the dtiStrategy and Budget

2004 - 2007

Presentation to Parliamentary Committees

26 May 2004

Contents

• Opening remarks

• What we achieved in 2003/4

• Our vision and plans for the next three years

• How the budget supports our strategy

Opening remarks

• 5th budget presentation by this DG

• At 1st budget presentation in 2000, the dti had underspent by almost 1/3!

• At this 5th budget presentation in 2004, by working together, we -the dti and the committee - have balanced the budget!

• Also, this is the 2nd time the department will report to the committee on its performance against the targets set out in the Vote 32

• Continue good working relationship between the department and parliament:

– Oversight role of the committees in ensuring the department fulfills its mandate

– Contribution the committee makes to policy development (IMS, cooperatives, Apex Fund)

What we achieved in 2003/4

the dti house

Ministry

Office of the DG

Economic Research and

Policy Coordination

International Trade and Economic Development

Enterprise and Industry Development

Consumer and Corporate Regulation

The Enterprise Organisation

Trade and Investment South

Africa

Marketing

Group Systems and Support Services

Key outputs delivered – programme 1 - Administration

• Public-private partnership to finance and construct the new dti campus

• Research study on the effects of a volatile exchange rate on manufacturing exports

• Launch of an industry forum for dialogue with sectors• Development of a set of key performance indicators to

measure the impact of the dti’s work on the economy• Web-based research database launched• Research fellowship programme with Pretoria and Vista

Universities launched• Investment Climate Survey, in conjunction with the World

Bank, initiated

Key outputs delivered – programme 2 – International Trade and Economic Development

• Leadership at the World Trade Organisation Ministerial in Cancun and participation in the formation of the G20 group of developing countries

• Five negotiating sessions were held between SACU and the US as part of the free trade agreement negotiations

• Three negotiating sessions were held with EFTA as part of the free trade agreement negotiations

• Negotiations between SACU and Mercosur on are on-track

• Exploratory talks were conducted with India and China

• 10 Investment Protection Agreements and Bilateral Cooperation Agreements concluded, 20 technical and trade missions to other African countries

• Turnaround time for tariff investigations has been halved from 6-months to 3-months

• Improvement in compliance with import and export controls – 287 inspections conducted

• 17 100 import permits issued – 5583 export permits issued

Key outputs delivered – programme 3 – Enterprise and Industrial Development (1)

• More than 15 000 small enterprises were trained, mentored and assisted by Ntsika

• 213 training courses were provided by Ntsika and 3 new courses were developed

• 282 service providers were trained and 209 were supported by Ntsika

• Khula provided 628 credit guarantees to the value of R180m

• R99.3m in loans was disbursed by Khula

• 1477 properties were provided to SMMEs by Khula’s Property Portfolio

• Khula financed 3 new retail finance institutions

• Khula equity fund financed deals to the value of R19,6m

• Namac assisted and supported more than 2000 manufacturing enterprises creating 1744 new jobs and retaining 14 726 existing jobs

Key outputs delivered – programme 3 – Enterprise and Industrial Development (2)

• Technology and innovation projects worth R205m supported through SPII

• 1125 researchers, 2651 students, and 376 enterprises supported through Thrip

• 292 new technical standards issued, and 301 standards revised including a label of origin for all locally made clothing

• 29 medical labs, 22 inspection bodies, and 25 test labs accredited and certified through SA National Accreditation System

• 3 research studies on critical skills completed: transport sector, chemicals sector, and Top 500 companies

• Publication of the broad-based black economic empowerment strategy and the enactment of the Act

• Participation in strategic charter processes – financial services, maritime, tourism

• More than R4bn loans to black companies approved by IDC

Key outputs delivered – programme 4 – Consumer and Corporate Regulation

• Draft corporate law reform policy finalised

• Draft consumer protection policy finalised

• Comprehensive research on consumer credit patterns completed and presented to Cabinet and Parliament

• Consumer credit complaints have fallen from between 1 and 12 months, to between 3 and 20 days, time to resolve a consumer complaint has fallen from between 90 and 180 days to between 1 and 3 days – a 600% improvement!

