries facilitated under rebates and APDP	R19 billion
Output 12: 1 million jobs supported, or covered by Master Plans	Number of jobs supported	Number of jobs supported (direct jobs at the time of application) as a result of implemented tariff increases, rebates, APDP and trade remedies administered	100 000 jobs
Output 13: 100 000 jobs to be created	Number of jobs to be created through the DTIC programmes: - 50 000 SEF part-time or temporary job opportunities; - 50 000 full-time jobs	Number of jobs created (direct jobs at the time of application) as a result of implemented tariff increases, rebates, APDP and trade remedies administered	500
Output 18: R1,3 billion in financial support to enterprises including SMMEs to mitigate impact of load shedding through Energy Resilience Fund (ERF)	Value of financial support to enterprises including SMMEs to mitigate impact of load shedding through ERF	Trade directive to assess the tariff structure for imports of alternative energy components and the final goods to ensure that tariffs encourage local manufacturing. This will include an assessment of the need for rebates or other tariff instruments.	1
Output 26: Four pieces of priority legislation amended, tabled or submitted to the Executive Authority, Cabinet or Parliament	Priority legislation amended, tabled or submitted to Executive Authority, Cabinet or Parliament	Patents Bill and Design Amendment Bill to support industrialisation by utilisation of Agreement on Trade-related Aspects of Intellectual Property Rights flexibilities decision	2
Output 27: 1 Implementation of the AfCFTA	Preferential trading in goods under the AfCFTA	SACU Tariff offer approved by AfCFTA Council of Ministers and adopted by the AfCFTA Summit by July 2023 Facilitate changes to Customs and Excise Act and gazetting thereof to implement SACU tariff offer by September 2023. Finalise the outstanding rules of origin for clothing and automotives by October 2023	3
Output 28: 10 High impact trade interventions completed	High impact trade interventions including, but not limited to the following: trade disputes, challenges with implementation of trade agreements, ITAC decisions and trade measures, bilateral trade concerns	High-impact trade interventions to facilitate market access for South African products	10
Output 29: 1 Strategy and advocacy finalised, responding to green trade barriers (Carbon Border Adjustment Mechanism (CBAM))	High impact trade and climate change strategy and advocacy	Finalise a strategy responding to green trade barriers (CBAM)	1
Output 37: 5 Conferences, summits, and international forums hosted	Conferences, summits, and international forums hosted	Co-ordinate the hosting of the BRICS[15] Trade Ministers meeting Co-ordinate the hosting of the African Growth Opportunity Act (AGOA) Forum	2
Output 40: 10 High-impact measures to reduce red tape or improve turnaround times in administration of incentives and work of agencies	Number of regulations published and red tape reduction interventions	Finalise and publish 3 regulations on anti-dumping, safeguards and tariff investigations to reduce red-tape in application process (ITAC)	3
Output 41: 4 Protocols finalised under the AfCFTA	Protocols finalised: Competition Protocol Investment Protocol Protocol on Women in Trade Protocol on digital trade	Ratification of the Competition Protocol Protocol on Women in trade approved by the AfCFTA Council of Ministers Protocol on digital trade approved by the AfCFTA Council of Ministers	4
Output 44: 6 Impact assessments or enhancements of trade instruments or measures	Impact reports (both internal and statutory) on trade instruments applied: for and issued across firms of different sizes that are geo-spatially referenced against relevant demographic markers	Impact reports (both internal and statutory) on trade instruments applied for and issued across firms of different sizes Impact reports (both internal and statutory) on trade instruments applied that are geo-spatially referenced Impact reports (both internal and statutory) on trade instruments applied for and issued, considering race, gender, age and other relevant demographic markers	6

Source: Department of Trade, Industry and Competition (2023: 132-135)

Programme 3: Investment and Spatial Industrial Development

The Investment and Spatial Industrial Development Programme was a merge of two former programmes, namely the Spatial Industrial Development Programme and the Invest South Africa Programme. The purpose of the Programme was to support foreign direct investment (FDI) flows and promote domestic investment by providing a one-stop shop for investment promotion, investor facilitation and aftercare support for investors, as well as to increase participation in industrialisation. The sub-programmes were Investment Promotion, Investment and Inter-Departmental Clearing House, Investor Support and Aftercare, and Spatial Industrial Development. The 12 planned targets are shown in the table below.

Table 3: Investment and Spatial Industrial Development Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 1: R200 billion in investment pledges secured across the state	Value of investment facilitated	Value of investment facilitated through investment support and SEZs	R151 billion
Output 2: R40 billion in additional local output committed or achieved	Value of additional local output committed or achieved	Value of additional local output through investment	R1 billion
Output 3: R700 billion in manufacturing exports	Value of exports in manufacturing sectors	Value of manufacturing exports facilitated through investments	R17 billion
Output 11: R40 billion in Black Industrialist Output Achieved	Value of output by Black Industrialist firms supported by the DTIC group.	Value of support on Black Industrialist Output Achieved through investments	R1,25 billion
Output 12: 1 million jobs supported, or covered by Master Plans	Number of jobs supported	Jobs supported through SEZs -(Existing) and investment unblocking investments	25 000 jobs
Output 13: 100 000 jobs to be created	Number of jobs to be created through the DTIC programmes: 50 000 SEF part-time or temporary job opportunities 50 000 full-time jobs	Jobs created through SEZs and investment unblocking investments	9 630 jobs
Output 17: 2 new SEZs designation and support work with provinces related to industrial parks	Number of New SEZ designated	Number of new SEZ applications considered for designation	2
Output 19: 1400 Megawatts of energy from projects facilitated	Number of Megawatts from projects facilitated	800 Megawatts (MW) of new energy projects supported	800MW
Output 20: 550 Megawatts of energy available for the grid	Megawatts of energy available for the grid	230MW energy projects completed energy available for the grid	230MW
Output 21: 1 Energy One-Stop Shop (EOSS) operational	Establishment of the physical EOSS	Establishment of the physical EOSS	Phase 1 - Physical EOSS
Output 23: 100 investor facilitation and unblocking interventions provided	Investor facilitation and unblocking interventions provided	Number of investor facilitation and unblocking interventions provided	100 investor facilitation and unblocking interventions
Output 37: 5 conferences, summits, and international forums hosted	Conferences, summits, and international forums hosted	Hosting of South African Investment Conference	1

Source: Department of Trade, Industry and Competition (2023: 143-144)

Programme 4: Sectors

The Sectors Programme, formerly the Industrial Policy Programme, was the third largest of the DTIC’s programmes accounting for 15,7 percent of the total budget. The Programme was responsible for the design and implementation of policies, strategies, and programmes to develop the manufacturing and related sectors of the economy contributing to the creation of decent jobs, adding value to manufactured products, and enhancing competitiveness in the domestic and export markets. Its sub-programmes were Industrial Competitiveness, and Customised Sector Programmes. The Programme has 16 planned targets for the financial year as shown in the table below.

