Posted: May 24, 2023
Portfolio Committee Chairperson.
Honourable Members and,
Fellow South Africans.
House Chairperson, we are presenting this budget vote during the hardest of times for our country.
As highlighted in Minister Patel’s opening address, the current economic environment has taken a huge strain – and our overall economic outlook is subdued because of factors such as the energy challenges and the European geopolitical conflict.
All of these factors account significantly into the backfoot with which we find ourselves, especially with regards to the low growth and the high unemployment figures.
Honourable members, Despite all these headwinds that are foundational to our current shocks, we are not in despair. We are confident that we will pass this phase and return to a higher growth path and accelerated rate of re-industrialization, the result of which would be the rising employment rate, upliftment of our people and the improvement of the social standards for our society.
I know that as we are making a call, not to despair, majority of our people have easily lost hope. Jodi Ann Bickley, the British writer, once advised us, that “When you are in the middle of a storm cloud, it’s hard to think outside of it, but the only way out of the storm is to ride through it and things will be a lot clearer on the other side” We have chosen to ride through and address these challenges, and things are going to be clearer on the other side soon.
The Economic Reconstruction and Recovery Plan (ERRP) is instructive to us as this thedtic group, working with the private sector that we rebuild the economy, above the levels we had pre-COVID and reverse the unemployment rate.
One of the biggest challenge we are confronting is the import/export balance impacting on our economy. South Africa’s import to GDP ratio is too high for an economy which needs to speed up its growth and a country desperately in need for job creation.
The World Bank figures cites that in 2021 our imports were 25% to GDP which is inconsistent with other peer countries. Some of these products imported can justifiably be produced locally.
To illustrate this point, on the 5th of April 2023, I opened a black owned footwear factory in Stanger, Light House Footwear Factory, the Department supported them through CTFL Growth Programme to buy machineries for an amount of R6 million.
In that launch, I was informed that South Africa consumes almost 300 million pairs of shoes, annually. The 75% of those are imported and only 25% are locally made. Just imagine the impact that we can make in job creation and growth if we can be intentional about driving import substitution, and build as many small and middle sized shoe factories across various districts. This factory, I am referring to, already has an offtake with Jam stores supplying 118 stores nationally.
Minister Patel has spoken extensively about boosting local production and exports.
In our vision as the dtic, we do not think only about large-sized manufacturing and factories, but also the small emerging ones.
I have a proud story of the young Jacobs couple in Ceres, western Cape, which I visited in 2021 as part of inspecting the post-Covid economic recovery in various factories. The Jacobs manufactures jam and were under strain after hard lockdown; we coordinated government assistance. We sent them to our trade mission in Dubai, in Durban for Inter-African Trade Fair. The department of Agriculture and Land Reform gave them a grant of R3.3 million. In Durban Trade fair they have secured an offtake to Zambia, in Dubai they secured an offtake to UAE and today they supply Shoprite in Western Cape and are negotiating with Spar. The eNCA featured their story last Sunday (21 May 2023).
New Departmental Approach.
As the department, we have been hard at work in putting a mirror against ourselves, to interrogate our inner workings, capacity and approaches in achieving all the systemic trade and industrial advances.
We have accepted that a new approach in how we implement, can give us much better results; and this new approach is underpinned by a clear theory of change.
Our point of departure is now an industrial policy and its supportive strategy.
At the centre of the re-imagined industrial policy are three Apex Outcomes agreed to in 2022/2023 financial year for thedtic group and its entities to contribute on. These three apex outcomes are:
- Industrialization to promote jobs and rising incomes.
- Transformation to build an inclusive economy, and
- A capable state to ensure improved impact of public policies.
These three outcomes have six underlying pillars:
- Combine growth with transformation.
- Boost local production.
- Grow exports and expand African trade.
- Increase levels of investment
- Establish a more reliable and low-cost energy system while greening the economy overall, and
- Grow employment.
These six pillars shape the core objectives of the 2023/2024 APP.
the dtic group in previous APPs targeted inputs and activities that would have a beneficial outcome and impact on jobs, industrial outputs, exports, and investment. This was done because many external factors driving the outcomes were outside the control of the Department.
These factors include global economic and geo-political developments, shock events including climate change, and domestic factors such as energy, transport and logistics and crime, which all impacts on growth. The output was often in the form of reports on successes.
This year, however, a significant step-change has been introduced. The new approach focuses on meaningful outputs, referred as targets.
Honourable members, ten core targets have been set that represent the real impact we aim to achieve in the economy, and measure crucial indicators like local output, job creation, and performance of black industrialists.
To demonstrate this with regards to the black industrialist, we have moved away from a broad-based black empowerment, which was more about securing shares from existing white companies, our policy levers have shifted towards expanding the number of firms and companies which are started and owned by black south Africans.
Of course there are still challenges in the policy and funding regime for black industrialists but we are determined to address those areas. The growth and transformation (pillar) can also be seen in our determination in the promotion of worker-ownership regime in the companies, with board representations.
While our targets are important, these core targets are the apex priorities of the Department, and all programmes of the dtic are expected to contribute to the achievement of these essential outputs. In total 45 outputs targets have been set and shared with parliament last month.
Chairperson, in this approach, Minister Patel has announced the stretch targets today, higher than that set out in the APP. The purpose is to galvanize the Department on these important drivers of growth.
We are introducing clear targets with weekly reports by staff managers. We want a problem-solving approach to work, instead of a bureaucratic mindset.
We are committed to integration of work between the dtic entities.
We have resolved to do more community outreach programmes, going to our people showcasing what the Department is doing, but also bring closer the agencies to the people where they are, for assistance.
We have started to target Districts in the form of izimbizo with all our agencies needed by the public. We have resolved that all our senior officials will be the ambassadors/champions for districts to ensure that we work with them to materially change the people’s lives.
In the same vein, we are strengthening partnership with business and labour and social compacting.
Internally, we have commenced with the project on the “Fit for Purpose” structure. The roles and responsibilities identified through “Fit for Purpose” structure will assist in addressing the working in silos, streamline business processes, reprioritize resources and reduce administrative burden.
All of the above measures are geared towards improving internal Departmental capacity to deliver in driving re-imagined industrialization policy, in the quickest possible way, with good attitude and without red tapes.
Honourable members, I want to remind you what the English Cleric and writer, Charles Caleb Colton, once said: “Times of great calamity and confusion have been productive for the greatest minds. The purest ore is produced from the hottest furnace. The brightest thunder-bolt is elicited from the darkest storm”
I want to take this opportunity to thank Minister Patel for his sterling leadership and collegiality. I extend my gratitude to Deputy Minister Majola for the cooperation and support. I want to also thank the Portfolio Committee for their oversight role towards us and the Department as a whole.
To the Acting DG Malebo-Thompson and the officials of the Department, we appreciate your work. May this financial year be a success for all of us!