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Conference of Mayors and the dplg The Presidency May 2006 Inform the 5-year strategic plans of national and provincial departments New electoral mandate and changes in global and domestic conditions Define a new development path Focus on the critical things that need to be done to blaze out on the new path of development. ‘The advances made in the First Decade by far supersede the weaknesses. Yet, if all indicators were to continue along the same trajectory, especially in respect of the dynamic of economic inclusion and exclusion, we could soon reach a point where the negatives start to overwhelm the positives. This could precipitate a vicious cycle of decline in all spheres. ‘Required are both focus and decisiveness on the part of government, the will to weigh trade-offs and make choices, as well as strategies to inspire all of society to proceed along a new trail. If decisive action is taken on a number of focused areas, the confluence of possibilities is such that the country would enter a road of faster economic growth and job-creation, faster and more efficient provision of quality services, increased social cohesion and reduction of the paradigm of exclusion prevalent among sections of society.’ S’gudi S’nais Dulisanang He Who Benz the Rules, Rules the Road We’re all in this taxi together Skedonk Shosholoza It goes, but only just On the Fast Track 1. Grow the economy – central and main intervention 2. Active state intervention to promote involvement of marginalised in economic activity and ensure sustainable livelihoods 3. Reliance of EAP on welfare grants should be temporary, as growth and inclusion improve 4. Performance of the state, the campaign against crime and international relations through prism of economic growth and inclusion. - Economic and fiscal policy tradeoffs - ? Key things that ought to be the focus of government in the coming three to five years The appropriate balance between short to medium-term equity concerns and mediumterm growth concerns ? ? Choices between a range of alternative economic infrastructure investments and social investments Optimal direction of scarce resources Prevent and limit the diffusion of government energy on a wide front with little decisive impact. Accelerated and Shared Growth Initiative (AsgiSA) Methodology to identify and address binding constraints to growth ? Macroeconomic balances: inflation and interest rates, budget deficit, value of currency? ? Infrastructure development: national/provincial projects – logistics & public transport, electricity, water Skills development: general education, FET/SETA, universities, JIPSA Growth sectors: immediate and medium-term Second Economy Interventions: EPWP, microcredit, co-operatives Attached to this is meaning of People’s Contract/Social Compact AsgiSA – Infrastructure Programme Overall government plans for infrastructure spending totals some R370bn over the current MTEF • Further allocations are envisaged going forward • Such investment levels have not been seen for decades 1994 50% To be spent by the three spheres of govt 5% To be spent through Public Private Partnerships 3-5% To be spent by development finance institutions 40% To be spent by State Owned Enterprises AsgiSA – Infrastructure Programme Public Sector capital expenditure annual increase April 2001 - March 2005 2005 - 2008 11,7% 18,8% Additional resources allocated for 2005 - further additions are expected in the coming period Additional allocations during the current MTEF R3bn R4bn R2bn R3bn R1,3bn Additional amounts (further allocations envisaged) MIG Provincial infrastructure Housing Community infrastructure Roads & passenger rail infrastructure Water resources, infrastructure, public works, hospital revitalisation, prisons, police stations & court facilities Under-expenditure Skills shortage Weaknesses in implementing PPPs Steps needed to: Improve govt capacity, cost, procedures Remove bureaucratic PPP capacity: Regulatory and implementation functions hurdles should remain as separate, capacity in both improved AsgiSA – Infrastructure Programme Identified for implementation in the ‘Provincial projects’ Note: coming 3 - 5 years Selected for: – Impact on employment, poverty eradication and economic growth – Sustainability and possibility to leverage private sector funding • All initiatives identified in the ASGI will take place in provinces • The process of aligning the NSDP with Provincial GDSs and municipal IDPs will result in identification of many other projects • Provincial projects will require outlay of resources from the fiscus yet most will leverage private sector partnerships and crowd in private sector investment Some projects have been mooted before - designation as special projects will help release provincial resources for other activities AsgiSA – regulations & land use Critical issues pertaining to regulations