Table 4: Sectors Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 1: R200 billion in investment pledges secured across the state	Value of investment facilitated	Value of investment facilitated by sectors (in addition to the impact of incentives)	R1,5 billion
Output 2: R40 billion in additional local output committed or achieved	Value of additional local output committed or achieved	Value of output generated by sectors through localisation (in addition to the impact of incentives)	R2,5 billion
Output 3: R700 billion in manufacturing exports	Value of exports in manufacturing sectors	Value of exports contributed by sectors through manufacturing exports (in addition to the impact of incentives)	R410 million
Output 4: R300 billion in exports to other African countries	Value of exports in manufacturing sectors to Africa	Value of exports contributed by sectors through manufacturing exports to the rest of Africa (in addition to the impact of incentives)	R93 million
Output 12: 1 million Jobs Supported, or covered by Master Plans	Number of jobs supported	600 000 jobs supported and maintained through sector interventions	600 000 jobs
Output 13: 100 000 jobs to be created	Number of jobs to be created through the DTIC programmes: 50 000 SEF part- time or temporary job opportunities; 50 000 full- time jobs	1 459 jobs created through sector interventions	1 459 jobs
Output 14: 23 000 jobs in Black Industrialist Firms	Number of jobs in Black Industrialist firms supported by the DTIC group	5 000 jobs supported through sector interventions	5 000 jobs
Output 22: Expedited regulatory amendments and flexibility, to promote energy efficiency	Publishing of regulations when necessary and expedited publishing of energy efficiency compulsory specifications.	4 compulsory specifications for Energy Efficiency concluded	4
Output 26: Four pieces of priority legislation amended, tabled or submitted to the Executive Authority, Cabinet or Parliament	Priority legislation amended, tabled or submitted to Executive Authority, Cabinet or Parliament	Amendment of National Building Regulations and Building Standards Act and submitted to Executive Authority	1 Amendment of the National Building Regulations and Building Standards and submitted to Executive Authority
Output 29: 1 Strategy and advocacy finalised responding to green trade barriers (CBAM)	High-impact trade and climate change strategy and advocacy	Develop a strategy and action plan for South Africa’s engagement with the European Union (EU) on CBAM	1 strategy and action plan for South Africa’s engagement with the EU on CBAM
Output 30: 1 Electric Vehicle (EV) strategy finalised	Increase in Green industrialisation and energy efficiency	Complete New EV Strategy and Roadmap	1
Output 31: 1 Finalisation of green hydrogen commercialisation framework	Green Hydrogen commercialisation framework finalised	Finalisation of Green Hydrogen Commercialisation Framework	1
Output 34: 7 Master Plans managed, and 1 new Master Plan finalised	Number of Master Plans managed, and new Master Plan finalised	Monitoring and evaluation of the implementation of approved Master Plans Medical Devices Master Plan developed as per the RIS	Monitoring and evaluation of the implementation of 6 approved Master Plans 1 Medical Devices Master Plan developed as per the RIS
Output 36: Oversight of other entities to ensure that at least 95% of planned KPIs are achieved	Action minutes towards the increased efficiency of Technical Infrastructure institutions by ensuring that 95% of KPIs of their APPS are achieved	Number of action minutes towards the increased efficiency of Technical Infrastructure institutions by ensuring that 95% of KPIS of their APPs are achieved.	4
Output 40: 10 High-impact measures to reduce red tape or improve turnaround times in administration of incentives and work of agencies	Number of regulations published and red tape reduction interventions	Improvements in turnaround times of two key technical infrastructure processes: South African Bureau of Standards (SABS): publication of standards National Regulator for Compulsory Specifications (NRCS): issuing letters of authority	Two bi-annual action minutes on the decrease in turnaround times within Technical Infrastructure institutions: SABS to improve turnaround times on publishing of standards from 365 days to 320 days NRCS to assess and decide on issuing a letter of authority from 120 to 90 days
Output 42: Promotion of a transparent and just adjudication process for incentive applications	Development of a Metal Trading System to identify stolen public infrastructure entering the scrap metal value-chain, export market or legitimate metal production industry	Development and institutionalisation of the New Metal Trading System to eliminate metal infrastructure theft and damage	Development and institutionalisation of the New Metal Trading System to eliminate metal infrastructure theft and damage

Source: Department of Trade, Industry and Competition (2023:152-155)

Programme 5: Regulation

The Regulation Programme, formally known as the Consumer and Corporate Regulation Programme, was aimed at developing and implementing coherent, predictable and transparent regulatory solutions that facilitate easy access to redress and efficient regulation for economic citizens. Its sub-programmes were Enforcement and Compliance, Policy and Legislative Development, and Regulatory Services. It has six planned targets for the financial year as shown in the table below.

Table 5: Regulation Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 7: R15 billion support programmes to enterprises in areas outside the 5 main metros	Value of approved funding accessed outside the 5 metros	Host 20 workshops in areas outside the metros to support SMMEs and will collaborate with Branches that require resources in this target	20
Output 8: R8 billion in financial support programmes to SMMEs and women and youth-empowered businesses	Value of funding accessed, and support provided to SMMEs	Education workshops to support SMMEs	20
Output 12: 1 million Jobs Supported, or covered by Master Plans	Number of jobs supported	20 000 (liquor and lotteries) estimated number of jobs from liquor distributors and macro manufacturers through renewal of liquor licence registrations by National Liquor Authority and jobs supported from the national lottery funded projects across the sectors provided in the Lotteries Act	20 000
Output 24: Grey listing: Publication of ‘Know Your Shareholder’ Regulations and Follow Ups	Grey listing ‘You’re your Shareholder’ regulations published; beneficial ownership register establishment; and integrated business ownership register	Publication of Quarterly reports on Entities in compliance with requirements	2
Output 26: Four pieces of priority legislation amended, tabled or submitted to the Executive Authority, Cabinet or Parliament	Priority legislation amended, tabled or submitted to Executive Authority, Cabinet or Parliament	Companies Amendment Bill tabled	2
Output 45: 10 Successful actions completed on price monitoring and excessive pricing or price gouging	Number of successful actions completed on price monitoring and excessive pricing or price gouging	10 successful actions completed on price monitoring and excessive pricing or price gouging	10

Source: Department of Trade, Industry and Competition (2023: 164-165)

Programme 6: Incentives

The Incentives Programme, which was previously known as the Industrial Financing Programme, was responsible to “stimulate and facilitate the development of sustainable and competitive enterprises, through the efficient provision of effective and accessible incentive measures that support national priorities”[16]. This programme captured the core mandate of the DTIC, and was the largest programme accounting for approximately 49,4 percent of the total budget. The sub-programmes were Broadening Participation and Industrial Innovation Incentives; Manufacturing Incentives; Services Investment Incentives; Infrastructure Investment Support; Product and Systems Development; and Strategic Partnership and Customer Care. It has 13 planned targets for the financial year, as shown in the table below.

Table 6: Incentives Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 1: R200 billion in investment pledges secured across the state	Value of investment facilitated	Value of investment facilitated through industrial financial support	R25 billion[17]
Output 2: R40 billion in additional local output committed or achieved	Value of additional local output committed or achieved	Value of projected additional local output and actual local output	R1,1 billion
Output 5: R2,5 billion in exports of GBS	Value of exports of GBS	Value of exports of GBS	R2,5 billion
Output 6: R30 billion in support programmes administered by or in partnership with the DTIC Group	Value through support programmes administered by or in partnership with the DTIC Group	Value of approved funding accessed by projects/enterprises	R5 billion[18]
Output 7: R15 billion support programmes to enterprises in areas outside the 5 main metros	Value of approved funding accessed outside the 5 metros	Value of funding accessed by projects/enterprises outside the 5 metros	R1 billion
Output 8: R8 billion in financial support programmes to SMMEs, and women and youth-empowered businesses	Value of funding accessed, and support provided to SMMEs	Value of approved funding accessed by SMMEs	R1 billion
Output 11: R40 billion in Black Industrialist Output Achieved	Value of output by Black Industrialist firms supported by the DTIC group	Value of output from black industrialist projects through industrial financing support	R3 billion
Output 12: 1 million Jobs Supported, or covered by Master Plans	Number of jobs supported	Number of retained and new jobs supported under GBS Master Plan	25 000 jobs
Output 13: 100 000 jobs to be created	Number of jobs to be created through the DTIC programmes: 50 000 SEF part-time or temporary job opportunities; 50 000 full-time jobs	Number of new permanent jobs created Construction job opportunities (Part time)	10 000 jobs 3 000 jobs
Output 14: 23 000 jobs in Black Industrialist Firms	Number of jobs in Black Industrialist firms supported by the DTIC group	Number of retained and new jobs supported by Black Industrialist Strategy projects	3 000 jobs
Output 18: R1,3 billion in financial support to enterprises including SMMEs to mitigate impact of load shedding through ERF	Value of financial support to enterprises including SMMEs to mitigate impact of load shedding through ERF	Value of Energy Resilience loan funding accessed by SMMEs and provide oversight to IDC and National Empowerment Fund (NEF) to ensure implementation of R1,3 billion fund	R240 million
Output 35: Oversight of IDC, NEF and Export Credit Insurance Corporation (ECIC) to ensure that at least 95% of planned KPIs are achieved	Action minutes towards the increased efficiency of DFIs by ensuring that 95% of the IDC, NEF and ECIC APP KPIs are achieved	Oversight of IDC and NEF to ensure that at least 95% of planned KPIs are achieved	1
Output 40: 10 High-impact measures to reduce red tape or improve turnaround times in administration of incentives and work of agencies	Number of regulations published and red tape reduction interventions	Implement measures to reduce red tape in administration of incentives by reviewing programmes or processes	2

Source: Department of Trade, Industry and Competition (2023: 173-175)

Programme 7: Export

The Export Programme, previously the Trade and Investment South Africa Programme, was aimed at increasing South African export capacity, and supporting direct investment flows through targeted strategies and an effectively managed network of foreign trade and investment offices. Its sub-programmes were Africa Bilateral Economic Relations; Export Promotion and Marketing; Trade and Investment Foreign Services Management Unit; and Export Development and Support. It has 14 planned targets for the financial year, as shown in the table below.

