Presentation to the Standing Committee on Appropriations

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• Presentation to the Standing Committee on
  Appropriations
• 12 November 2014

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PRESENTATION OUTLINE

• Performance of the Department for the first six
  months of the 2014/15 financial year ending 30
  Sept 2014.
• Expenditure of the department for the first 6
  months of the 2014/15 financial year
• Details and motivation for the virements of 54.5
  per cent and 48.8 percent
• Implications of funding shifts on service
  delivery indicators

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INTRODUCTION

• The 2014/15 financial started the with an
  election in May 2014, ending one administration
  and beginning a new administration. This then
  meant that the department had to table a new APP
  for the 2014/15 financial year after the
  elections.
• This provided an opportunity to the department to
  recraft its indicators, refocus its work and
  properly align its work to its 6 high level
  strategic objectives to increase its service
  delivery and impact.
• The exercise was intended at sharpening the work
  of the department, increase service delivery and
  reemphasise the role of the department to achieve
  a greater impact.

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The EDDs core roles

• Develop strategies and measures to make economic
  growth more inclusive, especially supporting and
  encouraging job creation
• Encourage and help all state agencies to work
  together for inclusive growth and job creation
• Provide secretariat and technical support for the
  Presidential Infrastructure Coordinating
  Commission act as secretariat to meetings
  manage monitoring and evaluation unblock
  projects and propose cross-cutting models and
  guidelines
• Facilitate social dialogue
• Oversees the Industrial Development Corporation
  (IDC) and the Small Enterprise Finance Agency
  (sefa)
• Oversees two national regulators the
  competition authorities (the Competition
  Commission and the Competition Tribunal) and the
  International Trade Administration Commission
  (ITAC).
• Undertake other activities as required to assist
  investments and programmes that lead to new kinds
  of economic activity and job creation, for
  instance by speeding up bureaucratic
  authorisations, assisting in obtaining
  infrastructure or finding sources of financing
  (although the EDD itself does not provide
  funding)

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ANNUAL PERFORMANCE PLAN FOR 2014/15

• Subsequent to the elections in May 2014, the
  department retabled its APP for the 2014/15
  financial year.
• The performance covered in this presentation
  reports against the tabled APP which has 22 KPIs
  which is a consolidation of the earlier version
  of the APP which had 35 KPIs.