Regulatory Impact Analysis (RIA) system … Government to consider introducing a RIA system, possibly legislated The RIA system will impose more discipline in identifying and addressing potentially negative consequences of laws and regulations, especially regarding employment Framework for planning and management of land use … Current regulatory framework inadequate, resulting in carte blanche behaviour by developers in major cities, which: - impedes spatial planning for industrial and settlement purposes - undermines forward planning Proposal: Speed up development of a legislative framework on land use management, informed by the National Spatial Development Perspective, e.g.: Special dispensations for mega-projects in industry Large-scale housing development projects AsgiSA – Expanded PWP Need continually to build on progress in the implementation of the EPWP programme, e.g. speedy rollout of the Early Childhood Development and other social sector programmes Guidelines, incentives and penalties to be considered wrt utilising labour-intensive and other public works methods in utilising infrastructure grants Specific measures to be put in place to extend Zibambele (KZN) and Gundo Lashu (LP) road building and maintenance programmes to all the other provinces Specific major projects should be identified for labour intensive methods of implementation, e.g. dams, housing projects, etc. Funds for EPWP community infrastructure programmes should be pooled and targeted on specific areas in a phased manner for maximum impact may require a national funding facility AsgiSA – some state capacity issues Review of all Development Finance Institutions Cabinet to conduct a review of all Development Finance Institutions If necessary, redefine their mandates and modus operandi in line with the imperatives of the ASGI One-Stop call centre for setting up enterprises Management Information System (capex) Critical constraint: setting up enterprises by foreign and local investors – matter left to individual, often ‘junior’ officials SOEs’ decisions in pricing negotiations can scupper strategic projects One-Stop response centre proposed, probably at TISA at the dti, where blockages can be cleared Management Information System (NT) – National Treasury to set up new Management Information System: to monitor implementation of capital investments to identify blockages and, working with other depts assist all spheres, especially municipalities, to carry out plans Nationality Language Race Class Race Class Nationality Language Religion Do these multiple identities fuse in a melting-pot of national identity? Do they co-exist in a variety of multiple combinations, with an overarching common identity? Characterisation of Society and Main Social Trends A society in dynamic change with improving sense of overarching identity – at least with geographic and state entity Race identity seems to be receding but rural and private sectors lag behind in relations; class on the rise; nationality precarious Reconstruction and development, nation-building and reconciliation define aspiration: but are they a Vision? Contradiction between market-based economic system and desire to build a caring society: impacts societal outlook and values, lifestyles, aspirations and conduct incl. crimes of greed Characterisation of Society and Main Social Trends Two Economies & high inequality: challenge is job-creation and entrepreneurship among Africans and Coloureds Centrality of education in social upliftment: employment, h/h income, entrepreneurship and women migration/independence An increase in single or extended households and relative decline in nuclear family Social conditions are a critical underlying factor for the incidence of contact crimes: poverty, built environment recreation forms, etc Comprehensive document discussed by extended Cabinet workshop: Re-examine configuration among departments and strengthen integration and peer accountability Strengthen integration of planning and implementation Improve executivemanagement relations and key performance assessment system Decisive interventions to strengthen local government Improve morale within public service, and ensure acquisition of scarce skills and their retention Further work being done in consultation with the President Carry out Vulindlela Project in relevant departments Proposals on operationalisation of system finalised To be implemented in phases across all spheres Will require strengthening of capacity in The Presidency and Premiers’ and Mayors’ Offices To be presented by G&A Cluster and relevant outcome incorporated into MTSF Work continuing, in the immediate to update NSDP, develop guidelines on PGDS and consult on assessment of each PGDS Process to be undertaken at metro/district level – ultimately ensuring that the aggregate of metro/district IDP becomes the basic local expression of national development plans Implication for MTSF – need to improve capacity in The Presidency as various elements of system come on stream. Broad Perspectives Ensures shared understanding of national space economy and provides normative principles for development planning Given our objective to grow the economy, create jobs, address poverty and promote social cohesion, need to confront three fundamental planning questions: Focus investment and development interventions to ensure maximum and sustainable impact Spatial arrangements to facilitate nation building and social and economic inclusion Ensure government implements its programmes taking into account economic, social and demographic realities International Experience International experience shows that spatial inequality and its reversal happen historically and culturally over a long period of time: most countries/regions have extreme spatial inequalities: 50% of US GDP produced in 2% of space 50% of the EU’s GDP is produced in 20% of its area convergence between developed and undeveloped regions takes a long time – it took the Southern US states 100 years to reach a similar level of economic development as the North regions and countries with unequal spatial economies converge at about 2% a year (if at all) South Africa not unique: spatial configuration of our country aggravated by apartheid spatial planning resulting in spatial marginalisation from economic opportunities Normative Principles Principle 2: Principle 1: Rapid, sustained and inclusive economic growth a pre-requisite for the achievement of other policy objectives, amongst which poverty alleviation is key Government spending on fixed investment should: address constitutional obligation to provide basic services to all citizens (such as water, electricity as well as health and educational facilities) focus economic infrastructure development on localities of economic growth and/or economic potential in order to gear up private sector investment, stimulate sustainable economic activities and create long-term employment opportunities Normative Principles Principle 3: Principle 4: Focus on people not places: In order to overcome the spatial distortions of Apartheid: localities with both high levels of poverty and economic potential require emphasis on fixed capital investment beyond basic services to exploit potential localities with low economic potential, beyond basic services, require emphasis on social transfers, human resource development and labour market intelligence: enable people to become more mobile and migrate, if they so choose, to localities that are more likely to provide sustainable employment or other economic opportunities future settlement and economic development opportunities should be channelled mainly into activity corridors and nodes that are adjacent to or link the main growth centres economic infrastructure investment should primarily support localities that are or will become growth nodes in South Africa and the SADC region to create regional gateways to the global economy Economic Distribution Economic activity is spread over the country, but bulk of the generated GVA is still in historically strong growth points Categories of Economic Potential Innovation and experimentation: R&D and application of novel technologies Production: Labour-intensive, massHigh value, differentiated produced goods (more goods (not strongly dependent on labour costs dependent on labour and/or natural resource costs) exploitation) Public services and administration Retail and private sector services Tourism 0 Source: Ricon (Pty) Ltd, Regional Economic Explorer (version 190) Thabo Mofutsanyane DM Bojanala DM Uthungulu DM Central DM Gert Sibande DM Umgungundlovu DM Nkangala DM Ehlanzeni DM Ekurhuleni MM Mopani DM City of Cape Town MM Zululand DM Sekhukune DM Chris Hani DM City of Johannesburg MM Vhembe DM Capricorn DM Ethekwini MM Amatole DM O R Tambo DM Twenty district and metropolitan municipalities with the highest percentages of those living below MLL in the country % of national population Poverty Distribution per Municipality 7 6 5 4 3 2 1 Combined dynamic: Poverty, Economic Potential & Migration Overall, national space economy also represents a dualism … Just 26 locations can be said to represent the engines of the South African economy These areas and their immediate hinterlands (70 km radius) are home to 70% of all people living under minimum living level in the country, 79% of the total population and generate 93% of the national Gross Value Added (GVA) In order to generate and sustain economic growth rates of 6% and more and address poverty it will be important to focus on and factor in the role of these areas However, between 1996 and 2004 these areas have been generally only growing at around or marginally above the natural population growth rates: resources and collaborative government action should be directed at making these areas more productive and socially