Table 7: Export Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 3: R700 billion in manufacturing exports	Value of exports in manufacturing sectors	Value of manufactured exports, including supported through export councils and export promotion initiatives	R445 billion
Output 4: R300 billion in manufacturing exports to other African countries	Value of exports in manufacturing sectors to Africa	Value of manufactured exports to other African countries, including supported through export councils and export promotion initiatives	R281 million
Output 6: R30 billion in support programmes administered by or in partnership with the DTIC Group	Value through support programmes administered by or in partnership with the DTIC Group	Value of support provided to exporters to participate in export promotion initiatives	R148 million
Output 7: R15 billion support programmes to enterprises in areas outside the 5 main metros	Value of approved funding accessed outside the 5 metros	Value of support provided to exporters outside the 5 main metros to participate in export promotion initiatives	R65 million
Output 8: R8 billion in financial support programmes to SMMEs, and women and youth-empowered businesses	Value of funding accessed, and support provided to SMMEs	Value of support provided to SMME exporters to participate in export promotion initiatives	R60 million
Output 9: R7,5 billion in financial support programmes to enterprises in labour absorbing sectors	Value of support programmes to enterprises in labour absorbing sectors	Value of support provided to exporters in labour absorbing sectors to participate in export promotion initiatives	R58 million
Output 11: R 40 billion in Black Industrialist Output achieved	Value of output by Black Industrialist firms supported by the DTIC Group	Value of output by black industrialists supported through export initiatives	R10 billion
Output 12: 1 million jobs supported, or covered by Master Plans	Number of jobs supported	Jobs supported through export initiatives	70 000 jobs
Output 14: 23 000 jobs in Black Industrialist Firms	Number of jobs in Black Industrialist firms supported by the DTIC Group	Jobs supported in Black Industrialist firms through export initiatives	6 500 jobs
Output 25: 10 Business Forums hosted aimed at supporting increased FDI, exports and outward investment hosted	Business Forums hosted aimed at supporting increased FDI, exports and outward investment	Business Forums hosted aimed at supporting increased FDI, exports and outward investment	10
Output 28: 10 High impact trade interventions completed	High impact trade interventions including, but not limited to the following: trade disputes, challenges with implementation of trade agreements, ITAC decisions and trade measures, bilateral trade concerns	Number of barriers affecting exports resolved	10
Output 35: Oversight of IDC, NEF and ECIC to ensure that at least 95% of planned KPIs are achieved	Action minutes towards the increased efficiency of DFIs by ensuring that 95% of the IDC, NEF and ECIC APP KPIs are achieved	Action minutes tracking progress of ECIC implementation of corporate plan and meeting targets	4
Output 37: 5 conferences, summits, and international forums hosted	Conferences, summits, and international forums hosted	Co-ordinate the hosting of the BRICS Business Forum	1
Output 40: 10 High-impact measures to reduce red tape or improve turnaround times in administration of incentives and work of agencies	Number of regulations published and red tape reduction interventions	Exporter development programme implemented to coordinate and pool support for exporters by the DTIC, ECIC, IDC and NEF	1

Source: Department of Trade, Industry and Competition (2023: 182-184)

Programme 8: Transformation and Competition

The Programme was previously known as the Competition Policy Programme. It focused on developing and implementing policy interventions that promote transformation and competition issues through effective economic planning, aligned investment and development policy tools. The sub-programmes were Economic Planning and Advisory; Implementation Coordination and Competition Oversight; Investment and Development; and Equity and Empowerment. It has 20 planned targets for the financial year, as shown in the table below.

Table 8: Transformation and Competition Programme Targets for the 2023/24 FY

Source: Department of Trade, Industry and Competition (2023: 192-196)

Programme 9: Research

Formerly the Economic Research Programme, the Research programme aims to “undertake economic research, contribute to development of trade and industrial policies and guide policy, legislative and strategy processes to facilitate inclusive growth”[21]. The sub-programmes for this programme are Economic Research and Policy Coordination, Macroeconomic and Microeconomic Policy, and Growth Path and Decent Work. It has 11 planned targets for the financial year, which are shown in the table below.

Table 9: Transformation and Competition Programme Targets for the 2023/24 FY

Output	Output Indicator	Programme contributions	Planned Performance
Output 1: R200 billion in investment pledges secured across the state	Value of investment facilitated	Assessment report on investment conference commitments	1
Output 3: R700 billion in manufacturing exports	Value of exports in manufacturing sectors	Export market strategy for Hemp, Cannabis and Furniture	1
Output 4: R300 billion in manufacturing exports to other African countries	Value of exports in manufacturing sectors to Africa	Manufacturing exports to rest of Africa	4
Output 7: R15 billion support programmes to enterprises in areas outside the 5 main metros	Value of approved funding accessed outside the 5 metros	Number of the maintained District Development Model Dashboards	52 dashboards
Output 11: R40 billion in Black Industrialist Output Achieved	Value of output by Black Industrialist firms supported by the DTIC Group	Number of reports on the Black Industrialist Census Quarterly surveys of BI sample to assess outlook and identify potential challenges	1 report on the Black Industrialist Census 4 Quarterly Surveys
Output 12: 1 million Jobs Supported, or covered by Master Plans	Number of jobs supported	Reports on jobs supported by the DTIC group interventions	3 Reports
Output 15: 20 000 additional workers with shares in their companies	Additional workers with shares in their companies as represented in commitments made	Number of the Worker Ownership Dashboard maintained	1 Dashboard maintained
Output 10: R800 Million in Equity Equivalent Investment Programme (EEIP) agreements agreed or administered	Value of loan, equity and procurement funding to support black-owned enterprises	Report on the Impact Assessment on EEIP	1 Report
Output 25: 10 Business Forums hosted aimed at supporting increased FDI, exports and outward investment hosted	Number of Business Forums hosted aimed at supporting increased FDI, exports and outward investment	Number of Bilateral trade reports produced	10 Reports
Output 29: 1 Strategy and advocacy finalised responding to green trade barriers (CBAM)	High impact trade and climate change strategy and advocacy	White Paper on EV, and CBAM	1 Report

Source: Department of Trade, Industry and Competition (2023: 204-205)

Budget Vote 39: Analysis of the 2023/24 – 2025/26 financial period

The allocated budget for the DTIC has increased by R8,9 million from R10,91 billion in the 2022/23 financial year to approximately R10,92 billion in the 2023/24 financial year[22]. While the budget has increased by 0,08 percent in nominal terms, in real (inflation-adjusted) terms[23], it decreased by 4,6 percent (adjusted for projected inflation of 4,9 percent[24]). Over the medium-term, the DTIC’s budget was expected to decrease to R10,5 billion in the 2024/25 financial year and increase to R11,0 billion in the 2025/26 financial year in nominal terms.[25] However, in real terms, the budget allocation was projected to decrease to R9,6 billion in the 2024/25 and 2025/26 financial years respectively. Figure 1 below shows the DTIC’s budget for the medium-term both in nominal and real terms[26].

Figure 1: Medium-Term Budget Allocation of the Department of Trade, Industry and Competition

Source: Madalane (2023) based on National Treasury (2023b: 815)

South Africa was currently facing a range of socio-economic challenges. The DTIC’s mandate was to facilitate economic growth that would create employment to address the challenges of high unemployment, poverty and inequality. However, a reduced budget over the medium-term could hamper its ability DTIC to stimulate the economy, thus, adversely affecting efforts to attract investment, create an inclusive economy through industrialisation and localisation, and improve trade. Consequently, this could negatively impact on the country’s ability to create more employment opportunities.

Over the strategic five-year period from 2020 to 2025 and for the 2023/24 financial year, the DTIC’s budget has been focused on the implementation of policies, strategies, and programmes, aimed at providing industrial finance, developing industrial infrastructure, and enhancing industrial competitiveness and localisation[27]. These priorities would be implemented mainly through Programme 6: Incentives, Programme 8: Transformation and Competition, and Programme 4: Sectors, as these programmes account for the largest shares of the allocated budget. For the 2023/24 financial year, the three abovementioned programmes account for approximately 81 percent of the total DTIC budget with Programme 6 (Incentives) being the largest programme accounting for 49,4 percent, and Programme 4 (Sectors) and Programme 8 (Transformation and Competition) accounting for 15,8 percent and 15,7 percent respectively.

