This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
Briefing on ASGISA by Deputy President Mlambo-Ngcuka, February, 2006
6 February 2006
DEPUTY PRESIDENT BRIEFING ON ACCELERATED AND SHARED GROWTH INITIATIVE
Documents handed out:
Briefing by Deputy President on Accelerated and Shared Growth Initiative South Africa (ASGISA) (see Appendix)
A Catalyst for Accelerated and Shared Growth-South Africa (ASGISA): A Summary
The Deputy Minister, Ms Phumzile Mlambo Ngcuka, accompanied by Trade and Industry Minister, Mr Mandisi Mpahlwa, gave a briefing on the Accelerated and Shared Growth Initiative. She explained that the Initiative's ultimate objective was to halve unemployment and poverty by 2014. It responded to a range of constraints that included skills shortage and the challenges faced by small- medium- and micro sized enterprises and emphasised partnerships with business, labour as well as civil society. Selected interventions would address challenges related to infrastructure, sector strategies, education and skills, the second economy, public administration as well as macro economic issues.
Question: The briefing mentioned that the currency had been strengthened way beyond desirable levels and that it's volatility was a concern. In what way would the currency assist in achieving some of the objectives outlined in ASGISA?
Minister Mpahlwa responded that the task team focused much attention on the macro economic as one of the binding constraints facing the South African economy. Addressing some of issues around the currency would enable ASGISA to achieve some of its objectives such as expanding the base of the economy since one of the key objectives was to move the economy in such a way that it would not be influenced unduly by issues such as fortunes and commodities or trends in commodity prices. Determining whether the currency was assisting in achieving this objective would be key. Despite South Africa having had a very high level of demand and consumption in recent months, one increasingly saw that the balance of payments has changed from what it has been in recent years. Much of the demand has also increasingly been met by imports. All of these issues were enjoying attention as far as the macro economy was concerned. This was not an easy issue. The economic cluster in their media briefing would address the planned action that would be taken. There were no easy answers but the Ministry would continue engaging on the topic.
Question (Beeld): The Deputy President indicated that 70% of the South African population was under 35 years of age? Where did this figure come from?
The Deputy President said that this figure had been provided by the Human Sciences Research Council (HSRC).
Question (Beeld) Both the President and the Deputy President made passing mention of an agreement between the South African clothing and textile industry and the Chinese. What did this agreement entail? Have South African trade unions been consulted?
Minister Mpahlwa pointed out that the problems within the clothing industry had been a matter of concern for some time now. Labour has been particularly concerned about the impact Chinese imports had on the local industry as far as job security was concerned. There had been a strong campaign for the DTI to approach the International Trade Organisation (ITO) in an attempt to curb the influx of such imports. He pointed out that Government has emphasised to industry players (textile industry and labour) that they should come forward with information that showed that there was a huge influx of Chinese imports into the market. Cabinet and government were of the opinion that given the strategic relationship between China and South Africa, the Government should consider whether an agreement could be arrived at that would assist in managing the situation. These negotiations commenced in 2005. While a basic agreement did exist there were still some outstanding issues. Further consultation still needed be done with the textile industry as well as with the labour sector. He said that the President in the State of the Nation address was highlighting the political shared by both countries to come to an agreement. The work that has gone into the process is ongoing and would soon be finalised.
Question: The attractions mentioned in the briefing were very appealing to multi nationals. Foreign medium enterprise companies however had a harder time accessing resources. She had been trying to assist a foreign small business owner who had been ripped off by a lawyer. Why was there no ministry of consumer affairs to protect foreigners as well as South Africans?
The Deputy President responded that there was a function within DTI that dealt with consumer affairs. She pointed out that the challenges faced by South African small-, medium- and micro-sized enterprises (SMMEs) were such that she did not know whether the Government was equipped to "understand and be open to hand hold" foreign SMMEs. Government obviously wanted larger investments since they had a greater impact on the economy. Smaller investments were not irrelevant but Government did not have the capacity to respond to all SMMEs. She said that she hoped that the legal system was able to respond to some of the challenges they faced. Hopefully the simplification of the regulations that impact on South African SMMEs would also impact positively on the ones that were foreign-owned.
