Background notes on the 2007 Mid-Year Cabinet Lekgotla
29 July 2007
 audio (mp3)
The July mid-year Cabinet Lekgotla brings together key decision makers in government, including Ministers, Premiers, Deputy Ministers, South African Local Government Association (Salga) representatives led by their Chairperson and Directors General of national departments and provinces. Its purpose is to review progress in implementing the Programme of Action and to identify interventions that will speed up progress.
The overall assessment was that government is making progress in implementing the Programme of Action. Major strides are being made in all the areas, particularly in the fight against poverty, as confirmed by the recently released Development Indicators and Household Survey. The Lekgotla reviewed the Medium Term Strategic Framework (MTSF) approved by Cabinet in 2004, which has been updated each year at July makgotla and which guides the medium term budgeting process.
Informed by detailed cluster reports, a number of initiatives were identified that will accelerate service delivery, improve the performance of the economy, extend the fight against poverty, strengthen the capacity of the state and address the skills challenge. It was concluded that certain issues should be treated as "apex priorities" for immediate action by all spheres of government, as catalysts for faster movement across all areas of government.
The meeting concluded that the direction we have taken is correct but that there is a need to increase our capacity and efforts, in partnership with society, to accelerate movement towards the goals we have set ourselves as a nation. These background notes highlight key issues discussed by the Lekgotla. More detailed briefings by Ministers on some of the issues will be given during the next two weeks.
Economic growth and development
The economy continues to show strength and is moving to higher rates of growth, fixed investments and job creation. While the economy is in a healthy state, some challenges are starting to emerge, including the fact our infrastructure has not been keeping pace with the demands of a growing economy.
Industrial Policy Action Plan
The Lekgotla was apprised of the key challenges facing South Africa's industrialisation process. It adopted an Industrial Policy Action Plan for the implementation of the national Industrial Policy Framework which was approved in January 2007. The meeting noted that South Africa's key industrialisation challenge is to grow and diversify manufacturing and tradable services in order to generate higher levels of value addition and to increase employment in low-medium skill industries. There is also unexplored high-value potential in agriculture and mining.
Industrialisation has yet to reach its full potential and faces a range of constraints which have collectively contributed to low manufacturing profitability. This has in turn led to low investment, low output and poor export and employment performance particularly in low-and-medium skill sectors. In this context the Industrial Policy Action Plan identifies interventions for immediate implementation.
There is a major opportunity to stimulate the metals, capital and transport equipment sectors by reducing import leakage of the public Capex programme and capitalising on the current mining and mineral-processing boom. This will form a platform to position these sectors as major future exporters to the rest of the continent and beyond. Measures envisaged include finalising the Supplier Development Plans in respect of some of the Capex projects.
Building on recent successes in the automotives and components sectors, current vehicle production can be doubled to 1,2 million units by 2020 with a corresponding deepening of local content and strong linkages to other low-medium skill manufacturing sectors. As part of measures envisaged, the Minister of Trade and Industry will shortly announce the broad direction of the automotive development programme (Motor Industry Development Programme).
There is untapped opportunity to increase local beneficiation in the chemicals, plastic fabrication and pharmaceuticals sectors. Envisaged actions include review of customs tariff for upstream products and leveraging the state's pharmaceutical procurement programme. The forestry, pulp and paper and furniture sectors have the potential to bring jobs and income to poor rural communities, notably through increased plantations in the Eastern Cape and KwaZulu-Natal. There will be interventions to stimulate further processing activities, such as saw milling and furniture.
With regard to stabilisation of clothing and textiles and retention of capacity and employment in the industry, broad consensus on the sector strategy has been reached among stakeholders, paving the way for systematic implementation of a range of measures to boost the sector's performance. The momentum of work underway on the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) priority sectors [Business Process Outsourcing and Offshoring (BPO&O), Tourism and Biofuels] will be maintained. Other sector strategies and projects will be undertaken with regard to diamond beneficiation and jewellery; mining and beneficiation; agriculture/agro-processing; Information and Communication Technology (ICT) and the creative industries.
Some new cross-cutting interventions will receive emphasis in addition to those already adopted by the Economic Cluster. A manufacturing-wide Industrial Upgrading Programme will be developed for greater competitiveness. The finalisation of a broader suite of Industrial Financing measures will promote strategic AsgiSA and Industrial Policy Objectives. Tariff reforms on intermediate inputs and strengthening of the competition regime will reduce input costs.