inclusive Alignment Process – PDGS Assessment Minimum characteristics of a PGDS… Use approach and principles of NSDP Provide framework for both public and private sector investment, indicating areas of opportunities and development priorities Provide direction and scope for province-wide development programmes, including metros/districts and local municipalities Take into consideration resources; economic, political, social and natural environment constraints and opportunities Enable intergovernmental alignment and guide activities of all agencies (including national and provincial departments; parastatals; and metropolitan, district and local municipalities) in the local areas Alignment Process – IDP Process Overall aim: Metro / District IDP to become local expression of development plans of all three spheres Clarify authority of Districts in relation to local municipalities Methodology Conduct spatial analysis of each District/Metro with focus on: need/poverty, development potential, demographic patterns, interventions required Incorporation of national and provincial plans as they apply to each District/Metro Process: by February 2008 National workshop on methodology Identify select number of districts/metros to pilot application of methodology Roll-out in remaining districts/metros In 2001 Cabinet approved NPF to ensure integrated planning and more efficient implementation. Defines cycle of: Development of Programmes Policy strategising National Planning Framework Public announcement of programmes Monitoring and Evaluation Budgeting Political strategising cycle Budgetary processes Poor communication and cycle misalignment mean departments do not use MTSF in MTEC Planning cycles among spheres do not feed into one another System is expected to improve massively with the introduction of effective M&E No proper alignment Is SALGA representation adequate for alignment of other cycles with those of local government; and how align cycles of SOE & other state entities? Weaknesses can be corrected a.o. through: Timely submission of MTSF to departments and provinces for inclusion in submissions during MTEC and provincial budget planning Usage of MTSF as primary frame of reference in the MTEC process As part of M&E, government PoA should also be used for reference purposes in the MTEC process Where this does not exist, Provincial executives should incorporate districts/metros in their planning sessions. Yearly Reports to Presidency 05 and 06 Preparation of PoA 06 PoA 05 and broad MTSF 06/09 ideas Local govt planning 06/09 SoNA/ Prov Address 2005 Budget Speech 05/06 Medium Term BPS 06/09 Oct March MTEC Hearings for 06/09 Local govt finalise budget 05/06 Local govt commences with IDP 06/09 Local Prov ` 05/08 National 06/09 MTSF 06/09 adopted Local govt PoA & budget 05/06 Draft MTSF 06/09 Jan ’05 PoA 05 Cabinet Lekgotla Broad MTSF Febr ’05 SoNA 05 March ‘05 Budget 05/06 Priorities 06/07 - 08/09 Provincial Makgotla PoA 05 Broad MTSF Priorities 06/07 - 08/09 State of the Prov 05 Budget 05/06 April ’05 Report to Cabinet on PoA 05 May ’05 June ’05 Report to Cabinet on PoA 05 July ‘05 Cabinet Lekgotla Review implementation of PoA 05 FOSAD MANCO discusses draft MTSF Provincial Inputs Provinces discuss own MTSF Local Gov Makgotla PoA 05/06 Broad MTSF Priorities 06/0708/09 FOSAD workshop finalises draft MTSF Adopt MTSF 06/07 -08/09 Provincial Inputs Provincial Inputs Provincial Inputs Provincial Inputs State of Local Govt Addresses (PoA & Budget 05/06) Aug ’05 Sept ’05 Report to Cabinet on PoA 05 Report to Cabinet on PoA 05 Departments submit MTEF requests to National Treasury Provincial Inputs Provincial Makgotla & MTEF requests to National Treasury Oct ’05 MTEC Hearings Medium Term Budget Policy Statement (06/07-08/09) Provincial Inputs Provinces finalise 06/07 Budgets Nov ’05 Dec ’05 Yearly Reports to Presidency from Depts Review Detailed FOSAD Workshop Yearly Reports to Presidency from Provinces Local Govt Makgotla for 06/07 Budget onwards PoA 05 PoA 06 Broad Priorities for 07/08 – 09/10 Provincial Inputs Provincial Inputs Jan ’06 Review PoA 05 Detailed PoA 06 Cabinet Lekgotla Feb ’06 SoNA 06 Broad MTSF Priorities 07/08-09/10 Provincial Makgotla Review PoA 05 Detailed PoA 06 Broad MTSF Priorities 07/08-09/10 State of the Prov 06 Budget 06/07 LG Communication Conference: May 2006 Observations: Start process to strengthen municipal communication and its interface with other spheres Gaps identified: not seen as strategic function; not structured; no overall political supervision Way Forward Five-year strategic plan on more proactive communication emphasising: direct communication including door-to-door work platforms incl. commercial & community radio/np’s, ICT Process: immediate action Start process to have functional units including designation of Councillor Exco focus incl. Current Affairs (messages and interventions) Provincial core teams on roadshows to districts