the dti Presentation on the Annual Report 2013/14 Mr Shabeer Khan Chief Financial Officer 29 October 2014 1 Presentation Outline • • • • Economic Context Strategic Goals The structure of the dti’s work Annual Performance 2013/14 – Key achievements – Summary of achievement of targets – Financial Management • Challenges 2 Economic context 3 Global Economy January – March 2014 (Q1 2014) Global gross domestic product (GDP) growth slowed from an annualised quarter-on-quarter rate of 3.4% in the fourth quarter of 2013 to 2.1% in the first quarter of 2014. This was primarily due to a 2.1% contraction of GDP in the United States (US) and slowing growth in China and the European Union (EU). April – June 2014 (Q2 2014) Global GDP growth likely recovered slightly in the second quarter as the US economy rebounded strongly and grew by 4% on an annualised quarter-on-quarter basis Economic conditions in the EU worsened however with Germany surprisingly contracting 4 Global Economy Quarterly GDP, Seasonally-adjusted and Annualised 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% USA Euro area China Japan Source: International Monetary Fund IMF 5 Global Economy International Monetary Fund (IMF) expects world output growth to rebound in the second quarter of 2014 and firmer in 2015 and 2016. The IMF further projects that imports by advanced economies will increase from 1.4% per annum in 2013 to 4.6% per annum in 2015. Overall, the economic growth outlook remains weak with significant downside risks. 6 Domestic Economy Real GDP grew by an annualised quarter-on-quarter rate of 0.6% in the second quarter of 2014. South Africa’s growth performance was led by the tertiary sector, mainly: o Government services, o Finance, real estate and business services, and o Transport, storage and communication services. The Manufacturing sector contracted by 2.1% in the second quarter of 2014 due to low production in autos, chemical products, rubber and plastics, glass and non-metallic mineral products. The contraction in Manufacturing was primarily due to the slow pick up in the mining sector after the prolonged strike in the platinum sector. 7 Domestic Economy Source: Statssa 8 Domestic Economy SA exports and imports to the world declined in the second quarter of 2014. Imports declined particularly significantly leading to an improvement in SA’s trade deficit. SA exports to Africa increased from R70.2bn to R71.9 bn resulting in a trade surplus of R39.5 bn with the continent. SA trade with the world and BRICS were affected by poor growth in the EU and the US. Demand for commodities and commodity prices remain relatively flat as China’s policymakers attempt to re-balance the economy. SA trade with Africa consequently remains a priority focus for the dti. 9 Domestic Economy SA trade with the world, Current Rands 300 250 200 Billions 150 100 50 0 1Q -50 2Q 3Q 4Q 1Q 2Q 2010 SA exports to WORLD 3Q 2011 4Q 1Q 2Q 3Q 2012 SA imports from WORLD 4Q 1Q 2Q 3Q 4Q 1Q 2013 2Q 2014 SA trade balance with WORLD Source: the dti 10 10 Strategic Goals the dti’s strategic goals for the period under review were: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation. Build mutually beneficial regional and global relations to advance South Africa’s trade, industrial policy and economic development objectives. Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth. Create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner. Promote a professional, ethical, dynamic, competitive and customerfocused working environment that ensures effective and efficient service delivery. The structure of the dti’s work the dti’s work is organised in terms of the following clusters: Industrial development; Trade, Investment and Exports; Broadening participation; Regulation, and Administration and co-ordination 12 12 Key achievements against planned targets for 2013/14 Financial Year Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation The sixth iteration of the annual rolling Industrial Policy Action Plan (IPAP 2013/14-2015/16) was successfully launched in April 2013 and implementation reports were produced. Key Achievements The new SABS Local Content Verification Office was officially launched in July 2013 together with a new technical instrument (SATS) 1286 in support of South Africa’s localisation strategy. Revised National Industrial Participation Programme (NIPP) guidelines were approved, effectively closing existing loopholes with respect to multiplier calculations. Concluded local content verification for all transversal contractors on clothing, textiles, leather and footwear (CTLF) tenders with contract value of R1 million or above in December 2013 to gauge compliance with designation instructions. 