19 SEPTEMBER 2016 PRESENTATION OUTLINE Global Economic Context - - PowerPoint PPT Presentation

PRESENTATON TO NEDLAC TIC STRATEGIC SESSION CURRENT STATE OF ECONOMY AND PROGRESS IN IMPLEMENTING THE 9-POINT PLAN 19 SEPTEMBER 2016

PRESENTATION OUTLINE

• Global Economic Context
• Domestic Economic Environment
• 9-Point Plan to Ignite Growth and Create Jobs
• 9-Point Plan Implementation Highlights

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SLOWDOWN IN GROWTH - ADDITIONAL FEATURES

 Decline in mineral commodity prices from 2012 peak levels:

• Platinum: ↓32%
• Gold: ↓30%
• Iron-ore: ↓55%
• Coal: ↓37%.

 Over production capacity in manufacturing. Steel surplus is case in point.  Monetary policy stimulus may have to run its course. Patchy outcomes: US successful, EU and Japan are still to be determined.  Developed countries dug deep into “policy toolkit” – even negative interest rates.  South Africa, on the other hand, is managing a serious drought, has an uptick in inflation and increases in interest rates.  Consumer and business confidence remain frail.

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GLOBAL GROWTH CHALLENGES

 International Monetary Fund (IMF) has repeatedly revised down its global growth forecast for 2016 – 3.4%…3.2%...3.1%.  Latest IMF growth forecasts for 2016:

• US – 2.2%
• China – 6.6%
• Japan – 0.3%
• India – 7.4%
• Mexico – 2.5%
• Brazil – (-) 3.3%
• Nigeria – (-) 1.8%
• SA – 0.1%.

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Manufacturing sector continues to cushion the economy against a possible recession  GDP contracted by 1.2% in Q1 of the Calendar Year.  In Q1 of the Financial Year, GDP grew by a robust 3.3%.  Although SA has avoided a recession, the expansion is still weaker than the recovery after the Global Financial Crisis.

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GROSS DOMESTIC PRODUCT (GDP)

• 8
• 6
• 4
• 2

2 4 6 2008 2009 2010 2011 2012 2013 2014 2015 2016

Per cent Quarters

GDP at Market Prices (Seasonally-adjusted, Annualised Percentage Change at Constant 2010 Prices)

Source: StatsSA, 2016

 GDP rebounded strongly in Quarter 2 of 2016 after having contracted by 1.2% (q-on-q) in Quarter 1.  Quarter 2 (q-on-q) GDP grew by a robust 3.3%, underpinned by:

• Manufacturing grew at a strong rate of 8%.
• Mining also grew strongly – at 11% having

contracted by 18% in the previous quarter.

• Financial Services grew at 2.9%.
• Construction has stagnated (0.05% growth).
• Rate of contraction of Agriculture has

slowed.

• Effects of the drought are still being felt,

although worst might now be over.

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GROSS DOMESTIC PRODUCT (GDP)

Business confidence improving as per the PMI indicator  The Barclay’s Purchasing Managers’ Index (PMI) showed a positive outlook in 1Q2016 albeit marginal, increasing by 0.4 index points.  Business Confidence Index (BCI) shows a marginal decrease of 0.2 index points in 1Q2016.  Consumer Confidence Index (CCI) dropped sharply in the last quarter of 2015.

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20 40 60 80 100 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2007 2008 2009 2010 2011 2012 2013 2014 20152016

Index : 2010=100

Purchasing Manager's Index, Business Confidence Index & Consumer Confidence Index

PMI BCI CCI

Source: Data-BER; Graph- the dti

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BUSINESS CONFIDENCE

 Between the onset of the GFC in Q4 2008 and Q3 2010, 1.1 million jobs were lost.

— Manufacturing disproportionately affected with 283,000 jobs lost (25% of total jobs lost) while Manufacturing = 14% of total employment. — Took 3 years for employment to recover to pre-GFC levels (Q3 2013).

 Implementing the 9PP and reducing unemployment:

— Means a greater focus on labour intensive employment sectors such as agriculture — Scale of intervention is not sufficient alone and requires private sector partnerships to support the 9PP .

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12 000 12 500 13 000 13 500 14 000 14 500 15 000 15 500 16 000 16 500

Total Employment

Source: StatsSA, QLFS

GFC Impact 2.3 million jobs created. New downturn emerges Turning point

EMPLOYMENT TRENDS

EMPLOYMENT TRENDS

Impact on Jobs  Between the third quarter of 2010 (lowest turning point) and the fourth quarter of 2015, 2.3 million net new jobs were created.  However, given the youth bulge, 3.2 million (mainly young) people entered the labour market thereby reducing impact on unemployment.  In quarter one and two 2016, almost 500 000 jobs have been lost mainly in Trade and Community Services

Employment in thousands Q4 2015 Q1 2016 Q2 2016 Jobs lost Total Employment 16,018 15,675 15,545

