Economic Sectors and Employment and Infrastructure Development Clusters media briefing

4 March 2014

It is an honour for us to be here today for the final post-State of the Nation Address briefing by these Clusters, as we approach the end of the political term that began in 2009. Given this importance, it is also a special honour to expand on the expansive evidence President Jacob Zuma presented in the State of the Nation Address of how South Africa has become a better place in which to live. It is also clear to us that we are, as the President said, “a nation at work” and that we are creating opportunities on many fronts in our war on unemployment.

We are here today to brief the nation on achievements made jointly by the Economic Sectors and Employment (ESE) and Infrastructure Development (IDC) Clusters. During our 20 Years of Freedom, South Africa has achieved a level of macro-economic stability not seen before 1994. This achievement created opportunities for real increases in expenditure on social services, and reduced the costs and risks for investors. It in turn laid the foundation for sustained investment and improved growth.

The 2008 global economic crisis presented a major challenge to the economy resulting in job losses estimated of about 1 million and declining economic activities. In 2010, the government adopted the New Growth Path, which placed job creation at the center of economic policy. This was further reinforced through the adoption of the National Development Plan.

South Africa’s labour market has continued to recovery from the 2008 global economic downturn. It is through the implementation of targeted interventions to support the economy that the economy turned around. In 2013, employment climbed by 653 000, or 4,5%. Employment now totals 15, 2 million, the highest level ever. Since 2009, employment has risen by 1,3 million. Today 43,3% of working-age South Africans are employed, up from 41% in 2010 and below 40% in 1994. While this is a real improvement, unemployment remains unacceptably high.

In the fourth quarter of 2013, the investment rate climbed to 19,2% of the GDP, compared to 18,9% a year earlier and 18,5% in the fourth quarter of 2010. The increase in the investment rate was driven above all by public investment, which reached 7, 3% of the GDP in the fourth quarter of 2013, compared to 6,7% in the fourth quarter of 2010.

Economic Infrastructure    
The infrastructure build programme has played a key role in South Africa’s recovery from the 2008/9 economic downturn. This admistration has spent over R1 trillion on economic infrastructure. The Presidential Infrastructure Coordination Commission was established to streamline the delivery of infrastructure in the economy. Critical infrastructure programmes have included investments in rural infrastructure, developing alternative energy sources, expanding access to broadband and building corridors along the backbone of our logistics systems.

Industrialisation
A further pillar of our economic programme has been industrialisation, driven by the Industrial Policy Action Plan (IPAP). The cumulative outcome of interventions under IPAP includes:

• Investment incentives have spurred approximately R143 billion in private sector investments, creating around 144 000 jobs in the process.
• Some 200 000 jobs have been retained in sectors that are either in distress or have been assisted to export through the Export Marketing and Investment Assistance, Automotive Investment Scheme, Manufacturing Competiveness Improvement Programme and Clothing and Textiles Competitive Programme.

More than 15 000 formal enterprises have been assisted by the DTI
In the past two years, we have seen substantial diversification of the auto industry, led by the recent establishment of two new minibus-taxi assembly plants. New investments and developments in the automotive sector include:

• The German auto component group, Friedrich Boysen GmbH, investing R180m in a new 10 000m2 plant;
• BMW SA introducing a third shift at its Rosslyn plant;
• Mercedes Benz SA beginning a recruitment drive for 600 new positions in preparation for production of the new C-class;
• Beijing Automotive Works (BAW) investing R196m in a taxi assembly plant for the South African/sub-Saharan markets;
• Toyota SA opening a new Ses’fikile tax assembly line in Durban along with a R363m investment in a parts distribution warehouse – the largest in Africa, and
• China’s First Automotive Work starting on the construction of a truck plant at the Coega IDZ in the Eastern Cape.

Ladies and gentlemen, key to economic diversification is the mobilisation of industrial financing for new industries. Since 2009, finance approvals by the Industrial Development Corporation more than doubled compared to the previous five years, reaching a total of R55 billion between April 2009 and March 2013. The IDC now leverages around 6% of total investment in South Africa. Moreover, it has aligned its spending with the Jobs Drivers in the New Growth Path.

Mineral Development
The mining sector remains a major contributor to economic growth and employment. Therefore, government has led an initiative, together with mining companies and unions, to ensure the implementation of key agreements that seek to stabilise the industry. Critical steps include:

• Strengthening the regulatory certainty in mining through the streamlining of authorisation processes,
• Establishing Mine Crime Combating Forums in North West, Limpopo and Mpumalanga, Free State and Gauteng;
• Prioritisation by the CCMA of mine disputes; 
• Reducing employee indebtedness. The National Credit Regulator has taken action against unscrupulous micro-lenders. Twelve microlenders have been closed in Rustenburg as a result of this initiative; and. 
• Allocating R2,7 billion to the Human Settlements Development Grant (HSDG) for identified mining towns.

