Budget Speech: Honourable Mec Mmaphefo Matsemela
BUDGET SPEECH: HONOURABLE MEC MMAPHEFO MATSEMELA
North West Department of Economic
Development and Tourism
7 July, 2009
Honourable Speaker
Honourable Premier
Honourable Members of the Executive Council
Honourable Members of the Provincial Legislature
Honourable Mayors
Leaders of the Broader Provincial Local Government Sphere
Boemedi jwa ntlo ya Segosi mo Profenseng ya Bokone Bophirima
Ditlhogo tsa mafapha a puso
Chief Executive Officers of our Parastatals
Members of the Business Community
Members of the Religious fraternity
Leaders of the broader Civil Society Formations
Baagi ba Bokone Bophirima
Distinguished guests
Comrades and friends
I greet you all
Introduction
Honourable Speaker and Honourable Members;
Following a change in administration as a result of the end of the second democratic term of office, both the National and Provincial Administration are making efforts for a seamless and casualty free transition. The new administration has already moved miles ahead in developing programmes for the next five years of this Government.
As Government, we have made massive achievement over the past 15 years. We are indeed proud of our past and confident about our future prospects for success. I am humbled by the millions of South Africans who braved the long queues to cast their vote which gave the ANC a resounding victory on the 22nd April 2009 elections. We have been given a renewed mandate by our people and we intend to carry it forward with much success and we will not falter.
As our life long icon, the former President, Nelson Mandela said after casting his vote during the April 1994 election, “It was tough as though we were a nation reborn”. Yes we are a new nation now, the one nation which is driven by the vision to strengthen our democracy, create an enabling environment where all South Africans will be able to enjoy the fruits of our freedom.
We salute the leadership of our President Jacob Zuma and the Premier Maureen Modiselle for the strategic leadership and guidance they are providing to us as the cadres of the party and agents of service delivery. I say to them, lead and we will follow the light of hope and sparks you carry with you all the time.
Honourable Speaker, this Departmental Budget Speech reflects a commitment made by the ANC led Government to implement its Polokwane Resolutions and the Election Manifesto to focus on expanding job opportunities for our people, fight the socio-economic inequalities, reduce poverty and unemployment, and to improve the quality of live of our people.
This speech reaffirms our commitment to implement programmes which strengthen equity, build an inclusive economy, create decent jobs and sustainable livelihoods.
In doing so we would have continued to push back the frontiers of poverty. This will require that we create jobs at a faster rate and provide more economic opportunities for our people, which will take them out of the vicious cycle of poverty, underdevelopment and unemployment.
The budget and the development programmes we are presenting today, clearly demonstrate our commitment to fulfil the manifesto of our ruling party to which we are indebted. We are translating the electoral mandate in actionable development programmes and projects linked to an Annual Performance Plan for 2009/10 fiscal year and the Strategic Plan for the next five years of this government. Indeed, actions speak louder than words as words, words, words signify nothing. Working together as a nation and people of the North WestProvince, we will take a zero tolerance to idleness in the Department and our Agencies as this will have a negative effect on our efforts to implement our development initiatives
Motswana o rile kgetsi ya tsie e kgonwa ka go tshwaraganelwa and this is the same message that bears the character of our theme for this year “working together we can.”
The State President Jacob Zuma, has set clear measures upon which the performance of our respective Departments can be measured against the following: He said we must deliver 500 000 jobs by the end of December, and let me emphasise that this will be achieved, “as working together we can do more”
He further said that the culture of non performance and lack of desire to deliver according to the targets set by our government should not be tolerated.
The message, Honourable Speaker, speaks to us and this budget reflects our understanding of the simple and clear orders from our State President.
Reflections on the past electoral mandate
Honourable speaker, fifteen years into this solid democracy, the ANC led Government has achieved a lot.
We have managed to create jobs, provided opportunities for skills training, developed social and economic infrastructure, strengthened our democratic institutions, improved the quality of life for our people, and we are continuing to eliminate the legacy of apartheid which has had very devastating effects to our development plans and resources.
Fifteen years into our democracy, we have achieved much in building a new society by uniting all our people, expanding opportunities so that the new freedom must be brought to our people, reducing poverty and improving the quality of life of millions of South Africans.
Much of the economic and social devastation of apartheid and its scars are still with us. Our common struggle to build a better South Africa continues.