• 473

Agriculture 860 869 825

• 35

Mining 483 471 447

• 36

Manufacturing 1,738 1,645 1,712

• 27

Utilities 123 110 111

• 12

Construction 1,438 1,362 1,388

• 51

Trade 3,280 3,158 3,136

• 144

Transport 900 901 862

• 38

Finance 2,273 2,227 2,220

• 53

Community and social services 3,624 3,671 3,544

• 81

Private households 1,294 1,257 1,296

• 2

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EMPLOYMENT TRENDS

Impact on Jobs  Between quarter three of 2010 (lowest turning point) and quarter four in 2015, 2.3 million net new jobs were created.  Greatest proportion of jobs created were in the Community and Social Services sector. This is a direct reflection of the Expanded Public Works Programme (EPWP) and Community Works Programme (CWP).

Agriculture Mining Manufacturing Utilities Construction Trade Transport Finance Community and social services Private households

Sectoral Distribution - New Jobs

Western cape Eastern cape Northern Cape Free State Kwazulu Natal North West Gauteng Mpumalanga Limpopo

Provincial Distribution – New Jobs

SA exports to the world rising  SA exports to the world increased to R294 billion in quarter two of 2016.  About 33% of goods were destined to China (R26bn), Germany (R23bn), the US (R22bn), the UK (R16bn) and Botswana (R14bn).  In quarter two of 2016, SA registered a trade surplus with the rest of the world, totalling R23bn.

• 100
• 50

50 100 150 200 250 300 350 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

R' billions Quarter

South Africa's trade with the rest of the world

SA Trade Balance Exports to World Imports from World Source: Data-Quantec, Graph-the dti

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SA TRADE WITH THE REST OF THE WORLD

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JOBS DRIVERS

• Oceans Economy
• Higher impact IPAP
• Revitalising

Agriculture

• Advancing

Beneficiation

• Unlocking SMME,

co-ops, township and rural enterprises’ potential

ENABLERS

• Resolving the

energy challenge

• Mediating

workplace conflict

• Crowding in private

sector investment

CROSS CUTTERS

• Science, Technology

and Innovation

• Transport

Infrastructure

• State Owned Entity

Reforms

• Water and

sanitation

• Broadband rollout

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9-POINT PLAN

POINT 1: REVITALISATION OF AGRICULTURE AND AGRO PROCESSING VALUE CHAIN

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Plan Target Progress

• 1. Institutionalise legislative

and policy review 50:50 Policy Framework piloted with 50 properties (DRDLR) and Four-tier Land Tenure System reviewed (DRDLR 50 pilots by 2019 (10 pilots for 2015/16) 11 commercial farms were allocated to farm workers under piloting of the “Strengthening of Relative Rights for People Working the Land - 50/50 Programme” and 32 proposals under evaluation.

• 2. Establish Agriparks (Co-
• ps/Clusters) in each of

the 27 poorest District Municipalities (DRDLR ‘One District, One Agriparks by September 2019 44 by 2019 6 Agri-Parks at various stages of construction. 2 Agri-parks have begun to operate (Ncora and Springbokpan). RFP’s for further private sector participation by September 2016. Current partnerships are being finalised to ensure access to markets e.g. Country Bird, Clover, Distill, McCain, Tiger Brands and Woolworths 9 Agri-parks (one per province) prioritized for InvestSA. 216 agricultural enterprises supported

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1 2 3 4 5 6 7 8 9

Investment Areas

• 1. Nkangala Agripark
• 2. Chris Hani Agripark

(Priority 2)

• 3. John Taolo

Gaetsewe Agripark

• 4. Ugu Agripark
• 5. West Rand Agripark
• 6. Ngaka Modiri

Molema (Prior iorit ity 1 )

• 7. Xhariep Agripark
• 8. Cape Winelands
• 9. Sekhukhune

Agripark

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Plan Target Progress

• 3. To increase market

access of Agriculture, Forestry and Fisheries products % and/or volume increase in exports SADC-EU trade agreement, signed on the 9 June, 2016,

• n wine, sugar and ethanol.

Increased exports of fruit into China: exports, citrus increased from 48 000 to 65 000 tons (26%); and table grapes exports increased from 1000 to 2000 tons (100%). Exports of Agricultural products into Africa: maize decreased by 23%; apples increased by 11%; animal feed increased by 18%; sugar decreased by 39%; wine and fruit increase by 11% SA GAP certification programme for smallholder farmers to improve market access. Smallholder supply contracts with Tiger brands completed Omnia PPP supported 109 farmers with production inputs (diesel, seeds, fertilizers, and chemicals)

POINT 1: REVITALISATION OF AGRICULTURE AND AGRO PROCESSING VALUE CHAIN

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Plan Target Progress

• 4. Financing existing

incentive schemes accessible to smallholders and new large incentives for primary production introduced. % and/or total value increase in incentive support 124 projects supported through the Aquaculture Development and enhancement programme (DTI incentive programme).