Question (Sunday Times): Was there a master list of the projects that would benefit from ASGISA? Such a list would give a clearer understanding of the mechanics of the initiative.
The Deputy President said that Government would have loved to have made the list available at the briefing but it was quite long. The list was being streamlined in consultation with the different implementing Departments, State Owned Enterprises (SOEs), etc.
Question (Sunday Times): The Briefing mentioned that the team had a plan for dealing with telecommunications costs through business process outsourcing (BPO). What form would this plan take? Would it be in the form of a subsidy? Might it include an agreement with Telkom?
The Deputy President responded that some of the concerns around telecommunications included issues around infrastructure, solutions to which would take some time to implement. Government wanted to start implementing BPO. Call Centres would be situated in areas in which economic activity was needed. Subsidies would be available. Although the emerging BPO industry was experiencing some constraints, the industry could do a lot more. The Second National Operator (SNO) would also make a difference in bringing down the cost of telephony. There were also specific incentives, which were still subject to negotiations between DTI and the National Treasury that would have relevant impact on these costs. Over time the investment infrastructure should bring down the cost. The Minister of Communication had also been asked to look at further regulation that would assist in reducing the cost of telephony. She might address this issue in her briefing.
Question (Sunday Times): R372 billion was the figure in the last MTEF. Was ASGISA just bringing these things together to manage them or was this "new money"?
The Deputy President replied that government felt that a concerted effort was necessary to ensure that the money was actually spent. Despite the fact that the money was available there might not be progress. ASGISA must for example address the issue of skills development. The National Treasury and the Department of Public Enterprises (DPE) would implement a dedicated monitoring mechanism that would monitor and track the projects. Treasury intended looking at additional resources should the money already set aside be exhausted.
Question (Financial Mail): The Deputy President mentioned the need for some policy review in the areas of youth and rural employment. Did this include the labour market. Why has the labour market not been included as one of the binding constraints
The Deputy President responded that apart from small business needs the labour market was not addressed because there was a process in the New Partnership for African Development (NEPAD) which catered to it. If everyone got involved in that area the process could get 'very messy'. They would allow the process in NEPAD to take its course. ASGISA would be led by the Department of Labour (DOL) and the appropriate business representatives within NEPAD.
Question (Financial Mail): In his State of the Nation address the President mentioned that Government would look at issues around domestic demand. Could the Deputy President comment on this?
The Deputy President responded by citing examples from housing: the domestic demands in terms of the white goods and the contents thereof content of houses could increase considerably if one built houses for people who did not actually have the basic contents of the house. Although she did not have the figures she pointed out that there was a large section of the population that wanted to buy houses for less than R150 000. She said that it was a systemic problem. There was also money in the financial services charter, which was supposed to assist in this matter. This money appeared to be "stuck". Part of what ASGISA seeked to do was to try and unblock the challenges, bringing together the stakeholders and making sure that they were able meet all challenges in order for new economic activity to be unleashed. This also applied to the accessibility of finance to SMMEs. There was still a category of people who were seeking finance and who were the potential owners of start up business. They could be the source of new economic activity. Unfortunately they still have limited access to finance. This represented a gap in the market that needed to be closed. Medium enterprises enjoyed greater access and were not the focal point of ASGISA's efforts to make finance more accessible.
Question: The Deputy President was asked to explain the 'striking' phrase "to unlock dead assets in the hands of the poor" which she used in her briefing.