14 14 Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation Total investment attracted into the Autos sector amounted to R16 billion. Since the designation of buses, 300 buses have been procured with localisation requirements as set out in the Designation Instruction Note. Key Achievements Major contracts included: • Mercedes-Benz SA’s successful tender to provide 134 buses for phase 1B of Johannesburg’s Rea Vaya Bus Rapid Transport (BRT) system; • Volvo SA’s successful tender to provide 40 new vehicles to the City of Cape Town for its extended MyCiti bus routes, at a cost of R180 million; and • MAN supplying 80 new commuter buses to Great North Transport, Limpopo’s largest public transit operator. The Automotive Supply Chain Competitiveness Initiative (ASCCI), a partnership between government, labour and business was launched in October 2013. 15 Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation Mercedes-Benz SA has escalated its total investment in South Africa to more than R5 billion, underpinning an increase in its local output to 100 000 units a year and creating 800 new jobs. Key Achievements Production of the new C-Class has already started at the Mercedes’ East London plant, and will slowly ramp up from the current 250 units to full capacity of 420 units a day. General Motors SA (GMSA), in partnership with component manufacturer Tenneco SA, had been awarded a R6 billion contract to export catalytic converters to North America. Part of the 2013/14 Family Planning Tender (all SA-made contraceptives) worth an estimated R100 million has been designated. Significant progress has been made in the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), with the Department of Energy (DOE) approving 19 bids in the second round of the solar photovoltaic, wind, small hydro and concentrated solar power 16 sectors. Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation Transnet announced its intention to purchase more than 1 000 locomotives at an estimated value of R50 billion. The Transnet contract commits locomotive manufacturers to a target of 65% local content over time and these will create and preserve approximately 30 000 jobs. Approximately 3 233 unemployed learners enrolled for training and 2 417 placed to increase the pool of agents suitable for middle management in the Monyetla Work Readiness Programme. The film Long Walk to Freedom, was produced at a cost of R239 million, premiered and released countrywide in November 2013, earning more than R23 million at the box-office to become the highest-grossing film in the country In agro-processing, the dti, in collaboration with Buhler, launched the innovative Isigayo plant in April 2013. MCEP funding approved: 29.7% spent on Agro-processing, 15.7% spent on metals sector and the remainder was spread across other sectors Key Achievements 17 Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation The Clothing and Textile Competitiveness Programme (CTCP) has stabilised the CTLF sector and much progress has been made since the launch of the programme: • 44 applications were received to the value of R 645 million under the Competitiveness Improvement Programme (CIP), with R77.7 million already disbursed. • 777 approvals have been made to date, under the Production Incentive Programme (PIP), to a total value of R2.2 billion. Since inception 63 311 jobs have been saved and 8 459 jobs created. Key Achievements Two new regional footwear clusters have been established under the National Leather and Footwear Cluster Initiative – the Fast-Track Cluster (Eddels) in KwaZulu-Natal and the Southern Cape Regional Footwear Cluster (Watsons). 18 Industrial Development SG 1: Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation The SEZ Bill was passed by both the National Assembly and the National Council of Provinces (NCOP). The Bill (which has now become law since May 2014) will enable the creation of new industrial hubs and bring previously marginalised regions into the mainstream of the national economy. Key Achievements A new IDZ was designated at Saldanha Bay in October 2013. Pre-feasibility studies have been completed for Tubatse in Limpopo and Upington in Northern Cape, while others are being finalised for Bojanala (North West), Maluti-a-Phofung (Free State), Musina (Limpopo) and Nkomazi (Mpumalanga). Applications for designation have been submitted to the Manufacturing Development Board in respect of Dube Trade Port (KwaZulu-Natal). 