Energy Infrustructure
The Government has undertaken a number of initiatives to ease the pressure on our national electricity grid. The delivery of Eskom’s build programme and integration of the private sector in electricity generation is crucial to ensure that we have sufficient generating capacity to the economy’s demand. In this regard, Eskom has completed the Return to Service Programme adding 1 700MW to the grid. The installation of the Open Cycle Gas Turbines also played a role to ease the pressure on the national grid and avoid the total collapse of the system.

The construction of the two major power stations Medupi and Kusile has progressed with both set to deliver power in 2014 and 2015 respectively.  In addition, the Ingula Pumped Storage Scheme will be Eskom’s third pumped storage scheme with an output of 1 332MW, mostly used during peak-demand periods. The total investment on these 3 projects is estimated at R250 billion and the timely delivery of these projects will continue to receive attention. 

The Renewable Energy Independent Power Producer Programme has gained traction with 3 windows having being concluded. Since 2012 to date, we have concluded 47 contracts for renewable energy across 9 provinces with total investment of R70 billion. The projects will add 2 460 MW of power to the grid. This is a vote  of confidence in the policies that we have implemented to reform the electricity sector. 

These investments have also ensured access to electricity by households. In 1994 only 34% of households had access to electricity, and through the relentless efforts of this government, today 86% of South African households have access to electricity. The quality of life for many has markedly improved due to the delivery of this basic service.

In addition to adding much-needed capacity to the national electricity grid, the Renewable Energy Power Producers programme has had a further positive impact on poverty-stricken rural areas, where community members are being trained and skilled to take up jobs in previously unknown technologies.
 
Government has installed more than 20 000 solar water geysers. In line with the Green Economy Accord, the contractual model for the solar water geysers programme has been revised to include a 70% local-content minimum requirement. The revised contractual model will optimise localisation benefits and create much-needed jobs.
 
Public Transport
Government has made significant strides in public transport infrastructure development. These strides are changing the way commuters find their way around our major centres for work and leisure and are creating certainty for workers and employers who rely on predictable, safe and comfortable public transport as a means to support productivity.

Our primary modes of public transport are passenger trains, buses and mini-bus taxis. We have made progress in achieving our policy objectives of an Integrated Public Transport Network through the introduction of Bus us Rapid Transit systems in several cities. In Johannesburg, the Rea Vaya Bus Rapid Transit system has been in operation since 2010 and currently transports more than 40 000 people a day.

In Cape Town, the MyCiti Bus Rapid Transit system has been in operation since 2011 and currently transports more than 10 000 people a day. Tshwane has started with the construction of Phase 1 of A Re Yeng which is 35 km long from Rainbow Junction in the North, through the central business district, all the way to Menlyn in the East. In the North West, Rustenburg has so far built 8 kilometres of BRT. In KwaZulu-Natal, Ethekwini has started with the construction of 18 kilometres from Inanda to Pinetown.

In Nelson Mandela Bay in the Eastern Cape, the Ibhongo Lethu system already operates 25 buses and 15 more kilometres are being completed from the CBD to Cleary Park. The remaining 5 cities of Polokwane, Mangaung, Mbombela, Msunduzi and Ekurhuleni are finalising their operational plans and designs.

Rural Scholar Transport
In recognition of the challenges confronting learners who attend school far away from their homes, we introduced the Rural Scholar Transport programme. At the moment, more than 360 000 learners are benefiting nationally. Since the introduction of Shova Kalula the Department of Transport in partnership with provinces, municipalities and private sector have distributed about 177 310 bicycles.

Rail Transport
Government has begun to invest billions of rand in new rolling stock, infrastructure upgrades and the building of new depots. As rail is the backbone of our future public transport system, government will over the next few years invest more than R50 billion in passenger rail infrastructure and services.

Over the next 20 years, PRASA will implement the New Rolling Stock Acquisition Programme, which will transform and modernise passenger rail to ensure safe and reliable passenger service. The first set of new trains from this programme will start operating in 2015.

In 2006, we commenced with the construction of the Gautrain Rapid Rail Link connecting Tshwane, Ekurhuleni and Johannesburg. The current daily passenger trip number stands at more than 50 000 on weekdays. We have plans to expand Gautrain to the eastern and western extremes of Gauteng.

Road Transport
Before 1994, the National Department of Transport was responsible for a road network of less than 530 km. In 1998, the ANC Government established SANRAL to manage the national road asset and is now managing over 19 700 km. Over the last 5 years, SANRAL awarded contracts worth R49 billion for new works, rehabilitation and improvement, and various maintenance cycles. SANRAL spent a total of R12 billion on contracts with SMMEs, of which more than R8.9 billion went to 5 494 black enterprises.