• 5. Bring 1 million hectares of

under-utilised land in communal areas and land reform projects into production 120,000 hectares for 2015/16 One household One hectare program was launched in October 2015 - implemented inline with APAP Commodities. To date 281 households have benefited from the programme 11000 are targeted for 2016/17 DRDLR allocated 246 207 acquired hectares of land to smallholder producers in 2015/16

POINT 1: REVITALISATION OF AGRICULTURE AND AGRO PROCESSING VALUE CHAIN

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Plan Target Progress

• 6. Bring 1 million

hectares of under- utilised land in communal areas and land reform projects into production 120,000 hectares for 2015/16 DAFF invested R1,1 billion in support of crop production: 153,000 ha; DAFF investment in production can be broken down as follows:

• Poultry: R 146 million ;
• Red Meat: R339 million ;
• Piggery: R9 million ;
• Dairy: R23 million;
• Aquaculture: R44 million;
• Fruit: R122 million (3,301 ha)
• Vegetables: R159 million (9,170 ha)
• Maize: R265 million (122,813 ha)
• 7. Producer support

16 000 producers DRDLR invested R1,2bn: 414 Land reform farms recapitalised and 1357 resource poor farmers were supported; 53 607 smallholder farmers supported and 78 863 farmers supported with drought relief Government invested R795mill in supporting smallholder farmers; and DFI’s, R545mill towards drought relief for commercial farmers 79 water licenses issued for agriculture

POINT 1: REVITALISATION OF AGRICULTURE AND AGRO PROCESSING VALUE CHAIN

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Plan Target Progress

9. Implementation of 75% local procurement (e.g. fresh produce for School Nutrition Schemes); and the provision of set-asides for strategic agricultural commodities 75% local procurement DSD procured fresh produce from 444 coops DBE procured food from community based cooperatives, community based SMME’s and smallholder producers for School Nutrition Programme

POINT 1: REVITALISATION OF AGRICULTURE AND AGRO PROCESSING VALUE CHAIN

POINT 2: ADVANCING BENEFICIATION

Plan Target Progress

1. Ensure that a percentage of production of designated strategic minerals are made available in requisite quantities, qualities, timeframes and a price arrangement supportive

• f local beneficiation

Finalisation of the MPRDA by Parliament Following Presidential Directive in SONA 2016, process to fast- track finalisation underway, technical issues addressed and traditional leaders consulted.

• 2. Maximise local beneficiation of

fluorspar Increase local feedstock capacity (Hydrogen fluoride {HF}) to at least 10 000 tons per annum IDC is engaged in discussions with Pelchem Ltd to explore ways

• f doubling HF capacity from

5000 to 10 000 tonnes per annum (tpa). 3. Platinum Group Metals locally beneficiated Create demand for local production

• f fuel cells

A PPP between DST, HySA and Impala Platinum led to the development of SA first fuel-cell powered forklift and refuelling infrastructure launched at the Impala Platinum Refineries.

• 4. Metal beneficiation zone

developed Musina Metallurgical cluster launched in 2016 Cabinet approved the designation of Musina-Makhado SEZ in July 2016

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POINT 3: IMPLEMENTATION OF HIGHER IMPACT IPAP

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Plan Target Progress

• 1. Infrastructure-driven

industrialisation: Leverage the up scaled investment from ICT, Energy and Transport infrastructure programmes to promote manufacturing Conduct spot checks

• n local companies

awarded tenders designated for local production to verify that local production does take place by March 2017. Deepen localisation by utilising Regulation 9.3

• f the PPPFA for the

procurement of non designated products/commodities

details on progress made in the next slides

INDUSTRIAL DEVELOPMENT

ABERDARE CABLES UNVEILS NEW RAIL SECTOR PRODUCTION LINE Solely focused on locally manufactured cables for PRASA and Transnet Aberdare Cables, a Powertech company within the JSE- listed Altron Group, today launched a new production line within its existing plant in Pietermaritzburg, KwaZulu-Natal in July 2015. The line, supported by the dti designation programme, is specifically designed to manufacture locomotive cables for the Passenger Rail Agency of SA (PRASA) and Transnet. Currently, South Africa has one of the largest wholesale renewal and general overhaul rail programmes in Africa, and serves as a strong manufacturing hub for rolling stock. Keith Edmond, CEO, Aberdare Cables. “We are committed to partnering with all stakeholders, public and private, to ensure that South Africa remains self- sufficient in the manufacturing of electrical cables essential to the maintenance, development and expansion of critical transport infrastructures.”

Photo by Duanne Daws

R 20 million invested into the expansion of its plants in Pietermaritzburg and Gauteng to enhance production, create additional jobs and drive skills development Resulting in these national locomotive and rails projects which will, in their entirety equate to a value of around R 100 billion

• ver a 10 year period.