19 Overview of Incentive Schemes Actual Number of firms/projects supported Manufacturing Investment Incentives Description Potential jobs supported Total disbursement R’000 R1 137 620 Enterprise Investment Programme (EIP)Manufacturing Investment Programme (MIP) EIP- Aquaculture Development and Enhancement Programme (ADEP) Automotive Investment Scheme (AIS) 12I Tax Allowance Incentive 374 11 734 20 574 36 1 121 13 2 681 Critical Infrastructure Programme (CIP) Manufacturing Competitiveness Enhancement Programme (MCEP) Services Investment Incentives 08 4 262 R 139 968 365 106 559 R 991 444 09 2 514 R 278 495 83 - R 276 505 Business Process Services (BPS) Film & Television R 817 838 20 Provincial Spread: Broadening Participation Incentives North West: BBSDP: 32 CIS: 10 EIP: 12 ISP: R 1 Gauteng: Limpopo: BBSDP: 339 CIS: 48 EIP: 128 ISP: 7 BBSDP: 208 CIS: 74 EIP: 20 ISP: 3 Mpumalanga: BBSDP:54 CIS: 6 EIP: 12 ISP: 4 Northern Cape: BBSDP: 6 CIS: 10 EIP: 0 ISP: R 3 Kwa Zulu Natal: BBSDP: 221 CIS: 15 EIP: 0 ISP:1 Free State: BBSDP: 23 CIS: 7 EIP: 8 ISP: 2 Western Cape: BBSDP: 53 CIS: 11 EIP: 80 ISP: 7 Eastern Cape: BBSDP: 130 CIS: 62 EIP: 38 ISP: 0 21 Provincial Spread: Manufacturing Incentives North West: 12I: 0 AIS: 1 CIP: 0 ADEP 1 Gauteng: Limpopo: 12I: 2 AIS: 4 incl 1 P-AIS CIP: 5 ADEP 2 12I: 0 AIS: 0 CIP: 2 ADEP 2 Mpumalanga: 12I: 1 AIS: 0 CIP: 0 ADEP 1 Northern Cape: 12I: 0 AIS: 0 CIP 1 ADEP 0 Kwa Zulu Natal: 12I: 3 AIS: 8 incl 1 P-AIS CIP 0 ADEP 1 Free State: 12I: 0 AIS: 0 CIP 0 ADEP 0 Western Cape: 12I: 2 AIS: 1 CIP: 0 ADEP 11 Eastern Cape: 12I: 5 AIS: 24 CIP: 0 ADEP 2 22 MCEP Provincial Performance: 2012/13 & 2013/14 LIMPOPO 2012/13: 3 Approvals (2%) R11.2 m (1%) 2013/14: 4 Approvals (1.1%) R 7.3 m (0.3%) NORTH WEST 2012/13: 1 Approval (0.5%) R4.5 m (0.5%) 2013/14: 6 Approvals (1.6%) R35.3 m (1.3%) NORTHERN CAPE 2012/13: 1 Approval (0.5%) R 5.5 m (0.5%) 2013/14: 2 Approvals (0.5%) R5.7 m (0.2%) WESTERN CAPE 2012/13: 66 Approvals (37%) R363 m (36%) 2013/14: 106 Approvals (29%) R497.8 m (17.5%) FREE STATE 2012/13: 2 Approvals (1%) R1.6 m (1%) 2013/14: 15 Approvals (4.1%) R63.1 m (2.3%) GAUTENG 2012/13: 73 Approvals (37%) R431.5 m (44%) 2013/14: 139 Approvals (38.1%) R1.7 b (63.3%) MPUMALANGA 2012/13: 5 Approvals (3%) R14.9 m (2%) 2013/14: 7 Approvals (2%) R25.9 m (0.9%) KWAZULU-NATAL 2012/13: 29 Approvals (14%) R81.9 m (8%) 2013/14: 54 Approvals (14.8%) R301.7 m (10.6%) EASTERN CAPE 2012/13: 17 Approvals (8%) R70.6 m (7%) 2013/14: 32 Approvals (8.8%) R101.1 m (3.6%) 23 Overview of Incentive Schemes Description Actual Number of firms/projects supported Total disbursement R’000 243 R 75 480 1 066 R 291 493 28 Paid from EIP budget 1 835 R 273 818 Broadening Participation Co-operatives Incentive Scheme (CIS) Black Business Supplier Development Programme (BBSDP) New Incubation Support Programme (ISP) Trade, Investment & Exports Export, Marketing and Investment Assistance (EMIA) 24 BBSDP Applications Approved in 2013/14 per province 25 CIS Applications Approved In 2013/14 26 CPFP Assistance Across Countries For 2013-14 Guinea •Iron Ore Mine •Bel Air Bauxite Mine Senegal •Railway Development Ethiopia •Development of the Beef Abattoir Cameroon •Development of the Student Housing Sierra Leone •Marampa Iron Ore Mine •Marampa Renewable energy Ghana •Housing Development •Sugar Cane Fields Development Namibia •Logistics Activity Precinct •Omitiomire Oxide Project Tanzania •20 000 Housing Development •East Africa Dry Port Malawi •Solid Waste to Energy project Mozambique •Mineral Sand Deposits •Picoco III Housing Development •Alluvial Gold Mine Angola •Development of the Hotel Chain Zambia •Chingola Railway Line •Ndola Gold project •Solid waste to Energy project Zimbabwe •Establishment of the Dark Fibre Infrastructure •Development of the Musami Dam project Burundi •Mule Hydropower development •Jiji Hydropower Development Madagascar •Molo Graphite Mine 27 EMIA Provincial Performance: 2012/13 & 2013/14 LIMPOPO 2012/13: 6 Approvals (1%) R436 516 (1%) NORTHERN CAPE 2012/13: 0 approvals (0%) R0 (0%) 2013/14: 0 Approvals (0%) R0 (0%) WESTERN CAPE 2012/13: 373 approvals (37%) R23 253 853 (33%) 2013/14: 318 Approvals (31%) R21 602 258 (27%) 2013/14; 6 Approvals (1%) R379 316 (1%) NORTH WEST 2012/13: 13 approvals (1%) R832 003 (1%) GAUTENG 2012/13: 488 Approvals (47%) R35 630 177 (50%) MPUMALANGA 2012/13: 40 Approvals (4%) R3 275 095 (5%) 2013/14: 9 Approvals (1%) R829 654 (1%) 2013/14: 526 Approvals (51%) R42 152 950 (54%) 2013/14: 50 Approvals (5%) R4 832 511 (6%) FREE STATE 2012/2013: 5 Approvals (1%) R192 142 (1%) 2013/14: 6 Approvals (1%) R322 384 (1%) KWAZULU-NATAL 2012/2013: 67 approvals (7%) R4 279 120 (6%) 2013/14: 74 Approvals (7%) R5 011 653 (7%) EASTERN CAPE 2012/2013: 26 approvals (2%) R1 982 895 (3%) 2013/14: 28 Approvals (3%) R2 004 402 (3%) 28 BPS & FILM Achievements 2013/14 Investment: R 13,2m Incentive: R 18,667 Jobs: 93 Investment: R 325m Incentive: R 8,4m Jobs: 750 Investment: R2,633m Incentive: R72,000 Jobs: 285 Investment: R 66,723m Incentive: R 4,952m Jobs: 788 29 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective Southern African Development Community (SADC) • SADC Services negotiations: submitted South Africa’s initial offers on financial and communication services. • Agreement reached at Cabinet’s International Cooperation, Trade and Security Cluster (ICTS) Director-General level to submit a cabinet memorandum to take steps to encourage compliance by certain SADC Members of their commitments under the SADC Trade Protocol. 30 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective Southern African Customs Union (SACU) • Consensus reached on the need for high level bilateral engagement in SACU towards effective implementation of a development integration approach in SACU. • Cabinet memorandum on options for South Africa in SACU was discussed at Cabinet. • Unified engagement by SACU in its trade negotiations with third parties e.g. Economic Partnership Agreement (EPA), Tripartite Free Trade Agreement (T-FTA). 31 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective Tripartite Free Trade Agreement (T-FTA) negotiations • Agreement reached on the scope and coverage of the Phase 1 negotiations. • Progress made in the tariff negotiations (Consultations within SACU on tariff offers to the East African Community (EAC) & Egypt at an advanced stage) • Good progress made on the negotiations on the text: • successful conclusion of the non-tariff barrier (NTB) and technical barriers to trade (TBT) provisions that contain over 90% of South Africa’s inputs; • Agreement to re-open negotiation on trade facilitation related annexes in light of the World Trade Organisation tripartite agreement 32 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective African Union (AU)/ New Partnership for Africa’s Development (NEPAD) • Guidelines of Good Business Practice approved by the ICTS DirectorsGeneral Cluster of Cabinet. • Hosting of Africa-India Trade Ministerial Conference. • Influenced Africa Partnerships to promote support for the development integration agenda in Africa. Tabled three memoranda of understanding (MoUs) on Economic Cooperation (Ghana, Benin and Nigeria) before Parliament. Finalised draft MoU on Automotive Cooperation between SA and Nigeria. Draft text exchanged through diplomatic channels. 33 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance SA’s trade, industrial policy & economic development objective Engaged in 32 Business and/or Technical missions to promote economic cooperation. Participated in 81 government to government platforms. Conclusion and implementation of the South Africa- Cuba agreement on economic assistance. Completion of the South Africa- Japan Joint Study on Economic Cooperation. Continued lobbying for extension of South Africa’s inclusion in the African Growth Opportunity Act (AGOA). Conclusion of the WTO Bali Package which included an agreement on Trade Facilitation Drafted responses and made a presentation at a public hearing of Australia’s safeguard investigation on canned fruits. 34 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective Facilitated exports of R 3. 4 billion 1 000 companies were trained on the Global Exporter Passport Initiative to enhance their export readiness. Obtained third position for the best stand in Mozambique (FACIM) in August 2013. Made inputs to the review of International Trade Administration Commission’s (ITAC) Anti-Dumping and Countervailing Regulations. Terminated the European Union (EU) bi-lateral investment treaty (BIT). Published the draft Promotion and Protection of Investment Bill for public comment. 