NCOP Budget Vote Debate for the Department of Trade and Industry by Minister Rob Davies (MP), in NCOP Chamber, Parliament on 16 May 2013

Honourable Chairperson
Officials of the Department Trade and Industry (the dti) and Council of Trade and Industry Institutions (COTII)
Leaders of organised Business and Labour
Distinguished guests
Ladies and gentlemen

Addressing this Council in the past, we noted that a historical feature of the South African economy most of the national gross value-add (GVA) is concentrated in a few regions of the country.  The latest data confirms continuation of historical trends with three regions, Gauteng, eThekwini-Pietermaritzburg and the Cape Peninsula, generating almost 70% of the national GVA. Economic opportunities become concentrated in these regions, perpetuating spatial inequalities.

In previous addresses to this Council we have said that we must work to unlock the long-term development potential of all regions to stop and reverse the process of economic marginalisation. This has proven to be a stubborn challenge with the limited resources at our disposal and the negative economic impact of the most severe global economic crisis since the 1930s, co-inciding with the term of this administration. In spite of these extraneous circumstances we have remained resolute in tackling these stubborn spatial disparities and are making progress on a number of fronts.

In this regard, as we reported in the National Assembly yesterday, the global economic crisis had put into sharp relief the necessity to transform a number of longstanding structural imbalances and weaknesses in order to place our economy on a sustainable and productive growth path.  Within the New Growth Path, the Industrial Policy Action Plan became the centrepiece of the dti’s work with all our actions being co-ordinated or aligned to it. IPAP is the central pillar of the dti and much of the work of the dti is co-ordinated or aligned to it. We reported extensively on the progress we made and said that one of our major conclusions was that where government has acted purposefully to implement programmes developed in consultation with industry players, business as well as labour – concrete positive results have been achieved.

Honourable Chair, we have maintained in our Addresses to this Chamber that industrial policy must be a collaborative venture of government in all spheres, acting in partnership with economic actors to implement agreed interventions emerging from strategic collaboration. In this regard we have said that Special Economic Zones can be a key component of our industrial development efforts.

At present our legislation provides for only one form of SEZ, IDZ’s. Over the years we have proclaimed 4 of these, 3 of which are operational. Despite concerns regarding limited success, the reality is that over the decade or more since the IDZ programme was established, a total of 42 investors are operational on site at the 3 operational IDZs, i.e. Coega, East London and Richards Bay with a total investment value including both signed and operational investors of R14.5bn, creating over 43 000 direct and indirect jobs. To give some sense of the progress over the life of this administration, in just one of these-the ELIDZ, the total investment value in 2009 was R600m. Today it stands at over R4bn.

Notwithstanding evidence of success, we felt that we should appropriate what we have learnt and continue to improve. The IDZ policy review was our response to this challenge and the conclusion of this introspection is the Special Economic Zones (SEZ) Policy and Bill, which is now being considered by Parliament.

Chairperson, the review highlighted as a key weakness   the absence of a national regulatory framework. Secondly, the review pointed out that alignment between industrial development and national policy is imperative for synergistic national economic development.

Taking into account the outcomes of the review, the Bill provides for the designation, promotion, development, operation and management of a broad range of Special Economic Zones. IDZ’s as a variant of an SEZ will automatically be part of the programme. Extensive consultation at the National Economic Development and Labour Council (Nedlac) led to important improvements in the Bill as well as developing buy in by key stakeholders.

In essence, this new policy that the Bill will introduce promotes joint planning and implementation of special economic zones between and across all spheres of government. We believe that well planned and supported SEZ’s will contribute significantly to the country’s development goals. And I must emphasise that strong partnerships among and within the three spheres of government, as well as within each sphere are vital for the effective planning and development of the Zones.

As we have been developing the Bill, we have also been working actively with provinces to identify 10 potential SEZ’s, at least one in each province.  Feasibility studies are currently being undertaken in conjunction with the provinces, on these proposed SEZs.

Honourable members, the dti has, during the term of this administration also in this Chamber outlined our programmes to promote entrepreneurship; cooperatives and SMME development as central to broadening economic participation in every province. The progress we can report on co-operative policy is that on Tuesday, the Co-operatives Amendment Bill was approved by this Chamber. I take this opportunity to thank you and, needless to say your support will contribute too much greater support in this critical area than what has been the case hitherto. We look forward to the establishment of the Co-operatives Development Agency and the Co-operatives Tribunal, this year. The Cooperatives Development Agency will provide business development support to cooperatives and the Cooperatives Tribunal will adjudicate over conflicts that so often have led to the collapse of promising co-operative ventures in the past.

In addition we are working   with the Department of Higher Education and Training to establish a Cooperative Academy to enhance the capacity of cooperatives in critical technical skills to improve sustainability based on standardized and accredited curricula benchmarked to international standards.

Cabinet has also agreed to South Africa hosting the International Co-operative Alliance General Assembly and World Conference in November this year. This will be an important opportunity to for us to learn from successful co-operatives the world over and to promote the potential of co-operatives nationally.

Chair, in 2009 we undertook to conduct a review of all SMME support programmes to improve outputs and impact.

The review, confirmed enterprise survival rate, especially during the start- up phase as a major problem. Consequently support for incubation programmes has been the prioritised on the basis of the successful outcomes achieved by such programmes nationally and internationally.   We believe that this initiative will support efforts to grow more entrepreneurs, especially in the manufacturing sector. In line with this new priority, the dti introduced the Incubation Support Programme (ISP) in September 2012 and we are working towards having 250 incubators in place by 2015/2016, supported by the private sector and the dti.

To date 13 projects,  with a project value of R373 million has been approved  in the  renewable energy; information and communication technology; agro-processing; chemicals; mining; and clothing and textiles sectors.

We will endeavour to continuously widen and deepen the scope of support for the incubator model and currently we are encouraging universities and science councils to host incubators. The development of hi-tech and high-growth sectors will be the main business of these incubators.

The seda Technology Programme (STP) provides financial and none financial support to small enterprises through technology transfer, business incubation and quality services. Currently the STP is supporting 42 Incubation Centres in all 9 provinces in different economic sectors such as biotechnology, mining, agro-processing, construction, jewellery, automotive, metals and renewable energy. As a result, by 31 December 2012, 265 new enterprises had been created, 2,247 SMMEs were supported, 28% of which are women-owned and 1,651 jobs were created.

An agreement has been entered into with two FET colleges in the Eastern Cape and Ekurhuleni in order to establish centres of entrepreneurship with a view of integrating entrepreneurship education in technical areas such as agro-processing, waste management and welding.

Honourable Members, we will continue in this financial year to promote the products and services of the dti throughout the length and breadth of South Africa and invite you to participate in our marketing and media events.

Finally, when we addressed this Chamber at the beginning of the term of this administration we said that we will work closely with the Economic Development Department and together intend fostering stronger than ever partnerships with provinces, to continue to address the challenge of persisting disparities in the spatial economy and promote rural development. I am glad to report that we have co-operated in this regard and my colleague Minister Patel will expand on this cooperation.

I commend Budget Vote 36 to this Chamber.

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