The Deputy President responded replied that in agriculture for example a lot of black people had livestock, which had very little value because they did not have access to the services (dipping, etc) that would increase the value of their assets. The absence of these services rendered the livestock untradable. In order to increase the economic value of these assets Government needed to address the shortage of services. Considering the losses that were suffered, this was a central matter of concern. As far as land was concerned, while people had access to land via land reforms, etc they did not have access to the support that would make the land productive. This asset thus also remained a 'dead asset'. People in the townships have homes but many did not have the title deeds to these homes. She said that much progress had been made and there was no reason why this process could not be completed. These interventions were possible-one just needed to be resolute in making the decisions that need to be made. One then needed to provide support.
Question (Mail and Guardian): Was the Deputy President concerned about the quality of jobs that would be created as 2014 neared. The latest figures indicated that more than half of the jobs available earned people up to R1000 a month. In its search for skills would Government be prioritising skills from the rest of Africa?
Answer: The Deputy President agreed that this was a concern. BPOs would perform outsourcing functions. The unions were concerned that if careful attention was not paid South Africa might de-skill in the process. Appropriate training was vital and should be more than just basic. In general unemployed graduates ended up taking dead end jobs because the quality of their education did not enable then to fill more meaningful and sustainable positions. Government's intervention should thus also enhance the quality of education via skills training. Government would consult with the labour sector regarding the details of the plan and would then share this with the public. She admitted that this was an area of concern and that Government could not claim to be on top of it.
Question (iafrica.com): In the State of the Nation address the President had said that the delay in the agreement between Government and financial institutions to unlock R42 billion needed to be addressed as soon as possible. Via the transfer of title deeds, etc people would be able to access the money. Why was the process taking so long?
Answer: The Deputy President responded that the Minster of Housing an expert on the matter and she might address this issue in her speech. On the previous Sunday a meeting with some of the banks, the Minister and one or two provinces had been held precisely because the matter was so urgent. Some of the banks were blaming the Government for the amount of time it took to rezone. She had no proof of this. All stakeholders had to work together to find a solution. The banks claimed that developers were not interested in the markets that were of interest to Government. They were financiers and could not "boss" developers. Government was of the opinion that some an agreement was possible. She admitted that she did not have all the answers now. As one of the issues that had to be addressed in ASGISA she did not think that, with the willingness to release the money, it was "mission impossible" The matter was enjoying Government's urgent attention.
Question (Engineering News): What steps would Government take to curb capital leakage? After ASGISA had been announced at least three contracts had been awarded to German, Finnish and Chinese companies. Why was local content as well as (BEE) principles waived in these instances? What was the target?
Answer: The Minister responded that this was one of the matters that would be addressed in the briefing by the economic cluster.
The Deputy President added that the issue of local content was one of the challenges of such a large infrastructure programme. Some of the industries in South Africa no longer existed because there has not been a need for them. They would look at whether some of these industries could be revived again. A study, involving both Transnet and Eskom, aimed at determining whether the re-emergence of these industries could be supported. This would be in an effort to keep some of the capital at home.
Question (SABC): In his State of the Nation Address the President had alluded to the impact of import parity prices. What was ASGISA's approach especially in relation to downstream systems?
Answer: The Deputy President said that this was one of the ASGISA projects especially in relation to steel and downstream chemicals. The approach, as put to Cabinet by the DTI, was to look at how through corporate competition regulation Government could tighten up and limit the negative impact of import parity prices. It was an issue of concern. Maybe the Minister intended to address it in his briefing.
The Minister pointed put that DTI has tabled proposals to Cabinet and these have been adopted. These have not been published since they would still engage with some of the private sector players. This was an issue that needed to be managed at a regulatory level as well as far as creating certain understandings with key players. He said that he hoped that by mid February these interactions would have been concluded.
Question (Financial Mail): The Deputy President had mentioned studies that had been conducted by local and international economists. What was the outcome of the modelling and growth accounting exercise in terms of jobs created? Could the Deputy President give an indication as to what the timeframes and the breakdown of ASGISA activities would be for 2006/2007? Could these be broken down sector by sector?
Answer: The Deputy President said that she did not yet have these details since the economists were only commissioned in the last three weeks. The international economists were working collaboratively with local ones. The work that has been done i9n detail related to the steel and the downstream chemical industries. She would be 'thumb sucking' if she commented on others sectors.