35 Trade, Investment and Exports SG 2: Build mutually beneficial regional & global relations to advance South Africa’s trade, industrial policy & economic development objective Investment Pipeline of R 60.5 bn with a potential of creating 34 560 jobs Major projects in manufacturing, mining and green economy. Total investment attracted into the green industries sector amounted to approximately R10 billion. Multinationals have affirmed South Africa as a hub and a Gateway into the continent with new investments and expansions in the manufacturing sector. These include Unilever, Proctor & Gamble, Nestle, Samsung, Hisense FAW, IVECO amongst others. Domestic companies such as Aspen, MPACT, Amka, Gibela Rail have expanded or added new investment. 36 AIS & 12I achievements 2013/14 Mercedes Benz SA InvestmentL R5,4bn Incentive: R1,6bn Jobs: 254 Johnson Controls Automotive South Africa (Pty) Ltd - W205 C-Class Mercedes Interior Project Investment: R 301m Incentive: R 90,4m Jobs: 73 Investment: R257,6m Incentive: R64,4m Jobs: 190 Investment: R 569m Allowance: R 202m Investment: R1b Allowance: R 496m Jobs: 1112 37 Broadening Participation SG 3: Facilitate broad-based economic participation targeted interventions to achieve more inclusive growth The Broad-Based Black Economic Empowerment Amendment Act, 2013 assented to by the President. through (B-BBEE) The B-BBEE Codes of Good Practice were approved by the Minister and published for implementation in 2015. Through the seda Technology Programme (stp) – 432 new Small Medium Micro Enterprises (SMMEs) were created and 1 587 SMMEs supported. Currently, 42 incubators countrywide support SMMEs in various industrial sectors (including chemical, biotechnology, floriculture, small-scale mining, ICT, stainless steel, furniture, construction, jewellery, bio-fuels, agriculture, automotives, base metals, mixed manufacturing and aluminium.) The National Informal Business Upliftment Strategy (NIBUS) was approved by Cabinet and launched by the Minister in March 2014. 38 Broadening Participation SG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth The Co-operatives Amendment Act, 2013 was assented to by the President in August 2013 and provides for the Co-operative Development Agency (CDA), with its primary role being to provide support with the development and capacity building of co-operatives as well as the Cooperatives Tribunal to look at resolving disputes. The Integrated SMMEs and Co-operative Development Framework and Action Plan have been approved by MinMec and the Minister. Phased implementation of the Action Plan is in progress. The Isivande Women’s Fund (IWF) supported 16 projects. Supported 322 companies participating in the Workplace Challenge Programme (WCP) Revised the draft National Strategic Framework on Gender and Women Empowerment. Youth Enterprise Development Strategy (YEDS) approved and launched by Minister in November 2013. 39 Regulation SG4: Create a fair regulatory environment that enables investment, trade and enterprise development in an equitable and socially responsible manner The Lotteries Amendment Act and the Intellectual Laws Property Amendment Act for the Protection of Traditional Knowledge were assented to by the President. The National Credit Amendment Bill was adopted by both Houses of Parliament. Developed Draft Policy Frameworks on Intellectual Property and Gambling Policy Framework and Bill for Licensing of Businesses developed and public consultations conducted. An Impact Assessment Study on the Liquor Act, 2003 and draft Policy were developed and the results were incorporated in the draft liquor policy. 40 Administration SG5: Promote a professional, ethical, dynamic and competitive and customer – focused working environment that ensures effective and efficient services delivery The vacancy rate was at 9.4% with an employee retention rate of 93.2% (the cumulative turnover stood at 6.8% in respect of permanent employees). The department recorded 44% of women employed in Senior Management Service (SMS) positions and 2.7% people with a disability. Payment of all eligible creditors made well within 30 days. Received an award in 2013 as the “Top performing government department” at the eleventh Annual National Business Awards organised by the private sector. Also received an acknowledgment as the second best functioning national department in 2012, according to the Management Performance Assessment Tool (MPAT) conducted by the Presidency’s DPME last year 41 Summary of achievement of targets for 2013/14 FY Strategic Goal Total APP target per strategic objective Achieved Not Achieved SG 1 33 28 (85%) 5 ( 15%) SG 2 4 4 (100%) 0 SG 3 23 19 (83%) 4 (17%) SG 4 4 3 (75%) 1 (25%) SG 5 11 9 (82%) 2 (18%) TOTAL 75 63 (84%) 12 (16%) Targets not achieved include partially achieved targets. Significant progress has been made on all partially achieved targets. 