DESIGNATION: LOCOMOTIVE CABLES

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INDUSTRIAL DEVELOPMENT

Southey Holdings and Nautic Africa have invested R289.9 million and R63.4 million respectively under the Section 12I Tax Incentive Scheme. It is expected that about 355 direct jobs will be created. Southern African Shipyards is currently in a process of building seven tugboats as part of the tender of R1.4 billion awarded by the TNPA in 2014 creating approximately 200 additional jobs. More than 60 apprentice artisans as well as three marine engineers were being trained. More than R700 million has been earmarked for the supplier development plan entered into between Southern African Shipyards and Transnet’s local suppliers, employees and graduates. Vee Craft (now acquired by Nautic Africa) was awarded a tender worth nearly R23 million to build workboat ferries for the South African Navy.

BOAT AND SHIP- BUILDING

Smit Amandla Marine partnered with Damen Shipyards Cape Town to build two new vessels valued at R150 million, which will carry out supply and support work for De Beers Group’s offshore diamond-mining activities in Port Nolloth. The vessels are part of Smit Amandla Marine’s NIPF obligations. Smit Amandla Marine was awarded a contract by PetroSA as part

• f Project Ikhwezi.

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INDUSTRIAL DEVELOPMENT

AUTOMOTIVE INVESTMENT IN ROSSLYN PLANT BMW Group South Africa announced in November 2015 that it will invest a total of R6 billion at its Rosslyn Plant in Pretoria in the coming years. The production of the next generation BMW X3 at Plant Rosslyn will replace the BMW 3 Series Sedan, which will now be allocated to other plants within the global BMW production network. “This investment is testament to the important partnership that exists between business and government and the role that business is playing in the development of the economy…” said Minister Davies.

Minister of Trade and Industry, Dr Rob Davies and the Managing Director of BMW Group South Africa Managing, Mr Tim Abbott shaking hands as Rosslyn BMW Plant Director Mr Stefan Huelsenberg looks on after the announcement.

Managing Director of BMW Group South Africa Managing, Mr Tim Abbott said the potential for Africa as a future market for exports as well as the current Automotive Production and Development Programme (APDP) enables South Africa to play a significant role in the manufacturing industry and production

• f high quality cars.

“ We are excited about the future prospects of Plant Rosslyn and cannot wait to start with the production of the next generation BMW X3” he added.

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INDUSTRIAL DEVELOPMENT

INDUSTRIAL DEVELOPMENT

Ford Motor Company of Southern Africa’s (FMCSA) R2.5 billion investment to expand operations at its Silverton assembly plant in Pretoria is an important indication of confidence in South Africa and the significance of the Africa Growth and Opportunity Act (AGOA) two-way benefits. The launch event was held in Pretoria, where Ford announced expansions to its local production of the Ford Everest seven-seater Sport Utility Vehicle (SUV) and expansion of the new Ranger pickup programme.

1 200 new jobs s

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INDUSTRIAL DEVELOPMENT

Volkswagen Group (VWSA) to invest more than R4.5 billion by 2017 for new models and infrastructure at its Uitenhage vehicles factory. Volvo has invested R60 million in a regional parts and distribution centre in Benoni, Ekurhuleni. This facility will consolidate all their logistical operations in Sub-Saharan Africa.

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INDUSTRIAL DEVELOPMENT

Davies said even though the sector still remains a challenge and export had gone down over the years, the government had put a number of measures in place e.g. (duty credit certificate schemes, tariff reduction, etc). “In order to address these challenges in the sector the dti introduced the Clothing and Textiles Competitiveness Programme which had had a big impact so far including the saving of the 69000 stable jobs. The programme has also been responsible for the introduction of the vertical cluster through the Competitive Improvement Programme (CIP). The Foschini Group was the first big retailer to embrace the dti CIP concept by forming the first vertical ordinary cluster which was formed and approved in April 2011,” said Davies. Davies added that The Foschini Fast Fashion Cluster was valued at a total cost of R32 791 604 of which R 24 593 703 was funded through the CIP whilst 8 197 901 was their contribution and the

• ther comes from the industry itself.

“Total funds allocated to the second phase was R 32 780 550 of which R 8 195 138 is the consortium contribution whilst the CIP contribution is R 24 585 412. This has shown that as a retail group, Foschini is currently leading in terms of a vertical cluster that has value chain representation,” he said Davies also said there is a fabric rebate discussion on the textile sector as a whole that will take into account all challenges that have been threatening the sector over the years.

CLOTHING AND TEXTILES COMPETITIVENESS PROGRAMME

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POINT 3: IMPLEMENTATION OF HIGHER IMPACT IPAP

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Plan Target Progress

2. Finalise financing and incentive for Black Industrialists Programme 100 black industrialists (BI) created by 2019 The guidelines and application form for BI Programme has been developed.