• 82 complaints were resolved by the Competition Commission

• 250 mergers were approved by the Competition Commission

• R286m of lotteries funds was paid out: 61% to charities, 22 to sports and recreation, and 14% to arts, culture and heritage

Key outputs delivered – programme 5 – The Enterprise Organisation

•Investment incentives–6000 enterprises

–R1,3bn investment generated

–19 700 new jobs created

–44 500 jobs sustained

–40 new technology projects

•Infrastructure investments–R2,4bn investment in 7 infrastructure projects

•IMS support measures–247 enterprises

•Black business supplier development programme–259 enterprises

•15 Strategic Industrial Programme projects approved - R4.7bn investment

Key outputs delivered – programme 6 – Trade and Investment South Africa

•R5,8bn investment secured, 305 projects facilitated

•5506 exporters assisted and advised

•50% of EMIA recipients were SMMEs, 21% were enterprises owned by HDPs

•29 national pavillions were held generating R324,8m in export sales for participating enterprises

•45 inward investment and buying missions

•28 outward selling missions

Key outputs delivered – programme 7 – Marketing

• Average of 88 000 website hits per month

• 10 000 new clients were reached through phase 2 of the the dti Business Express, 500 000 clients were reached through exhibitions and events

•Almost 5m people read the dti’s regular publications Sisebenza Sonke, My Business, businessSA and 76 ad hoc, one-off, or specialised publications, brochures and pamphlets were published

•In total, over 3,52m economic citizens were reached through publications and advertising

•76% of all calls are handled within 30 seconds

•98% of all escalated queries are resolved within 48 hours

the dti’s vision for 2004 – 2007What do we want to achieve ?

For the first time, a strategic planning process was implemented in the dti in June 2003

This new process involved:• Strategising – setting out a common vision of where we

want to go as a department• Planning – putting together a set of concrete and practical

tasks to achieve the vision• Budgeting – allocating money and people to these tasks• Making strategic choices about which tasks were the most

important, which would have the biggest impact• Getting different parts of the department to work together

more closely on shared tasks

We will work to increase the contribution of small enterprises to the economy by

• Launching the Apex Fund for micro-credit this year• Merging Ntsika and Namac into a single agency this year with an

annual budget of R120m• Providing financial and technical assistance to cooperatives later this

year including R3,5m to the National Cooperatives Association of SA• Finalising a cooperatives development strategy• New legislation to promote and support franchising• Enterprise development bill to provide streamlined system of

providing grants and incentives to all kinds of enterprises in all sectors

• R2m to support the SA Women’s Empowerment Network• R25m to Khula

We will make significant progress in achieving broad-based black economic empowerment by

• Implementing the Broad-Based Black Economic Empowerment Strategy including establishing the Advisory Council and gazetting the Codes of Good Practice

• Raising an additional R1bn to capitalise the National Empowerment Fund and fund new financial products for BEE to be launched on 31 May

• R10m for the operating budget of the NEF

We will raise the level of investment in the economy as a whole and in priority sectors by

• R503m in investment incentives for enterprises• R72m for investment promotion and facilitation• R32m for sector strategy development and projects to grow • Completion of the investment climate survey• New incentives for labour-intensive sectors: film and

business process outsourcing• Improving the functioning of foreign economic offices• Regional initiatives like cross-border Spatial Development

Initiatives and the Coega Industrial Development Zone

We will increase the market access opportunities available to our enterprises and increase exports of South African goods and services by• R36m on bilateral and multilateral trade negotiations• R243m on export development and export promotion

– Including, R200m for the Export Credit Insurance Corporation– Plus R112m for the Export Marketing and Investment Assistance

scheme

• R43m for the International Trade Administration Commission

• Nepad business initiative• Commonwealth business council

We will contribute to building skills, technology and infrastructure platforms to make our enterprises competitive by• Advocacy role in the cluster and working with other government

departments

• R100m for critical infrastructure projects

• R7,6m for the Youth Internship Programme in the ICT sector

• R135m for the Technology and Human Resources for Industry Programme

• R83m for the Support Programme for Industrial Innovation

• R48,6m for technology incubators

• R6m for Technology for Women in Business

• R10m for technology venture capital

We will seek to reposition the economy in higher value-added activities by

• Implementing the IMS and sector strategies • Hosting an international symposium on

competitiveness in June 2004 • R45m for the Competitiveness Fund and R13m for

the Sector Partnership Fund• R7m for the Fund for Research on Industrial

Development, Growth and Equity at Nedlac• R7m for the Workplace Challenge

We will contribute to providing economic citizens with better and easier access to redress by

