Economic Development Strategic Plan and Budget

Presentation to the Select Committee on Economic Development

13 April 2010

Presentation outline• Background

• Medium Term Strategic Plan

– Aim and Focus of EDD

– Programmes, sub-programmes, outputs and activities

– A phased approach to implementation

• Medium Term Expenditure Framework

– Budget per programme and sub-programme

• Concluding remarks

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A new department

• EDD established following the announcement of the new Cabinet

• President Zuma on 10 May 2009:– “A new Department of Economic Development has been

established to focus on economic policy-making.”

• President Zuma SONA 3 June 2009: – “The creation of decent work will be at the centre of our

economic policies”

• President Zuma in Budget Vote speech 24 June 2009:– “The Economic Development portfolio will have a strong

domestic focus and will address, amongst others, matters of macro and micro-economic development planning.”

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Medium Term Strategic Plan

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Aim of EDD• The aim of the Economic Development Department is to

promote economic development through participatory, coherent and coordinated economic policy and planning for the benefit of all South Africans

– Coordinate economic development contributions of government departments, state entities and civil society

– Contribute to coherence between government objectives and the public sector economic policies and plans

– Promote government’s ability to achieve its goals of advancing development with decent work opportunities

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Focus of EDD• The Department will be responsible for –

• Administration (Programme 1)

• Developing economic policy with a broad, cross-cutting focus so that macro and micro-economic policy reinforce each other and are both aligned to the electoral mandate (Programme 2);

• Economic development planning and will work collegially with other departments to ensure coordination around a programme that places decent work at the centre of government’s economic policies in order to secure better employment outcomes (Programme 3); and

• Facilitating social dialogue as a means to address the economic development challenges facing society, build a common national vision and enhance partnerships in the workplace and in the broader society (Programme 4).

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7

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Economic Policy Development

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Economic Planning and Coordination sub-programmes

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Development Finance Institutions

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Economic Regulatory Bodies

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Economic Development and Dialogue sub-programmes

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Provincial dimensions

• Alignment: National, provincial and local economic development to be better aligned and connected

• Strong partnerships with provinces

• Identify provincial dimension of the growth path, to address and transform the spatial inequities of the past

• Develop support for distressed areas and regions (eg Dimbaza and Doringbaai)

• Example 1: rural development and E Cape/Limpopo

• Example 2: green economy and N Cape

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Provincial dimensions

• Corridor opportunities across provinces

• Economic clusters across sectors and regions

• Identify competitive advantages in each province and linkages between them

• Build strategic relationships with SALGA and the metropolitan councils

• Build coherence between national and provincial development agencies

• Identify social partnership opportunities and social pacts at provincial and local levels

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Provincial dimensions

• Ensure equitable focus by development finance institutions on provinces

• Micro-economic policy (eg small business development) need to take the spatial dimension into consideration

• Host Policy Platforms in partnership with provinces (example of KZN and rural economic development)

• Annual economic development conference to look at spatial dimensions

• Create common database on economic development budgets

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A phased approach

• Strategic plan sets out the medium term framework for the EDD

• Requires a phased, step-by-step implementation plan

• Building an initial capacity in each programme

• Outputs and activities phased in over the full MTEF period

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Year 1: 2010/11

• Establish basic capacity in the 4 programmes• Basic policy work and planning in each of the areas• Limited number of sub-programmes created initially and

progressively expanded• Key posts will be filled, particularly high-level ones

Targets for 2010/11

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Indicator Programme 2010/11

Number of policy and analytical papers on economic policy challenges EPD 10

Number of policy platforms on economic policy challenges EPD 10

Number of engagements with provincial and/or local government EPC 10

Number of strategic engagements with development finance institutions and/or economic regulatory bodies

EPC 6

Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress

EPC R2bn

Number of sector plans produced or reviewed EPC 5

Number of spatial plans produced or reviewed EPC 10

Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement

EPC 10

Social dialogue and capacity building engagements ED&D 10

Number of economic development agreements (sectoral, workplace and national) facilitated with social partners

ED&D 10

Year 2: 2011/12

• Expanded operational staff capacity in each of the sub-programmes

• Level of policy work and planning significantly enhanced – would cover the full range of areas within the mandate of the department

• Stronger focus on areas that have been prioritised

Targets for 2011/12

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Indicator Programme 2011/12

Number of policy and analytical papers on economic policy challenges EPD 20

Number of policy platforms on economic policy challenges EPD 15

Number of engagements with provincial and/or local government EPC 20

Number of strategic engagements with development finance institutions and/or economic regulatory bodies

