Extracts from
A catalyst for Shared and Accelerated Growth (Asgisa)
Asgisa’s ultimate objective is to halve unemployment and poverty by 2014. Asgisa is not a new policy nor does it replace Gear and it is not an Industrial policy. Between 2005 and 2009 we seek an annual growth rate that averages 4,5% or higher. Between 2010 and 2014 we will seek a growth rate of at least 6% of GDP.Our recent growth although welcome has been unbalanced and based on strong commodity prices, strong capital inflows and strong domestic consumer demand which has increased imports and strengthened the currency way beyond desirable levels; yet levels of unemployment are still too high and growth has not been adequately shared. The divide between the 1st and 2nd economy has meant that those who live in the 2nd economy have less benefits.We seek to take advantage of the growth in order to share the benefits and base it on a more sustainable basis beyond commodity prices/consumption and capital inflows.The high business confidence offers an opportunity to create a healthy and a growing private sector in the 1st economy which can address the challenges of the 2nd economy. (Asgisa emphasises) partnerships with business, labour, civil society and other members of society.
Asgisa responds to binding constraints which are:
The volatility and level of the currency;
The cost, efficiency and capacity of national logistics system;
Shortage of suitably skilled labour amplified by the cost effects on labour of apartheid spatial patterns;
Barriers to entry, limits to competition and limited new investment opportunities;
Regulatory environment and the burden on small and medium businesses; and
Deficiencies in state organization, capacity and leadership.
InfrastructureOverall government expenditure for infrastructure spending totals some R370 bn over the current MTEF.
40% will be spent by Public Enterprises:
Eskom – R84 bn – cover generation, transmission, distribution and others
Transnet – R47 bn. R40 bn is “core” ie. Harbours, ports, railway and petroleum pipeline), ACSA (R5,2 bn which includes airport improvement and Dube Trade Port),
Water Infrastructure (R19,7 bn),
2010 Infrastructure, which will include building or improving the 10 stadiums to be used, and investment in the environs and access to the stadiums,
ICT Infrastructure which includes the strategy to rapidly grow South Africa’s broadband network; implementation of a plan to reduce telephony costs more rapidly; the completion of a submarine cable project that will provide competitive and reliable international access, especially to Africa and Asia, and the provision of subsidies to encourage the establishment of call centres and labour intensive business in poor areas.
(Some provincial projects will come on track later.)
Sector strategiesSectors with the highest potential for impact within a short time are Tourism and Business Process Outsourcing (BPO) (call centres) sectors. (Call centres) have the potential for 100 000 additional direct and indirect jobs by 2009. Tourism could take its contribution to GDP from about 8% to about 12%, and increase employment by up to 400 000 people by 2014. Other priority sectors under consideration are: biofuels, chemicals, metals and metallurgy, agriculture, agro-processing, creative industries, wood pulp and paper, clothing and textile and durable consumer goods. These will be announced when more work has been done.There are several cross cutting industrial policy challenges being addressed too, including: inadequate competition and import parity pricing; capacity for trade negotiations; a more coordinated Africa development strategy; better incentives for private R & D investment; and better use of BBBEE to encourage industry transformation, beyond the transfer of equity.
Education and skills developmentFor both the public infrastructure and the private investment programmes, the single greatest impediment is the shortage of skills – including professional skills such as engineers and scientists, managers and financial personnel, project managers; and skilled technical employees such as IT specialists and artisans.Key measures to address the skills challenge in the educational sphere will focus on:a) quality of education, b) ABET, FETs and artisan skills. Scarce and priority skills include high skills and artisans.A new institution will be established in March – the Joint Initiative for Priority Skills Acquisition (JIPSA). This structure is led by a committee of relevant Ministers, business leaders, trade unionists and education and training providers or experts. Its job will be to confirm the urgently needed skills and find quick and effective solutions. Solutions may include special training programmes, bringing retirees or South Africans who are working outside SA, and drawing in new immigrants when necessary, programmes for placement of personnel and unemployed graduates.JIPSA will have an initial timetable of 18 months; placement of skills for local government is already advanced.Plans for private sector placements in infrastructure project management is also advanced and will ensure women’s involvement.