• R95m for efficient and accessible regulatory services• Consumer Protection Law, Consumer Credit Law and

Corporate Law reform processes will be completed• Education and communication campaigns including the

consumer help-line• R23m for enforcement and compliance of consumer and

corporate regulations• R15m to the Micro-Finance Regulatory Council

We will continue the day-to-day operations that keep the economy functioning

• Registering companies and close corporations• Issuing technical standards for product quality and safety• Resolving consumer complaints• Investigating anti-competitive practices• Issuing General System of Preferences certificates to exporters• Issuing import and export permits• Conducting tariff investigations• Answering 16 000 calls per week from economic citizens seeking

information about the dti and about the economy, opportunities and available support

• Manage 19 agencies and 42 foreign economic offices

We will continue to improve the efficiency and capacity of the dti to deliver

• Moving into the new campus

• Rolling out an extensive programme for the training and development of staff

• Introduction of better reporting and measurement systems to make sure we meet our targets

• R76,7m to extend our accessibility to economic citizens through our marketing efforts and investigating better ways of delivering services

Our ‘Flagship Projects’ for this year are (1)

• Finalise the consumer credit law reform process• Merge Ntsika and Namac into a single enterprise

development agency• Disburse the first loans from the Apex Fund by the end of

the year• Implementing the cooperatives development strategy• Finalising a strategy to promote a more equitable

geographic spread of sustainable and productive economic activity

• Implementing the Broad-Based Black Economic Empowerment strategy including establishing the Advisory Council, issuing codes of good practice, and disbursing new financial products for black enterprises

Our ‘Flagship Projects’ for this year are (2)

• Finalising a strategy to increase level of trade between African countries

• Investigating options to improve the delivery of the dti’s services to the second economy

• Introduce to Parliament the Enterprise Development Bill to provide a streamlined and transparent way of providing grants to enterprises in all economic sectors

How does the budget support the strategy?

Better planning means better budgeting, less under-spending and a balanced budget

Current spending trend vs. budget: 5 yrs comparison

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Budget 2,323,596 2,236,455 2,218,476 2,494,852 2,519,926

Expenditure 1,808,631 2,151,231 1,947,976 2,346,187 2,495,818

1999-2000 2000-2001 2001-2002 2002-2003 2003-2004

What is the dti’s budget?

From 2000/01 to 2006/7, the average annual increase in the budget of the dti is 6.8%

– R2, 159bn in 2000/01

– R2, 848bn in 2004/5

– R3, 023bn in 2005/6

– R3, 213bn in 2006/7

In the Estimates of National Expenditure (Vote 32), the budget is divided into 7 programmes

1. Administration R236m 8.3%

2. International Trade and

Economic Development R97,9m 3.4%

3. Enterprise and Industry Development R1,015bn 35.7%

4. Consumer and Corporate Regulation R130m 4.6%

5. The Enterprise Organisation R943,2m 33.1%

6. Trade and Investment South Africa R348m 12.2%

7. Marketing R76,7m 2.7%

Another way of looking at how the dti spends its budget

• Staff costs = 9.9% = R281m

• Procurement of goods

and services = 12.5% = R357m

• Transfers to agencies = 38.5% = R1,09bn

• Grants to enterprises = 31.6% = R900m

• Equipment = 0.5% = R13,6m

Which are the programmes that have received more money this year?

• Increase to Programme 1 – Administration– Strengthen strategic planning, monitoring and evaluation, agency

management and internal audit functions• Increase to Programme 2 – International Trade and Economic

Development– Increased number of trade negotiations– Extend the African economic development programme

• Increase to Programme 2 – Consumer and Corporate Regulation– Incubate new agencies for consumer credit regulation and

consumer protection• Increase to programme 5 – TEO

– Transfer of EMIA from Tisa to Teo

Thank You