1. 1 2006/07 ANNUAL REPORT PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND FOREIGN AFFAIRS 20 FEBRUARY 2008

2. 2 PRESENTATION CONTENT Economic Context dti Strategic Objectives 2006/07 Achievements and Progress Six Year Expenditure Comparison Analysis of 2006/07 Under Expenditure Analysis of current MTEF YTD Expenditure – 31 August 2007 Conclusion and challenges 2006/07 ANNUAL REPORT

3. 3 ECONOMIC CONTEXT Economy has been growing for seven consecutive years driven by domestic demand SA economy registered 5% real GDP in 2006 remaining constant for 3 rd consecutive calendar year. Aggregate real domestic expenditure grew by 8,7% with contributions by households (7,3%); government (5,4%) & private & public sector fixed investment (12,8%) Current economic performance is widening the current account deficit (6,4% of GDP in 2006) driven by demand exceeding supply, import penetration & weak export performance Domestic CPIX within the 6% range in 2006 but came under increased pressure in early 2007 Approx. 500 000 jobs per annum being created Modest improvement to manufacturing, growing 5% last year driven by buoyant domestic market 2006/07 ANNUAL REPORT

4. 4 ECONOMIC CONTEXT Aggregate exports grew 5,5% in real terms during 2006 However, key constraints emerging likely to dampen manufacturing & export growth:- Capacity Rising input costs Exchange Rate Interest Rates Investment remains robust with Gross Fixed Capital Formation across the economy forecast to grow by 13,3% in 2007 These conditions make a strong case for a robust industrial policy to support manufacturing, exports & employment It is therefore imperative for the dti & government to ensure the effective & sustained implementation of the National Industrial Policy Framework and key sector action plans 2006/07 ANNUAL REPORT

5. 5 STRATEGIC OBJECTIVES Promoting coordinated implementation of the accelerated and shared growth initiative Promoting direct investment and growth in the industrial and service economy, with particular focus on employment creation Raising the level of exports and promote equitable global trade Promoting broader participation, equity and redress in the economy; and Contributing to Africa's development and regional integration within the NEPAD framework 2006/07 ANNUAL REPORT

6. 6 ACHIEVEMENTS AND PROGRESS The department seeks to organise its work in terms of the following areas on which the annual report is based:- Industrial development Trade, investment and export Broadening participation Regulation Administration and coordination 2006/07 ANNUAL REPORT

7. 7 ACHIEVEMENTS AND PROGRESS Industrial Development Purpose: Provide leadership in the development of policies and strategies that promote competitiveness, enterprise development and the efficient administration of support measures. 2006/07 ANNUAL REPORT Progress Cabinet endorsement of National Industrial Policy Framework, followed by outline of the Industrial Policy Action Plan Finalisation of key sector strategies (eg chemicals & pharmaceuticals; automotives, metals & capital equipment; forestry, pulp, paper & furniture; & clothing & textiles) Implementation of key sector strategies (BPO&O, tourism) Implementation of the National Industrial Participation Programme (150 projects, US$7.5 billion 12,000 direct jobs)

8. 8 ACHIEVEMENTS AND PROGRESS Industrial Development 2006/07 ANNUAL REPORT Progress – cont. Key incentives have contributed to the manufacturing & services industries: SMEDP - 11,309 projects approved since 2000 with R12,7b in incentive value. Since April 2006 2,501 projects approved with incentive value of R2,96b Strategic Industrial Projects (SIP) – 45 approved projects in July 2005 when scheme expired. Estimated value of ongoing investment of R28,7b with estimated 8,446 direct & 104,545 indirect jobs being created. 22 of the approved projects already established with investment of R10b.

9. 9 ACHIEVEMENTS AND PROGRESS Industrial Development 2006/07 ANNUAL REPORT Progress – cont. Critical Infrastructure Programme (CIP) – 19 projects approved to date with qualifying investment of R32b & infrastructure investment of R9,2b Industrial Development Zones – attracting growing investor interest with commitments currently valued at R28b. Film & TV production – 31 productions approved since 2004 with R1,8b in local expenditure. In 2006/07 four local productions assisted to the value of R31,3m incl. Oscar winning Tsotsi Support for technology & innovation:- Support Programme for Industrial Innovation (SPII) – 85 projects endorsed to the value of R250m (18% female & 34% BEE)