2nd economy interventionsInequalities are entrenched in the structure of SA economy and a systematic policy intervention will be elaborated outside Asgisa which will only consider more urgent interventions.Without interventions directly addressed at reducing South Africa’s historical inequalities, growth is unsustainable. The intention is to create sustainable bridges between the 1st and 2nd economy:
to enable growth and graduation to a sustainable economy;
to unlock dead assets/asset poverty in poor people’s hands eg livestock, housing, land, etc;
to promote local economic development and local content;
to grow cooperatives with a link to 1st economy markets;
to address the “missing housing stock” valued between R50 000 and R150 000.
All priority sectors will have to provide a bridge to the 2nd economy. Tourism, BPO, Creative Arts, Agriculture, Clothing and Textiles are sectors which are easily responsive to the 2nd economy. Links in the business plans with the 2nd economy are being made. Infrastructure is crucial for such linkages.There are several other interventions designed to support Small and Micro-Enterprises (SMMEs). Nafcoc’s commitment to establish 100 000 new SMEs per year is laudable, and government will support Nafcoc’s efforts. A key challenge is to address the gap in loans between R10 000 and R250 000. One such effort is a new partnership between Khula and business partners in a R150 million fund for business loans of this size. We also plan to accelerate the roll out of the Apex and Mafisa programmes for loans under R10 000.Government is trying to establish new venture funds for SMMEs. The IDC’s R1 bn programme and the National Empowerment Fund’s venture fund will make a considerable impact on the growth of small businesses.The other intervention is in the area of Preferential Procurement. For Public Enterprises, the State Owned Enterprise Procurement Forum is codifying and spreading best practices for Affirmative Procurement which will have a dedicated Supplier Development Programme. For the government, the DTI is developing a procedure through which 10 products will be set aside for procurement through smaller black owned businesses.A further key small business initiative will be to pursue these issues: * the Minister of Labour leading a review of labour laws’ impact on small businesses; * reforms in tax administration affecting small businesses; * preparation by DTI and DPLG on how to improve the regulatory environment for small businesses in municipalities; * sector departments reviewing the impact of their laws and regulations on small businesses;* DPLG, in consultation with the DTI, to improve the capacity of local government to support local economic development.
Expanded Public Works Programme (EPWP)The Expanded Public Works Programme (EPWP) will be expanded beyond its original targets. The relevance of training provided will be given greater attention. EPWP mandate has been extended to a larger number of roads and some larger road projects. This will entail about R4,5 bn additional funds over the coming MTEF period, about 63 000 more people maintaining roads, and about 100 000 additional people in jobs averaging 6 months in road building. In addition, 1000 more small black contractors will be developed. New access roads will have a significant impact on conditions and opportunities in some poor and rural areas.
Women and youthTo achieve ASGISA’s goal of halving unemployment and poverty by 2014, we will have to work more closely with women and the youth. On women the focus will be on:
human resource training:
ensuring they have access to finance across the board;
fast tracking them out of the 2nd economy;
ensuring their significant participation beyond SMMEs and
improving their access to basic services;
increasing their participation in EPWP.
On the youth front we will:
target unemployed graduates for jobs or learnerships
support the Umsobomvu youth fund initiative to register unemployed graduates on their database.
set up 100 new Youth Advisory Centres.
enrol at least 10 000 young people in the National Youth Service,
enrol 5 000 volunteers to act as mentors to vulnerable children. 70% of our population is below 35 years.
expand the reach of our business support system to young people and
intensify the Youth Cooperative Programme.
closely monitor the impact of our programmes on youth skills training and business empowerment as an integral part of our national effort.
In relation to the 2nd economy, much focus is on women and youth in the rural and urban areas and on programme interventions to achieve mass impact. Cooperatives, land reform and productive use of land, and housing stock problems of the range between R50 000 and R150 000 will receive special attention.Already agreed initiatives which are meant to benefit the 2nd economy will be prioritized, BEE charters, GDS, offset agreements will be followed up by relevant departments.
Governing and institutional interventionsAsgisa will push for government to implement and respond better to the public. On local government and service delivery we are focusing on addressing the skills problems identified in Project Consolidate. (We will) urgent(ly) deploy experienced professionals and managers to local government to improve project development implementation and maintenance capabilities.
Delivered by Deputy President, Phumzile Mlambo Ngcuka to Parliament,
6 February 2006