Lowering cost of communications
Our guiding ICT vision is to establish South Africa as an advanced Information Society in which ICT tools and information are key drivers of economic and societal development. The Lekgotla considered a World Economic Forum Annual Network Readiness Report which indicated that we are doing well on ICT policy and the regulatory environment but that we need to introduce more interventions especially in the area of infrastructure investment and ICT usage.
The Lekgotla noted progress in policy and regulations. This includes initiatives to complete local loop unbundling by 2011; conclusion of the call termination hearings by Independent Communications Authority of South Africa (Icasa); agreements reached with Telkom on special telecommunications costs in support of growing the BPO industry; number portability; operationalisation of Neotel; disallowing disconnection of predetermined emergency numbers for non-payment; increased public access to government information and services via the internet at Post Offices and Thusong Service Centres.
The major focus over the next few months will be two-fold: expanded investment in infrastructure to increase the country's national and international connectivity and reduce ICT cost and implementation of the Information and Society and Development Plan approved by Cabinet early this year to increase uptake and usage of ICTs by government as a means of improving service delivery.
At national level, Telkom has committed R30 billion to modernise its backbone infrastructure and Sentech and Infraco, the soon to be established State Owned Enterprises (SOE), will be investing in the broadband backbone and operationalisation of Neotel. Furthermore, the state is looking at an extremely high capacity cable to cater for the country's scientific initiatives, such as our bid to host the Square Kilometre Array.
A number of initiatives in the pipeline or being launched will increase connectivity and access. Access points for government information and services will be increased by electronically leveraging the massive South African Post Office (SAPO) infrastructure, transforming SAPO outlets over time, using Expanded Public Works Programme (EPWP) principles, to incorporate the Thusong (Multipurpose Community) Centres. Sentech will be rolling out the core national wireless broadband network for government service delivery, especially for schools, health centres, government offices and the post office.
Infraco will lay a fibre-optic cable linking economic centres of the country. One enhancement will focus on the KAT satellite project and Square Kilometre Array in the Northern Cape and another will progress build a fibre-optic cable linking all the academic and health institutions in the country to improve access to local and global databases.
At international level, we will be increasing the presence of South Africa and Africa in the global sub-marine cable space in support of our developmental objectives. In this regard, we will be doing our part to accelerate implementation of the New Partnership for Africa's Development (Nepad) ICT Broadband Infrastructure Network for East and Southern Africa to link both coastal and land-locked signatory countries in the region. The protocol which provides the Policy and Regulatory Framework for the Nepad Network was ratified by Parliament in June 2007.
In addition, and in an effort to decisively change the current situation we will be building a super high capacity West Coast Marine Cable to link us to Europe and another one to the Americas. This cable is also proposed to incorporate the Nepad Network, thus giving additional routes and capacity to the Nepad cable. This will contribute to accelerating the development and integration of Africa as envisaged in the Nepad objectives and principles.
AsgiSA and Second Economy interventions
Lekgotla reviewed progress in implementing AsgiSA and other Second Economy Interventions. While the review report indicated that AsgiSA is achieving its targets in the investment and employment areas, a number of challenges need focused attention, including sustaining performance, reaching the marginalised poor, maintaining momentum on key areas like skills programmes, and constraints on public sector capacity to implement key programmes.
The review included a report on visits by the Deputy President to provinces during recent months. The visits provided government with a mechanism to review and monitor progress in implementation, identify and unlock blockages and unnecessary red-tape which slows down delivery. Within this broader scope, they assisted in facilitating the achievement of AsgiSA objectives and priorities.
In the coming period AsgiSA will give special attention to a number of focus areas. These will include better implementation of the ICT initiatives, REDS strategies and the national Maintenance Strategy; as well as better implementation of immigration policy in the context of the acquisition of scarce skills. With regard to infrastructure programmes, attention will be given to more integrated infrastructure planning; developing infrastructure supplies; 2010 stadia and public transport; and to the implementation of EPWP rural access road programmes.
More rapid development of small, medium and micro enterprises (SMME) and co-operatives is a priority. In this context a proposal on a suite of 10 products for exclusive and targeted procurement from small medium and micro enterprises (SMMEs) was noted and will be finalised following further consideration by the Economic Cluster and other spheres of government.
The strengthening of public institutions that support economic development and Second Economy interventions will be another area of focus, including attention to personnel related issues e.g. training, recruitment. The Presidency will work with national departments and provinces to finalise an integrated approach to Second Economy Interventions.