In closing the Deputy President said that Government would be seeking greater consensus since a lot of input has been received from stakeholders such as COSATU, the youth organisations as well as women's groups. Those issues that were ASGISA related would be tackled while other issues would be filtered through to the relevant Departments and clusters.
In the next six months Government would definitely be making progress in the areas of its industrial strategy. Definite progress would also be made as far as the launch of the Joint Initiative for Priority and Scarce Skills for South Africa. Activity as far as the BPO and tourism sectors would also be increased and Government would be attracting investment in those two areas. The supportive dispensation would be working aggressively to assist.
The Further Education and Training for artisanal skills, improvement of the functioning of learnerships as well as the revival of apprenticeships would also be embarked upon. The private and public sectors would be approached in this regard.
The implementation of BEE would be reviewed in terms of the functioning of the existing charters. Government would consider the extent to which in some instances there were unintended consequences as well as to extent to which companies were aligning to the codes that have been announced by DTI.
The productive use of land and SMMEs (especially on the impact on Women and youth in urban as well as rural areas) was an issue of priority. As far as housing was close attention would be paid to issues relating money being 'stuck somewhere' and thus not accessible. Work would be done on the affirmative procurement dispensation within Government as well as in SOEs.
The Cabinet system would be adjusted to include a mechanism within cabinet that would track and monitor ASGISA projects. The Investment and Employment cluster would be the cluster that would have a standing item on ASGISA.
A catalyst for: Shared and Accelerated Growth (ASGISA)
6 FEBRUARY 2006
The three spheres of government have been working together for some months and in consultation with partners to elaborate on the specific interventions that will elaborate on the Shared and Accelerated Growth Initiative of South Africa – ASGISA whose ultimate objective is to halve unemployment and poverty by 2014. As the President said "ASGISA is not intended to cover all elements of a comprehensive development plan, rather it consists of a limited set of interventions that are intended to serve as catalysts to Accelerated and Shared Growth Development" State of the Nation Address 2006. ASGISA is not a new policy nor does replace GEAR and it is not an Industrial policy. Most of the interventions are built on the micro-economic reforms and agreements reached at Growth and Development Summit. It takes advantage of a stable macro-economic environment, an economy that is growing at 4% plus in the past two years. Between 2005 and 2009 we seek an annual growth rate that averages 4,5% or higher. Between 2010 and 2014 we will seek a growth rate of at least 6% of GDP.
Our recent growth although welcome has been unbalanced and based on strong commodity prices, strong capital inflows and strong domestic consumer demand which has increased imports and strengthened the currency way beyond desirable levels; yet levels of unemployment are still too high and growth has not been adequately shared. The divide between the 1st and 2nd economy has meant that those who live in the 2nd economy have less benefits.
We seek to take advantage of the growth in order to share the benefits and base it on a more sustainable basis beyond commodity prices/consumption and capital in-flows.
The high business confidence offers an opportunity to create a healthy and a growing private sector in the 1st economy which can address the challenges of the 2nd economy. "Years of freedom have been very good for business and I believe that should have convinced the investor community by now, that it is to its own interest and as part of national effort it has to invest in the expansion of that freedom especially by actively and consciously contributing towards the achievement of the goal of halving poverty and unemployment by 2014", President said in his state of the nation address 2006
Hence our emphasis on partnerships not only with business but also with labour, civil society and other members of society is important for ASGISA. Much consultation has taken place and will be on-going so as to build on the emerging consensus on what should be done to accelerate and share growth and seek response to some of the issues that have been raised through during the consultations some which even though legitimate do not fall within the limited mandate of ASGISA.
ASGISA responds to binding constraints which are:
Ø The volatility and level of the currency;
Ø The cost, efficiency and capacity of national logistics system;
Ø Shortage of suitably skilled labour amplified by the cost effects on labour of apartheid spatial patterns;
Ø Barriers to entry, limits to competition and limited new investment opportunities;
Ø Regulatory environment and the burden on small and medium businesses; and
Ø Deficiencies in state organization, capacity and leadership.
