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14 November 2006

Introduction

During the course of 2006 the Economic Cluster has found that greater focus and prioritisation of projects has been a critical success factor in fostering better co-ordination among Cluster departments and spheres of government. This has been enabled by the Cluster's organisation of its work through the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) framework and of the "focus group" or "Task Team" method of work adopted at the beginning of the year. The Cluster will continue to make use of this approach in the coming period.

A key challenge has been that most of the planned actions contained in the programme of action required a higher level of interdepartmental and inter-governmental co-ordination than ever before, and 'united' effort and time to foster this; and this will remain a key challenge going forward.

The Cluster is also processing other outcomes of the July Cabinet Lekgotla, such as the development of an integrated service delivery for small enterprises, a Second Economy Framework and the development of integrated infrastructure investment plans. We will, where possible, integrate this work into the Critical Growth Path.

Update on Programme of Action items

Building a competitive and labour-absorbing economy

The Biofuels strategy will be finalised by Cabinet soon. It is an important strategy in terms of job creation, energy security and environmental sustainability. Besides comprehensive regulation the strategy also suggests that to stimulate underdeveloped areas specific support incentives and projects are required to integrate emerging producers into the value chain. The industry may also require an equalisation levy to mitigate risk.

The National Industrial Policy Framework (NIPF) will form an important basis for the Cluster's Critical Growth Path. The Department of Trade and Industry (dti) has completed an intensive process of ensuring that all departments contribute to the Framework, scheduled for completion before the end of the year.

To help bring down the costs of Information and Communications Technology (ICT), we are targeting interventions to resolve challenges such as the costs of communication, the need to upgrade ICT infrastructure, the scarcity of ICT skills, low levels of ICT usage and limited local content development capacity. Besides the much-publicised cellular phone number portability initiative, the New Partnership for Africa's Development (NEPAD) broadband network (including Eastern Africa Submarine Cable System) protocol was signed by seven countries on 29 August 2006. The remaining countries will sign before the end of November. From March 2007 mobile operators will be authorised for the self-provisioning of international connectivity. By July 2007 Municipal ICT broadband is to be linked to Under Serviced Area Licences. To identify opportunities for new entrants a frequency spectrum audit will be done by July 2007.

In addition to these initiatives, Department of Communications (DOC) and National Treasury (NT) are discussing the better resourcing of the Independent Communications Authority of South Africa (ICASA) to implement the Electronic Communications Act.

For business process outsourcing and offshoring (BPO&O), since the last update, the DOC and the dti have engaged in research into a developmental pricing model for telecommunications for BPO. The research should be completed by January 2007.

In terms of accelerating growth in tourism the skills demand in the sector is a challenge. The Department of Environmental Affairs and Tourism (DEAT), the Tourism and Hospitality Education and Training Authority and the National Business Initiative are currently conducting a comprehensive skills audit, which will culminate in the revision of the Sector Skills Plan. A successful skills conference involving all major stakeholders was held on the 19 and 20 October 2006.

Mechanisms to ensure that the second economy benefits from tourism growth are currently being investigated by the task team responsible for this work.

In our project to promote Research and Development (R&D) by increasing public sector R&D, and increasing total R&D spending to 1% of Gross Domestic Product (GDP), a draft ICT Research and Development Strategy has been finalised and will soon be presented to Cabinet for approval.

Massively increase public investment

The Cluster is reviewing the capital expenditure procurement of State Owned Enterprise (SOEs), seeking ways to build the local capital equipment industry. Good progress has been made in this project with a Procurement Strategy and Policy for SOE supplier development endorsed by the Department of Public Enterprises's (DPE's) SOEs.

With regard to Olifants River System, on 13 October 2006 the Minister of DEAT issued a revised Record of Decision (ROD) taking into account some of the concerns expressed by the appellants. Consequently this development can proceed with an adequate and proper mitigation of the potential impacts. The revised ROD will inform the Environmental Management Plans. The Department of Water Affairs and Forestry (DWAF) will also formalise off-take agreements with mines.

Sentech's business plan to DOC for the roll-out of Sentech's wireless broadband network has been finalised. A committee of consisting of DOC, DPE, dti, NT and the Presidency is to finalise the financial arrangements for the rollout. As reported previously, this will be co-ordinated with other initiatives in broadband.

Equity and development

In approaching targeted procurement for Small Medium and Micro Enterprises (SMMEs), the ten most procured products have been identified and will be considered by Cabinet soon.

In the area of improving access to finance for SMMEs (R10 000 – R 250 000) the Apex Fund has disbursed R23 million to 27 partner organisations between May 2006 and 30 September 2006. This is in addition to the R12 million disbursed in 2005/06. The disbursement plan is being rolled out across all nine provinces.

In order to facilitate intensified implementation of the Expanded Public Works Programme (EPWP) additional funds will be allocated to provinces through the Infrastructure Grant for Provinces for use in the labour-intensive construction and maintenance of access roads. A modality for structuring large EPWP projects has been developed and will be piloted in three municipalities.

Ensure priority skills for the economy

In terms of achieving the National Skills Development Strategy annual targets, all government departments have agreed upon and signed off on a common definition of scarce and critical skills. The Department of Home Affairs (DHA) will implement the quota list pending an independent verification project led by the Department of Labour (DOL), and including dti, DHA, the Presidency and the Human Sciences Research Council (HSRC).

Inputs for the Employment Services System (ESS) have been consolidated through an extensive consultation process. The ESS includes the registration of work seekers and Sector Education and Training Authority (SETA) performance management. A finalised project plan detailing three phases of implementation over three years has been completed and is being implemented.

In terms of the Joint Initiative for Priority Skills Acquisition (JIPSA) strategies to address intermediate priority skills have been developed and proposals to address town and regional planning, planning and management capacity in the public health system and ICT are to be finalised in early 2007.

Conclusion

In conclusion, the Cluster has made key progress on key initiatives to support AsgiSA, which will reinforce the attainment of government's economic goals over the long term. Through focusing on key infrastructure delivery, progress has been made in increasing economic efficiency. We have also focused on providing a more supportive and enabling environment for small enterprises and supported the development of dynamic and labour absorbing sectors of the economy. To determine the Cluster's Programme of Action for next year, we will be seeking to build on those areas where we have made good progress and to address areas where delivery can be improved. Improved monitoring and evaluation of Cluster projects will assist in this regard.

Issued by: Department of Trade and Industry
14 November 2006