10. 10 ACHIEVEMENTS AND PROGRESS Industrial Development 2006/07 ANNUAL REPORT Progress – cont. Technology & Human Resources for Industry Prgramme (THRIP) – assisted 746 researchers; 3,178 students & 371 industry partners (36% female & 55% BEE) The South African National Accreditation System (SANAS) & the South African Bureau of Standards are also major contributors to this area of the dept’s work Centres of Excellence established to increase manufacturing skills (i.e. Aerospace, Clothing & Textiles, Advanced Eng., etc.) Launched support measures for the development of the aerospace industry (eg. aerospace village) Comprehensive review of all major incentives undertaken to guide future support for Industrial Policy

11. 11 ACHIEVEMENTS AND PROGRESS Trade, Investment and Export Purpose: To promote economic development by working to build an equitable multilateral trading system that facilitates development; strengthening trade and investment links with key economies; and by fostering African development including through regional and continental integration and development co-operation in line with NEPAD 2006/07 ANNUAL REPORT Progress Leadership role in WTO Doha Round negotiations Key bilateral trade links and negotiations (EU, EFTA, USA, India, Brazil (and IBSA), China) EFTA agreement ratified by South Africa. Lesotho, Namibia & Swaziland to ratify agreement SACU-Mercusor PTA – major progress made & negotiations expected to be finalised in the current financial year.

12. 12 ACHIEVEMENTS AND PROGRESS Trade, Investment and Export 2006/07 ANNUAL REPORT Progress – cont. SACU-US – a Trade Investment & Development Co-operation Agreement proposed as framework for these relations Clothing and textile quotas against import surges from China instituted to provide relief to local manufacturers Ongoing negotiations to promote African and regional economic integration Bilateral Investment Treaties - signed with one country; negotiations concluded with 7 countries; ongoing negotiations with 3 countries; & planned negotiations with 9 countries Engaged in the set-up of new SACU institutional arrangements

13. 13 ACHIEVEMENTS AND PROGRESS Trade, Investment and Export 2006/07 ANNUAL REPORT Progress – cont. Ongoing export promotion activities on the basis of a revamped export strategy, including trade missions & national pavilions, identification & dissemination of trade leads & financial assistance to exhibitors & market researchers Wide range of investment promotion activities undertaken, including investment pavilions & seminars; ministerial & presidential missions; international investment council meetings; investment conferences & sector specific briefs

14. 14 ACHIEVEMENTS AND PROGRESS Trade, Investment and Export 2006/07 ANNUAL REPORT Progress – cont. Networks established with Provincial Investment Agencies, with meetings every quarter Joint collaboration and co-ordination with Provinces on investment & international projects EMIA scheme hosted workshops in all provinces Provinces encouraged to participate in all missions & pavilions locally & internationally & access funding through the EMIA scheme 5 export ready seminars attended by 410 SMEs

15. 15 ACHIEVEMENTS AND PROGRESS Broadening Participation Purpose: Lead in the development of policies and strategies that promote enterprise growth, empowerment and equity in the economy 2006/07 ANNUAL REPORT Progress Support for small enterprise development through increased financing of SMEs by Khula, NEF & IDC and the rollout of SEDA & SAMAF:-  47 SEDA offices  103 Enterprise Information Centres  18 Incubation Centres  13 Retail finance partners through which Khula lends  13 Khula Mentorship offices  8 SA Micro finance Apex Fund (SAMAF) Provincial offices

16. 16 ACHIEVEMENTS AND PROGRESS Broadening Participation Purpose: Lead in the development of policies and strategies that promote enterprise growth, empowerment and equity in the economy 2006/07 ANNUAL REPORT Progress Codes of Good Practice for BBBEE adopted by Cabinet, gazetted in February 2007 & under implementation (incl. Sector Charters) Regional Industrial Development work being linked to the National Industrial Policy Framework & Local Economic Development work BEE and women empowerment also supported by key incentive schemes:- BBSP, SPII & THRIP

17. 17 ACHIEVEMENTS AND PROGRESS Broadening Participation 2006/07 ANNUAL REPORT Progress – cont. Training workshops on women empowerment and access to finance through SAWEN Cooperative legislation developed and support to cooperatives provided – 4 large projects totaling R9m & 16 small projects totaling R3,78m Products for targeted procurement from SMEs by government departments identified Publications, road shows and imbizo’s to promote awareness of the dti’s services and offerings

18. 18 ACHIEVEMENTS AND PROGRESS Regulation Purpose: Develop and implement coherent, predictable and transparent regulatory solutions that facilitate easy access to redress and efficient regulatory services for economic citizens. 2006/07 ANNUAL REPORT Progress National Credit Act proclaimed and Regulator established Companies Bill published for public comment Consumer Protection Bill published for public comment Competition Policy Review completed & drafting of amendments to Act started Corporate laws Amendment Bill introduced in 2006 Processed the FIFA request for trademark protection & issued public notice

