The Budget Vote Address Delivered to the National assembly by Mr. Mzwandile Masina, Deputy Minister Trade and Industry, 20 April 2016

The Budget Vote Address Delivered to the National assembly by Mr. Mzwandile Masina, Deputy Minister Trade and Industry, 20 April 2016

Chairperson of the Session;
Members of the National Assembly;
Minister Davies, 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
Black Industrialists
Distinguished Guests
Ladies and Gentlemen

Honourable Chairperson and the entire Presidium of the National Assembly, I stand here today to discharge my obligation of accountability as a member of the National Executive. I also stand here as a child of the people of Ekurhuleni struck by grief at the tragic loss of the lives of our brothers, sisters and comrades over the weekend.

I wish to use this moment to convey my heartfelt condolences to families and friends of my comrades who passed away in the bus accident that happened as they were making their way home from the ANC Manifesto Launch held in Port Elizabeth.

Honourable Chairperson, as the Department of Trade and Industry, we account for the progress made on the commitments we made in our budget vote and state new objectives that we will pursue in the context of the budget allocations of this Financial Year.

Since the break of the global downturn almost a decade ago, we have worked hard to limit the effects of global contagion on us. We have kept our economy alive by employing numerous industrial policy interventions to maintain stability.

The experience of the global crisis informed our view that we need to pursue a radical economic transformation that makes us less vulnerable to external investment and volatile markets while developing programmes that give rise to inclusive growth.

Job-rich industrial growth builds sustainable industries, communities and societies. If we are to give the current generation of young people the hope of a better life then our commitment to radical economic transformation and industrialisation must be unwavering.

Inclusive growth must mean that black people are no longer relegated to being labourers forever! Inclusive growth – if it is to have real meaning in South Africa – must embrace the need to increase the participation of black people in all aspects of business including as shareholders, managers and entrepreneurs.

One tool to achieve inclusive growth is to provide economic infrastructure such as local industrial parks to township entrepreneurs. This is after all precisely the kind of economic infastructure that the dti provides within the Industrial Development and Special Economic Zones. Revitalisation of Industrial Parks will unlock entrepreneurial capabilities and provide institutional support to township businesses.

This reactivation of Industrial Parks is systematically linked to the bigger programme of Special Economic Zones. Its main focus is to break the spatial profile of investment flow that is concentrated in metropolitan and mostly coastal regions to the exclusion of township and rural spaces.

Therefore our continued efforts to attract overall increased Investment within the outlines of our industrial objectives as articulated in IPAP also have in mind the growth of industrial activity in townships and rural regions in which mostly black people reside and seek economic opportunities.

It is in this context that we pursue strengthening of the Black Industrialists programme. We have already developed a Black Industrialists Incentive Scheme whose allocation will come from the 6.9 billion rands earmarked for the Incentive Development and Administration budgets. The bulk of its capital will be generated and administered from the other Development Finance Institutions.

One of the criticisms that have been levelled against our work on the Black Industrialists Programme has been about our supposed neglect of Small Businesses. This is factually incorrect.

The Black Industrialist Policy identifies its intended beneficiaries to include, in particular, entities owned by small business, co-operatives, youth, people with disabilities, amongst others.

We are working with the Department of Small Business Development, to establish strong collaborative relationships and linkages between the Black Industrialist programme and their Gazelles programme that deals with business development support for SMMEs.

The objective is to develop pathways for SMMEs to grow – supported by comprehensive and seamless support measures from the Department of Small Business Development initially, and as these SMMEs graduate to large-scale enterprises, with support from the dti under the Black Industrialists Programme.

After all, these are policy efforts of one government and they must not be read in separation from each other. It is a collective project of the ANC government to achieve a transformed industrial economy with increased black participation in the space of small and big business.

Honourable Chairperson, we canvass the position that the democratic state must use all its muscle to facilitate and lead transformation. This includes the use of Public Procurement policy as a strategic tool to boost the development and market competitiveness of emerging black businesses.

In this regard, the dti signed an MOU with the State Owned Enterprise Procurement Forum (SOEPF) in January 2016. This is an umbrella forum for all main State Owned Enterprises including Transnet, Eskom, SAA, Denel, Armscor, and PetroSA.

This MOU with the SOEs is designed to leverage State procurement through the permits of the Preferential Public Procurement Framework Act. It underscores targeted procurement for local production and developing a database with long term procurement opportunities as per the demand management strategies of various SOEs.