Human Resources Development Strategy
Lekgotla reflected on the report on work to refocus the Human Resources Development Strategy (HRDS) which was approved by Cabinet in 2001. The approved strategy was found to be still appropriate and relevant to meet demands for skills, but needs better focus, improved alignment with country human resources and requires greater involvement of the social partners. The goal of the National Human Resources Development Strategy is to develop the country's human capital in order to contribute to economic growth, promote social development, create employment and reduce poverty.
The meeting noted a gap analysis which revealed, among other things, insufficient integration and co-ordination in implementation; lack of protocols to clarify roles and responsibilities of the different provincial and national delivery agents, civil society, business and organised labour.
Lekgotla agreed that there was a need, not necessarily for a new strategy, but for more focused implementation of the strategy in partnership with all sectors of society. In the MTEF period, the national strategy will shape, and be shaped by, the following research and policy documents: Industrial Policy Action Plan; Science and Technology Strategy; Sectoral Skills Plans; Employment Equity Legislation; National Spatial Development Perspective; National Youth Strategy; and the Public Service Human Resources Development Plan.
Further work will be done to review, among other things, the strategy's indicators and its alignment to initiatives such as the Joint Initiative on Priority Skills Acquisition (Jipsa) and AsgiSA. As from 2008, a national stakeholder National Human Resource Development Strategy (NHRDS) Conference will be held annually review implementation, monitor and ensure that there is cooperation between the state and all other stakeholders in society. A new co-ordinating mechanism was endorsed with Education and Labour as lead departments.
Other interventions will include expanding the capacity of FET Colleges and increasing enrolments. Resources to schools in poorest quintiles will be increased, including reference materials for mathematics, English and general reading. A schools sports programme will be implemented in poorer schools to promote physical education and healthy lifestyles. These projects will be managed by the Departments of Education and Sports and Recreation.
More resources will be allocated for engineering skills training. The role that professional bodies could play in assisting the country to meet this challenge will be examined.
The current Sector Education and Training Authority (SETA) landscape will be reviewed with a view to aligning the work of SETAs to new and emerging national priorities such as those of AsgiSA and the National Industrial Policy Framework.
Social Sector Comprehensive Anti-poverty Strategy
Reducing poverty remains one of the fundamental and most urgent challenges facing our new democracy. We are on course to achieve the Millennium Development Goals and to halve poverty and unemployment by 2014 and indications are that we will exceed these goals.
Whilst the central role of the state in the community development was acknowledged, the meeting agreed that the state, as a developmental state, must work in partnership with civil society and communities in the fight against poverty and facilitate the active participation of society in the implementation of anti-poverty programmes.
Whilst the review indicated that the country is making progress in reducing poverty, there are indicators that income inequality is growing.
Government's approach deals with poverty on multiple fronts: basic income security, aimed at providing safety nets for the most vulnerable; basic services and other non-financial transfers (social wage), including free basic municipal services like water, electricity, refuse removal, education and primary health care for the poor; addressing asset poverty by accelerating delivery of houses and land reform programmes; human resource development initiatives which focus on skilling the poor to improve employment prospects; and second economy initiatives such as EPWP, AsgiSA, SME initiatives.
The Lekgotla welcomed details of progress in the fight against poverty, drawing amongst other sources on the Development Indicators, Mid Term Review and the recent StatsSA Household Survey. It was noted also that eradicating the consequences of years of neglect will still require further time to work on.
With regard to social assistance and social insurance, 3,2% of gross domestic product (GDP) is going in the form of social grants to 12,7 million beneficiaries, and the Social Security Agency is in full swing, helping reduce inefficiencies in the social grant system. The establishment of the Government Employees Medical Scheme has extended medical cover to employees previously not covered by medial schemes and the Unemployment Insurance Fund (UIF) has been extended to cover domestic and farm workers.
Free basic services now reach 74% of the population. By April 2007 access to water had increased from 59% of households in 1994 to 86%; and access to sanitation to 71% increased from 50% in 1994. Free healthcare is being provided to children under 6, pregnant and lactating women; and to people with disabilities. 1600 clinics have either been built or upgraded since 1995 and 11 new hospitals built since 1998. The schools Nutrition Program is reaching 5.9 million learners in 18 000 schools; and the no school fee policy is being implemented.
Programmes to address asset poverty include the delivery of 2,3 million housing units since 1994.
While welcoming these advances as consequences of government interventions, it was the considered view of the lekgotla that the fight against poverty cannot be left to government alone. The scale and the nature of the poverty challenge require a strong partnership between government, business, labour, and civil society and the mobilisation of society as a whole.