A modeling and growth accounting exercise has been undertaken by a range of economists in the private and public sector support the premises and potential of ASGISA, but only if the interventions are well targeted and efficiently managed. A team of local and international economists from Harvard, MIT, SOAS and LSE have been tasked with testing our assumptions and plans in order to present us with new options if any, which will inform the evolution of ASGISA over 2006-2007.
The response to binding constraints is a combination of systematic initiatives, optimizing on public expenditure improving an environment to do business in SA and removing bottlenecks in the main within government. In addition there is a range of projects especially in the 2nd economy which are targeted to urban and rural youth and women as well as limited policy initiatives, wide ranging policy proposal or comprehensive economic review will need a different process.
The initiative as indicated is not a sum total of all governments' responses to issues of poverty and unemployment; it is selected interventions which are as follows:
Further consultation with partners will seek to gain their active involvement in the different aspects and implementation of ASGISA on areas of strong agreement.
Overall government expenditure for infrastructure spending totals some R370 bn over the current MTEF. This is unprecedented increased public expenditure which will boost the much needed fixed investments.
Of this, about 40% will be spent by Public Enterprises, mostly Eskom (R84 bn covering generation, transmission, distribution and others) and Transnet (R47 bn, of which R40 bn is "core" ie. Harbours, ports, railway and petroleum pipeline), ACSA (R5,2 bn which includes airport improvement and Dube Trade Port), Water Infrastructure (R19,7 bn), 2010 Infrastructure, which will include building or improving the 10 stadiums to be used, and investment in the environs and access to the stadiums, ICT Infrastructure which includes the strategy to rapidly grow South Africa's broadband network; implementation of a plan to reduce telephony costs more rapidly; the completion of a submarine cable project that will provide competitive and reliable international access, especially to Africa and Asia, and the provision of subsidies to encourage the establishment of call centres and labour intensive business in poor areas.
In addition to the general infrastructure programmes, provinces were asked to propose special projects that would have a major impact on accelerating and sharing growth. A set of projects has been selected for finalization of implementation plans. These projects are selected for their impact on employment, poverty eradication and economic growth including sustainability and possibility to leverage private sector funding. Further work on ASGISA will incorporate local government initiatives.
One of the intentions of the Infrastructure Investment Programme is to address the maintenance backlog out of which skills will be needed and sustainable new jobs could be created for artisans. A framework for Infrastructure Maintenance Plan is being developed along these lines.
Sectors that are competitive and able to meet both the Growth and Sharing objectives of ASGISA have been identified. This process will further benefit from the broader industrial strategy that is being finalized. While all are priority and strategic, the sectors with highest potential for impact within a short time and where extensive work has been done and therefore implementation is immediate are Tourism and Business Process Outsourcing (BPO) sectors. Those priority sectors where work is not as advanced are work in progress.
With BPO, SA has attracted about 5000 of such jobs from the rest of the world so far. The sector has the potential for 100 000 additional direct and indirect jobs by 2009. challenges that are being addressed to achieve the above include marketing, skills/training, telecoms costs and regulatory challenges. A tailor-made incentive environment for BPO is being finalized. Government and business have a joint project, supported by the Business Trust, led by the Minister of Trade and Industry and Chair of Standard Bank to remove obstacles and refine incentives to achieve this goal. The Minister of Trade and Industry will elaborate more on BPO.
The other immediate priority sector is Tourism. This sector has already grown rapidly in South Africa but is ready for a second phase of growth that could take its contribution to GDP from about 8% to about 12%, and increase employment by up to 400 000 people by 2014. Key issues are: marketing, air access, safety, and skills development. This industry also entails a strong government/private sector partnership, which was established during the 1st phase of growth. The Minister of Tourism and Environmental Affairs will elaborate more on the Tourism sector.
