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22 March 2007

One year after AsgiSA's launch, the Deputy President is able to report on substantial progress in many of the programmes that will take the country to the targets for faster and shared growth. At the same time the first year of implementation has identified a number of challenges that will be addressed in the coming year.

AsgiSA's vision for growth has had an impact. Public and private sector institutions have revised their investment plans upwards in the light of the insights and direction provided by AsgiSA. It has been embraced as a realistic and effective vision, embodying practical strategies, and as a national initiative rather than merely a government programme. We believe it will continue to contribute to shared growth for the foreseeable future.

The full report on AsgiSA for 2006 is available on South Africa Government Online (http://www.gov.za).

AsgiSA was launched by Deputy President, Ms Phumzile Mlambo-Ngcuka, on 6 February 2006. A year later government is reporting back on progress made and future plans for AsgiSA.

While AsgiSA was formally launched in February 2006, the decision to adopt a shared growth strategy was taken in July 2005 after Cabinet considered a report submitted by the Minister of Finance. The Deputy President was asked to lead a task team including the ministers of Finance, Trade and Industry, and Public Enterprises, the Premiers of Gauteng and Eastern Cape and the Mayor of Johannesburg, who represented the South African Local Government Association (SALGA).

The concerns that gave rise to AsgiSA were that although South Africa was beginning to grow faster, it was uncertain that growth would be sustained and that it would contribute to an improvement in the lives of the poor. Growth was too dependent on a few strong sectors—an "accelerated and shared growth initiative" was needed to spread growth across the economy, and to remove obstacles to faster growth.

The main focal areas of AsgiSA were based on an analysis of the binding constraints on accelerating and sharing growth. The binding constraints were identified as: the capacity of the national infrastructure system; the shortage of skills and the cost impact on low skilled labour of the apartheid spatial system; the poor international competitiveness of much of our manufacturing and tradable services sectors; the relative volatility of the currency; the regulatory environment for small and medium business; and the capacity of government organs to support economic development.

Considerable progress has been made in all six areas. Regarding macroeconomics, fiscal and monetary policy have contributed a sound foundation for sustained growth, and currency volatility is declining. Infrastructure investments have leapt forwards—current public investment plans total over R415 billion in the coming three year budget cycle, with Eskom and Transnet leading the way with huge investment projects in electrical power and rail transport. Major projects like the de Hoop Dam, the King Shaka Airport and Gautrain are underway, and a national public transport plan has been adopted by Cabinet. Several other major provincial projects are being planned, including the Moloto Corridor in Mpumalanga and the Mzimvubu scheme in the Eastern Cape.

In the skills sector, two important quality of education projects—QIDS-Up for literacy and numeracy in primary schools and Dinaledi for maths and science in high schools—are running. The Further Education and Training Colleges have been recapitalised with modern equipment and will be supported by a major new bursary programme. The second phase of the National Skills Development Strategy is underway, and a new system to match job seekers to jobs is in an advanced stage of planning.

The skills initiatives are driven by the Joint Initiative for Priority Skills Acquisition (Jipsa) which will be presenting a report on its first year of operation on March 26th.

In the industrial sector strategy arena, the tourism industry has moved strongly ahead: a new approach to air access has allowed an additional 700 000 inbound air passengers; government has greatly increased the tourism marketing budget; the Tourism Enterprise Project for small business development in the tourism sector has also received major funding from government; and the SAPS is implementing a tourism safety strategy.

The Business Process Outsourcing strategy was completed and the programme was launched by the Minister of Trade and Industry on March 15th. This includes skills development support, investment incentives, and a marketing programme.

Cabinet approved a draft Biofuels strategy for public comment in November last year, and a draft final strategy is expected to be discussed by Cabinet in May this year.

Regarding the capacity of the state, some landmarks for AsgiSA were the establishment of Siyenza Manje, a support facility for municipalities which compliments Project Consolidate, at the Development Bank of Southern Africa, and the approval by Cabinet of a Regulatory Impact Assessment system for adoption, initially in pilot form this year. The Department of Public Service Administration has analysed deficiencies in several government departments and agencies and has recommended remedies which are to be implemented during the course of 2007.

The main focus of AsgiSA for 2007 is to implement the strategies already agreed on in all of these fields, and to monitor the outcomes of the programmes. Future areas of work will include addressing key challenges that have emerged in the identified areas, for example the implementation of the Regional Electricity Distribution system (REDs). Areas of focus for 2007 are identified in the AsgiSA annual report.

Regarding the Second Economy, while the Expanded Public Works programme has surpassed its initial targets, the leaders of the AsgiSA initiative are concerned that, in general, Second Economy measures adopted have not yet had a major impact. Large pockets of poverty remain in the former Bantustans and on the edge of our major cities. While job creation has been very strong in recent years, poor communities with low skills are not major beneficiaries of employment growth. Further work will be done this year reviewing government's approach to eradicating poverty.

AsgiSA is not always well understood. It is not a separate programme of government with its own budget. It is a mechanism to focus attention on implementing projects and programmes, to improve coordination and to unblock blockages.

AsgiSA has also had an impact by providing a vision for growth. Public and private sector institutions have revised their investment plans upwards in the light of the insights and direction provided by AsgiSA. The Accelerated and Shared Growth Initiative for South Africa, AsgiSA, is a realistic and effective vision, embodying practical strategies. It is not simply a government programme—it is a national vision which has wide support. We believe it should continue to contribute to shared growth for the foreseeable future.

Enquiries: Thabang Chiloane
Cell: 082 888 8783

Issued by: Government Communications (GCIS) on behalf of The Presidency
22 March 2007