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Zig Enterprise, a black-owned incubator, won the tender for Ford’s new vehicle personalisation centre located adjacent to the plant. Lawrence Global Manufacturing (LGM), the first 100% black-owned manufacturing and engineering company in Nelson Mandela Bay was launched, focused on providing design and precision engineering components to VW and Mercedes-Benz. Jonas Gutu, secured R75 million in funding to build the first hypodermic disposable syringes and needles plant in SA located in

• Coega. The plant is expected to create 300

jobs.

POINT 3: IMPLEMENTATION OF HIGHER IMPACT IPAP

POINT 3: IMPLEMENTATION OF HIGHER IMPACT IPAP

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Plan Target Progress

• 3. Scale-up access

to and terms for industrial financing. Developing new sector-specific packages and tailoring existing sector-specific support measures by March 2017 IDC funding for job drivers: Approval: R15bn Disbursements: R11.4bn The DBSA contributed about R21bn to government's infrastructure rollout and municipal support. NEF approved 700 transactions worth about R6.9bn for black-empowered businesses. MCEP approved funding for 258 entities. R1.7bn has been committed to support manufacturers, with a total investment value of R8.8bn. The scheme sustained 58 520 jobs. AIS approved 35 projects resulting in about R3.7bn in projected investments leveraged and 611 jobs created. 38 projects were approved through the 12i tax allowance with projected investment leveraged amounting to R13.9bn and 6 551 jobs created. Conditionalities have been tightened across financial incentives. Conditionalities include and will include:

• BEE requirements,
• Labour intensity and jobs created,
• Limitations on retrenchments (e.g. already in MCEP).

INDUSTRIAL DEVELOPMENT

Number of firms/projects supported Potential jobs supported Manufacturing Investment Incentives EIP- Aquaculture Development and Enhancement Programme (ADEP) 11 256 Automotive Investment Scheme (AIS) 35 611 12I Tax Allowance Incentive 38 6 551 Critical Infrastructure Programme (CIP) 16 9 718 Manufacturing Competitiveness Enhancement Programme (MCEP) 258 58 520 Services Investment Incentives Business Process Services (BPS) 12 7 239

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POINT 4: UNLOCKING THE POTENTIAL OF SMMES, CO-OPERATIVES, TOWNSHIP AND RURAL ENTERPRISES

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Plan Target Progress

• 1. 30% set asides for

designated categories of state procurement Issuing of an instruction note by National Treasury Draft Preferential Procurement Regulations, 2016 Published for Public Comment. DSBD to develop a mechanism of tracking department’s contribution to the 9-point plan inclusive of the 30% set aside. DSBD to engage with national departments to the support required from DSBD.

• 2. Increase procurement

from SMMEs, co-ops, township and rural enterprises Increase the contribution of SMMEs to the GDP from 42% to 45% by 2019. 2354 SMME’s in the environmental space 3 473 SMME’s in the environmental space supported a total of 403 existing rural enterprises were supported through various initiatives and 531 new enterprises in rural district municipalities were supported during establishment phase R 184million (85%) of DPW goods and services procured from SMMEs (mainly construction) 83 rural enterprises were supported through the Tourism Enterprise Partnership (TEP).

• 3. Enter into transversal

agreements with other government departments and state agencies Entered into Transversal Agreements with NDT, DPE, DSD, DHET and DRDLR Draft agreements awaiting signature: Labour, DHS

POINT 5: GROWING THE OCEANS ECONOMY (MARINE TRANSPORT AND MANUFACTURING)

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Plan Target Progress

• 1. Establish purpose-

built oil and gas port infrastructure Public-Private Partnership (PPP) model for port infrastructure implemented 100% (PPP) for three (3) projects that includes:

• An Offshore Supply Base with work already commenced;
• Construction of Berth 205 for the new rig repair and maintenance

facility while Berth 204 is currently available for rig repair in the interim; and

• An extension of the existing Mossgas Jetty.
• 2. Maintain and

refurbish existing port and ship repair facilities Existing port and ship repair facilities maintained and refurbished Refurbished and upgraded existing Ship Repair facilities:

• The Port Elizabeth refurbishment of the slipway (boat repair facility)

with a new 90 Ton boat hoist and the lead-in jetties

• The Durban port refurbishment include the outer dry dock caisson

and procurement of equipment;

• Saldanha Bay upgrade of Offshore Supply Base in execution phase.
• 3. Fast-track decisions
• n issuing of licences

in terms of Section 79

• f National Ports Act

Licences issued in terms of Section 79 of Ports Act within prescribed time frames (to encourage efficiency) Section 79 approvals were issued in support of the Composites Cluster and boatbuilding (unlocking an investment of R1,25 billion in catamaran production by Tag Yachts) in the Port of Port Elizabeth and the establishment of the manganese terminal at the Port of Nqura.

