1. Presentation to the Standing Committee on Appropriations
Date : 11 August 2011
Presented by: Director-General
Mr Lionel October

2. Introduction
The information presented is based on the 2010/11 Audited Annual Financial Statements
The Auditor General SA expressed an unqualified audit opinion on the 201/11 Annual Financial Statements

3. Overview of expenditure
The budget allocation for the 2010/11 financial year was R6,194,208 million as compared to R 6,402,076 million in 2009/10. The expenditure for 2010/11 was R5,796,741 million, i.e. 93,6% of the budget, and in 2009/10, it stood at 97,6 %, i.e. R 6,237,955 million.
This spending pattern should be considered in the context of the departmental cost drivers, comprising mainly incentive schemes and transfer payments. Approximately 58% of the expenditure consisted of incentives and 22% of transfers to the departmental agencies. The remaining funds were utilised for operational expenses.
The under spending was mainly in the division responsible for Incentive Administration, viz, The Enterprise Organisation division, by 4.09%, which is mainly attributable to the Automotive Investment Scheme (AIS).

4. Budget vs. expenditure for the 2010/11 financial year – per programme
Unspent as % of final appropriation
Final Appropriation
Actual Expenditure
Variance
Expenditure as % of final appropriation
R’000
Administration
443,251
435,815
7,436
93.3%
0.12%
International Trade and Economic Development
125,088
106,949
18,139
87.0%
0.29%
Empowerment & Enterprise Development
814,034
801,173
12,861
99.6%
0.21%
Industrial Development
1,156,961
1,142,033
14,928
94.38%
0.24%
Consumer and Corporate Regulation
195,531
145,021
50,510
96.13%
0.82%
The Enterprise Organisation
3,046,652
2,792,994
253,658
82.37%
4.09%
Trade and Investment South Africa
353,476
328,582
24,894
99.94%
0.40%
Communication & Marketing
59,215
44,174
15,041
100%
Total
6,194,208
5,796,741
397,467
6.42%

5. Budget vs. expenditure for the 2010/11 financial year – economic classification
Unspent as % of final appropriation
Final Appropriation
Actual Expenditure
Variance
Expenditure as % of final appropriation
R’000
Compensation of employees
551,748
514,935
36,813
93.3%
0.59%
Goods and services
545,826
474,830
70,996
87.0%
1.15%
Interest and rent on land
276
275 1
99.6% 0%
Departmental agencies and accounts
872,762
838,980
33,782
96.1%
0.55%
Universities & technikons
16,298
14,793
1,505
90.8%
0.02%
Foreign governments and international organisations
39,084
36,642
2,442
93.8%
0.04%
Public corporations and private enterprises
4,105,170
3,859,334
245,836
94.0%
3.97%
Non-profit institutions
37,800 -
100%
Households
2,754
1,657
1,097
60.2%
Payment for capital assets
20,183
15,189
4,994
75.26%
0.08%
Payment for financial assets
2,307
2,306
99.9%
Total
6,194,208
5,796,741
397,467
6.42%

6. Budget vs. expenditure for the 2010/11 financial year – economic classification
Unspent as % of final appropriation
Final Appropriation
Actual Expenditure
Variance
Expenditure as % of final appropriation
R’000
Compensation of Employees
551,748
514,935
36,813
93.3%
0.59%
Goods & Services
545,826
474,830
70,996
87.0%
1.15%
Interest and rent on land
276
275 1
99.6% 0%
Transfers to:
5,073,868
4,789,206
284,662
94.38%
4.60%
Departmental agencies
872,762
838,980
33,782
96.13%
0.55%
Manufacturing incentives,
including:
1,389,176
1,144,261
244,915
82.37%
3.95%
**Automotive Production & Development Programme
538,000
294,252
243,748
54.69%
3.94%
Programme payments
1,216,984
1,216,225
759
99.94%
0.01%
Infrastructure incentives
1,224,374
1,224,337 37
100%
Export Incentives
274,636
274,511
125
99.95%
Other
95,936
90,892
5,044
94.74%
0.08%
Payments for capital assets
20,183
15,189
4,994
75.26%
Payment for financial assets
2,307
2,306
0%%
Total
6,194,208
5,796,741
397,467
6.42%
6.42
** Amounts in respect of AIS are already included under the manufacturing incentives