For both BPO and tourism a detailed business plans that both government and the private sector are contributing to.
There are several cross cutting industrial policy challenges being addressed too, including: inadequate competition and import parity pricing; capacity for trade negotiations; a more coordinated Africa development strategy; better incentives for private R & D investment; and better use of BBBEE to encourage industry transformation, beyond the transfer of equity.
EDUCATION AND SKILLS DEVELOPMENT
For both the public infrastructure and the private investment programmes, the single greatest impediment is the shortage of skills – including professional skills such as engineers and scientists, managers and financial personnel, project managers; and skilled technical employees such as IT specialists and artisans.
Key measures to address the skills challenge in the educational sphere will focus on the a) quality of education, b) ABET, FETs and artesenal skills which the Minister of Education will elaborate. Scarce and priority skills include high skills and artisans.
In the context of ASGISA, the focus will be on priority and scarce skills which including artisans. A new institution that will be established in the month of March is the Joint Initiative for Priority Skills Acquisition (JIPSA). This structure is led by a committee of relevant Ministers, business leaders, trade unionists and education and training providers or experts. Its job will be to confirm the urgently needed skills and find quick and effective solutions. Solutions may include special training programmes, bringing retirees or South Africans who are working outside SA, and drawing in new immigrants when necessary. Programes for placements of personnel and unemployed graduates is. JIPSA will have an initial timetable of 18 months placement of skills for local government is already advanced.
Plans for private sector placements in infrastructure project management is also advanced and will ensure women's involvement.
2nd ECONOMY INTERVENTIONS
Inequalities are entrenched in the structure of SA economy and a systematic policy intervention will be elaborated outside ASGISA which will only consider more urgent interventions.
Without interventions directly addressed at reducing South Africa's historical inequalities, growth is unsustainable. The intention is to create sustainable bridges between 1st and 2nd economy to enable growth and graduation to a sustainable economy; unlock dead assets/asset poverty in poor people's hands e.g. livestock, housing, land, etc; promote local economic development and local content; growth cooperatives with a link to 1st economy markets; and the need to address the "missing housing stock" valued between R50 000 and R150 000.
All priority sectors will have to provide a bridge to the 2nd economy. Tourism, BPO, Creative Arts, Agriculture, Clothing and Textiles are sectors which are easily responsive to the 2nd economy. A link is in the business plans with the 2nd economy are being made. Infrastructure is crucial for such linkages.
There are several other interventions designed to support Small and Micro-Enterprises (SMMEs). Nafcoc's commitment to establish 100 000 new SMEs per year is laudable, and government will support Nafcoc's efforts. A key challenge is to address the gap in loans between R10 000 and R250 000. One such effort is a new partnership between Khula and business partners in a R150 million fund for business loans of this size, we will be launching tomorrow which has a stronger focus on women. We also plan to accelerate the roll out of the Apex and Mafisa programmes of loans under R10 000.
For the next stage of business development venture funding is key, and government is trying to establish new venture funds for SMMEs. The R1 bn programme recently announced by the IDC and the National Empowerment Fund's venture fund will make a considerable impact on the growth of small businesses.
The other intervention is in the area of Preferential Procurement. For Public Enterprises, the State Owned Enterprise Procurement Forum is codifying and spreading best practices for Affirmative Procurement which will have a dedicated Supplier Development Programme. For the government, the DTI is developing a procedure through which 10 products will be set aside for Procurement through Smaller Black Owned Businesses.
A further key small business initiative will be to pursue the recommendations made to Cabinet on the regulatory environment for small businesses. These recommendations include: that the Minister of Labour will lead a review of labour laws' impact on small businesses; that the reforms in tax administration affecting small businesses will continue; that the DTI and DPLG will prepare recommendations on how to improve the regulatory environment for small businesses in municipalities; and that sector departments will review the impact of their laws and regulations on small businesses. In respect of municipalities, the ASGISA process has also mandated DPLG, in consultation with the DTI, to improve the capacity of local government to support local economic development.