The Administration Programme was the fourth largest programme with 7,7 percent of the budget. The smallest programmes were Research, Investment and Spatial Industrial Development, and Trade, accounting for 0,6 percent, 1,5 percent and 2,2 percent of the total budget respectively. The breakdown of each programme’s share of the total budget is shown in figure 2 below.

Figure 2: Share of Allocated Budgets per Programme for the 2022/23 Financial Year

Source: Madalane (2023) based on National Treasury (2023b: 815)

Programme Analysis[28]

The R8,9 million increase in the 2023/24 financial year represented a R501,2 million decrease in real terms. The nominal increase was as a result of changes in the programmes’ allocated budgets in the financial year compared to the 2022/23 financial year. Table 10 below shows the budget for the 2022/23 and 2023/24 financial years as well as changes in each of the programmes in both nominal and real terms.

Table 10: Budget Allocation by Programme

Programme (R million)	Budget		Nominal change	Real change
Programme (R million)	2022/23	2023/24	2022/23-2023/24
P1: Administration	864,0	840,3	-2,74%	-7,28%
P2: Trade	235,8	244,2	3,54%	-1,29%
P3: Investment and Spatial Industrial Development	181,2	168,6	-6,96%	-11,30%
P4: Sectors	1 749,5	1 722,4	-1,55%	-6,15%
P5: Regulation	343,8	359,6	4,60%	-0,29%
P6: Incentives	5 317,0	5 391,4	1,40%	-3,34%
P7: Export	365,8	407,6	11,40%	6,20%
P8: Transformation and Competition	1 805,8	1 728,1	-4,30%	-8,77%
P9: Research	50,5	60,4	19,46%	13,88%
TOTAL	10 913,6	10 922,5	0,08%	-4,59%

Source: Madalane (2023) based on National Treasury (2023b: 815)

The declines in programme budgets include:

Programme 1: Administration – a decrease of R23,7 million;
Programme 3: Investment and Spatial Industrial Development – a decrease of R12,6 million;
Programme 4: Sectors – a decrease of R27,1 million; and
Programme 8: Transformation and Competition – a decrease of R77,7 million. The significant decrease in this programme was as a result of “the Social Employment Fund for the presidential employment initiative not being extended beyond 2023/24”[29]. The SEF was one of the COVID-19 interventions in the Economic Reconstruction and Recovery Plan introduced in October 2020. With the end of the pandemic, it is expected that some of the interventions targeted at addressing the impact of COVID-19 may be discontinued.

The increases in programme budgets include:

Programme 3: Trade – an increase of R8,4 million;
Programme 5: Regulation – an increase of R15,8 million;
Programme 6: Incentives – an increase of R74,4 million. This increase was attributed to expected increases in “spending in the Incentives programme, mainly to disburse funds for industrial financial assistance”[30]; and
Programme 9: Research – an increase of R9,8 million.

Economic classification[31]

Of the total budget of R10,9 billion for the 2023/24 financial year, approximately R1,7 billion (16,0 percent of the total budget) was the operational budget of the DTIC (compensation of employees, and goods and services), and the bulk of the budget, R9,16 billion (83,9 percent of the total budget) was allocated to transfers and subsidies to departmental entities and private enterprises, among others (a detailed analysis on transfers to the DTIC entities is depicted in sub-section 3.2.2.1). While R15,7 million (0,1 percent) of the budget is allocated to payments for capital assets (machinery and software).

Table 11: Budget Allocation by Economic Classification

(R million)	2019/20	2020/21	2021/22	2022/23	2023/24	Share of the Total Allocated Budget
Current payments	1 809,1	1 568,9	1 513,3	1 769,8	1 745,3	16,0%
Compensation of employees	1 078,5	1 017,9	1 018,5	1 081,7	1 066,1	9,8%
Goods and services	730,5	551,0	494,8	688,1	679,2	6,2%
Transfers and subsidies	9 039,8	7 427,2	10 096,8	9 130,7	9 161,5	83,9%
Departmental agencies and accounts	1 144,2	1 043,0	1 294,7	1 247,8	1 265,3	11,6%
Foreign governments and international organisations	29,6	30,7	30,3	44,1	44,5	0,4%
Public corporations and private enterprises	7 681,8	6 215,1	8 611,4	7 670,6	7 685,7	70,4%
Non-profit institutions	178,9	134,3	153,3	165,4	165,1	1,5%
Households	5,2	4,1	7,0	2,8	1,0	0,0%
Payments for capital assets	12,6	42,7	2,8	13,1	15,7	0,1%
Machinery and equipment	10,0	42,7	2,5	9,1	12,6	0,1%
Software and other intangible assets	2,5	–	0,3	3,9	3,0	0,0%
Payments for financial assets	14,5	0,9	1,1	0,0	–	0,0%
Total	10 876,0	9 039,7	11 614,1	10 913,6	10 922,5	100,0%

Source: Madalane (2023) based on National Treasury (2023b: 816)

Of the operational budget, 61,1 percent was allocated for compensation of employees (R1,06 billion or 9,8 percent of the total budget). The compensation of employees’ budget decreased by 1,4 percent between the 2022/23 and the 2023/24 financial years due to the estimated reduction in the number of employees from 1 325 employees to 1 300 employees. In the 2024/25 and 2025/26 financial years, the compensation of employees’ budget was expected to increase to R1,08 billion in 2024/25 with 1 243 employees and R1,13 billion in 2025/26 with 1 264 employees.

Transfers to Entities

Of the R9,16 billion budget for the DTIC’s transfers and subsidies, R1,26 billion would be allocated to the DTIC’s entities, approximately R7,7 billion to Public corporations and private enterprises, R165,4 million to Non-profit institutions, R44,1 million to Foreign governments and international organisations, and R2,8 million to households. Three of the DTIC’s 17 entities were self-funded, namely the Companies and Intellectual Property Commission (CIPC), the NEF, and the National Lotteries Commission (NLC). While 13 entities received annual transfers. In addition, the IDC received funding for various activities and incentives. It administered some of the incentive programmes on behalf of the DTIC including Regional Industrial Development; Sector programmes; Industrial Financing; the SEF; the Tirisano Construction Fund Trust; and the Downstream Steel Industry Competitiveness Fund. Transfers to the DTIC’s entities are as shown in the table below:

Table 12: Transfers to entities

Entities (R’000)	2019/20	2020/21	2021/22	2022/23	2023/24
Companies Tribunal	17 352	20 752	20 313	24 529	28 202
Competition Commission	295 438	302 586	439 550	449 518	453 195
Competition Tribunal	36 172	32 342	36 970	42 286	42 703
Export Credit Insurance Corporation of South Africa	233 511	162 710	208 078	150 000	172 783
International Trade Administration Commission	111 428	95 998	112 478	108 559	121 427
National Consumer Commission	58 304	51 530	58 505	59 388	73 566
National Consumer Tribunal	56 639	47 492	53 515	54 756	55 295
National Credit Regulator	86 580	71 272	82 632	83 241	84 060
National Gambling Board	33 797	31 027	35 928	36 477	36 836
National Metrology Institute of South Africa: Operations	115 057	103 550	121 061	122 832	124 041
National Regulator for Compulsory Specifications	139 501	126 126	144 099	147 560	154 012
South African Bureau of Standards	420 384	270 421	328 819	361 248	379 471
South African National Accreditation System	31 669	28 748	32 967	33 820	34 153
Industrial Development Corporation
Regional Industrial Development	–	–	–	15 000	21 000
Sector Programmes	838 399	637 029	487 363	599 483	564 050
Industrial Financing	700 000	892 000	1 997 500	–	–
Social Employment Fund	–	–	800 000	861 566	787 941
Tirisano Construction Fund Trust	61 250	36 279	46 222	64 375	53 750
Downstream Steel Industry Competitiveness Fund	35 000	29 449	37 727	39 550	39 939

Source: National Treasury (2023b)

Transfers to most of the entities would not increase during the financial year compared to the 2022/23 financial year. Entities whose transfers would increase included the National Consumer Commission (NCC) (24 percent increase), the ECIC (15 percent increase), the Companies Tribunal (15 percent increase), the ITAC (12 percent increase), the SABS (5 percent increase), and the NRCS (5 percent increase) in nominal terms. In terms of the Companies Tribunal, the DTIC reported that the increase in transfers was for “building capacity to reverse the trend of the decreasing caseload, improve marketing and communications to improve the public’s awareness of the tribunal, and improve hearing facilities”[32].