The SANRAL skills development programme trained 72 064 people in road-building projects at a cost of about R112 million, with 23 200 women being trained in the process. During the peak of the Gauteng Freeway Improvement Project construction phase approximately 20 000 jobs were created.

Aviation 
We have invested billions of rand to ensure that our country has world-class airports that can help realise South Africa’s full economic potential. Between 2006 and 2010 the Airports Company of South Africa invested R17 billion in airport infrastructure upgrades, including the addition of the new King Shaka International Airport in Durban, and the OR Tambo and Cape Town International Airports.

ICT Infrastructure
To modernise communications and improve our economic efficiency, 37 000 kilometres of fibre-optic cable has been laid by private and public sectors  in the past five years. Since 2009, 1 367 schools, 234 community ICT access centres and 18 Further Education & Training (FET) colleges have been connected to the internet. Government’s broadband policy known as “South Africa Connect”, aims to have all schools, public health and other government facilities - as well as 90% of the general - population be connected by year 2020.

Infraco has invested just over R1 billion since 2009 on 13 000 kilometres of fibre-optic cable, which includes a core network linking the main cities; a regional network linking SA with its neighbours, and an interface with the EASSY submarine cable linking SA with the world.

Agriculture and rural development
Employment in agriculture grew by around 65 000 from December 2009 to December 2013, reversing a trend of job losses stretching back to the 1970s. In an effort to improve the rural economy, household income and access to nutrition  a total of 1 740 555 hectares of land were acquired, redistributed and restituted or restored from 2009 up to September 2013. About R20 billion was spent between 2009 and 2013 to implement land restitution and distribution.

To ensure sustained production on productive land, 700 000 small holder producers - including those under the recapitilisation and development programme - were supported through various initiatives including access to finance and mentoring. The Fetsa Tlala programme, which aims to support emerging farmers, was launched on 24 October 2013. Planting is taking place on 230 000 hectares of land in six provinces with half of the land set aside for smallholders. A total of 10 271 resource poor historically disadvantaged producers were supported to access water for agricultural purposes, and over 18 000 hectares were irrigated during this period.

From 1 April 2009 until 31 December 2013 a total 2 400 000 hectares of land has been added to the area of land under rehabilitation and restoration. A total of 3 486 000 hectares was cleared as part of follow-up treatment. A further 33 341 smallholder producers were assisted to access markets and 1 284 producer cooperatives and marketing depots were established in order to increase their competitiveness and take advantage of market opportunities.

An additional 22 cooperatives have been linked to the Department of Social Development’s Food for All programmes as part of procuring produce for social programmes from the very smallholders who are being supported by government.

DAFF drafted an Agricultural Policy Action Plan, or APAP, with a focus on six value chains based on their potential contribution to food security, job creation, growth potential and potential contribution to the trade balance, including by replacing imports. Furthermore, we have committed to extending the primary animal health care programme to smallholders in all provinces.

In the past year, 23 mobile animal clinics were procured and delivered to remote rural areas. The scientific committee of the World Animal Health Organization (OIE) has confirmed the restoration of the Foot and Mouth Disease (FMD) free-status which enables South Africa to negotiate with the trade partners to lift the export ban on livestock products. The confirmation of the restored FMD free-status is a positive step for trade and markets access for the industry.

A total of 3 384 small rural enterprises were established in different sectors between 2010 and 2013. We were also able to link 170 196 poor and vulnerable South Africans, including recipients of social grants, to the economic opportunities.

In rural areas alone, a total of 3 422 110 work opportunities were created through the Expanded Public Works Programme (or EPWP), including the Community Work Programme, since 2010. Most of these jobs were created under the infrastructure sector of the EPWP. An additional 798 586 full-time equivalent jobs were created in different sectors from 2010 to date.

National Water Infrustructure Development and Construction
The development of key water resources infrastructure is critical for sustained economic growth. Government has completed a number of major projects to ensure security of water supply for Industrial, agricultural and domestic use. These include the completion in 2013 of the De Hoop Dam Limpopo and the Spring Grove Dam in KZN, bringing 126 million cubic meters of new water into our system; the upgrading of the Inyaka Water Treatment Works, and the Vaal River Eastern Sub-system Augmentation Project which delivers water from the Vaal Dam to Secunda in the Mpumalanga Highveld.

In addition to this, the Komati Water Scheme Augmentation Project (KWSAP) was started in January 2011. It will provide additional water to Eskom’s power stations in the Mpumalanga Highveld, including the new Kusile Station.

Sanitation
Government has made significant progress in addressing sanitation challenges. The 2011 Census report confirmed that the sanitation backlog had been reduced from 5 million in 1994 to 2.4 million in 2011.