Such a partnership will help co-ordinate and align all anti-poverty initiatives to maximise impact. Its success will require a poverty matrix for the country, including a database of households living in poverty and the identification and implementation of specific interventions relevant to these households.
It was also agreed that there is no scope for complacency as too many people remain poor. Therefore, measures will be put in place to accelerate and broaden government's anti-poverty program. Implementation of poverty alleviation programmes will be intensified. The existing sectoral anti-poverty framework will be sharpened and steps will be taken to ensure proper articulation among relevant programmes.
The Lekgotla also identified some specific challenges in the fight against poverty, in the form of gaps which require further work.
With regard to social assistance the challenges include children in poor families who are 14 to 18 years old who fall outside any social security grants; and adults who are structurally unemployed or irregularly employed e.g. adults with chronic illnesses and young adults of 18 to 24 years who are in transition from education to work. An estimated 7 million low income earners remain excluded from medical cover. There is a need to identify all persons currently excluded from the UIF e.g. civil servants, non-citizens and fixed term contract workers.
With regard to basic services and assets, there is a need to accelerate the delivery of community infrastructure to address asset poverty and achieve universal access to basic and essential services. The contribution of internal migration to demands for service delivery needs attention.
Social Cohesion
The Lekgotla discussed and agreed on the need for programmes to promote and strengthen social cohesion in our society.
Such programmes would be informed by the need to improve the quality of social relations by promoting positive values, including social solidarity and trust. They would include a response to the need to ensure that benefits of growth are shared among social groups. Social cohesion programmes should address social, economic and cultural factors tending to diminish social cohesion.
There is also a requirement to develop institutional frameworks to address social cohesion. It was agreed that indicators of successful social cohesion programmes will include the peaceful co-existence of citizens living free of deprivation such as food, water, shelter or in terms of basic human rights; and showing tolerance and respect for others. Pride amongst citizens in being South African and optimism about the future of the country; trust and pride in the new democratic institutions; and public participation in social dialogue on issues of material interest would be further indicators of social cohesion. Media institutions have a key role in increasing social cohesion through accurate news and information.
The ultimate objective of the social cohesion programme is to contribute to the building of a united, non-racial, non-sexist, democratic society held together by common values.
Implementation of the programme will be led by the departments of Social Development and Arts & Culture. Partnership with civil society organisations will be established to take the conversation forward. Following a review of existing programmes, new initiatives will be presented at the January Lekgotla.
Organisation and capacity of the State
Single Public Service
The Lekgotla noted that work to establish the single public service is on course. The key milestone will be the promulgation of a Single Public Service Act. The Bill is currently being drafted and will be tabled in Parliament during this year, with a view to promulgate by September 2008. A central pillar is the acceleration of access to public service over the next 7 years. In this regard, the access strategy has been finalised and is being implemented, amongst others through the programmes for the roll-out of Thusong Service Centres; Public Information Terminals; a pilot for urban service malls in Durban, Cape Town and Johannesburg.
A Single Public Service GIS (Geographical Information System) will be established to link existing GIS databases in government. By combining different data sets e.g. maps, service delivery points, and community profiles such as poverty levels it will facilitate more focused interventions to expand access to public services.
Safer and more secure communities
The Lekgotla's review indicated that crime remains a major challenge that requires the involvement of all sectors of our society.
Fighting crime remains a key priority for government. The Justice, Crime Prevention and Security (JCPS) cluster reported on the crime statistics with a focus on the crime trends which are indicating an overall downward trend over time. For instance, in October 2003, contact crimes reached a peak of 94 000 per month but this figure has come down to around 60 000 in February 2007. Priority crimes came down from a peak of 220 000 per month in December 2003 to below 169 000 in February 2007. Although the levels still remain unacceptably high, the downward trend was welcomed as grounds for confidence that intensification of the programmes will bring further progress.
The cluster reported on its major interventions in the fight against crime.
Social crime prevention has been informed by the socio-demographic and profiling of crime ridden areas. Sector policing has been operationalised in 169 priority areas; 35 285 additional reservists have been recruited; and 1 064 Community Police Forums are already in place at 1 115 police stations.
Strategic community mobilisation and partnership has focused in the first instance on the establishment of the Anti-crime Leadership Forum, which is made up of government and business leaders. The forum has set up with working groups on: violent and organised crime; review of criminal justice system; baseline effectiveness; communication. This year, the launch of the 365 Days National Action Plan to address abuse of women and children builds on the mobilisation over a number of years of all sectors of society in the 16 days campaign for no violence against women and children.