7. Reasons for under spending
Item
Amount unspent
Unspent as % of final appropriation
Reasons
R’000
Automotive Production &
Development Programme
243,748
3.94%
The Automotive Investment Scheme (AIS) was launched in May The AIS Adjudication Committee was established in December 2010 and the first meeting was held on 6 December Projects have been approved by the Adjudication Committee with the total concession amount of R1,861 billion as on 31 March R293,918 million was paid during the first quarter of the new financial year.
Goods & Services
70,996
1.15%
Outstanding foreign mission accounts from DIRCO. The account for March 2011 was only received on 19 May 2011 and charged against the budget for 2011/12
Postponement of the SACU Tripartite Summit from February to June 2011
Payments for funds earmarked for variation orders for a building currently occupied by CIPC could not materialise pending their move to new premises
Cost savings initiatives on venues and facilities as well as on travel contributed to the saving
Compensation of Employees
36,813
0.59%
Vacancies
Departmental agencies
33,782
0.55%
Delays in the establishment of the National Consumer Commission and the Companies and Intellectual Property Commission.

8. Vacancy report Baseline vacancies as at 01.04.11
Baseline vacancy reduction
Baseline vacancies as at
253
Baseline vacancy rate as at
18.2%
Baseline vacancies as at
184
Baseline vacancy rate as at
13.2%
Recruitment efforts
2010/11
Quarter 4
( – )
Quarters 1 - 4
2011/12
Quarter 1
( – )
Posts filled through appointments 19
138 42
Posts filled through promotions 29 97 27
Total recruitment efforts * 48
235 69
* Excludes posts additional to the establishment

9. Interventions to ensure reduction of vacancy rate:
Clean up of establishment to identify redundant posts to be redesigned in order to create posts in line with new priorities, eg IPAP2. Resulted in old untriggered vacancies being abolished and new vacancies being created and triggered for filling.
Directives were issued in terms of turn around times for advertising and filling of positions to be concluded in a three month period. Non compliance resulting in posts being abolished or redesigned for new posts needed.
Improved monitoring and reporting on vacancies through focus session held to review progress made per position. Reporting done monthly to Chief Operating Officers, Deputy Director-Generals and Director-General.
Improvement of recruitment turn around times through:
Providing additional capacity to Recruitment Office
Outsourcing of recruitment processes

10. Summary of key achievements for the 2010/11 Financial Year

11. Key Achievements for 2010/11 FY
Industrial Development: Industrial financing
Launched the 12i Tax allowance for investment in new manufacturing assets and Training of staff - 2 applications received
Automotive Investment Scheme (AIS) launched and finalised leading to investment commitments of R13bn from assemblers and component suppliers, supporting 24,000 jobs in the sector. Large increases in levels of volumes and localisation
Rollout of the Clothing Textile Competitive Programme (CTCP) and Production Incentive (PI) with 106 and 94 companies benefiting under the CTCP and PI respectively
R40 million investments made and 950 jobs created. R42 million new investment commitments approved linked to 806 jobs. 3,400 are currently being trained under the Monyetla II Programme – 70% guaranteed employment by BPO consortium
Improved the performance of incentive programmes by submitting amended guidelines for BPS & EIP

12. Key Achievements for 2010/11 FY
Industrial Development
Procurement
Agreement by National Treasury, Economic Development Department and the dti to process amendments to PPPFA regulations to designate sectors for local production and alignment with B-BBEE codes. Amendments await promulgation by National Treasury
the dti has developed a sector designation methodology and is compiling necessary research to designate a range of sectors
Trade
Early warning system developed by South African Bureau of Standards (SABS) identifying technical barriers to trade for exporters launched and distributed to exporters on a monthly basis
Africa Regional Development
Developed concept note on areas of cooperation towards a SACU regional industrial policy. This was warmly received by SACU member states. Engagements are currently underway to finalise joint projects
Investment announcements of R13 billion from OEMs amounted to R13 demonstrate massive support for the new government programme and for South Africa as an automotive manufacturing destination
R9 billion investment commitments by Ford, General Motors, Volkswagen (VW) and the Bavarian Motor Works (BMW)
A further R4 billion in assembly has been announced in the automotives components industry; which will support over direct jobs in vehicle assembly and a further direct jobs in components
The VWSA announcement means an injection of R560m into its operations; which may double production from to units in Local content on Polo and Polo Vivo models is currently 40% and VWSA has committed to reach 70% local content by the end of 2010

13. THANK YOU