This is further being reduced by the rapid bucket eradication programme and general sanitation rollout in a joint venture by the departments of Human Settlements, Water Affairs and Cooperative Governance. The immediate target is to eradicate bucket sanitation in formalised township/ settlements within the shortest period. Basic sanitation services contribute to the improvement of people’s wellbeing, their dignity, improved health and better human settlements and livelihoods.

Climate change
On Climate Change adaptation, the first phase of the Long Term Adaptation Scenarios (LTAS) process has been completed and technical reports have been concluded for the following sectors: Biodiversity, Marine Fisheries, Health, Agriculture and Water. The second phase is underway to support an integrated assessment of the cross-sectoral and socio-economic implications of climate scenarios for South Africa and the region.

Environmental Impact Assessment
Since the promulgation of the 2006 Environmental Impact Assessment (EIA) Regulations, 24 996 EIA applications have been processed by 10 Competent Authorities. As at the end of December 2013, a total of 22 497 had been finalised and 2 499 were still in process.
 
In terms of the expansion of the national conservation estate, the area under formal conservation is currently at 7.8%, with a target of 9% by this month, March 2014.

There has been an increase in the total area of our Exclusive Economic Zone under protection from 0.5 to 2% through the proclamation of the Prince Edward Island Marine Protection Area. Sixty per cent of estuaries have partial protection.

Expanding Education and Training Infrastructure
A budget of R6 billion was allocated to universities for infrastructure for the 2012/13 to 2014/15 financial years. This includes R1.6 billion for student housing of which R1.4 billion will go to Historically Disadvantaged Institutions (HDIs), as well as R1.1 billion to address HDI infrastructure backlogs through the renovation of old facilities and the building of new teaching facilities and related infrastructure. A further R6 billion has been allocated for the newly establishment of the University of Mpumalanga and Sol Plaatje University in the Northern Cape.

R2.5 billion has also been allocated from the National Skills Fund and Further Education and Training (FET) Sector Education and Training Authorities (SETAs) for refurbishing two existing FET campuses and the construction of 12 new college campuses.

In April 2013 government signed the Youth Employment Accord with organised business and labour and the representatives of a wide range of youth groups. Substantial progress has been made in implementing the accord, including expanding post-secondary education and training; establishing set-asides for youth employment in the business process service industry; the allocation of R2,7 billion in financing for youth-owned enterprise by the IDC and SEFA; expanding workplace training and internships; and Introducing an employment tax incentive for employers to take on young workers.

Science and Technology
South Africa, together with its eight African partner countries, is hosting the major portion of the Square Kilometre Array (SKA) radio telescope. The iconic SKA project will be one of the biggest scientific projects the world has ever undertaken – and is the biggest radio astronomy project in the world.

In March the first dish of the 64-dish precursor to the SKA, the MeerKAT, will be complete. In the past five years South Africa’s contribution to global scientific output has doubled from 6 000 scientific research papers per annum to over 12 000, and the impact of that output has increased by about 15%.

On the health front, a significant breakthrough was made by the Centre for the AIDS Programme of Research in South Africa (CAPRISA) in the quest to find a solution to HIV and AIDS in the country. The study discovered how certain people develop very powerful HIV antibodies. These antibodies are referred to as broadly neutralising antibodies because they kill a wide range of HIV types from different parts of the world. This ground breaking discovery provided important clues that could be useful in the quest to develop an AIDS vaccine.

Skills development
Government has to date put in place a number of initiatives to alleviate the burden of fees from poor parents and students at both public universities and FET colleges by providing loans and bursaries to students from poor and working class households through the National Student Financial Aid Scheme (NSFAS).

Since its inception, NSFAS has assisted over 1.4 million students. In order to keep pace with the increasing number of students who need assistance to attend public universities and FET colleges, the budget of NSFAS has almost tripled from R3.1 billion in 2009 to just over R9.6 billion in 2014.
In our effort to ensure that rural people participate in the economic activity 94 820 people were involved in different skills development programmes including NARYSEC and learnerships.

Conclusion
There is no doubt that various infrastructure projects undertaken since the advent of democracy have changed the social and economic landscape of South Africa for the better. Through various interventions initiated by government, such localisation, in the implementation of projects resulted in major spin offs for job creation.

Other than jobs created during project implementation, delivered projects ensure a competitive infrastructure that reduces cost of doing business, promote a conducive environment for entrepreneurship to thrive, economic growth that create jobs and amenities that enhances social life.

We are indeed a nation at work with a good story to tell.

Thank you

Enquiries:
Nikelwa Tengimfene
Chief Director- Government Communication and Information System
nikelwa@gcis.gov.za
082 574 5495