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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 4 A quarterly report on trends in inclusive growth, reviewing the targets set for Outcome 4 of the MTSF EDD Proposed annual targets for Outcome 4 under the new MTSF, which was approved by Cabinet. KPI 1 Various interventions were made around the mining value chain, which is a Jobs Driver in the New Growth Path, to promote the capacity to beneficiate raw materials locally and address critical social issues
KPI 5 EDD hosted a conference on Manufacturing led growth for employment and equality. Attended by 200 academics including stakeholders from Mozambique, Zambia, Mauritius, Zimbabwe and other African countries. Partial EU funding KP1 2 Two Cluster meetings were attended by the Ministry during the quarter. EDD was tasked by the Cluster to coordinate preparation of a discussion document infrastructure and economic development. Drafted a discussion document on how infrastructure supports inclusive growth, with a review of some key trade-offs opportunities and risks.
KPI 7 An analysis of employment, migration and growth trends by province was undertaken. EDD developed recommendations on the programme for radical economic change that forms part of the MTSF KPI 3 Minister presented at the DRICO heads of mission conference Minister was part of the development of the approach on the BRICS Development Bank TOR for policy dialogue work with UNDESA on financialisation of the South African Economy developed
KPI 8 An EDD research paper for the manufacturing conference analysed trends in employment, equity and growth in manufacturing, overall and by subsectors KPI 4 Assessment of 5 provincial APPs Minister and Premier of Gauteng launched an incubation hub in Diepsloot
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 8 Minister engaged with a number of companies in the clothing and textile industry to evaluate the impact of government programmes and identify additional requirements. Minister launched a R25 million design centre TCIA as part of a focus on improving fashion innovation in South Africa. KPI 5 18 SIP Construction reports reviewed that formed the core of briefing within Cabinet Processes KPI 6 EDD facilitated the unblocking of Water Use Licence Application for Rustenburg Bus Rapid Transport and SANRAL N
KPI 12 Supported a small enterprise owned by Ms B Taho to develop her perfume business, as a result she has received inquiries from chain stores. EDD networked with SARS and the Textile Federation to assist in curtailing illegal blanket imports. The Federation has agreed to provide technical support to SARS. Various support to Noble Resources a soya producer in Lekwa provided by EDD. Supported Sihlela Community to develop forestry plantation on a 350 hector land. Help negotiate a settlement between IDC and Mediterranean Textiles to restructure a loan to save jobs EDD mediated a dispute between an investor and the IDC which avoided legal action KPI 7 Operationalisation of the Infrastructure Development Act including appointment of members of governance structures Publication of an in-depth report on Skills for and Through SIPs KPI 8 PICC commenced work under the new Infrastructure Development Act KPI 9 Assisted potato processors to increase duties resulting in enhancing the industries sustainability. Negotiated with Tshwane municipality to managed power cuts at Babelegi that was negatively affecting Nestle production
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 15 Supported KZN and Limpopo Province with their strategic planning session KPI 9 Phosphate Pricing was constrained by a previous Tribunal decision, once clarity was reached on pricing, Bosveld could resume production
KPI 16 EDD complied 18 SIP reports for January-March quarter 2014 for the PICC 5 site visits conducted to enhance SIP reports Minister attended sod turning at Mzimvubu Dam EDD provided the 11th special report on progress on the SIPs to Cabinet Lekotla in June 2014 EDD convened and provided assistance to PICC secretariat and Manco Minister provided strategic overview of priorities to SIP coordinators KPI 9 Arranged a lease agreement for Silvapen from Department of Rural Development, this opened the way for a bio-fuel investment. Unblocked the conclusion of DST processes to allow the IDC to begin work on Ketlaphela, a production facility to produce ARVs KPI 10 Minister engaged with the IDC on its corporate plan and annual report
KPI 17 EDD unblocked the following PICC project Hobhouse in Mantsopa in the Free State Ngobi in Moretele in North West Gibson Bay Wind Farm in the Eastern Cape KPI 10 EDD completed an evaluative report on IDC/sefa funding and turnaround times KPI 11
KPI 18 Ministerial engagement with IDC to identify key priorities A baseline report on the levels of government and DFI industrial funding industrial funding by IDC, sefa, NEF and provincial DFI was developed
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 19 IDC and sefa road shows to market their offering Minister participated in a road show in Delft and met with women in construction EDD developed a small business toolkit Minister convened a small business conference on 7 April 2014 Minister opened the Shanduka Black Umbrella Enterprise Development Awards KPI 11 In Q2 IDC approved R2,2 billion and disbursed R1.9 billion sefa approved R163,7 million and disbursed R164.9 million KPI 12 Minister site visit to Chic Shoes, a shoe factory