POINT 5: GROWING THE OCEANS ECONOMY (MARINE TRANSPORT AND MANUFACTURING)

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Plan Target Progress

• 4. Reform of the port tariff

structure to incentivise export of value-added / processed goods Appropriate port tariff structure determined The Port Regulator declined the application of National Port Authority to increase port tariffs by an average of 5.9%. All cargo dues will increase by 0%, except marine services and related tariffs. Full container export dues will decrease by 10%. The decrease will support the manufacturing sector and also see an increase of SA manufactured products. Automotive volume discount will be equalised tor all users at the maximum 60% level discount.

• 5. Designation of port

facilities for boat, ship repair and rig repair with localisation Section 79 applications finalised This had been achieved though Section 79 approvals through the Department of Transport

• 6. Establish a supporting

funding model for infrastructure development in ports in

• rder to support

manufacturing Support for funding model for infrastructure development established in ports (in order to support manufacturing) TNPA and Transnet SOC Limited adopted a Public Private Partnership (PPP) model to finance new Operation Phakisa infrastructure at the Ports of Saldanha Bay, Richards Bay and East London:

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Plan Target Progress

7 Initiate legislative reform to promote aquaculture development Aquaculture Bill submitted to Parliament for approval Aquaculture Bill gazetted for public comment on 19 February 2016. Public Comments have been collated and the revised Bill sent to the State Law Advisors for review in July 2016. Draft norms and standards for land-based aquaculture published for comment. 8 Address access to land and sea/port infrastructure, including leases Land secured and leases finalised

• Ten (10) leases approved; 8 for a 15-year period: Diamond Coast

Abalone, Imbaza mussels, Doringbaai and Saldahna Bay Oysters, Oyster Catcher, Blue Saphire Pearls, West Coast Oyster Grower with

• Dept. of Public Works.
• TRANSNET published a notice for comment to approve fifteen (15) year

period for 8 leases (additional 85 ha) in Saldanha, a big win for the aquaculture industry and for Operation Phakisa. 9 Streamline authorisations through the establishment of an inter- departmental authorisations committee Inter-departmental authorisations committee established (Streamline business processes for efficiiency) An Inter-Departmental Authorisations Committee (“IAC”) had been established to reduce the approval process from 830 days to 240/360 days. Committee dealt with EIAs, Coastal Discharge permits, Biodiversity Risk Assessments and Leases.

POINT 5: GROWING THE OCEANS ECONOMY (MARINE TRANSPORT AND MANUFACTURING)

POINT 6: RESOLVING THE ENERGY CHALLENGE

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Plan Target Progress 1. Improved Eskom maintenance and operational practices No load shedding Eskom has scaled-up maintenance activities 2. Co-generation implemented 800 MW RFP issued and Financial Close to be reached in 3rd quarter of 2016/17 FY (W1) 3. Gas to power generation implemented 3000MW RFP issued in 1st quarter of 2016/17 and financial close targeted in 2018/19 (W1)

POINT 6: RESOLVING THE ENERGY CHALLENGE

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Plan Target Progress

4. Other IPPs and additional sources

• f supply implemented

2500MW (Coal) 6300MW (REIPP) RFP issued and successful bidders to be announced in Q2 2016/17. 6 300MW have been procured from REIPPP and 2200MW of it is supplying into the grid. 5. Demand Side Management Initiatives implemented 0.5 TWh 18 GWh 6. National Solar Water Heater Programme implemented 131 000 SWH by 2019 Procurement of first phase units completed (9000). Installation scheduled for Q3 2016/17 7. Nuclear Build Programme 9600MW Country agreements signed and development

• f the RFP in progress

POINT 7: STABILISING THE LABOUR MARKET

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Plan Target Progress

1. Implement sector frameworks for business stability in collaboration with DMR; Chamber of Mines; DAFF and various Trade Unions. Sector Frameworks for business stability developed A total of 7 857 hectares of land allocated to farm dwellers and labour tenants Draft Social Compact Sector Framework for Agricultural sector. Mining Industry Growth, Development and Employment Task Team (MIGDETT) established 2010,

• Framework for Peace and Stability in the Mining Sector

established addressing labour market challenges

• Ten Point plan framework adopted in MIGDETT in 2015 to

address job losses 2. Labour market stability supported through NEDLAC Significant progress has been made at NEDLAC on the critical elements identified to moderate workplace conflict. 3. Develop modalities of a national minimum wage through NEDLAC Deputy-President ‘s process is progressing:

POINT 8: CROWDING IN PRIVATE SECTOR INVESTMENT

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Plan Target Progress

• 1. Establishment of

the One Stop Shop Investment One Stop Shop established and operational. Private-sector investment into productive sectors facilitated.

• Invest South Africa has been established and is fully
• perational.
• Site and Design approved for National One Stop

Shop to be launched in Q3 at dti.

• Letters have been sent to Ministers, Premiers and

Agencies on OSS approach and staff secondment.

• Consultations have been undertaken with Provinces

– Western Cape, KZN & Gauteng.