The cluster will continue to deploy technology to combat crime and to strengthen and integrate the justice system.
With regard to immigration control, a turnaround project is being implemented which includes: establishment of an integrated refugee information system; development of a draft protocol on smuggling of human beings; ratification of a SADC protocol on free movement of people; developing a new secure passport system; and capacitating of the Home Affairs immigration branch as part of the department's turnaround strategy.
International relations
The Lekgotla reviewed on the development since 1994 of South Africa's role in the global arena. The country's international work is based on two pillars, political and economic diplomacy. The political work has been largely consolidated and there is now a two-fold challenge: integrating and co-coordinating international marketing and economic diplomacy; and leveraging our extensive global reach to advance national economic interests.
The Lekgotla reflected on the need for greater co-ordination among the various role players in the public sector, for example in overseas visits. The Department of Foreign Affairs will play a much stronger role to ensure that overseas trips are better coordinated in order to effectively realise the country's potential in advancing our political and economic interests.
Work will be done to develop common messages for all government delegations that travel abroad to avoid competition or lack of consistency between different departments and spheres of government. The International Relations, Peace and Security (IRPS) cluster has set up an Interdepartmental task Team, which includes the International Marketing Council (IMC) and SATourism to co-ordinate the activities of the all various players.
The co-ordinated international marketing approach will be piloted in our dealings with China by ensuring that all departments and spheres of government plan together as South Africa and China prepare to celebrate 10 years of diplomatic relationship between the two countries. As well as this tenth anniversary celebration in 2008, the coordinated marketing and economic diplomacy will encompass the SA - China Partnership for growth and development; the visit by President Thabo Mbeki to China in 2008; participation in the Shanghai World Expo in 2010; and the launch of a major campaign to market South Africa in China.
Enhancing the country's economic diplomacy and marketing efforts in the African continent will include strengthening work at multilateral level through Nepad, Southern African Development Community (SADC) and the African Union (AU). The recent launch of the Pan African Infrastructure Development Fund will accelerate this work.
The 'Grand Debate' on the Union of States of Africa was noted, particularly the Accra Declaration, which reiterated the conviction to establish a United States of Africa with a Union Government as the ultimate objective. The Lekgotla noted that the AU Summit re-iterated the need for common African response to global challenges, to boost regional integration processes through continental mechanisms and agreed to accelerate economic and political integration of the continent. The lekgotla supported the principle of a United States of Africa as a an ultimate objective but concluded that this strategic goal must be considered further and that immediate focus should be on building regional economic communities and strengthening the African Union.
Work on the economic diplomacy front covers a wide area of activity which encompasses trade and investment, tourism, science & technology, multilateral issues and international finance. Greater coherence is critical to maximising our gains and to advance our national economic interests. Three key elements are essential in advancing a progressive global agenda, namely: promoting good governance and human rights, advancement of peace and security, and promotion of sustainable economic development.
Our efforts in advancing trade, attracting foreign direct investment and promoting tourism will focus on strengthening engagement with traditional markets, increased focus on new emerging markets, strengthening economic engagement with the rest of the African continent and continued work in the World Trade Organisation.
Continued efforts in the global arena will be linked closely to the positive projection of the African region and the continent.
On economic front, government will continue to build strategic alliances in support of industrial policy and establishing a link between these alliances with the strategic sectors of our economy. These partners will include the SADC, EU, the Americas and the emerging markets. Special attention will be paid strengthening links with other emerging markets. This will include continuing focus on the BRIC Countries (Brazil, Russia, India and China), Gulf States and Latin American Countries. Economic links will be strengthened with our IBSA partners (India and Brazil). The meeting noted that our links with emerging markets is particularly important since these markets are experiencing unparalleled growth.
Action plans will be developed to ensure that common messages and themes about the country are developed and agreed to by all role players. A proposal will be developed by the IRPS on how to align and co-ordinate international activities between all spheres of government.
We are therefore convinced that we are indeed making progress in all areas that we have identified as critical to improving the lives of all South Africans. However, we will not be complacent. If anything, we want to double our efforts to accelerate the rate and extent of change in the material conditions or our people.
Enquiries:
Themba Maseko
Government Spokesperson
Cell: 083 645 0810
Issued by: Government Communications (GCIS)
29 July 2007
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