KPI 20 Target for sefa and IDC funding was R1,25 billion, actual approvals were R2.2 billion and disbursement R3.7 billion. IDC funded 41 enterprises in the Q1 of which, 21 were black empowered and 11 had at least 25 women ownership. Evaluative report on jobs created and saved was completed Minster worked with IDC on a report identifying the IDCs impact on industrial development using case studies KPI 14 Minister participated in the strategic session of the Competition Commission (CC)
KPI 21 EDD evaluated the impact of its regulatory agencies on job creation, in the period under review ITAC measures lead to the creation or saving of 100 jobs while the decision of the Competition Commission on certain mergers saw 119 jobs saved A keynote speech on governments approach to competition policy was unveiled at the CC conference on Competition Law KPI 15 Progress report on the AFGRI Development Fund was prepared
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 22 Minister held 3 meetings with the competition authorities to discuss strategic issues arising under the new administration ITAC published draft policy guidelines on scrap metal for comment and finalised 6 investigations, and an anti-dumping investigation on soda ash and wheelbarrows. It made a preliminary determination on frozen chicken, completed a sunset review on welded chain link, issued 4615 import and 3351 export permits. Conducted 218 scheduled and 157 unscheduled investigations. ITAC also researched local manufacture of boats. Ground breaking decision by the Tribunal on excessive pricing by Sasol for purified propylene and polypropylene Agreement was reached with Afgri as part of the Competition Commissions review of a takeover by Agrigroupe KPI 15 Refined quarterly dashboards on performance of trade and competition authorities was developed KPI 16 A socio-economic impact assessment system is being introduced to ensure that impact assessments are aligned with national priorities of inclusive growth EDD concluded SEIAS training for Tshwane and Ekurhuleni Municipalities KPI 18 An updated report on the implementation of the Local Procurement Accord was prepared
KPI 23 EDD engaged with Economic Regulatory Bodies (ERBs) on their security strategies Minister conducted a site visit to AMAN, a factory seeking to produce anti-theft cabling systems. KPI 19
KPI 25 Minister engaged with manufacturers in Atlantis to discuss constraints to growing manufacturing there. As part of the work with the Alexandra Renewal initiative, Minister launched the concept of the Green Skills Hub in Alexandra. EDD compiled and produced an initial report on the implementation of the Green Economy Accord
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 26 Minister engaged with Minister of Health on the Lodox Scanner produced in South Africa, as a result the Gauteng Health Department purchased 12 scanners at R3 million each. KPI 21 An assessment of the implementation of the youth employment accord was prepared and a publication on successes of the youth employment accord was drafted.
KPI 28 The Presidential Youth Indaba Western Cape report back forum was successfully held on 10 April 2014 in Cape Town EDD briefed Gauteng government on progress on the Youth Employment Accord. Minister addressed a Harambee conference on youth, this is an initiative that provides work placement and job readiness training for young people.
KPI 29 EDD undertook a monitoring and evaluation of progress on youth employment initiatives under the Youth Employment Accord Report on the implementation of the other social accords for the fourth quarter of 2013/14 was completed.
KPI 31 EDD facilitated funding for and sits on the steering committee of the Western Cape Furniture Cluster
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QUARTERLY PERFROMANCE TO DATE
Q 1 Indicators Q 2 Indicators
KPI 32 Hosted 2 small business knowledge network sessions on unlocking the economic potential of townships in the North West and Eastern Cape
KPI 33 EDD arranged for a training session on local chicken production
KPI 34 EDD developed a booklet on the indigenous chickens user friendly guide for small scale farmers. Minister launched the Mitchells Plain Skills Centre in April following technical support and premises supplied through EDD intervention.
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Expenditure Performance per Programme
Programmes 2014/5 2014/5 2014/5 2014/5 2014/5 2014/5
Programmes Annual Budget Expenses Variance Spent Funds available for reprioritisation Funds available for reprioritisation
Programmes R'000 R'000 R000 R000
Administration 79 460 35 045 44 415 44 4 685 6
Economic Policy Development 23 075 5 645 17 430 24 5 892 26
Economic Planning and Coordination 579 064 273 189 305 875 47 16 343 3
Economic Development and Dialogue 15 261 4 611 10 650 30 3 019 20
Total 696 860 318 490 378 370 46 29 940 4
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Expenditure Performance per Programme
Classification 2014/5 2014/5 2014/5 2014/5 2014/5 2014/5
Classification Annual Budget Expenses Variance Spent Funds available for reprioritisation Funds available for reprioritisation
Classification R'000 R'000 R000 R000
Compensation of employees 107 728 35 660 72 068 33 18 204 17
Goods and services 52 909 17 505 35 404 33 8 949 17
Transfers 534 030 264 068 269 962 49
Capital expenditure 2 193 1 257 936 57 (160) -7
Total 696 860 318 490 378 370 46 29 940 4
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Details and motivation for virements

