Posted: May 20, 2022
Fellow South Africans.
When we presented the Budget Vote last year, 2021, our key running theme was our Economy Resilience. At the time, we were on the second year of COVID-19 adjusted lockdowns, having survived the 2020 hard lockdown that saw our economy shutting down, whilst globally, confronted with massive supply chain disruptions. But the robustness of our economic base, our sophisticated financial institutions and other advanced sectors of our economy, demonstrated resilience in the face of shocks and tailspins.
The strength and stubbornness of our economy has been further demonstrated, notwithstanding the massive joblessness it has brought and the weakening of corporate balance sheets, by the survival and solid response to July Unrest of last year, the current East European War and the recent coastal floods.
House chairperson, In underlining the above resilience, we are not oversimplifying the negative economic blows that we are receiving, nor our covering ourselves in glory. As a result of all the above challenges to the economy, we are confronted with a sustained weak growth, extreme fiscal pressures, deepening poverty and a real threat of food shortages and the advent of rising food prices because of the Russian/Ukrainian conflict. This has prompted a new thinking in us, including what Minister Patel alluded on, with regards to the positioning of South Africa for multinationals Regional Hubs which is going to be a new response to global supply chains risk-proofing.
Honourable members, If there is one thing that is urgent and mostly required in manifold from our side, as government, to shoulder up this small yet sophisticated economy to grow stronger, is building a capable state. A capable state plans extensively, coordinates and also build its institutions that outlives every political leadership elected in public offices. Such a state drives decisive developmental projects even in risk areas that the private sector cannot dare going. Such a state, where it mobilizes businesses in risk areas, it develops a mechanism to de-risk the private investments for the greater good of business and developmental objectives. But a capable state must enjoy partnership with business, and drive trade and industrialization policy for growth. Such a state should be incorruptible, with its institutions staffed with sound technical know-how and patriotism. Minister Patel has spoken extensively about our path on capable state anchored on the District Development Model.
Spatial Industrial Development Approach.
House Chairperson, for sometime thedtic has been implementing the Spatial Industrial Development (SID). This has been driven by the designation and the establishments of the Special Economic Zones and Industrial Parks in various Cities and regions across the country, to build regional economies has been unfolding. But this approach has been limited to those Metros and Districts with Industrial Parks legacy infrastructure, only for us to revitalise and attract investors. For SEZs, few regions had a capacity to apply for designations; and this meant the rest of other districts in the 44 of them had no spatial industrial plan and development. The new approach seek to bog down all 44 Districts and 8 metros, with Provincial government anchored by the dtic to plan and coordinate industrial hubs of different shapes.
However, we have since realised that – for this amount of work to succeed – all three spheres of government must get involved. In that context, we seek to impose mechanisms of a capable state in the building of economy in all three spheres of government through this new approach to play a role. District Development Model approach in the spatial economic development will see thedtic planning and putting resources per each district municipality, with a provincial government also putting resources in establishing economic hubs, economic zones and industrial parks.
District municipalities will play a pivotal role in driving the economic growth, which will be a new mandate to Districts. The task of job creation in the economy must be seen as a collective responsibility of all spheres of government. District Municipal LEDs working with National government economic cluster Departments and provincial government involved in the economic development, will now be entrenched in this approach that the dtic brings.
At the centre of catalysing industrial hubs, Parks and Special Zones, is the drive to fast tract the level of Localisation as a fundamental policy of industrialization and resilient national economy, that is self-sufficient and strong. Our excessive exposure to imports has exposed us during the pandemic when global supply chains were disrupted.
Presidential Investments Pledges.
Honourable members, It is interesting to note that what started as a far-fetched dream from President Ramaphosa to launch an investment drive has already produced commitments of more than 95% targets, despite COVID-19 fears. This achievement translates to R1.14 trillion of the R1.2 trillion overall target by the President when he announced this initiative in 2018.
Recently, we opened an Ireland multinational ingredients company in Hammersdale, Durban. The Kerry Group invested R650 million and will play a significant role in the food/ingredients sector in the continent as a whole, creating more jobs directly and through SMMEs contracting.
Master Plans Engagements.
One of the key pillars of re-industrialization is the building of economic social compacts. With the experience of the Automotive, Sugar, Clothing, Textile, Leather and Shoes Masterplan, Steel and Furniture Masterplans, we can deduce that there is no stakeholder in all economic sectors that is not committed to the re-industrialization agenda. The tripartite engagement between government, business and organized labour, often gets intense on the terms of the ultimate goal of the Plan and how to reach there in terms of targets, but ultimately all parties emerge as committed to the implementation. Whilst COVID environment created some slow pace in steaming ahead with implementing some of the targets in the Automotive sector, but sugarcane sector is already implementing its elements, working with stakeholder partners.
In the Steel Masterplan, the dtic has supported 11 projects in the value chain resulting in disbursements to the value of R209 Million; R1.3 billion Investments leveraged and 2 439 jobs supported.
In the Poultry Masterplan, 10 Black contract growers have been established leveraging investment of R336 million, with 122 new jobs created.
In the Sugar Masterplan, Shoprite is partnering with the SA Cane Growers to promote the sale of locally produced sugar in its 1,189 stores.
In the Autos Masterplan, the Automotive Industry Transformation Fund is supporting six companies with funding of R82 million but more importantly, access to orders of R1.8 billion.
We are generally encouraged by the collegiality and commitment in all sectors that we have achieved the signings of the Masterplans, after extensive engagements. We see no retreat and backhand outmanoeuvring by some stakeholders.
Social Employment Fund.
Following the thedtic engagement with the Social and Solidarity Economic Policy at the back of COVID-19 lockdowns. A proposition of the establishment of the Social Employment Fund was concluded to be driven by the Presidency through Strategic Implementing Partners (SIPs) working with IDC. An amount of R800 million for the first phase has been committed for various infrastructure projects.