VOTE 6: POLICY AND BUDGET SPEECH (2015-2016) FOR THE DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM PRESENTED BY THE MEC FOR TREASURY, ECONOMIC DEVELOPMENT AND TOURISM, R SE KHOLWANE, MPL, TO THE MPUMALANGA PROVINCIAL LEGISLATURE AT RIVERSIDE, MBOMBELA LOCAL MUNICIPALITY. Tuesday, 02 June 2015 Madame Speaker, Honourable Thandi Shongwe; The Premier of Mpumalanga Province, Honourable David Mabuza; Deputy Speaker, Honourable David Dube; Colleagues in the Executive Council; Chief Whip of the Majority Party, Honourable Johanne Mkhatshwa; Honourable Members of the Provincial Legislature; Councillors in our Midst; The Director General of the Mpumalanga Provincial Government, Dr Nonhlanhla Mkhize; The Acting Head of the Department of Economic Development and Tourism, Mr Thulani Mdakane; Other Heads of Departments in our midst; Chairpersons of Boards and CEOs of our Public Entities; Our social partners; Provincial Secretary of the ANC, Cde Lucky Ndinisa; and the entire Leadership of the Alliance in our Midst; Members of the media; Distinguished guests; Ladies and gentlemen; Good Morning 1. Madame Speaker, Allow me with your indulgence to premise the budget of Vote 6 by drawing wisdom from our late President Nelson Mandela in his final speech as the President of the Republic of South Africa in June 1999: Page 1 of 22 “I am a product of Africa and her long cherished view of rebirth that can be realised so that her children may play in the sun.” 2. These words of wisdom have a very special and profound meaning to the Province of the rising sun. Firstly the people of Mpumalanga have demonstrated just like Nelson Mandela that they are a true product of Africa by emphatically rejecting counter-revolutionary xenophobic attacks. 3. I am certain that Nelson Mandela himself, Oliver Tambo, Samora Machel, Thomas Sankara, Patrice Lumumba, Kwamme Nkruma, Jomo Kenyatta, Augustino Neto wherever they are should be waving and smiling at the people of Mpumalanga Province. 4. Let’s give the people of Mpumalanga a round of applause. We know these perpetrators of crimes against humanity do not represent the majority of South Africans and therefore should not be allowed to betray the course of building one African continent, one people and one nation. 5. I am also a product of Africa and therefore my loyalty and revolutionary responsibility confirms that Africa is my beginning and Africa shall be my ending… 6. Let us therefore start from the beginning… 7. Our forefathers and mothers who fought bravely to defend our land were not defeated by the mighty weapons of the coloniser but it was the division of the African people which led to the colonisation of many countries in Africa and South Africa inflicted by a “colonisation of a special type” was no exception. 7.1 It was not only the land that was colonised, our belief systems, knowledge and economy was also colonised. Acknowledging this national crisis, the historical Real Congress of the People in June 1955 sought to reverse the frontiers of colonisation by their freedom demands which are now the pillars of the Constitution of the Republic of South Africa. 7.2 The extract of the preamble of our Constitution reads: “We the people of South Africa, recognise the injustices of our past. Honour those who suffered for justice and freedom in our land. Respect those who have worked to build and develop our country. Improve the quality of life of all citizens and free the potential of each citizen.” Page 2 of 22 8. Madame Speaker, The ruling party has sustained this constitutional call through its 2014 election manifesto which has found expression in government public policies, programmes and performance plans as evidenced by my colleagues who have already tabled their policy and budget votes before this respectable house. 8.1 Our collective objective statement seeks to improve the quality of life of all citizens and free the potential of each person socially and economically through: Quality education and skills development; Creating sustainable jobs and business opportunities; Improved healthcare; Strengthening access to shelter and basic services such as water and sanitation; 9. The major thrust of our 2015-16 priorities as the provincial government gives practical expression to the ANC-led government’s economic policy position to protect the poor and vulnerable communities as a matter of priority. 10. Madame Speaker, there is no doubt that the past 21 years of democracy have laid a solid foundation towards building an inclusive National Democratic Society. Over these years, we have seen major economic policy interventions to address the triple challenges of unemployment, poverty and inequality. 