Statement on the Cabinet Lekgotla of August 2016

22 August 2016

Cabinet held its Lekgotla from 16 to 19 August 2016 at Sefako Makgatho Presidential Guesthouse in Pretoria.

The August 2016 Cabinet Lekgotla marked the halfway point of the Fifth Administration’s term of office.

Cabinet Lekgotla took time to congratulate South Africa for a peaceful, free and fair Local Government Election that took place on the 3rd of August 2016.

The Lekgotla took place in the context of a continuing sub-optimal economic outlook occasioned by various internal and external factors, as well as an ever-present threat to our sovereign credit ratings.

The Lekgotla provided an opportunity for Cabinet to collectively reflect on the implementation of Government’s programme of action and provided crucial lessons for a much nuanced and effective implementation of the National Development Plan, which underpins the Medium Term Strategic Framework 2014-2019.

Firm decisions were taken on concrete actionable plans which will take implementation of the Medium-Term Strategic Framework 2014-2019 and the Nine Point Plan to a higher level. These plans require all sectors, which includes government, civil society, business and labour, to roll up their sleeves and work together to ensure that together we take South Africa on a sustainable social development and economic growth trajectory.

Concrete plans have been put in place to deepen implementation in the next financial year, which also allows government to align its Medium-Term Expenditure Framework (MTEF) to the implementation of the Nine-Point Plan.

The Cabinet Lekgotla focused on six key areas:

1. First, a global and domestic macro-economic analysis was deliberated on together with further proposals for economic and fiscal consolidation in the next year and beyond. This enabled Cabinet to locate its economic growth and fiscal decisions within the global economic context.

1.1. Global recovery is still expected to strengthen but to a lesser degree than previously estimated, as Brexit impacts unfavourably on global growth. Sub-Saharan Africa is reflecting challenging macroeconomic conditions as its major economies adjust to lower commodity process.

1.2. Other risks include potential vulnerability in the Euro banking system; financial stability in emerging markets; geopolitical risks, climatic and health risks.

1.3. The medium-term framework sustains social gains in a weakening economic environment. Government remains committed to meeting its medium-term fiscal targets and will take additional steps to do so as conditions warrant.

1.4. Future commitments of the state will depend on reforms that are based on effective governance, and with participation from the private-sector.

2. Second, the Cabinet Lekgotla Cabinet also reflected on the implementation of the Nine-Point Plan to grow the South African economy which was announced by President Jacob Zuma in his State of the Nation Address in February 2015.

2.1. The focus was on key programmes and projects to deepen the implementation of the Nine-Point Plan in the next financial year. This led to the adoption of key high-impact projects for the next financial year and beyond which aim to have a substantial positive impact on the economy through unlocking key levers.

2.2. Cabinet took strategic decisions to secure higher impact implementation of the Industrial Policy Action Plan including:

• That the Department of Public Enterprises and National Treasury will consolidate procurement for locomotives into a single institution (Transnet) to ensure efficiency and compliance with the localisation requirements.
• Finalising the evaluation of financial incentives for business to strengthen conditionalities and achieve greater value for money to enhance more inclusive growth.
• A trade statistics architecture developed by the South African Reserve Bank, National Treasury, SARS and Stats SA will identify and hold illicit financial flows.
• Introducing legislative amendments to implement the 30% set asides (a new Procurement Bill developed by National Treasury) by March 2017 and unlock the potential of SMME’s, cooperatives and the township and rural enterprises.
• Implementing the new Preferential Procurement Regulations by end August 2016 as an interim measure to this radical intervention.

2.3. Government will continue to focus on labour-intensive sectors, including the need for various mechanisms to support greater impact on jobs, such as the use of our incentive programmes, amongst others: clothing, textiles, leather and footwear value-chain; agro-processing and business process services.

2.4. The successful Oceans Economy intervention will scale up projects to expand coastal and marine tourism in order to realise significant job creation.

2.5. To resolve the energy challenges in country, the Department of Energy will complete the Integrated Energy Plan and Integrated Resource Plan for Electricity by the end of 2016 to provide certainty on electricity pricing and investment in the generation capacity.

2.6. The Inter Ministerial Committee on Investment, Chaired by President Jacob Zuma will coordinate 40 priority investment projects across government. These 40 projects include the agro-processing and agri-parks, energy and infrastructure, manufacturing and services projects. These projects were selected based on having a high-scale economic impact linked to the Nine-Point Plan; being able to take-off within the next two years; and able to crowd-in further investment and community benefits.