However, the increases were smaller given the inflation rate of 4,9 percent. For the other entities whose increase in transfers were approximately 1 percent, their transfers had actually decreased. This was concerning given that the DTIC entities have been struggling financially even in the previous financial years.

The National Metrology Institute of South Africa (NMISA) has been receiving additional funding for its infrastructure upgrades. This was approved in the 2016/17 financial year. In the current financial year, NMISA would receive an additional R45,6 million, a decrease from the R72,8 million in the 2022/23 financial year.

Key issues raised by the Committee during its deliberations

The Committee raised a number of concerns during its deliberations, including:

New approach to the APP: The APP for the current financial year substantively changed the manner in which the work of the DTIC would be evaluated. The new approach addressed the Committee’s previously expressed concerns about the key performance indicators being overly focussed on the DTIC’s outputs and not speaking to much required outcomes. However, a view was expressed that this change was late given that it was the last year of this Administration, and should have been introduced within the first year on the new administration. While the Minister acknowledged the view expressed, he indicated that the Committee should recognise that at the beginning of this Administration, the focus was on amalgamating the Departments of Economic Development, and of Trade and Industry. This was done successfully, integrating the new vision expressed by the President. Therefore, it had not been possible to initially make these substantive changes to the newly established DTIC. Furthermore, the process around developing an APP begins in the preceding year, around June/July, where budget bids are being formulated within the different divisions of a department. Therefore, the process for the 2019 APP started in the 2018/19 financial year, and was set out in the Budget and the SONA prior to elections. Notwithstanding the above, the Minister informed the Committee that there had been elements of the new approach from 2019, aligning the modalities of implementing the AfCFTA among others and now being able to bring together all the activities, such as the Master Plans, which were first launched in 2019, and building on these achievements and foundations.

In his view, the COVID-19 pandemic had impacted on all global economies, which was further exacerbated by the July unrest and floods in 2021 in South Africa. However, significant lessons had been learnt in responding to these crises, showing the resilience, durability and flexibility of the South African economy. During this period of global economic uncertainty, the South African economy boosted its food production and produced critical medication and other medical products. This resulted in South Africa developing new capabilities which had not existed prior to the pandemic such as vaccine production. So in order to navigate these challenges, the DTIC had operated with two APPs, the formally published one for the 2020/21 financial year, and a reviewed one, that as a result of the COVID-19 pandemic, July unrest and floods, reflected a practice of the redirection of resources where required, and the establishment of Funds after APPs had already been finalised. The new approach allows for more flexibility to address challenges as they emerge.

Achievability of the APP’s measures: In the forward of the APP, the Minister clearly stated that the APP presents a better alignment of the DTIC’s objectives to address the challenges facing the South African economy. The three outcomes it wanted to attain, namely increased industrialisation, the transformation of the economy, and the creation of a capable state, were commendable. However, in light of this bold statement, the Committee enquired whether the Minister was of the view that the measures set out in the APP were achievable. The Minister informed the Committee that, given the current economic environment, the DTIC had recognised that doing things the usual way would not achieve these objectives, and that there would be no guarantee that it would succeed. In previous APPs, the DTIC had determined targets that were easy to achieve and not necessarily identifying a set of targets that could make a difference in the economy, given the harsh economic reality facing the country. Currently, the public sector has been reduced to setting performance targets that could be audited by the Office of the Auditor-General but did not allow for any innovation in addressing the challenges facing the economy. This had caused departments to engage in a tick boxing exercise in setting conservative targets that ensured that they would achieve these targets. However, this fostered a culture of being super cautious, super safe and not encouraging bold action required to address the challenges facing the economy. Getting a clean audit without significantly impacting or changing and improving the trajectory of the economy, became the mantra. The DTIC, in developing this year’s APP, had taken a more aggressive approach in setting targets that would be more meaningful and impactful in addressing the economic challenges facing the country. Facing criticism in not achieving a particular target, should not deter the DTIC in trying to do something that could move the economy forward. He emphasised that achieving green ticks should not be the driving force in determining or setting targets but rather seeking targets that would deliver a meaningful impact, and not simply to meet an audit target.

Impact of the energy challenges on the broader economy: The continual power outages were having an adverse impact on the broader economy and the ability for the government to effectively implement its industrial policy. These outages have caused many businesses, across all sectors of the economy, to experience lower production, higher costs and reduced income. Stable electricity supply, at an appropriate price, was essential for economic growth and industrialisation. Notwithstanding the new APP, without the reliable and affordable supply of electricity, slow economic growth and limited foreign direct investment would be perpetuated. In light of the above, the Committee enquired how the DTIC would seek to address the energy challenges facing South Africa. The DTIC informed the Committee that it has formulated eight key actions to contribute towards resolving the energy challenges. These were:

The establishment of an EOSS to assist power-generating companies to navigate the different legislative processes and improve turnaround times by assisting investors to submit applications through a single window process.
Work to increase private-sector investment in electricity generation. The South African Investment Conference and IDC serve as primary conduits to unlock investment in the energy sector.
Regulatory flexibility in terms of transformation is being considered in the form of a customised BEE scorecard, which takes account of the unique characteristics of utility scale electricity projects. The DTIC will continue to pursue the transformation imperative necessary for inclusive growth, while improving regulatory flexibility.
Regulatory flexibility on competition laws for energy suppliers aimed to promote collaboration to increase or optimise the supply of energy in the market; or to reduce the cost of energy. To date, two block exemptions have been published for public comment.
The establishment of a blended funding facility of R1,3 billion between the DTIC, IDC and NEF. This ERF aims by means of working capital to assist companies with alternative energy solutions, support to local component manufacturers, and support to township and rural businesses with acquisition of capital equipment, technical support and non-financial assistance.
A collaboration between the SABS and the NRCS to develop a range of energy efficiency regulations that set minimum energy performance requirements for appliances, general service lamps, hot water storage tanks (geysers) and electric motors
Consumer protection from potential ‘price gouging’ and price fixing. The Competition Commission, the NCC and the NRCS would be monitoring the market for pricing irregularities on targeted renewable energy components; complaints on potential grid access discrimination against SMMEs; and the compliance of users to mandatory standards and safety requirements for energy-efficient, renewable and backup products.
The industrialisation of components. Work to focus on attracting investment in component manufacturing, providing support through the DTIC and its DFIs, and pursuing trade and export remedies relating to renewable energy components with a focus on accessing regional markets.

Status of the SADC-EU Economic Partnership Agreement (EPA): The SADC-EU EPA contains a revision clause requiring the parties to review the Agreement in its entirety no later than five years after entry into force. The review was initiated at the end of 2021 and was currently underway. A perception had been created that the EPA was at risk of not being renewed. As a result, the Committee enquired what actions the DTIC was undertaking to ensure South Africa’s continued beneficial participation within this trade agreement. The Minister informed the Committee that the SADC-EU EPA was not expiring but that it was coming up for review. Both parties were considering whether changes were required, and if yes, what those changes should be. The EU had requested additional time in order to do a more comprehensive review, however, notwithstanding this request, discussions around the EPA had commenced.

Status around the renewal of the AGOA: In signing the Trade Preference Extension Act in 2015, President Obama extended the validity of the AGOA and reauthorised it for a further ten years. The AGOA is a trade programme meant to establish stronger commercial ties between the United States and sub-Saharan Africa. As the AGOA is up for renewal, some Members of the Committee were concerned that recent positions taken by the South African government on Geo-political matters may compromise South Africa’s inclusion as a signatory, if AGOA was renewed. The Minister informed the Committee that South Africa would be hosting the next AGOA Summit, and that they had been in discussion with the US Administration regarding its renewal. During the second Summit held in Washington DC in December last year, the DTIC engaged with Members of the US Congress, Administration and the Business Community regarding the renewal of the AGOA. Discussions on the matter had been positive and the DTIC look forward to continued engagements on the AGOA. The South African government recognises the important strategic relationship with the US, as it is the source of significant investment in South Africa. In the Minister’s meetings with members of the US Administration, the State, Trade, Agriculture and Commerce Departments, the importance of the strategic relationship between the US and South Africa was continually re-emphasised.