19. 19 ACHIEVEMENTS AND PROGRESS Regulation 2006/07 ANNUAL REPORT Progress – cont. Legislation passed: Measurement Units & Measurements Standards Act (Act 18 of 2006) Accreditation for Conformity Assessment, Calibration & Good Laboratory Practice Act (Act 19 of 2006) Amendments to the Close Corporations Act, 1984 Subordinate legislation introduced: Regulations under the Cooperatives Act, 2005 Regulations under the National Credit Act, 2006 Amendments to regulations made under Legal Metrology Act 1973

20. 20 ACHIEVEMENTS AND PROGRESS Regulation Work undertaken on the following legislation for introduction in 2007/08 2006/07 ANNUAL REPORT The Consumer Protection Bill Intellectual Property Law Amendment Bill Competition Amendment Bill Companies Bill National Gambling Amendment Bill National Regulator for Compulsory Specifications Bill The Standards Bill The Lotteries Amendment Bill

21. 21 ACHIEVEMENTS AND PROGRESS Regulation 2006/07 ANNUAL REPORT Progress Quarterly meetings of the National Consumer Protection Forum, which include Provincial offices of consumer protection, to co-ordinate consumer protection activities. Capacity building programmes in alternative dispute resolution arranged by Office of Consumer Protection & to be rolled out to Provinces Liquor Awareness Campaign is a partnership between the National Liquor Authority, provinces, SAPS, business and civil society. Campaign encourages responsible trading and drinking. Bi-annual meetings of the National Gambling Policy Council and the National Liquor Policy Council to advise the Minister on policy issues

22. 22 ACHIEVEMENTS AND PROGRESS Administration and co-ordination Purpose: Ensure efficient and effective coordination and systems within the dti and with stakeholders & partners 2006/07 ANNUAL REPORT Progress HR is a critical challenge & ongoing efforts made to fill key vacancies, incl. use of specialized recruitment agencies 213 vacancies were filled out of 323 in the year to 31 March 2007, & the vacancy rate stood at 27% An integrated HRD strategy under development, covering recruitment, retention & training Greater alignment, co-operation & co-ordination with the dti agencies (COTII), including leveraging capacity in agencies (eg. IDC )

23. 23 ACHIEVEMENTS AND PROGRESS Administration and co-ordination 2006/07 ANNUAL REPORT Progress – cont. Strong Corporate Governance maintained Unqualified dti audits over several years & unqualified COTII audits in 2006/07, except for two agencies All COTII agencies tabled annual reports timeously Key Boards of Directors & CEO appointments made Estate Agency Affairs Board (EAAB) Small Enterprise Development Agency (SEDA) South African Bureau of Standards (SABS) SABS Trade Metrology Advisory Committee (TMAC) National Credit Regulator (NCR) International Trade Administration Commission of SA (ITAC)

24. 24 ACHIEVEMENTS AND PROGRESS Administration and co-ordination 2006/07 ANNUAL REPORT Progress – cont. South African Micro-finance Apex Fund (SAMAF) Companies & Intellectual Property Registration Office (CIPRO) National Metrology Institute of South Africa (NMISA) Commissioner of the Competition Commission Effective & efficient use of allocated funds

25. 25 Six year comparison of budget vs expenditure 2006/07 ANNUAL REPORT

26. 26 ANALYSIS 2006/07 UNDER EXPENDITURE Under-expenditure in 2006/07 occurred in mainly in the following areas for which roll-overs have been approved: 2006/07 ANNUAL REPORT

27. 27 ANALYSIS OF CURRENT MTEF On average, the allocation of the budget over the MTEF period is as follows: 27% to agencies 53% to incentive payments 10% to compensation, after deducting the budget for agencies (8% of total budget) 12% for goods and services, of which 7% is already committed 2006/07 ANNUAL REPORT

28. 28 ANALYSIS OF CURRENT MTEF 2006/07 ANNUAL REPORT

29. 29 CHALLENGES In conclusion 2006/07 ANNUAL REPORT Overall we have achieved our targets for the reporting period Challenge is to enhance impact of the department through:- Ensuring effective programme & project performance Stronger strategic & operational management Greater integration of work, including with agencies Adequate financial resources for extensive dti programmes HR challenge of recruitment, retention and development Improved cluster co-ordination

30. 30 THANK YOU & QUESTIONS