EPC 12

Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress

EPC R3bn

Number of sector plans produced or reviewed EPC 8

Number of spatial plans produced or reviewed EPC 15

Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement

EPC 20

Social dialogue and capacity building engagements ED&D 20

Number of economic development agreements (sectoral, workplace and national) facilitated with social partners

ED&D 20

Year 3: 2012/13

• Full staff capacity in each of the sub-programmes

• Full range of policy and planning services set out in the Strategic Plan

• Ramped-up targets across all programmes and sub-programmes

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Targets for 2012/13

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Indicator Programme 2012/13

Number of policy and analytical papers on economic policy challenges EPD 30

Number of policy platforms on economic policy challenges EPD 20

Number of engagements with provincial and/or local government EPC 30

Number of strategic engagements with development finance institutions and/or economic regulatory bodies

EPC 12

Value of special financing facilitated for small businesses, targeted growth sectors and companies in distress

EPC R5bn

Number of sector plans produced or reviewed EPC 10

Number of spatial plans produced or reviewed EPC 20

Number of interventions in relation to promoting economic development through leveraging state expenditure and procurement

EPC 25

Social dialogue and capacity building engagements ED&D 30

Number of economic development agreements (sectoral, workplace and national) facilitated with social partners

ED&D 30

Budget overview: 2010/11The Budget allocation is R418m, distributed as follows:

• R18,2 million for policy development work

• R25,8 million for economic planning and coordination

• R11,2 million for economic development and dialogue

• R44,8 million for administration, the Ministry and capital expenditure

• R152 million for small business funding, through transfers to Khula and SAMAF

• R102 million for the competition authorities to strengthen their work and

• R64 million for trade administration to ITAC.

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Medium Term Expenditure Framework

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EDD Budget per programme

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(R million) 2010/11 2011/12 2012/13

Programme 1: Administration

44.8 56.0 61.3

Programme 2: Economic Policy Development

18.2 23.1 29.0

Programme 3: Economic Planning and Coordination

25.8 34.7 41.7

Programme 4: Economic Development and Dialogue

11.2 16.1 18.0

Sub-total 100.0 129.9 150.0

Transfers and subsidies (Programme 3)

318.6 364.4 370.3

Total 418.6 494.4 520.3

Programme 1: Administration(per sub-programme)

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(R million) 2010/11 2011/12 2012/13

Ministry 16.3 20.3 21.8

Office of the DG 4.6 5.8 6.3

General Management Services

23.9 29.9 33.3

Total 44.8 56.0 61.3

Programme 2: Economic Policy Development (per sub-programme)

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(R million) 2010/11 2011/12 2012/13

Growth Path and Creation of Decent Work

4.8 5.7 7.5

Economic Policy 6.6 8.6 10.9

Broad-Based Black Economic Empowerment

4.7 6.2 7.4

Second Economy 2.1 2.7 3.3

Total 18.2 23.1 29.0

Programme 3: Economic Planning & Coordination (per sub-programme)

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(R million) 2010/11 2011/12 2012/13

Spatial, Sector and Economic Planning

12.4 15.7 19.5

Financing and Procurement

3.8 5.4 6.3

Investment for Economic Development

156.6 171.4 177.0

Competitiveness and Trade for Decent Work

171.6 206.7 209.1

Total 344.4 399.1 411.9

Programme 3: Economic Planning & Coordination: Detail of transfers and subsidies

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(R million) 2010/11 2011/12 2012/13

Competition Commission

88.8 116.6 114.0

Competition Tribunal 13.6 15.2 15.6

International Trade Administration Commission (ITAC)

64.3 68.2 71.7

SA Micro-finance APEX Fund (SAMAF)

82.1 90.5 93.1

Khula Enterprise Finance Limited

69.7 73.9 75.9

Total 318.6 364.4 370.3

Programme 4: Economic Development and Dialogue (per sub-programme)

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(R million) 2010/11 2011/12 2012/13

National Social Dialogue and Strategic Frameworks

7.7 10.8 12.0

Sector and Workplace Social Dialogue

0.4 0.5 0.6

Capacity Building for Economic Development

1.7 2.5 3.0

Productivity, Entrepreneurship and Innovation

1.5 2.3 2.5

Total 11.2 16.1 18.0

Concluding remarks

• Mandate and Framework constitute a bold economic vision

• Strategic Plan is the focus of EDD contribution to realise this vision

• Will be complemented by operational plans in each programme

• The Budget as presented contains expenditure estimates for the medium term including transfer payments for the DFIs and ERBs

• Excluding transfers the budget is R100m – R130m – R150m over the medium term

• The immediate challenge for EDD will be the building of capacity to implement the department’s programmes and sub-programmes

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Thank you