11. Notwithstanding challenges that remain, we recognise major strides that the ANC-led government has made in advancing economic and social transformation. In the main: We have broadened access to economic opportunities to ensure that there is broad-based participation in the economy; We have seen declining poverty levels as a result of targeted interventions to build a solid social security net to protect the poor and the vulnerable. The Mpumalanga share of population living below the Lower Bound Poverty Line has shown a declining trend and was 36.2% in 2013, ranking us 6th out of nine provinces. In terms of income inequality, in 2013 the poorest 40% of households, earned 7.5% of total income. This is better than the national average of 6.7%; Page 3 of 22 Our rural development programmes continue to provide a necessary platform for enterprise development that drives the economic revitalization of rural areas; More and more youth and women-owned business are accessing economic development opportunities than pre-1994; 12. Despite these positive developments, poverty, unemployment and inequality continue to rise to unacceptable levels. 12.1 The reality is that we cannot successfully defend the social and economic gains accrued over the last 21 years of democracy unless we create and grow step by step, block by block a resilient, competitive and inclusive economy that provides more job opportunities and allows a critical mass of SMME’s and co-operatives to participate productively in the mainstream economy. 12.2 As we move forward, we are cognisant of the global economic outlook that will continue to constrain economic growth and prospects for massive employment creation. In the face of a tight fiscal environment, we need to find innovative ways to attract much needed private sector investment and partnerships to stimulate economic growth and job creation. Economic Outlook Economic Growth 13. Madame Speaker; global economic growth is subdued, and it is projected to be 3.5% in 2015, rising to 3.7% in 2016. This is indeed a forecast which suggests a long and challenging road towards recovery to levels seen pre-2008. 14. Growth in the sub-Saharan Africa region is expected to average 4.5% in 2015 and increase to 5.1% in 2016. This is in the face of weaker global demand for commodities. 15. As a country, we are not immune to the difficult global economic conditions. South Africa’s forecasted growth rate up to 2016 is expected to remain roughly in line with average world growth prospects, yet lagging behind that of emerging and developing economies. 16. The rate of GDP growth slowed down from a rate of 4.1% in the fourth quarter of 2014 to a rate of 1.3% in the first quarter of 2015. Page 4 of 22 This was lower than the expected 1.6% forecast by most economists. The chances of achieving an average growth rate of 2% this year, as initially forecast, will therefore be a slightly more demanding goal. 17. As a Province, our nominal GDP figures indicate that our overall share contribution towards the South African economy has risen the last couple of years to 7.6% in 2013. Our average rate of growth in the ten year period from 2003 to 2013 was relatively low at 2.9%. 17.1 This was the joint fifth highest growth rate of the nine provinces and was well below the national average of 3.7% over the same period. 18. Relative to the South African economy, Mpumalanga contributes strongly in the areas of mining (21%) and utilities (15%), which includes electricity generation. It also contributes a fair share in the areas of agriculture and forestry (9%) as well as trade and manufacturing (both 7%). 19. Mining still dominates Mpumalanga’s economy in terms of its share (measured in constant prices) of the provincial GDP as it accounts for 25% of the provincial economy, community services (including government services) (16%), trade (15%), manufacturing (13%) and finance (12%).These sectors account for more than 80% of the provincial economy. Employment 20. The first quarter national employment figures for 2015 show that whilst employment rose by 405 thousand or 2.7% on an annual basis, the unemployment rate rose to 26.4% in the first quarter of 2015 as compared to 25.2% in the same period of 2014. 21. This emphasises the need to not only accelerate the pace at which we are creating jobs, but to also drastically improve the levels of preparedness of the working age population to access work opportunities. 22. The official unemployment rate in Mpumalanga stands at 28.4% as at the end of the first quarter of 2015. This is down by 2% from 30.4% during the same period in 2014. It is however, 1.8% higher than the fourth quarter of 2014. Page 5 of 22 23. Madame Speaker, what is of concern however is the high level of discouraged work seekers in the Province. This is reflected in the relatively high expanded unemployment rate of 40.7% at the end of the first quarter of 2015.