• EDDs second term of existence in line with the
  new MTSF, adopted 5 core strategic objectives and
  re-aligned the Annual Performance Plan (APP) to
  these.
• The revised objectives and APP have necessitated
  a review of the organisational structure and
  skills sets required to achieve the mandate.
• The governance processes of finalising the
  revised organisational structure aligned to the
  new strategic direction is an advanced stage of
  finalisation
• Compensation of Employees baseline allocation
  (ENE 2014) is for 166 funded posts. The targeted
  number as per the approved APP2014/15 was 146. As
  at 30 Sept 2014, EDD had 116 filled posts.
• EDD is able to meet its targets through overtime
  and assistance received from entities and this
  has contributed to the cost saving measures
• In the Adjusted ENE, EDD did a straightline
  projection based on historical spending for the
  first 5 months of the year and projected for the
  remainder of the 7 months on a number of posts.
  
• Savings of R30.895 million from the current
  largely core unfilled posts and the envisaged
  vacancies for the remainder of the financial year
  were identified during the AENE.

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Details and motivation

• Goods and services Funds (R3.5 mil) were
  reprioritised for the tenant installations
  required to house EDD in one office block on the
  dti campus. Currently EDD officials occupy 3
  different building within the campus which is
  inefficient.
• Funding was reprioritised for phase 2 of the
  innovative building technologies project
  commission to the CSIR (R1.6 mil.)
• A new transfer was introduced to provide for the
  30 of the 1 earmarked for training by PSETA
• The biggest amount of the generated savings were
  recommended to support small businesses as an
  additional transfer to sefa in order to augment
  the budget cut of R50 million to the Economic
  Competitiveness Support Package.

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Details and motivation

• The aforementioned virements were made in line
  with the Technical Guidelines for the
  preparation of Adjusted Estimates of National
  Expenditure, as provided for by section 30 of
  the PFMA 1 of 1999
• Page 9
• Approval is required from the legislature for
  the virements which result in utilisation of
  funds that amount to more than 8 per cent of the
  amount appropriated for a programme (shifts
  between different segments within a programme do
  not affect overall amount appropriated for a
  programme, only virements from a programme
  effectively reduce the programme budget.
• EDDs has observed National Treasury requirements
  that virements do not exceed 8 of the
  appropriated allocation including the related
  reporting requirements.

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AENE 2014/15 virements
Classification Original Budget 2014/15 Variance
R000 Virement Net movement
Administration 79 460 15 392 19
Economic Policy Development 23 075 (11 183) (48)
Economic Planning and Coordination 579 064 2 062 0.4
Economic Development and Dialogue 15 261 (6 271) (41)
Total 696 860 0
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AENE 2014/15 virements
Classification Original Budget 2014/15 Variance
R000 Virement Net movement
Compensation of employees 107 728 (30 895) (-29)
Goods and services 52 909 2 075 4
Transfers 533 970 26 564 5
Capital expenditure 2 193 2 256 103
Total 696 860 0
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AENE 2014/15 virements

• Programme 2 Economic Policy Development ENE
  2014/15 allocation was R23.075 million and
  R11.272 million(48.5) was proposed as virement
  for legislatures approval mainly in support of
  small businesses competitiveness and support
  package.
• The funds was intended for
• Mainly venues, travel and facilities amount in
  line with the strict enforcement of the cost
  containment measures to support or increase small
  business allocation transfer to sefa R9.062
  million
• Compensation of employees posts not yet filled-
  R2.21 million
• Programme 4 Economic Development and Dialogue
  ENE 2014/15 allocation was R15.261 million and
  R8.377 million (54.9) was proposed as virement
  mainly in favour of small businesses
  competitiveness and support package (R6.151
  million) and R2.2 million for labour saving
  devices.
• The funds were initially intended to
• Fill posts and as outlined, these are savings
  realised from vacant posts that will be filled in
  line with the revised strategic objectives and
  APP and operational costs that would have been
  incurred had posts been filled.

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Implication of funding shifts on service delivery
indicators

• As EDD is still in the process of reviewing and
  finalising its structure, care is being taken
  that its objectives and targets are achieved and,
  at times, exceeded.
• The HR turnaround strategy is prioritizing the
  appointments of critical posts to ensure delivery
  of core business including provincial and local
  departments initiatives, economic regulatory
  bodies and job drivers.

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THANK YOU
SIYABONGA