Patel: jump starting the economy

ADDRESS BY THE MINISTER OF ECONOMIC DEVELOPMENT, MR EBRAHIM PATEL, IN THE NATIONAL COUNCIL OF PROVINCES, 16 MAY 2013.

Thank you for the opportunity to introduce this Policy Debate on the Economic Development Budget Vote in this august house. It is appropriate that I do it with Minister Davies, whose department has been a great partner in the Economic Cluster.

In this past year, we have focused on creating conditions for greater job creation, stronger long term growth and countercyclical economic interventions to address the less favourable global environment. Cabinet adopted the National Development Plan as the overall country vision that also integrates the various elements of policy with improving the capacity of the state; and the New Growth Path as government’s economic strategy, with IPAP as the manufacturing driver and the Infrastructure Plan as the infrastructure driver.

In March this year, government hosted the BRICS Summit of heads of state from China, Russia, India and Brazil, and we used it to strengthen our economic relations. Immediately after the Summit, under the leadership of the President, the BRICS leaders met with more than 15 other African heads of state to discuss ways of strengthening partnership, integration and industrialisation. The value of this relationship is demonstrated in the growing trade and investment links between ourselves, and between SA and the rest of the African continent.

We made significant progress with the rollout of the National Infrastructure Plan, with construction activities now taking place in all nine provinces. The best performing provinces on infrastructure spending for the first three quarters to December 2012 are KZN and Gauteng, measured by size of spend and level of budget used.

We improved the level of industrial funding that the IDC is making available to support local factories, farms and mines.

The new small business finance agency – sefa – was launched and has bedded down its systems, with a large increase in the level of funding it has approved in this past year.

Competition policy has focussed on addressing the scandal of price fixing and collusion between construction companies in past infrastructure projects.

But above all, our focus has been on job creation.

Last week, StatsSA released its Quarterly Labour Force Survey which shows on aggregate that 44 000 net new jobs were created in South Africa over the first three months of this year, and 199 000 over the 12 months ending in March this year.

Honourable Members, the provincial breakdown of the job creation over the past 12 months show that employment was neutral in just one province, it grew in seven provinces and jobs were lost in one province.

The biggest jobs gains were in Mpumalanga and Limpopo, both of which grew by 57 000 jobs each. These two provinces are also the location of two big projects of the National Infrastructure Plan, namely the building of the Medupi and the Kusile coal-fired power stations.

The only province which lost jobs in the year ending March 2013 is the Western Cape, which lost 37 000 jobs.

If we take a longer view, namely the state of jobs since the adoption of the New Growth Path in 2010, the economy created about 650 000 new jobs, with growth in all provinces except Free State, which lost jobs over this period.

While we welcome the job creation over the 12 months and since 2010, we need to do even better in order to provide jobs to the large number of young people entering the labour market every year. Unemployment is the most serious economic challenge of our time, with its twins – poverty and inequality.

To respond to this challenge, we are fast-tracking our efforts.

These include using the New Growth Path framework to strengthen the focus on the industrial sectors of the economy. The IDC has scaled up its levels of industrial funding, committing R27bn over the past two years, an increase of 48% compared to the previous two years. Sefa and the IDC will together make close to R3 billion available for youth employment and youth entrepreneurship over the next five years.

The IDC has been directed to expand its development impact, including by its focus on poorer provinces, on youth employment and above all on job creation.

The results are showing a positive trendline on investment, on jobs and on development. They are complemented by the rollout of the National Infrastructure Plan, our 20 year, R4 trillion initiative that is building the foundations for long term growth and development. In addition to this, we are developing partnerships with business, organised labour and community organisations, on skills, the green economy, basic education, localisation, and youth employment. I am tabling a Report with this august House, setting out the progress we are making with the Accords. The efforts draw on and support the Industrial Policy Action Plan that is overseen by my colleague, Minister Rob Davies.

Our initiatives cover all provinces and I can in the available time simply lift a few examples.

In the E Cape, we are a partner in efforts to rebuild the foundations of its manufacturing and agro-processing base, including through infrastructure development. For example: the IDC is funding a number of green economy and manufacturing projects including the manufacturing of Solar PV panels that are able to generate 85MW of electricity per annum at the East London IDZ and wind turbines in the Coega IDZ.

In the Northern Cape, we co-fund the construction of the world’s largest manganese sinter plant and we financially support the expansion of a  fruit production and exporting facility that will over time create 1100 new jobs.

In the Western Cape, national government’s small business funding is being expanded, increasing by 174% in the last year to more than R68 million, and of course the new Film Studio is co-funded by the IDC, who has also been approached to fund the construction of a water tank facility and beach reservoir at the studio which would enable them to attract productions requiring ocean scenes.

In Mpumalanga EDD is working with a large foreign investor who is building a state of the art oilseed crushing facility in Standerton that can support black farmers to provide soya beans to the plant. Construction of the R118 billion Kusile Coal-Fired Power Station in Mpumalanga has been accelerated. The project is currently employing 12 700 people and is set to employ an additional 3000 people over the next two years.

KwaZulu-Natal is benefiting with the funding of a new factory in Durban for manufacturing plastic moulded components for motor vehicles and the support given to the local manufacturing of minibus taxis.

Limpopo is the site of large construction, in what we call SIP 1 of the National Infrastructure Plan, and it includes the De Hoop Dam and the Medupe Power Station. Sefa has provided funding, for example to a young entrepreneur who manufactures conveyor belt components for the mines.

In Gauteng, we launched the Youth Employment Accord on 18 April this year, to bring together efforts across the private and public sectors to provide better skills, work exposure and jobs to young people.

In Free State, Sefa has lent R20 million to a woman-owned and -run financial intermediary. This business in turn provides bridging finance, working capital and asset finance to small and micro businesses across the province, including farms buying new equipment, small construction firms building roads and entrepreneurs buying a guest house.

In North West, the Department supported the Presidency and worked closely with social partners last year to defuse the platinum strike, through a Social Accord that contained a commitment to return to work, to condemn violence in industrial relations and to address the challenges of human settlements and collective bargaining in the platinum sector.

In the next ten months, we will do 18 large roadshows to provinces, to showcase the new products available in government and to help communities to connect local entrepreneurship with national resources.

I wish to thank Members of the Select Committee as well as Economic Development MECs and the leadership of Salga, who are our partners in driving jobs, industrialisation and development.

I thank you.

 

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