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Accelerated and Shared Growth—South Africa
(ASGI-SA)
A Summary & Role of DPSA
5 June 2006
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Outline of Presentation
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Objectives
Background and Introduction
Binding Constraints
Response
Role of DPSA
Relationships
Conclusion
Challenge: objectives set
in May 2004
 Halve poverty from about one third of households in
2004 to less than one-sixth of households by 2014
 Halve unemployment from about 30% in 2004 to lower
than 15% by 2014
 This requires growth averaging over 5% between 2004
and 2014
 The objective we set was to average >4.5% growth up to
2009 and >6% growth after 2010
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ASGISA task teams
 Strategy project driven by Minister of Finance reported
on parameters of strategy to July 2005 Lekgotla
 President appointed a team to transform strategy into an
initiative:
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led by Deputy President and including
Ministers of Finance, T&I and Public Enterprises,
Premiers of Gauteng and Eastern Cape, and
Mayor of Johannesburg
 Objective: not a new economic policy, but initiatives to
sustain higher and shared growth
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Building on firm foundations
 GDP Growth in first decade of Freedom averaged about
3% per year
 Since 2004 it has averaged over 4%
 Reasonably strong employment growth in recent years
 Trend towards significant reduction of poverty since
2000
 Strong commodity prices and capital inflows, and strong
growth and broadening of domestic consumption
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But growth is somewhat
unbalanced
 First imbalance is growth profile:
 Strong commodity prices and capital inflows lead to
strengthening of the rand
 Trade deficit of 4.3% of GDP in 2005
 Difficult conditions for producers of tradable non-commodity
goods and services
 Risk of “hollowing out”—potentially vulnerable economy to
changes in world economic conditions
 Second imbalance is the fact that one-third of the
population cannot directly benefit from the stronger
growth—the second economy remains largely excluded
except through remittances and social grants
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Need to focus on key issues and
implementation modalities
 Approach of identifying the “binding constraints”—not the
unfocussed approach of the Washington Consensus
 The binding constraints are those which, if removed,
would have a considerable effect on accelerating and
sharing growth in the short to medium term
 The key innovations of ASGISA are to focus on key
initiatives and provide strong coordinating and
monitoring structures
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Binding Constraints
 Relative volatility of the currency, and current strength
 Cost and efficiency of national logistics system and
some infrastructure
 Shortage of suitably skilled labour and disjointed spatial
settlement patterns
 Barriers to entry and competition in sectors of the
economy & lack of investment opportunities
 Regulatory environment and burden on SMMEs
 Deficiencies in state organisation, capacity and strategic
leadership impacting on delivery
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Infrastructure
Overall government plans for infrastructure spending
totals over R370bn over the current MTEF
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Further allocations are envisaged going forward
50%
To be spent by the three spheres of govt
40%
To be spent by State Owned Enterprises.
5%
3 - 5%
To be spent through Public Private Partnerships
To be spent by development finance institutions
2nd economy benefits are considerable but must be spelt out
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Some key infrastructure elements
 Challenge of monitoring and trouble shooting—new
systems in DPE and NT
 Challenge of supply industries and shortage of
managerial, professional and artisan skills
 Developmental opportunities: employment, enterprise
development, BBBEE
 Provincial projects as flagships
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Sector strategies
(industrial strategies)
 Focus on sectors with potential for high growth,
employment creations and enterprise development
 Immediate focus on BPO and Tourism (strategies are
essentially complete)
 Focus on agriculture/agro-processing for next set of
initiatives: biofuels, timber, food production and
processing
 Other sectors include: chemicals; metals beneficiation
(including capital goods); creative industries; clothing
and textiles; durable consumer goods
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Crosscutting industrial issues
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Weak competition and import parity pricing
Capacity for trade negotiations
A more coordinated Africa development strategy
Better incentives for R&D investment
Better use of BBBEE to encourage industry
transformation beyond the transfer of equity
Education and skills development
 Interventions in quality of general education: QIDS-UP;
Maths & Science (Dinaledi schools); stronger career
guidance programmes
 Strengthening of FET system: R1.9 billion injection over
next 3 years
 Much strengthened ABET programme
 Next phase of National Skills Development Strategy:
better targeting on skills needs
 Joint Initiative for Priority Skills Acquisition
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Eliminating the second economy
 Expansion of EPWP: bigger rural road projects; focus on
maintenance; roll out of Early Childhood Development
component
 Strengthening of microfinance initiatives especially loans
between R10 000 and R250 000
 Targeted initiatives for women and youths
 All sector strategies must have developmental elements
 Regulatory environment for SMMEs
 Realisation of dead assets
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Macroeconomic issues
 Challenge of volatility—accumulation of reserves and
related strategies
 Challenge of improving budgeting in government—need
to predict income and expenditure better
 Need to monitor better implementation of decisions to
spend, especially on capex
 Need to review the economic parameters of our strategy
over time—work with the Harvard-based team
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Governance issues
 ASGISA standing agenda item for monthly Investment &
Employment Cabinet Committee
 Focus on local government delivery capacity—Project Consolidate
and related skills development and skills pool schemes
 Economic departments—address capacity constraints
 Better mechanisms for GDS implementation
 Review of role of DFIs
 One-stop investment trouble shooting centre
 Introduction of RIA system
 Improvements in planning, zoning and administration
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Role of DPSA
 Creating an enabling and supportive environment
focusing on: HRM & D
 Remuneration and conditions of service
 Service delivery improvement
 ICT issues
 Improvement of working environment
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Role of DPSA (cont)
 Key focus areas
 Support departments in conducting capacity assessments –
ability to deliver
 Identification of short, medium and long term skills requirements
 Development of strategies to recruit and retain required skills
 Improving ICT to foster planning, implementation, monitoring
and reporting across Government – both inter-sphere & depts
 Policies, procedures and practices to improve administration and
management
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Role of DPSA (cont)
 Current activities
 Single Public Service
 Improving access to services via multiple channels of service delivery
 Integrated ICT
 Integrated planning, budgeting, monitoring, etc
 Improved inter-governmental relations
 Personnel Expenditure Review
 Wage policy for the public sector
 Recruitment and retention strategies
 Career pathing & remuneration for professionals
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Role of DPSA (cont)
 Current activities
 HRM & D
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HR Planning tools
Skills management information system
Public Service HRDS II
Flow of skills into the Public Service
Focused training and development
 Capacity assessment to implement ASGI-SA
 To determine the right-mix of resources – human, leadership, financial,
institutional and physical
 Infrastructure projects – specific focus on transport sector
 Durban-Gauteng corridor & 2nd economy interventions related to rail
and road infrastructure
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Relationships
 DPSA and JIPSA
 MPSA serves on the Task Team
 Samdi and DPSA serve on the technical working group
 Internal focus – skills requirements of govt depts to deliver
 DPSA and Economic Cluster
 Capacity assessment
 Skills requirements at DTI
 External focus - MIS
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Conclusion
 ASGISA will be improved from time to time drawing on
experts, social partners etc
 We believe that we have built a basis for a national
programme for shared and accelerated growth—not a
“government programme”
 On this basis our economic goals and our social goals
are achievable, as well as our Millennium Development
Goals
 Indeed, we believe we should be able to surpass our
goals, especially poverty eradication
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