Our life long icon, Mr. Nelson Mandela said, “It should never be that the anger of the poor should be the finger of accusation pointed at all of us because we failed to respond to the cries of the people for food, for shelter, the dignity of the individual. No one can be at peace whilst others wall in poverty and insecurity. We cannot wait on the side and watch our people suffer”.
The programmes and projects covered in this speech are aimed at making direct interventions to deal with all the socio-economic challenges facing our people. We all know, and have witnessed the anger of our citizens in the Province frustrated by lack of opportunities which have created a lot of stress and explosive incidents. This cannot be allowed to happen. The programmes and projects we have packaged and presenting today, indicate that we have heard the cries of our people and we have felt the impact of global economic crisis.
Honourable Speaker, this current Government came into office against the backdrop of the economic meltdown which has scared both the developed and developing countries, and South Africa has not been immune to such a state of affairs. The slowing down of economic growth will have a negative bearing on the enhancement of key efforts which are inclusive of job creation, intervention programmes, social and economic investment and sustainable livelihood of our people.
In the words of the former 28th American President Woodrow Wilson, “The truth is we are all caught in a greater economic system which is heartless”. It is hoped that when an economy is engulfed in a global crisis such as the current one, the market would regulate itself. This is not happening and hence government is making a direct contribution to save the situation from total collapse. We as Government, will implement the turnaround programmes and projects as well as appropriate strategies to make direct intervention that will grow our economy, create jobs, up-skill our people and provide means for sustainable livelihood.
The ANC together with Government, Labour, Civil Society, Business, and our Development Partners will work together to whether the storm. We believe as a province that through cooperation and focused intervention, together we can do more to deal with these challenges and ultimately increase the rate of our development impact.
Thomas Sowell, an American economist and writer, said that “The first lesson of economics is scarcity. There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” We must admit that whilst the economic challenges of our time have affected the quantity of our resources, it should not dampen our political spirit to try and provide development resources to make intervention to deal with the challenges facing our people.
The development wheel has began to spin even more faster and there is hope that as we enter the next decade of our democracy, together we can do more to create jobs, alleviate poverty, develop the skills this economy needs, and grow our economic sectors. We are confident that working together with you we can do more, and better.
The Impact of the Global Economic Meltdown
South Africa is indeed in a recession and this calls for more government intervention. In her State of the Province address, Honourable Premier Maureen Modiselle stated that, “Recession or no recession, our people still expect government to provide answers on job creation, poverty relief, investment and growth”. It is for this reason and optimism that as a government we will have to increase the pace of our intervention efforts, with scares resource.
The current global economic developments continued to impact on South Africa and even more on our provincial economy given the economic sensitivity to platinum and gold mining in the province.
Given South Africa’s dependence on the mining sector, the downturn in the world economy has manifested itself in slowing exports of mining products and lower commodity prices, noticeably platinum, during the latter half of 2008.
South Africa’s international trade has slowed considerably in the final quarter of 2008 and in the first quarter of 2009. The South African Reserve Bank (SARB) has stepped in to ease the Monetary Policy in order to provide more room for the South African economy to recover towards the end of 2009 when, hopefully, consumer demand will strengthen. The Government’s continued increased spending on infrastructure will contribute more to stabilizing the economic climate and avert a deepening recession.
At a meeting of the G20 countries in London recently, it was clear that an economic recovery will not only occur because the business cycle trough has been reached, but will mainly come about, if measures that were taken, assist to restore economic competency of the world.
Government will have to keep a watchful eye and act timeously on the nature and speed of the structural adjustments taking place in the world and how it will impact our country nationally, and our province in particular.
North WestProvince Economic Indicators
According to Stats SA, during 2006, the North West economy grew by 4.3% following a growth rate of 4.9% in 2005. The sector that dominated in terms of contribution to the Growth Domestic Product (GDP) of the province remains mining at 25.8% followed by finance, real estate and business services with 13.7%. The government sector stands at 11.3%. Up to 2007 economic growth has been characterised by two dichotomies.
Firstly, growth has been driven by a combination of substantial commodity prices, strong capital inflows and robust domestic consumer demand, and is grounded on antipoverty measures, growing employment, and rising asset prices.
Unfortunately, the effect of this combination was the strengthening of the rand, which made it difficult for exporters outside the commodity sector, and those who compete with imports, to remain competitive.
There is a perceived risk of an unbalanced economy, compounded by the uncertainty of trends in commodity prices, capital flows, and a domestic consumption boom.