2.7. Department of Trade and Industry will finalise the strategy for the deployment of locally developed technologies by the end of 2016. Further, the Department of Science and Technology and the National Treasury will secure additional funds to sustain and expand the Sector Innovation Fund through the Economic Competitive Support Package.

2.8. Priority continues to be placed on water saving and minimisation of water losses. By September 2016, agreements are to be completed with municipalities with high water losses, to facilitate placement of agents, and a clear funding model is to be completed.

2.9.  In fast tracking the implementation of the South African Connect Strategy to connect schools, health facilities and government offices, the ICT Policy will be finalised and approved. A Broadband War Room will be established to accelerate implementation.

3. Thirdly, the Presidential Infrastructure Coordinating Commission (PICC) MANCO presented the Lekgotla with a high-level report on the implementation of the national infrastructure development programme as well as concrete infrastructure implementation plans in the next financial year and beyond. The work of the PICC is closely aligned to that of the Nine-Point Plan.

4. Fourthly, a summarised progress report on the implementation of the Medium-Term Strategic Framework (MTSF) 2014-2019 was presented, which concentrated on a review of key aspects of the MTSF 2014-2019 so as to improve implementation in the next financial year.

4.1. Whilst acknowledging the work done to date in the 9-Point Plan, it was also acknowledged that accelerated implementation is necessary to enhance economic growth.

4.2. An action plan to ensure greater expenditure on municipal infrastructure maintenance and to enforce proper financial asset management will be developed and implemented to extend the lifespan and quality of our infrastructure assets.

4.3. Cabinet resolved to initiate a national process towards the negotiation of a Social Compact between labour, business and government to stimulate economic growth and mitigate job losses.

5. Fifth, over and above the alignment of the MTEF to the Nine-Point Plan, the National Treasury and the Department of Planning, Monitoring and Evaluation presented their recommendations on work done in the past year to align the national budget to the National Development Plan as well as to the Medium-Term Strategic Framework (MTSF) 2014-2019.

5.1. Government has identified a set of budget priorities for 2017/18 which focusses on maintaining infrastructure spend, strengthening support for skills development and maintaining real levels of spending on the poor.

5.2. Work on identifying efficiencies and savings over the remainder of the MTEF will continue.

6. Sixth, the Lekgotla also reflected on progress made and the next steps in the reform of state-owned companies (SOCs) since the Cabinet Lekgotla of February 2015. This is in view of the important role played by SOCs in the radical socio-economic transformation advocated in the programme of the Fifth Administration.

6.1. The implementation of the stabilisation programme has progressed with varying degrees. Strengthening of leadership to execute the turnaround strategies remains critical.

6.2. Eskom has largely been stabilised with both operational and financial performance improving.

6.3. The Inter Ministerial Committee will continue to oversee thirteen (13) other SOC specific interventions.

6.4. The Lekgotla placed priority on the finalisation of the Shareholder Ownership Model, which will inform the legislative framework for SOC reform by November 2016.

6.5. Work will also start for the creation of the Presidential SOCs Coordinating Council which will provide President Zuma line of sight on strategic decisions and interventions to create SOCs that play a transformative role in a capable developmental state.

The decisions and plans from the Cabinet Lekgotla will bolster implementation of government’s programme of action and gives confidence that South Africa is on a sustainable social development and economic growth trajectory.

7. Special Official Funeral

7.1 Cabinet is saddened by the passing away of the former Minister of Sports and Recreation, Reverend Arnold Makhenkesi Stofile. As a veteran political activist, he participated in all pillars of government, at various provincial, national and international structures.

7.2 President Jacob Zuma declared that Reverend Stofile will be accorded a Special Official Funeral in terms of Category 2 of the State Official and Provincial Official Funeral Policy. As we remember this great leader of our country, the official memorial service for the late Rev. Stofile is being held today, 11am at the Abbotsford Christian Centre in East London. President Zuma ordered that the National Flag be flown at half-mast at all flag posts in the Republic of South Africa on the day of the funeral.

7.3 The late Rev. Stofile will be laid to rest at the funeral service taking place at University of Fort Hare where he was Chancellor, on Thursday 25 August 2016 in Alice, Eastern Cape Province. President Zuma will deliver the eulogy at the funeral of the late Reverend Stofile.

We convey our deepest condolences to his family and friends during this painful and difficult period.

Lala Ngoxolo tata Stofile.

Enquiries:
Donald Liphoko
Contact: 082 901 0766

Issued by: Government Communication and Information System (GCIS)