• Consultations have been undertaken with SARS and

DHA.

• Forty (40) priority investment projects which are

shovel-ready or close to shovel-ready and of substantial scale have been identified.

INDUSTRIAL DEVELOPMENT

OFFICIAL OPENING OF UNILEVER’S FIRST ICE CREAM FACTORY

With the continued support of the dti, Unilever South Africa has been able to reinvest in the country and secure its legacy in South Africa. Over the past 3 years, Unilever has invested nearly R4 billion in various factory upgrades and brand new manufacturing sites. This is testament to the company’s commitment to contribute towards growing the economy by creating jobs and producing quality products in world-class facilities.

Unilever’s FIRST Ice Cream Factory in Africa opened in October 2015.

12i tax incentive

43

INDUSTRIAL DEVELOPMENT

TO SAVE AND CREATE JOBS IN THE EASTERN CAPE The Memorandum of Understanding (MoU), part of the Public-Private sector collaboration between industry and government, signed by the dti, Eastern Cape Provincial government and Nestle South Africa to create 800

permanent and seasonal jobs by 2019.

The chicory programme is aimed at encouraging local farmers to grow chicory and supply Nestlé for use in its manufacturing of Ricoffy thus contributing to the revitalising of rural economies. Minister Davies urged the emerging farmers and chicory producers in the Eastern Cape and create sustainable jobs. The Director for Communication and Public Affairs representing the CEO of Nestle, Ian Donald; Mr Ravi Pillay was optimistic that the MoU signed with the Eastern Cape Chicory farmers would assist in addressing some of the regression currently facing the industry in South Africa. He said Nestle will provide technical support to ensure optimal quality and specification of chicory in the KwaZulu-Natal and Eastern Cape provinces. He further added that this is a long term commitment of 5 years with the dti to curb imports and promote local procurement in South Africa.

AGRO-PR PROCES OCESSI SING NG SECTOR OR

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TRADE, INVESTMENT & EXPORTS

South Africa– Saudi Arabia Joint Commission held in March 2016 to provide a stronger platform for export and investment initiatives with Saudi Arabia. Launch ch of R5 billion ion Solar Power Plant t in the Northern hern Cape The R 5 billion, 50 MW Concentrated Solar Power plant forms part of South Africa’s Renewable Energy Independent Power Producers Procurement Program (REIPPP) and this project marks a key milestone in South Africa’s electricity supply security and CO2 reduction.

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TRADE, INVESTMENT & EXPORTS

The Beijing Automobile International Corporation announced an investment of R11 billion in a completely knocked down automotive manufacturing plant in December 2015.

The investment is an outcome of the Forum on China-Africa Cooperation (FOCAC) that was held in Johannesburg in December 2015, where South Africa’s President Jacob Zuma and Chinese Prime Minister Xi Jinping signed no less than 26 bilateral agreements valued at approximately R100 billion.

The Coega Development Corporation signed a historic investment with BAIC, the biggest automotive investment in Africa in the last 40 years in August 2016. FOCAC

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POINT 8: CROWDING IN PRIVATE SECTOR INVESTMENT

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Plan Target Progress

2. Township and local industrial parks revitalised to support SMMEs Upscale from revitalising four industrial parks to 10

• Two industrial parks: Botha Belo and Seshego were

revitalised and launched.

• Additionally, Two Industrial Parks (Isithembe – KZN

and Queendustria –EC) will be launched in the second quarter.

• The first phase of the revitalisation includes the

upgrading and provision of security, electricity, road, bulk water supply and sewage treatment infrastructure.

Industrial Park revitalisation programme has focused on infrastructure upgrading of facilities in former ‘homelands’. Programme rollout has revealed astonishing degree of entrepreneurship and activity. 1. 1,600 people employed in enterprises located in the Seshego industrial park, and 2. 10,000 people employed in Botshabelo industrial park.

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POINT 8: CROWDING IN PRIVATE SECTOR INVESTMENT

POINT 9.1.: CROSSCUTTER - SCIENCE AND TECHNOLOGY

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Plan Target Progress

• 1. Establish a Sovereign

Fund for innovation Establish a fund as a PPP Concept note on the fund developed. Initiated engagements with other government departments to ensure synergies with other support instruments.

• 2. Expand the current

Intellectual Property Fund to provide support to all recipients

• f public funds

Establish an IP Leakage Fund Finalising the IP valuation methodology (in partnership with World Intellectual Property Right Organization) to determine a reliable and reproducible method before insuring IP .

• 3. Expand Technology

Localisation 1)By 2019, new commercial and industrial financing of R2 billion secured for a portfolio of R&D-led industrial development initiatives funded by the DST 2)By 2019, additional revenue of R500 million generated from firms and companies supported from DST-funded instruments since 2010 3) By 2019, performance of 10 000 SMEs improved through technology interventions. Increased local manufacturing activity, resulting in increased exports, local manufacturing activity, economic growth and jobs. Leveraging local procurement / Increased local manufacturing The Technology Localisation Programme has provided direct technological support to 64 new firms enabling them to create:

• more than 275 direct and 825 indirect

jobs

• generated more than R192m in

additional turnover and

• R125m through import substitution.