The least contributor is the secondary industry at 9.5%. There has been a constant decline of the secondary industry in the province for the past few years and only in 2007 was there a slight improvement from a contribution of 9.4% to 9.5%. Given the global scenario, it is possible that the anticipated growth levels will need to be adjusted downwards.
The second imbalance relates to the fact that approximately a third of South African households have not as yet been able to benefit directly from the initial relative economic success, despite the fact that the social grant program has given some impetus to poverty reduction and income redistribution. As long as a significant part of the population is functionally dislocated from the mainstream economy, South Africa's growth potential will remain constrained.
Within this context, Government has identified a number of "binding constraints" that must be effectively addressed if the target of a 6% GDP growth rate is to be achieved and sustained, and the two key dichotomies identified above are to be countered. These binding constraints include the volatility and level of the Rand currency, a shortage of relevant skilled labour, amplified by the cost effects on labour of previous apartheid spatial patterns,
barriers to entry, limits to competition, limited new investment opportunities, a sub-optimal regulatory environment, the burden on small and medium businesses, and deficiencies in state organisation, capacity and leadership.
Addressing these constraints will entail a series of decisive interventions. These interventions will imply more than a shift in economic policy, and will involve a set of specific initiatives that are designed to achieve government’s objectives more effectively.
CORPORATE GOVERNANCE
Prudent Financial Management
Honourable Speaker, the Department has embraced the requirements for fiscal responsibility and implementation plans are in motion to ensure that all issues raised by the Auditors are fully being implemented.
The procedures to detect irregular, fruitless and wasteful expenditure are in place and occurrences of such expenditures have been reduced drastically. We have tightened our belts regarding fruitless and wasteful expenditures and will continue to ensure that these expenditures are being monitored regularly without fail. In addition, we have introduced risk assessment workshops to foster a culture of responsibility amongst our Senior Managers. This initiative is in line with the call from the State President Jacob Zuma to deal effectively with the flow of corruption and fraud in the civil service.
Productivity and Efficiency
Our Honourable Premier, Mrs. Maureen Modiselle said in her State of the Province address,
“As part of preparing government for the achievements of these goals, we will be starting a process of auditing the functionality of State Owned Entities responsible for Economic Development. Duplications and cross funding of same mandates has in the past limited the opportunity for these Entities to maximize their contribution for the attainment of the provincial goals”.
Honourable Speaker, we have started with the procurement process of engaging Specialists who will conduct an in-depth study and present viable models for streamlining the roles, functions and structural adjustment required to improve the effectiveness and efficiency of our agencies inclusive of the Department’s Directorates.
I will ensure that this study is being concluded before the end of November 2009. This study will further give advice on how this Department will collaborate with Municipalities on their Local Economic Development frameworks.
TRADE AND INDUSTRIAL DEVELOPMENT
Honourable Speaker, industrial development is a fulcrum of the economy of any developing country or region. In his Budget Speech the Minister of Trade and Industry, Dr. Rob Davies, referred to the “Framework for South Africa’s Response to the International Economic Crisis”. In his State of the Nation Address, State President Zuma reiterated that the Framework remains the central pillar of our joint efforts to respond to the crisis.
We are in the process of developing our Provincial Industrial Development Implementation Framework in consultation with the National Department of Trade and Industry. The Mafikeng Industrial Development Zone (MIDZ) is currently our anchor project for this mass job creation initiative.
Infrastructure development
Honourable Speaker, key basic infrastructure projects for the Mafikeng Industrial Development Zone (MIDZ), have been completed. Such includes the bulk water supply at a total value of R 22.6 million (early 2009); the bulk sewer pipeline at a total value of R 15.3 million; and the bulk Electrical Power Supply, total value R18.7 million, is 70% complete.
It is being anticipated that the Internal Services Project, worth R20 million will be completed by the end of September 2009, and twenty three (23) fully serviced industrial sites will be ready for occupation by industrialists.
A review study is currently being conducted to analyse the options of converting the now apparent non-viable MineralsPark building into a Business and Trade Centre. A Business Plan is being developed and is due for presentation to the Department by the end of August 2009.
The IDZ operator permit
A detailed MIDZ Business Plan has been submitted to the National Department of Trade and Industry (DTI) for the purpose of applying for an IDZ operator permit. We expect the DTI to pronounce on this matter during the third quarter of this financial year. This will enhance the operations of the airport to most optimally benefit the operations of the MIDZ.