Timeframe around the publication of the White Paper on Energy Vehicles in South Africa: In 2021, the DTIC released an Auto Green Paper on the advancement of new energy vehicles in South Africa for public comment. A concern for the Committee was that since the publication of the Green Paper no White Paper had been released that would have incorporated the input from the public and stakeholders from the first call. The publication of a White Paper would also provide role-players within the auto-sector industry certainty on a way forward. Therefore, the Committee enquired when the White Paper on Energy Vehicles in South Africa would be published. The Minister responded that the publication of the White Paper on Energy Vehicles was of utmost importance to the DTIC, but it would be premature in the absence of the answers that would ensure that the transition firms must make in the next few years, would enable them to access, in particular, the European market in 2035. This did not preclude other markets, where regulatory adjustments were being made, therefore, South Africa needed to consider the final requirements of these markets as well. According to the Minister, the initial position of the EU was that it would allow electric vehicles in their market from 2025, however, the German auto industry had protested. This resulted in the German government engaging the EU on the matter, and as a result of these negotiations, the EU adjusted its policy and would now exempt cars that run on e-fuels from the EU’s 2035 phase-out. As a result of this policy adjustment, South Africa needed to review its position and this presented government with an opportunity in relation to e-fuels, using SASOL technology. The Minister informed the Committee that he was currently in discussion with the Chief Executive Officer of SASOL on the matter.

Furthermore, the Minister informed the Committee that in considering and evaluating the feedback received from industry stakeholders and the public on energy vehicles, once it had been analysed and costed, it appeared not to be affordable. Hence, this required further engagement with the National Treasury and the Auto Industry based on these findings. Also, it would not have been prudent to introduce electric vehicles on scale into the South African economy given its energy challenges. Notwithstanding the energy challenges, the Minister was of the view that even if South Africa was able to do so, given that the energy grid was still largely coal-based, the net climate change benefit would have been moderate.

In light of the above, it became important that in moving forward, government provides certainty to investors and ensures that it does not compromise its climate goals nor the grid stability in its haste to publish a White Paper. South Africa requires a different approach, and the Minister informed the Committee that he and the Minister of Finance recently met with the auto industry. This was for the Finance Minister to get a sense of the financial requirements needed, and, from a policy perspective, outline a possible roadmap that would be prudent and affordable. Therefore, the Minister informed the Committee that it would proceed with caution, and once the final document was published, it would provide the necessary certainty to the auto industry around incentives and other elements of a support programme for electric vehicles.

The impact of state capture and corruption on the South African economy: At a recent investment conference, the President recognised the impact of underinvestment, mismanagement, and corruption in the electricity, rail and logistics sector and the impact on the broader economy. However, despite this acknowledgment, a view was expressed that the APP, notwithstanding the other external geopolitical factors, did not incorporate the impact of crime and corruption in this regard. The Minister responded stating that the assessment of the impact of state capture on the broader economy had been done in 2017 in order to mobilise against State Capture. In 2018, an Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector, the “Zondo Commission”, had been launched. The report recommended that various implicated individuals be investigated further and possibly prosecuted for their involvement in state capture, mostly concerning charges of fraud, corruption, and money laundering. According to the Minister, state capture and corruption is facilitated when one hides the identity of stakeholders and financial sources who have access to funds illegal or are connected to decision makers. Currently, the state was in the process of taking the necessary action against implicated individuals. The Minister also informed the Committee that the Parliament had passed the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act (Act No. 22 of 2022), introduced by National Treasury, that amended five pieces of legislation, including the Companies Act (Act No. 71 of 2008). This Act introduced a mechanism through which the CIPC could maintain beneficial interest/beneficial ownership information of companies. This required the DTIC to develop regulations, which have been published for public comment. Once the process was completed, a set of regulations would be published in this regard.

Role of education in transforming the South African economy: During the Committee’s recent visit to South Korea, it became apparent that the alignment of education and economic policies were critical in transforming and industrialising the South Korean economy. South Africa was facing a similar challenge, but it was not clear whether its current education policies were aligned to deliver the necessary industrialisation objectives as outlined in the APP. The Minister acknowledged the importance of education and that it was critical to ensure the long-term competitiveness of the domestic economy. Currently, universities were supplying the necessary skill set without practical training. South Korea and Germany were good examples of countries that combine the theoretical and practical skills well, hence the DTIC was promoting workplace learning. He further informed the Committee that although education fell outside the scope of its mandate, it has a number of programmes and activities that improve and increase the skills levels of people at the workplace, especially in the manufacturing sector.

Impact of the introduction of the CBAM for South African trade with the EU: The EU was considering introducing the CBAM, which seeks to place a carbon tariff on carbon intensive products, such as cement and some electricity, imported by the EU. This, in the view of the Committee, was another attempt by the EU to create artificial barriers for exports to its markets. The Committee enquired what mechanisms were being considered by the DTIC to address the latest attempt by the EU to protect its markets through the implementation of the CBAM. The Minister informed the Committee that government views this practice of unilateralism from the EU as extremely unhelpful and that it poses a threat to the global trading system. This would enable trading blocks and countries to impose conditions on trade that had been absent from any World Trade Organization (WTO) agreement. This represented a form of green protectionism and South Africa had conveyed its concern to the EU and implored it not to act unilaterally. South Africa was available to discuss this matter at the WTO, and accepted and acknowledged that climate change was real and that it imposed significant risks to society and future generations. South Africa acknowledged that all countries should contribute to making the world a greener place and to reduce carbon emissions, however, it should be based on a multi-lateral approach to find common ground on modalities and the level of ambition and responsibilities of each country within the global trading system.

Need for collaboration and coordination among government departments to address the energy crisis: FDI was critical to address the challenges facing the South African economy. Failure to address the impediments to FDI, such as the energy crisis, would further inhibit the recovery of the economy and the achievement of the DTIC’s objectives as outlined in the APP. Better coordination and collaboration among the relevant departments would be a critical element to address the energy challenge and to place South Africa on a path to recovery. The Committee enquired what mechanisms were being considered by the DTIC to ensure closer collaboration and coordination among the relevant departments to secure the necessary FDI, as well as domestic investment into the economy. The DTIC acknowledged the importance of stable, cost-effective electricity supply to encourage both domestic investment and FDI, economic growth, and job creation. Five key outputs in the APP were explicitly focused on contributing to the Energy Action Plan announced by the President in July 2022. They included the establishment of an Energy One-Stop Shop which would coordinate investment unblocking activities so that private-sector investment in renewable energy – whether for own use (‘embedded generation’) or for the grid – was not impeded by red-tape and slow regulatory processes. In addition, the DTIC would provide concessional finance to enterprises including SMMEs, to mitigate the impact of load shedding while also using the DTIC Group’s industrial finance interventions to support new investments by firms approved through the Renewable Energy Independent Power Producer Programme bid windows. Moreover, it participates in the National Energy Crisis Committee chaired by the Director-General in the Presidency. It was confident that through these various interventions, the electricity supply challenges would be addressed in the short to medium-term and the DTIC would continue to spearhead the President’s call for new foreign and domestic investment of R2 trillion over the next five years.

Role of beneficiation in promoting industrialisation: Beneficiation of South Africa’s natural resources remains a key ingredient in creating higher employment and boosting localisation and industrialisation in South Africa. Beneficiation should move beyond the first stage of smelting and refining, to the fourth stage, which is the fabrication of finished products. The Committee enquired what measures were being considered by the DTIC to support fabrication of raw materials, especially steel, titanium, uranium, platinum and other precious metals, which are in high demand by developed economies. The Minister responded that the DTIC recognises the importance of shifting from a society that is simply an exporter of raw materials towards the promotion of greater levels of beneficiation of natural resources within South Africa. South Africa still has a trade structure heavily reliant on the export of raw materials and the import of capital and consumer goods. Through the RIS, there is a need for greater levels of local procurement by the state and major firms, coupled with supplier development initiatives. This was to strengthen the ability of manufacturing and other sectors of the economy to create decent jobs and increase value-addition and competiveness in both domestic and export markets. The advancement of the new green economy manufacturing, which aimed to develop the value chains that would deal with among others battery production. The Minister acknowledged that beneficiation was constrained by the energy crisis because the first phase of beneficiation was very energy intensive.

The impact of crime on the economy: Crime remains one of the barriers to investment and industrial growth. Although fighting crime falls outside the competency of the DTIC, the Committee enquired what measures have been considered by the DTIC to address the challenge posed by the “Construction Mafia”. The Minister informed the Committee that the DTIC worked closely with the police in reporting such activities. The DTIC had tools available to deal with white collar crime such as corruption and the abuse of the tender system.