POINT 9.2.: CROSSCUTTER - WATER AND SANITATION

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Plan Target Progress

• 1. Enhance an integrated

regulatory regime e.g. water use licensing) 300 days for EIA, water and mineral rights licenses. Finalise water use licensing within 300 days 80% of water use applications processed by DWS 76 licenses finalised within 300 days 62% water use applications processed by DWS

• 2. Issuing of Licences for

strategic sectors such as Agriculture, Mining, Manufacturing and Energy Issue licenses to strategic sectors 12 licenses were issued to strategic sector (3: Agriculture, 5: Mining, 0: Industry and 4: Energy)

• 4. Minimisation of water

losses and appointment

• f ‘Water Ants’

15 000 artisans “War on Leaks Agents” 3000 agents have been recruited across all disciplines artisans, plumbers and water agents and first year theoretical and practical training is completed and now ready for work place.

POINT 9.3.: CROSSCUTTER - TRANSPORT INFRASTRUCTURE

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Plan Target Progress

1. Prasa Rail Modernisation Programme 3600 jobs Construction of the Training Centre building - 4000m2- commenced in June 2016. 9 train sets delivered at Wolmerton Depot 2. Integrated Public Transport Networks Roll-out to Metros, local & district municipalities 4 Cities constructed over 110km of dedicated lanes & 600km of feeder routes 1000 buses procured worth over R3bn 3. Provincial Road Maintenance programme (Sihamba sonke) 61 000 (biggest contributor) R31.4 bn has been allocated for maintenance of the secondary road network for rehabilitation of roads, re- sealing of surfaced roads, maintenance, patching; blading and re-gravelling of gravel roads

POINT 9.3.: CROSSCUTTER - TRANSPORT INFRASTRUCTURE

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Plan Target Progress

• 4. Upgrade of Moloto Road

Road safety Routine road maintenance to improve road safety on sections already transferred.- (Limpopo and Mpumalanga = 92.4 Km Construction planned to commence during 4th quarter

• f 2016. R1,1bn allocated over three years
• 5. N3 Harrismith Transport

Hub Strengthening of the logistics linkages between Free State, Gauteng and KZN provinces Inception report finalized and the draft Harrismith Hub Logistics Corridor Framework has been developed. SANRAL is developing an engineering solution to ensure that the town of Harrismith is not bypassed with substantial economic ramifications.

• 6. N2 Wild Coast Highway

Road construction to link KZN and the EC Land acquisition for the entire route underway and Water Use License Applications was submitted to DWS in February 2016. Construction of the 2 mega bridges (Mtentu and Msikaba) confirmed to commence in December 2016 Three Community Development Projects (CDP) awarded to SMMEs (local access roads).

POINT 9.4.: CROSSCUTTER - BROADBAND ROLLOUT

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Plan Target Progress

• 1. Finalisation and

implementation of the Integrated White Paper on ICTs to ensure policy certainty Approval of the National Integrated ICT Policy White Paper which will pave the way for the drafting of new ICT legislation The DTPS is finalising the ICT Policy White Paper for tabling at Cabinet

• 2. Fast track the implementation
• f the SA Connect Strategy to

connect schools, health facilities and government offices Sentec has spent over R150 million towards infrastructure upgrades 81 503 homes passed by fibre (8129 homes subscribe to fibre connectivity) The broadband connectivity project in Limpopo was completed and 39 clinics will connect to the SA Connect (USAASA) Clinic project The work on the rollout of Broadband in 8 District Municipalities where the National Health Insurance (NHI) programme is being piloted is in progress. 131 rural communities provided with functional ICT equipment and services, 5 towers have been upgraded and all customer premises equipment has been installed

SOME CONCLUSIONS

 Energy supply has been stabilised and labour stoppages substantially

• reduced. Exports of value-added manufactures to Africa are growing.

 But impact of drought has been severe. Business & consumer confidence is still tentative, ‘set-asides’ have not yet been implemented to support SMMEs, implementation of public investment slower than expected and import leakages remain substantial.  We need to continue to provide a consistent ‘package’ of economic interventions to encourage private-sector to invest in transformative industrialisation, create jobs and sustain economic growth.  In addition to overall implementation of 9-PP , circumstances require a big push on Job Creation across all sectors of the economy linking the primary production sectors to the manufacturing and services sectors.  Achieving higher impact and scale is critical.

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KE YA LEBOGA KE A LEBOHA KE A LEBOGA NGIYABONGA NDIYABULELA NGIYATHOKOZA NGIYABONGA INKOMU NDI KHOU LIVHUHA DANKIE THANK YOU

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