This approach will assist Black Industrialists and emerging black business in general with access to opportunities and market incubation. The Black Industrialist Policy encourages SOEs to set targeted procurement for the promotion of transformation in the manufacturing sector.

Therefore targeted procurement and ‘set-asides’ are key instruments that will be used to pursue market transformation. It is for this reason that we engaged the National Treasury and registered 8 challenges with the PPPFA in July 2015, including, amongst others, “inclusion of targeted procurement in the PPPFA Regulations”.

We continue to participate in the National Treasury’s committee to ensure that these Regulations enable support of Black Industrialists through targeted procurement and set-asides in the SOEs as pronounced in the Black Industrialists Policy.

Honourable Chairperson, industrial development is not limited to heavy industries. It also includes the growth industries that cultivate and promote cultural and spiritual development as part of nation building.

The South African government has held the notion that the film industry is a critical site of cultural articulation of our historically evolved identities. It serves as a platform that mirrors conversations about social identities that emerge as we forge a new nation based on values of democracy, non-racialism non-sexism.

Moreover the film industry has great potential to be among South Africa’s key drivers of economic development through the creation of jobs, both direct and indirect, and through skills development. In fulfilling its commitment, the Film and Television Production incentive was launched by the dti in June of 2004.

Since implementation of the Film and TV production incentive programme in June of 2004 up to March 2015; a total of 583 productions spanning block busters, documentaries, television series and animations were approved with a total Qualifying South African Production Expenditure (QSAPE) valued at R 15.2 billion with a total incentive commitment of R 3.3 billion.

Of the productions assisted above, 336 South African productions, 86 Co-productions, 97 foreign productions and 15 Emerging Black filmmakers.

Secondly, we used the Infrastructure support programme (CIP) to assist build a world class film and sound studio in the city of Cape Town to help local producers attract larger budget productions.

This has resulted in a noticeable strengthening of the film supply value chain such as the transfer of technology, skill and knowledge to South Africans practitioners which they would otherwise not have acquired through working on lower budget films.

A collaborative funding effort by the dti and the National Film and Video Foundation led to the realisation of the Box Office topping film, Happiness Is A Four Letter Word”; which has been named the first genre film in South Africa to gross more than R 12 million at local cinemas.

This production was a result of a co-production by experienced producers Helena Spring and Junaid Ahmend partnering with emerging Black Female filmmaker Bongiwe Selane, with an investment close to R10 Million and assistance from the dti worth about R4 Million creating a total of 516 job opportunities during production.

Honourable Chairperson, many opinions have been reported about South Africa’s apparent declining attractiveness for foreign direct investment. Some Honourable Members regularly lament that South Africa seems to be doing poorly in attracting FDI.

Yet, as I undertake the Taking the dti to the Factories, I meet industrialists and investors who are actively demonstrating their faith in the domestic economy. These investors – supported by the dti’s incentive programmes – invested some R57bn in the South African economy in the last financial year.

These developments are in part due to our efforts of leading investment trade missions, some of which I led in the last financial year to Africa, Europe, Canada, North America and Asia.

Honourable Members, just last week I returned from the UAE with two awards. The first was the runners-up award for best investment project facilitated in the Southern African Region.

The second award was 3rd prize for investment agency in the Indian Ocean Rim Association countries. These are only the most recent of a number of awards South Africa, the dti and Invest SA have achieved over the last few years.

These awards and our investment performance on shop-floors and in factories – not in newspapers – provide evidence that the private-sector contains to invest in our economy.

In conclusion, Honourable Chairperson, our strategy of a High Impact Industrial Policy Action Plan is multipronged. We view a wide range of sectors, both heavy and soft industries, as critical pillars of its objectives.

We have committed the dti to working tirelessly and systematically to protect our economy from extreme effects of the struggling global economy.

We have also set in place a good policy infrastructure to set off the trigger for improving our productive advantage when global markets stabilize. However, the need for inclusive growth cannot wait for better global conditions.

We have no choice but to act decisively now to create the conditions for inclusive growth and to implement direct interventions such as the Black Industrialists Programme to achieve increased participation by black people in the South African economy. Failure to do so would represent a key missed opportunity to place the South African economy on a more equitable and stable growth path.

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