Another key 2nd economy intervention is the Expanded Public Works Programme (EPWP). This programme will be expanded beyond its original targets in terms of ASGISA. The relevance of training provided will be given greater attention. EPWP mandate has been extended to a larger number of roads and some larger road projects. This will entail about R4,5 bn additional funds over the coming Medium Term Expenditure Framework period, about 63 000 more people maintaining roads, and about 100 000 additional people in jobs averaging 6 months in roads building. In addition, 1000 more small black contractors will be developed. New access roads will have a significant impact on conditions and opportunities in some poor and rural areas.
We are convinced that to achieve ASGISA's goal of halving unemployment and poverty by 2014, we will have to work more closely with women and the youth. On women the focus will be on human resource training: ensuring they have access to finance across the board; fast tracking them out of the 2nd economy; ensure their significant participation beyond SMMEs and to improve their access to basic services; increase their participation in expanded public works programme.
On the youth front, one of the interventions is to target unemployed graduates for jobs or learnerships which will also be part of the 2nd economy outside ASGISA. We support the Umsobomvu youth fund initiative to register unemployment graduates on their database. In this regard we wish to thank many companies that last December pledged to employ some of these graduates. As President Mbeki said in his state of the nation address: we shall ensure that the focus on youth development is intensified in all spheres of government. Among other things during the next financial year, we will set 100 new Youth Advisory Centres, enroll at least 10 000 young people in the National Youth Service, we will enroll 5 000 volunteers to act as mentors to vulnerable children. 70% of our population is below 35% years.
We will also expand the reach of our business support system to young people and intensify the Youth Cooperative Programme. We will closely monitor the impact of our programmes on youth skills training and business empowerment as an integral part of our National Effort.
In relation to the 2nd economy you will notice that much focus is on women and youth in the rural and urban areas and on programme interventions that can be upscaled to achieve mass impact. Cooperatives, land reform and productive use of land, and housing stock problems of the range between R50 000 and R150 000 will receive special attention.
Follow-up on already agreed initiatives which are meant to benefit the 2nd economy will be prioritized. BEE charters, GDS, offset agreements will be followed up by relevant departments.
ASGISA responses to macro environment are limited as it is focused on micro initiatives. The National Treasury, SARB will engage on issues identified in the binding constraints.
A key challenge is to improve budgeting in government, particularly at a macro level where we tend to underestimate revenue and over estimate expenditure, which results in the budget appearing more expansionary than it is which in turn sends misleading signals to other players in the economic arena. A further area where macro economic policies or implementation will be improved is in expenditure management, particularly in government capital investment, where several agencies' budgets are considerably under-spent and some run out of funds before the end of the financial year. One of the key activities will be the review of the functioning of the Development Finance Institutions to ensure that they are effectively employed in our developmental efforts. One innovation to be introduced in 2006 is a development of a new capital expenditure management information system by the National Treasury.
GOVERNING AND INSTITUTIONAL INTERVENTIONS
ASGISA will push for government to implement and respond better to the public. A key role of ASGISA is better management and response by government as against thorough going policy reforms.
All spheres of government, State Owned Entities and social partners will be engaged.
On Local Government and Service Delivery we are focusing on addressing the skills problems identified in Project Consolidate.
The skills interventions include the urgent deployment of experienced professionals and managers to local governments to improve project development implementation and maintenance capabilities. The project managed by the Development Bank of Southern Africa will deploy an estimated total of 150 expert staff, with the first 90 to be deployed in May 2006. The project will also include skills transfer to new graduates. The DBSA is compiling as database of "retired experts" for this and further deployments.
For ASGISA implementation, it has been decided in Cabinet that the Cabinet Committee for Investment and Employment would now have ASGISA as a standing item for regular reports and problem solving at its monthly meetings.
The ASGISA task team includes Ministers, Premiers and SALGA representatives and is chaired by the Deputy President.