Financial support provided to SMMEs, and Women and Youth-Empowered Businesses: As part of the output for industrial support and transformation, an amount of R8 billion has been allocated in support of SMMEs, Women, and Youth -Empowered Programmes. The Committee enquired how much of these funds would be directed to townships, and SMMEs and enterprises located in rural provinces. The Minister informed the Committee that the amounts of R8 billion and R15 billion were funds available from the IDC that would be publicised by the DTIC calling for individuals and firms to apply for funds. This was to promote small business development and/or the promotion of women in the economy. It should be noted that this was not an allocation to any specific province or township but a fund where individuals and firms can apply for funding and these applications would then be evaluated by a committee. The Minister acknowledged that often smaller provinces may not be aware of the resources available or have the technical skills to put together a business plan that would comply with all the requirements. Therefore, it became important for the DTIC to have an outreach programme that facilitates access to entities such as the Small Enterprise Finance Agency, the Small Enterprise Development Agency (SEDA) and the NEF that could assist these individuals and firms to develop business plans. SEDA would be able to assist in developing business plans, and the NEF would be able identify weaknesses in these business plans and provide some support in how to strengthen these areas. However, it should be noted that the IDC may not be in a position to fund too many projects as it is funded from the IDC’s balance sheet, and is not funded by the National Treasury.

Investment pledges and how they translate into projects and job creation: At the recent South African Investment Conference hosted by Invest SA, an amount of R200 billion in investment pledges had been secured. The Committee enquired how these pledges translated into physical projects and jobs, and in which sectors have these investments been pledge. With regard to investment and whether it translates into jobs, the Minister informed the Committee that pledges translate into jobs over the three phases of the implementation of the investment. The initial phase is the construction phase which creates mostly temporary construction jobs and employ a large number of workers. The second phase, the production phase, relates to purchasing of equipment to furnish the factory and create employment for people through the operation of factories. The third phase refers to the production phase such as the recent opening of the Hesto Harness facility in KwaDukuza, in KwaZulu-Natal, which created jobs for 4 000 workers. Furthermore, the Minister informed the Committee that pledges were in different sectors of the economy such as manufacturing, mining, infrastructure, retail and service centres.

Securing private sector support for the industrialisation strategy: In building a capable state, it is critical to have a well-functioning relationship between the state and the private sector. The state cannot operate in isolation and the RIS recognises the importance of leveraging the strength of the private sector and organised labour, as private investment is the key driver of growth in the economy. In recognising the role of the private sector, the Committee enquired what efforts were being made by the DTIC to further enhance the role of the private sector in support of industrialisation and the implementation of the RIS. The DTIC indicated that the RIS centred on a robust social compact between the government, industry, and organised labour. Each social partner takes on the responsibility of implementing concrete interventions to transform and grow the economy. To date, seven Master Plans had been developed and signed, covering various industries such as sugar, automotive, clothing, footwear, textiles, furniture, steel, poultry, and GBS. These Master Plans were currently at different stages of implementation.

The key focus areas across each Master Plan included investing in productive assets, job creation and retention, enhancing productive efficiencies, fostering transformation, promoting localisation, and developing SMMEs. Moreover, social partnerships play a vital role in this strategy. One notable accomplishment was the agreement secured through the National Economic Development and Labour Council, in which the social partners committed to localising R200 billion worth of goods over a five-year period. Targeted value chains for this localisation effort encompass agro-processing, healthcare, basic consumer goods, capital goods, construction, and transport equipment. In addition, businesses have agreed to establish supplier development programs, and ongoing engagements with companies listed on the Johannesburg Stock Exchange aimed to mobilize resources to support industrialisation initiatives.

Coordination for improvement and maintenance of Industrial Parks: Coordination around the implementation of policies among all spheres of government are critical for their success. The Committee enquired how the DTIC was ensuring better coordination among all spheres of government relating to the improvement and maintenance of Industrial Parks located in rural and under-developed provinces. The Minister informed the Committee that there was a MINMEC, which is a Ministerial Structure that brings together all relevant stakeholders (MECs and officials), to ensure effective coordination and problem solving. The DTIC had begun to use this structure to highlight DTIC-related issues. Although Industrial Parks fell within the responsibilities of provinces, funds for the improvement and maintenance for the Industrial Parks have been provided by the DTIC. However, it would appear that after the initial investment, provinces did not provide the necessary support to maintain these Parks. Therefore, the DTIC should consider placing conditions on funds provided to ensure its sustainability.

Reduction of barriers to entry for SMMEs: As a result of the supply chain shock to the global economy, prices, including food prices have increased significantly. This had an adverse impact on the vast majority of, especially unemployed, South Africans. Furthermore, economic concentration exacerbated the situation through abuse by dominant firms. The Committee enquired what steps were being considered by the DTIC to limit or reduce barriers to entry by SMMEs and ensure their sustainability and growth. With regard to dominance by large firms, the Minister was of the view that this was not only confined to the food sector. However, he informed the Committee that recent changes to legislation provided the Competition Authorities with new mechanisms to act against any predatory behaviour by larger firms. With regard to price discrimination, small enterprises could now raise complaints with the Competition Commission for it to investigate whether differing prices offered in the market was unfair and/or an attempt to eliminate competition. If, after an investigation it was found that the price discrimination was unfair, it could be prohibited. In support of SMMEs, the DTIC was considering whether mechanisms to lock in larger firms to support smaller players in the market were necessary. This incubation process would allow entrepreneurs to preserve capital and gain external support to ensure growth and the sustainability of their business.

Economic concentration at sector or firm level: The APP reflects high levels of economic concentration in product markets and as an output the DTIC seeks ten high impact outcomes on addressing market concentration at sector or firm level. The Committee enquired in which particulars sectors these were intended to be achieved and how would this be achieved. The Minister informed the Committee that the Competition Commission would commence/initiate inquiries based on either complaints or it may be of the view that a sector may be preventing, distorting or restricting competition. Currently, the Competition Commission was busy with an inquiry into online market services such as grocery delivery services, online platforms for cars, and the fresh produce market. A draft report on the steel sector had also recently been released. With respect to mergers, the Minister informed the Committee that Heineken had recently bought the Distell Business which increased the level of concentration within the sector. The DTIC had challenged this conduct and it had resulted in Heineken selling one of its brand, Strongbow, to a black industrialist, as part of the conditions attached to the R40 billion Distell and Heineken merger.

Impact of the illicit economy: The illicit economy remains a serious threat to the growth and transformation of the economy evident by the recent grey listing of South Africa by the Financial Action Task Force. The Committee enquired what measures the DTIC was considering to strengthen controls in terms of combating illicit trade and illegal imports. The Minister informed the Committee that the DTIC had been engaging the South African Revenue Service (SARS), the government agency with the legal instruments to combat illicit trade. The DTIC provided information to SARS on companies involved in illicit trade and imports. Furthermore, the DTIC had joined SARS in a court case and provided an affidavit on the under-declaration of clothing imported from countries such as China, which is a systemic problem in South Africa. In a seminal ruling, the Supreme Court of Appeal held that the Gauteng High Court erred in holding that the decision of SARS to seize the imported clothing was not lawful. The seizure relates to the importing of clothes that SARS and the Minister contended were under-declared in order to evade customs duties.

Energy related matters: The APP reflects several targets related to energy including the new energy vehicle roadmap and the finalisation of the green hydrogen commercialisation framework. The Committee enquired whether the DTIC has been engaging the Department of Mineral Resources and Energy (DMRE) or any other relevant department on these matters, and what were the shared projects undertaken to improve energy efficiency. The Minister informed the Committee that the DTIC had been working with the DMRE on the renewable energy programme to ensure that it gets off the ground and to address any regulatory issues that needed the DTIC’s support. With any energy project the DTIC worked on, it would require the support of the DMRE and the Department of Public Enterprises, as this would require access to the grid. Furthermore, the Minister of Electricity has the important job of reducing load-shedding and stabilising the grid. It is also important to recognise that industrial policy is not the exclusive domain of the DTIC and that it is an all of government initiative that places inclusive growth and job creation at the centre of the national agenda. According to the Minister, it should also be an all society effort.

