Posted: May 21, 2015
The Budget Vote address delivered to the National assembly
|Chairperson of the session;
Members of the National Assembly;
DG October and officials of the Department of Trade and Industry, and the Council of Trade and Industry Institutions (COTII);
Leaders of government business and Labour
Ladies and Gentlemen
1. On the occasion of delivering the budget vote in July 2014, I had mentioned that our central task in the coming year would be to give life to the injunction made by the President that we need to foster a radical socio-economic transformation agenda for the benefit of the people as a whole.
2. Chairperson, In April this year we launched an integrated system at CIPC for company Registration for R125 per registration, free BEE Certificate for Exempted Micro Enterprises (EME R10m turnover) and the second phase will be for the Qualifying Small Enterprise (QSE R10-R50M turnover), which will be accessed through Self Service Terminals throughout the Country.
3. In partnership with the department of Home Affairs and Commissioner SARS we are using combined information systems in the registration process. Using Biometrics, we can now verify and register a company on the spot and issue you with a verified BEE certificate issued including tax clearance certificate in the shortest possible time if the books are in order.
4. Through this initiative we stepped up efforts to root-out fraud and corruption within the BEE verification sector.
5. During our budget last year we announced reforms in the film sector to ensure inclusion of emerging black film makers. I¡¦m happy to report that in September last year we launched the South African Emerging Black Film Makers Incentive, which now benefit many black film makers.
6. The scheme provides financial assistance to qualifying applicants in a form of a rebate from R1 million and above production budget and 50% for the first 6 million of the qualifying SA production.
7. Subsequently the dti has supported 105 companies to participate in over 19 International Markets at the cost of R30million with the return on investment of R1billion into SA economy (Kalarahi Pictures as a local beneficiary).
8. Last year we undertook to reform the practice of constituting delegations to international trade relations trips. We decided to open up space for new players into the Investment and Trade delegation and to date over 200 new companies have been exposed to different foreign markets.
9. I led delegations to various parts of the world including amongst others China, India, Iran, France, Algeria, Zimbabwe, and Botswana. Many companies who had an opportunity for the first time valued this new approach as they got to interface directly with the dynamics of international trade.
10. Honorable Chairperson, we revealed last year that the dti would embark on a systematic and deliberate effort to increase the presence of Black Industrialists in our economy. We said these efforts would be consolidated under the umbrella of the Black Industrialist Programme.
11. In this regard, we said the concept of black industrialists refers to black people directly involved in the origination, creation, a minimum 51% ownership, management and operation of industrial enterprises that derive value from the production of goods and services at a large scale; acting to unlock the productive potential of our country’s productive assets for massive employment locally.
12. This is premised from the observation that black entrepreneurs and industrialists cannot emerge and play a more meaningful role in the economy without special support measures dedicated exclusively to them. Feedback from some of our DFIs suggests that black owned manufacturing entities have substantially less equity investment. They also have fewer loans at start up and for their growth than others.
13. They have limited capacity to finance their industrial ambitions and have difficulty accessing private credit without productive assets to use as collateral.
14. They are likely to pay higher interest rates on loans than their peers. This is added to the likelihood of being denied loans by funding institutions. It is in this context that we intend on using this Black Industrialists scheme to provide various support mechanisms to transcend these barriers to entry and growth
15. In response to this industrial limitation, we appointed a Black industrialists Advisory Panel; comprising of experts from different sectors, to help us conceive a policy and implementation framework.
16. This work has led to the development of a policy framework for the Black Industrialists. Amongst other things this draft policy proposes a combination of financial and non-financial support mechanisms intended to boost the industrial asset share of Black industrialists. These broadly include:
17. Deriving from the definition of black industrialists I gave earlier, we have generated criteria for qualifying enterprises. The central properties to this criteria is 51% black ownership, majority black management and control of the enterprise, production of products with wide use in specified sectors of the economy.
18. We have prepared and will present a consolidated policy implementation plan before Cabinet. This will assist us to release, for public engagement, a final policy action plan from government to the people.
