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27 October 2004

Colleagues, members of the media, diplomatic corps, ladies and gentlemen. At the last media briefing held two months ago, we provided you with substantial detail regarding the progress made by the Economic Cluster in relation to the Government’s Programme of Action. There has since been two updates on the GCIS website regarding each action as announced by the President in his State of the Nation Address in May 2004. I encourage you to regularly visit the website as we continue to inform you of our progress.

My colleagues in the Economic cluster have made several key announcements over the past few weeks regarding progress made to date. Minister Manuel’s medium term budget policy statement yesterday provided highlights on the focus areas for the cluster over the next three years.

Minister Erwin has announced that government will undertake an indicative R121 billion worth of investments in the energy and transport sectors to be undertaken by Eskom and Transnet. This will have a major impact on growth and development in the economy.

Minister Matsepe-Cassaburi made an announcement on plans to bolster competition in the telecommunications sector by granting a license to the Second National Operator (SNO). Since then, expressions of interest have been received from two potential investors for the majority stake of 26%. Two of these have qualified to participate in the closed tender process.

Government is also pleased to announce that the Expanded Public Works Programme (EPWP) has been launched in all nine provinces.

The Construction Education and Training Authority has successfully implemented a learnership programme for contractors and the unskilled labour force. During the first quarter 750 emerging contractors in labour intensive methods were trained and a further 750 will join the programme. The South African Cities network has agreed to set-up a working group to encourage the participation of large cities in the programme.

The hosting of the 2010 soccer World Cup will further enhance the EPWP through the development of infrastructure and additional job creation.

We are happy to note that the Business Trust has come on board with the establishment of a facilitation fund to support the EPWP through funding activities that will enhance implementation.

We are encouraged by the fact that many companies have shown interest in the EPWP, and we believe that many other opportunities exist for further cooperation. Municipalities have received their funding allocation and the Division of Revenue Act are implementing the appropriate conditionalities as set out in the EPWP. As a cluster we have launched the Economic Opportunities booklet. This user-friendly communication tool is being widely distributed in communities with limited access to information on government’s wide range of incentives for business development.

In preparing for the January 2005 Cabinet Lekgotla, a detailed review of the implementation of the programme of action will be conducted. This will include a strategic review and assessment of how the microeconomic reform strategy is addressing the challenges of the second economy. We will be making announcements in this regard early next year, as it is important that government increasingly find mechanisms that create opportunities for people in the second economy. As we enter a period of stronger economic growth we cannot allow our country to become further divided economically, and we need to ensure that through government interventions people in the second economy are integrated, so that ultimately we have one economy.

Two areas that have received a lot of attention over the past few months by economic cluster, and the dti in particular have been the implementation of broad-based black economic empowerment (BEE) and small business development.

One of the critical challenges we are facing in providing support to the Small Business Sector is that we don’ have sufficient variation in catering towards different sizes of enterprises and to cater for the large number of enterprises, particularly micro enterprises. We need to give this sector more attention in all the strategies we employ to propel development as the growth of the SMME sector has a positive effect on unemployment, empowerment and poverty eradication.

It is also necessary for us to attract more entrepreneurs into this area. I am therefore pleased to announce that we have made significant progress regarding the launch and operationalisation of the Apex Fund, which will be providing greater levels of support to micro enterprises. We have completed the profiling of the initial Apex Micro Finance Intermediaries and partner organizations. The registration of the entity will be finalized in the next two weeks. We will soon table before Cabinet names of people that would serve on the Apex Fund Board. Having these milestones, I am confident that the first disbursements will be made before the end of the year.

As announced in the President’s State of the Nation Address in May, we will be merging Ntsika and the NAMAC Trust to create a Single Enterprise Development Agency (SEDA). Cabinet has approved amendments to the National Small Business Act to allow for the creation of this entity. An interim CEO has been appointed and the recruitment process for the permanent CEO is underway.

We look forward to this institution providing greater levels of business development support to small enterprises and play an important role in improving the capabilities of small businesses. In a globally competitive economy that South Africa has become part of, it is necessary for us to ensure that our businesses, both big and small, are able to compete effectively.

In May this year, the National Empowerment Fund (NEF) launched new products that will support black owned enterprises. I am pleased to announce that the NEF has consequently approved six transaction deals with a total combined investment of just under R14 million for wholly-owned and managed black companies in the financial services, media & publishing, distribution and telecommunications sectors.

This uptake will increase and an amount of R150 million has been transferred to the NEF in the current financial year and we expect that a further amount of R600 million will be committed in the next financial year.

Government will continue to propel economic transformation. The strategic intent of the BEE Act, policy and strategy remains one of the top priorities. The Codes of Good Practice and the BEE Advisory Council will add impetus to the implementation of the BEE legislation. These are matters that are being thoroughly considered and I anticipate making announcements on both of these issues before the end of the year.

Already significant progress has been made in respect of the Codes of Good Practice. The Codes will provide clarity on matters related to inconsistencies in implementation. The BEE Codes of Good Practice are not to be applied in the development, evaluation and monitoring of BEE charters, initiatives, transactions and other implementation mechanisms.

These Codes will therefore be able to reduce the incidence of fronting, and they will also provide a common understanding of BEE for all sizes of enterprises, thereby reducing speculation and varied interpretations of broad based black economic empowerment. Importantly, the codes will cover what we mean by a BEE firm in terms of shareholding and how we understand management control, so that we avoid problems that arise from complex pyramid structures of increasingly diluted BEE ownership that have no real broad based empowerment.

The Codes will be tabled before Cabinet after which consultation with key stakeholders will take place because we believe that active dialogue, particularly with private sector remains critical for the successful implementation of BEE.

One of the important elements of the implementation of the BEE Act is the appointment of members of the BEE Advisory Council. The members will be advising the President on the implementation of the BEE legislation.

CONCLUSION

In conclusion, government is committed to ensuring the stability of our democracy, amongst other things, through greater participation by more people in our economy. Our contribution as the Economic cluster is to ensure that we grow the economy, create an environment that provides additional employment opportunities and that the levels of poverty and inequalities are reduced. We are committed to fulfilling our mandate outlined in the Government Programme of Action and as shown by the progress, we remain confident that we will succeed.

I thank you.

Issued by: Department of Trade and Industry
27 October 2004

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