42 Financial management 43 Overview of the expenditure for the 2013/14 financial year The expenditure based on the final appropriation of R9,516 billion is 98.6% or R9,380 billion, implying an under-spending of R135 million (1.4%) Overview of expenditure per programme: Programme Administration Final Appropriation R’000 724 139 Actual Expenditure 700 370 R’000 23 769 Expenditure as a % of Final Appropriation % 96.7% R’000 (Over)/Under Expenditure ITED 146 339 139 566 6 773 95.4% BPD 1 006 282 999 833 6 449 99.4% IDPD 1 590 453 1 575 586 14 867 99.1% CCRD 258 146 256 698 1 448 99.4% IDIAD 5 440 720 5 361 292 79 428 98.5% 349 501 346 951 2 550 99.3% 9 515 580 9 380 296 135 284 98.6% TISA Total 44 Overview of the expenditure for the 2013/14 financial year Overview of expenditure per economic classification: Economic Classification Final Appropriation R'000 Current payments Compensation of employees Goods and services Transfers and subsidies Departmental agencies and accounts Higher education institutions Foreign governments and international organisations Public corporations and private enterprises Non-profit institutions Households Gifts and donations Payment for capital assets Machinery and equipment Intangible assets Payment for financial assets TOTAL Expenditure as % of final appropriation Actual Expenditure Variance R'000 R'000 % 799 139 718 808 789 346 690 354 9 793 28 454 98.8% 96.0% 1 288 722 1 287 727 995 99.9% 12 834 12 830 4 99.9% 38 874 6 583 109 27 885 4 222 807 37 572 6 511 248 26 885 3 955 559 1 302 71 861 1 000 267 248 96.7% 98.9% 96.4% 93.7% 69.3% 15 913 24 048 12 041 6 615 3 872 17 433 75.7% 27.5% 1 219 1 164 55 95.5% 9 515 580 9 380 296 135 284 98.6% 45 Audit outcome for 2013/14 Financial Year and interventions to address the Auditor-General’s findings 46 Audit outcomes the dti has received a financially unqualified audit opinion from the Auditor-General South Africa (AGSA) for the 2013/14 financial year, Audit outcomes HR Management Procurement Management Expenditure management Asset management Findings on areas of non-compliance Annual financial statements Reported information not reliable Findings on predetermined objectives Reported information not useful Audit opinion Financial year Fincial statements 13/14 12/13 11/12 10/11 No findings Legend Findings 47 Interventions to address AGSA’s Audit Findings Finding Management interventions The accounting officer did not take steps to prevent irregular expenditure. These relate to transactions where three quotations could not be obtained. The following additional measures was implemented: • Clear communication via financial circulars on the procurement requirements of transactions less than R500,000 have been implemented. • Targeted training interventions with procurement staff and divisional advisors on the department’s procurement policies and procedures and SCM legislation was implemented. • An information session on irregular expenditure was presented by National Treasury on 28 October 2013 • An easy to follow guide was also distributed during December 2013 to assist staff with the procurement procedure to be followed in order to prevent irregular expenditure • Irregular expenditure transactions are analysed per Division and memoranda were issued on a quarterly basis to the relevant managers to take appropriate action against staff that permits irregular expenditure. • Based on the implemented additional controls irregular expenditure reduced from R32 966 million in 2012/13 to R6 376 million in 2013/14. 48 Challenges Poorer manufacturing performance due to slow global growth and strikes in the mining industry Industrial sectors supported by dti incentives show growth, while other sectors like plastics, steel and metal fabrication lagging Credit fuelled consumption driven demand is running out of steam Electricity and water supply shutdowns impacted on manufacturing Sharply escalating administered prices where municipal premiums and pricing anomalies within and in between municipalities Higher rail freight and port charges Need to build partnerships between government and business to secure much greater progress in upstream mining supply chains and downstream beneficiation 49 Ke ya leboga Ke a leboha Ke a leboga Ngiyabonga Ndiyabulela Ngiyathokoza Ngiyabonga Inkomu Ndi khou livhuha Dankie Thank you