19. As a prime ethical principle, we will actively apply a transparency in the application and admissions process for benefitting in the Black Industrialists programme. Our considerations include the publication in newspapers and our website of all applying companies as well as the successful applicants.
20. We have 40 applicants who volunteered as soon as we announced the idea of the BI programme. They have not undergone any adjudication process but will be processed alongside all other applicants when the implementation starts.
21. As part of our implementation plan, we want to have processed and accredited fifty beneficiaries under the scheme by end of the 2015.
22. This will increase to hundred at the end of the second year. This is in view of our three year medium term objective of assisting 100 Black industrialists. The third year will be used for preliminary assessment of the implementation and what reinforcement mechanisms are required as we leap into the future
23. As the dti we have set-aside R1,5 billion in investment into NEF to enable it to secure cheaper loans, SEFA R100million followed by IDC R23 billion, DBSA R2 Billion and the rest will still come after the policy has been formally adopted by Cabinet.
24. Various private financial institutions have also expressed willingness to partner with us as government on this programme. These include Standard Bank, FNB and to a certain extent BIDVEST. We invite other private financial institutions to join us in this transformative initiative.
25. Government has committed its public procurement as one of the instruments to be utilized in advancing this inclusive objective of transformation. This is implemented through the set-asides for targeted procurement from SMMEs and black owned companies.
Current government threshold on set-asides is 30%. The objective is to institutionalize a 70% procurement target from emerging business.
26. In this regard, we signed a MoU with SAA on the 18 May 2015 to set-aside R10 billion from their public procurement for Black Entrepreneurs and Industrialists within the Airline. We have been engaging Eskom, Transnet, Prasa and Denel in pursuit of a similar arrangement. We are satisfied with the progress so far and the rest of the SOE will be engaged.
27. The Prasa/Gibela Consortium (R51billion) provides an opportunity to create Industrial Supplier Parks to support this huge investment activity in Nigel.
28. We are engaging the department of Water and Sanitation on the possible development of alternative sources of sanitation to create new industries. We intend on rolling out through the Black Industrialist Programme manufacturing of pipes in Richards Bay in KZN and Kagiso in Gauteng . International investors from are being engaged to partner with our local firms to pursue a wide range of opportunities.
29. A stable growth path requires a capable labor force with sufficient skills to drive a competitive and diverse economy. This is the reality that informs our close cooperation with the Department of Higher Education and Training in the pursuit of critical skills through the Sector Education and Training Authorities. We have engaged in an artisan programme that has a 15000 enrolment figure with Deputy Minister Manana.
30. We have invested R20 million in a pilot in Saldanha Bay. An equal amount has been invested in a skills academy in the Northern Cape that deals with the energy sector. Similarly, the social composition of our skills base broadly and leadership of institutions as well as sectors of the economy needs to rewrite the script of gender relations in society.
31. Our programme of “Taking the dti to the factories” has taken us to all provinces in the country and this will continue. The objective of this programme is to engage with our people in their spaces both to study their conditions and to avail information about existing government initiatives.
39. Honorable members, we have an abiding responsibility to actively make this economy work for all our people.
40. the dti takes very seriously the role of government in fostering transformed economic relations. We view this in line with the national objectives of building an inclusive society.
41. It is in this context that the dti progressively evolves a policy regime that is a midwife to transformed relations of assets ownership and high economic growth.
42. Our policy objectives are designed to help the economy overcome the vitality of the market in resolving structural and social inequalities historically embedded in Apartheid state policy. This includes overcoming spatial inequalities amongst provinces in terms of industrialization.
43. In this context, the aim is not to substitute the dti for private capital. The objective of the dti is to induce the emergence of new entrepreneurial groups in critical sectors, consistent with the national transformation objectives.
44. I also want to take this opportunity to congratulate and salute SA Premier Business Award 2015 Lifetime Achiever, Dr Anna Mogokong. She remains a symbol of inspiration to many. We areinspired by her achievement and her continued activism as an agent of transformation in the business sector.
I thank you