Conclusions

Having considered the information shared and reports from the DTIC with respect to its budget, and strategic and annual performance plans, the Committee has reached the following conclusions:

The Committee welcomed the DTIC’s new approach to the APP, which now focused on the impact of the DTIC’s work rather than merely outputs. This should ensure that the DTIC’s activities were better co-ordinated and geared towards creating an enabling environment to bolster the economy and stimulate job creation.

However, the impact of the energy crisis on the broader economy was expected to inhibit industrialisation, beneficiation, and the attraction of foreign direct investment. This would limit the ability of the DTIC’s programmes to facilitate economic growth and job creation. The Committee encouraged the DTIC to strengthen collaboration and coordination with the relevant departments to resolve the energy crisis and mitigate its impact on the manufacturing sector. In particular, the Committee was of the view that the DTIC should continue engagements with the Department of Mineral Resources and Energy, and the Department of Public Enterprises on the new energy vehicle roadmap and the finalisation of the green hydrogen commercialisation framework.

Given the regulatory adjustments being considered and adopted by the European and other major auto markets, the implementation of a policy on energy vehicles would be premature. Therefore, the Committee welcomed the DTIC’s cautionary approach to publishing the White Paper on Energy Vehicles in South Africa. This would afford government the time to consider the European and other markets’ regulatory adjustments and adjust its policy accordingly. In doing so, this should provide the necessary certainty to the domestic automotive industry, and ensure that South African energy vehicles meet the requirements in these markets.

The Committee noted that education and the development of practical skills was critical to enable the industrialisation of the economy. However, it encouraged the DTIC to engage the relevant departments and tertiary education institutions to ensure that there was alignment between their policies and/or material, and the skills required by the economy, particularly the manufacturing sector.

The Committee welcomed the amendments to the Companies Act through the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, which should assist in addressing state capture. It encouraged the DTIC to finalise the regulations in this regard.

The Committee encouraged the ongoing negotiations in terms of the review of the Economic Partnership Agreement, and the African Growth Opportunity Act, as it recognised the strategic economic partnerships with the European Union and the United States of America, among others.

The Committee was concerned by the impact of the European Union’s pending implementation of the Carbon Border Adjustment Mechanism on South Africa’s exports. While the Committee acknowledged the need to reduce global carbon emissions to mitigate the impact of climate change, this unilateral approach could be perceived as a protectionist measure. The Committee supported the government’s position that a multilateral rules-based approach should be developed in this regard to ensure the maintenance of a fair global trading system.

The Committee encouraged the DTIC to embark on education and awareness programmes targeting small, medium and micro enterprises, women, people living with disabilities and youth-owned enterprises, especially in rural areas, on the financial programmes being offered by the DTIC and its development finance institutions, and the support available to assist them in this regard.

The Committee welcomed the R200 billion in investment pledges, and encouraged the DTIC to ensure that these materialised into capital investment projects for the creation of jobs.

The Committee acknowledged the role of the private sector to support industrialisation and the implementation of the Re-imagined Industrial Strategy. This has been evidenced by its pivotal role in enhancing and implementing Master Plans. However, the Committee emphasised that there was a need for additional support and investment from the private sector.

The Committee was concerned that while the DTIC had invested in the maintenance and refurbishment of certain industrial parks, there had been limited reciprocal commitment from provinces to support the ongoing maintenance of their parks. It supported the position that the conditions of this funding should be reconsidered to ensure that this investment was sustainable.

The Committee welcomed the Competition Authorities’ efforts to reduce and address price discrimination as a barrier to entry for small, medium and micro enterprises, as these players were important job creators and were critical for the transformation of the economy. Furthermore, it noted the DTIC’s consideration of mechanisms to lock in larger firms to support smaller players in the market.

The Committee welcomed the DTIC’s collaboration with the South African Revenue Service in addressing illicit trade. It noted the recent court ruling by the Supreme Court of Appeal in favour of the South African Revenue Service regarding the seizure of imported clothing that had been under-declared.

The Committee noted that certain entities have unfunded mandates given legislative changes. In addition, transfers to most entities had not substantively increased over the last few financial years. Given the ongoing fiscal constraints, the Committee urged the DTIC to review the prescribed income sources, such as levies or fees for services rendered, available to entities to ensure that they were able to effectively fulfil their legislative mandates.

Acknowledgements

The Committee would like to thank Mr E Patel, the Minister of Trade, Industry and Competition, and Ms M Mabitje-Thompson, the Acting Director-General of the DTIC, for their cooperation and transparency during this process. The Chairperson wishes to thank all Members of the Committee for their active participation during the process of engagement and deliberations and their constructive recommendations reflected in this report. The Committee also wishes to thank its support staff, in particular Mr A Hermans, the Committee Secretary, Ms M Sheldon, the Content Advisor, Ms Z Madalane, the Researcher, and Ms Y Manakaza, the Committee Assistant, for their professional support.

Recommendations

The Portfolio Committee on Trade, Industry and Competition, having considered the proposed 2023 Budget Vote 39: Trade, Industry and Competition, recommends that the House adopts Budget Vote 39: Trade, Industry and Competition.

In addition, it recommended that the Minister of Trade, Industry and Competition should consider reviewing the various prescribed income sources of the entities falling under his mandate, in accordance with the relevant legislation, with the intention of increasing existing income sources and introducing new ones, where applicable. The Minister should submit a progress report in this regard within six months of the adoption of this report.

Report to be considered.

The Democratic Alliance abstained.

References

African Union Commission (2015). Agenda 2063: The Africa We Want. [Internet]. Available from < https://au.int/en/agenda2063>.

Department of Monitoring, Planning and Evaluation (2021) Medium Term Strategic Framework 2019 – 2024. Government Printers: Pretoria.

Department of Trade, Industry and Competition (2022) Annual Performance Plan 2022/23.

Department of Trade, Industry and Competition (2023) Annual Performance Plan 2023/24.

Industrial Development Corporation (2023) Social Employment Fund. [Internet]. Available from <https://www.idc.co.za/sef>.

Madalane, Z. (2023) Analysis of the Department of Trade and Industry’s Budget (Vote 39) and a Summary of the Annual Performance Plan for the 2023/24 Financial Year. Research brief. Parliament of the Republic of South Africa.

National Treasury (2023a) Budget 2023: Budget Review. Government Printers: Pretoria.

National Treasury (2023b) Estimates of National Expenditure: Vote 39 – Trade, Industry, and Competition. Government Printers: Pretoria.

Ramaphosa, C. (2023) State of the Nation Address. 9 February 2023. Parliament, Cape Town.

Southern African Development Community (2015). SADC Industrialization Strategy and Roadmap 2015 – 2063.

United Nations Development Programme (n.d.) Sustainable Development Goals. [Internet]. Available from: <http://www.za.undp.org/>.

[1] Ramaphosa (2023)

[2] Department of Planning, Monitoring and Evaluation (2021: 5)

[3] Department of Planning, Monitoring and Evaluation (2021: 13)

[4] United National Development Programme (n.d.)

[5] Ibid

[6] Ibid

[7] AU Commission (2015)

[8] Ibid

[9] SADC (2015)

[10] National Treasury (2023b: 813)

[11] DTIC (2023: 12)

[12] DTIC (2022: 16-17)

[13] The SEF is a Presidential Employment Stimulus which “seeks to use direct public investment to support employment opportunities, counteracting job losses due to COVID-19, and creating an opportunity for growth and renewal” (Industrial Development Corporation (2023)).

[14] DTIC (2023: 30)

[15] Brazil, Russia, India, China and South Africa

[16] DTIC (2023: 171)

[17] This target decreased from R26,7 billion in the 2022/23 financial year (DTIC 2023: 173).

[18] This target remained the same as in the 2022/23 financial year (DTIC 2023: 173).

[19] This target was the same as in the 2022/23 financial year (DTIC 2023: 194).

[20] In the 2022/23 financial year the target was to co-ordinate one conference (DTIC 2023: 194).

[21] DTIC (2023: 203)

[22] National Treasury (2023b: 815)

[23] Real terms refer to the amount after inflation has been taken into account.

[24] National Treasury (2023a: 28)

[25] National Treasury (2023b: 813)

[26]Projected inflation is 4,9 per cent for 2023/24, 4,8 per cent in 2024/25, and 4,7 per cent in 2025/26 (National Treasury 2023a: 28)

[27] National Treasury (2023b)

[28] Based on National Treasury (2023b)

[29] National Treasury (2023b: 814)

[30] National Treasury (2023b: 814)

[31] National Treasury (2023b)

[32] National Treasury (2023b: 838)

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