Strategic Plan and Annual Performance Plan Presentation to Select Committee 04 May 2016 1

Presentation outline Purpose of the presentation Strategic context Strategic objectives Strategic outcomes 2016/17 priorities Resources Strategy roadmap

Purpose of the presentation The purpose of the presentation is to brief the Portfolio Committee on : The strategic context within which the Department will implement its plans The changes that have be introduced into the plans The strategic outcomes that will be pursued by the Department over the MTSF period Define the Strategic objectives of the Department Outline the 2016/17 priorities for the Department Resourcing of the mandate The roadmap for the execution of the Strategy

Strategic context: Economic outlook The current State of the economy presents a major challenge that needs to be actively addressed by the State The poor performance of the global economy has exposed weaknesses in the domestic economy: Greater dependency on the commodities that are vulnerable to changes in the global economy Level of concentration in the economy that undermines new entrants Infrastructure network that is geared for commodities and not support regional integration and industrialisation Limited participation of the larger part of society which limits the vicious cycle of sustained growth 1

Strategic context: Investments in the economy Investments in the economy has remained below the National Development Plan Target The productive sectors of the economy has been worst affected with Investments in mining and manufacturing leveling off This present a major challenge for the economy and the investment driven growth approach presented by Government in the New Growth Path and National Development Plan This is requiring Government and its institutions to play a leading role in the short to the medium term 1

Strategic context: Investments in the economy In 2005 investment by the public sector amounted to just over R80 bn per annum Over a period of 10 years this has increased to R261 bn While private sector investment still represents a greater proportion of total investment in the economy: In 2013 private sector invested R412 bn but this has declined between 2014 and 2015 and falling below the R400 bn level Private sector investments still dominated by Mining and financial services Investment by Manufacturing remains weak

The spatial economy The spatial distribution of economic activities has not significantly changed since 1994 Greater portion of the RSA economy still concentrated in Gauteng in particular manufacturing and financial services Provinces such as Northern Cape and Free State have lowest contribution This distribution needs to be changed and support must be extended to these provinces

Growth by Province The collapse in the commodity prices had a devastating impact on commodity dependent provinces such as North West and being the only province experiencing a contraction in economic activities The implementation of the Government’s Renewable Energy Programme had profound impact on Northern Cape limiting the impact of the collapse in steel prices and production

Economic context: Implications on Department’s Plan The implementation of Government Plans will be more challenging SOCs will be required to invest more optimally and support the diversification of the South African economy SOCs must support recovery of other sectors of the economy New opportunities must be explored and actively pursued There must be greater coherence in the different spheres of Government

Strategic objectives: What has changed? Greater emphasis on supporting the re-industrialisation programme of Government Strengthening intergovernmental relations Greater joint planning and execution between the Department and its Portfolio of SOCs Active engagement with society to make SOC and Department more accountable to the public as part of building confidence in the State and its institutions Pursuing fewer high impact targets: Greater influence in the transformation of the economy Capacity building programmes to support other spheres of Government

Strategic outcomes i Core Outcomes ii Enabling Financial Sustainability Commercially viable operations Capital projects delivery Enabling Strong Shareholder Key strategic outcomes Interventions within this segment are intended to resolve core capacity challenges, particular within Transnet and Eskom*, which directly impacts MTSF targets Interventions that enable the institutional model to perform effectively, whilst supporting core outcomes as well and support greater collaboration i ii Description of outcome SOCs are entirely capable of funding their own operations, without requiring State intervention Focus can be placed on running of efficient operations as the financial pressure has been alleviated Alignment and efficiency across institutional model Operations that are efficient and effective such that desired operational target levels are achieved, allowing for expansion of operational capability and capacity to occur Capital project targets are met, in line with strategic and policy expectations, thereby enabling the rest of the economy to prosper, driving up investment, GDP and exports Stakeholders are aligned across the institutional model, ensuring a collaborative and synergistic approach to delivery of policy Improved ability to fast-track major decisions Outreach programme (provincial, local and international) DPE’s oversight of SOCs is strengthened, allowing it to play a more integral role and have a greater say in decisions going forward DPE is internally, a robust and flexible organisation, that acts as the benchmark for its peers

Strategic outcomes .. Transfor Mation Outcomes Industrialisation Skills development Enterprise development Key strategic outcomes Interventions within this segment are intended to fast track the restructuring of the economy with focus on transformation and industrialisation iv Description of outcome Increasing the local content in the build programme in line with IPAP Defining new initiatives that will improve industrial base and accelerate industrialisation Accelerate the implementation of the current skills development programme Engage on financing options Identifying opportunities that will increase participation of enterprises owned by the previously disadvantaged Explore set asides in partnership with DSBD

Strategic objectives to be jointly pursued with SOCs

Strategic objectives to be jointly pursued with SOCs..

Departmental 2016/17 Priorities Finalisation of the SOC Shareholder Policy Concept Paper Exploring funding options for SOCs Development of the Intergovernmental relations programme and formation of strategic partnership with Provincial Economic Development Departments Support the implementation of the Black Industrialists programme Optimisation of SOCs’ Skills Development Programme focused on scarce and critical skills Implementation of interventions to strengthen financial positions of SOCs Position SOCs to be able to pursue African markets

Resourcing of the Department 1

Strategy roadmap Solidify Strengthen Stabilise 36 – 60 months Stabilisation: Continue exploring programmes that will improve stability of the SOCs and contribute to economic development Building for success: DPE repositions itself and its SOCs onto a growth trajectory through delivery of projects positively impacting the economy and greater partnerships Enhancing our value: DPE recognises its original purpose as a Shareholder of excellence of SOCs through delivery of projects that ensure overarching targets are met, optimised shareholder function and greater contribution to economic developemnt 0 – 12 months 12 – 36 months 36 – 60 months

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