Business Enhancement and Industrialisation

BUSINESS ENHANCEMENT AND INDUSTRIALISATION

Purpose: Provide sector oversight to ensure that state-owned companies contribute to the advancement of industrialisation, transformation, intergovernmental relations and international collaboration services.Support the shareholder position and enhancing the operations of state-owned companies.

Programme Overview & Objectives: Contribute to the enhancement of the performance of SOCs on an ongoing basis by:

  • Conducting reviews, research and modelling of pipelines and new business enhancement opportunities within the SOCs.
  • Assessing operations of SOCs and developing mitigation instruments in conjunction with policy departments, regulatory bodies and industry.
  • Conducting research, modelling job creation and transforming instruments for SOCs to inform compact alignment imperatives, unlock bottlenecks affecting state-owned companies and inform evidence-based policy formulation.
SUB-PROGRAMMES
BUSINESS ENHANCEMENT SERVICES

develops and coordinates the implementation of SOCs’ strategies to leverage localisation programmes; Provides intergovernmental coordination and support to programmes and SOCs in relation to economic development programmes, as agreed with provincial and local governments; maintains a register of commitments made by SOCs and lobbies for the implementation of special programmes focusing on skills development, transformation and the youth

ENERGY RESOURCES

Exercises shareholder oversight over Eskom, Alexkor and SAFCOL

RESEARCH AND ECONOMIC MODELLING

Conducts cost benefit analysis reviews on business enhancement and transformation initiatives and develops economic sustainability models for proposed work packages and projects

TRANSPORT AND DEFENCE

Exercises shareholder oversight over Transnet, SA Express, SAA and Denel

SUB-PROGRAMME: BUSINESS ENHANCEMENT AND INDUSTRIALISATION

 This sub-programme involves the following:

International and Intergovernmental Relations

The Chief Directorate Intergovernmental Relations (IGR) was established in line with the intergovernmental Relations Framework Act (2005) to foster relations and co-operation between the Department, different spheres of government and foreign states to advance DPE SOCs, mandate and objective.

 

At the core of the IGR Unit is:

  • The Constitutional imperative, which states that “government is constituted by national, provincial and local spheres of government which are distinctive, interdependent and interrelated”. IGR shall give effect to the principle of cooperative government.
  • Develop inter-Departmental and international relations programmes to realise cooperative government by fostering working relations, strengthening alignment, informing and consulting one another on matters of common interest; adhering to agreed procedures.
  • Manage all engagements SOCs are involved with, be they with government departments, foreign states or international agencies, to report back to the department on agreements and have knowledge on such contracts.
  • Reviewing the Africa Strategy.
Transformation

Transformation, in all its facets, has deep-rooted political, social and economic foundations in the South African context. To address these socio-economic challenges, the DPE has through its Transformation Framework and Guidelines identified areas of intervention in ensuring SOCs’ contributions to create opportunities for participation by marginalised sectors of our society and previously disadvantaged individuals in the sectors our SOCs operate.

 

The Transformation Framework and Guidelines is thus premised on four key pillars critical to transformation, which are:

 

(a) Skills Development;

(b) Employment Creation;

(c) Procurement; and

(d) Corporate Social Investment (CSI) Contributions.

Corporate Social Investment (CSI)

The South African BBBEE Code, not only aims to correct racial imbalances, but also strives to promote social investment and the empowerment of communities. It is thus important that as required by both the BBBEE Codes and the Companies Act (2008), SOCs commit 1% of the Net Profit after Tax (NPAT) and other additional financial resources for development of the communities in which their businesses operate through social compacts. In this regard, the programme will:

 

  • Ensure SOCs’ CSI spend is strategically leveraged to ensure the delivery of impactful interventions in various communities.
  • Coordinate SOCs’ quarterly forums on CSI to advance community development and transformation.
  • Conduct SOCs’ quarterly performance assessments on CSI.
Industrilisation and Localisation

Based on their procurement capacity, manufacturing capabilities and their role in providing infrastructure and economic services, SOCs are better positioned to support industrialisation of the Economy. They serve as clusters of expertise and have important linkages to various parts of the economy, as anchor institutions in their sectors, channels for international knowledge spillovers, and hubs for human capital development.

 

As set out in the New Growth Path (NGP) and Industrial Policy Action Plan (IPAP), procurement of locally manufactured products is one of the key levers identified by government to support industrial development in South Africa. Government is currently using (i) designation/local content, (ii) National Industrial Participation Programme (NIPP) and (iii) the Competitive Supplier Development Programme (CSDP) as distinct procurement levers to leverage procurement, develop new industrial and technological capabilities.

 

In ensuring implementation of these programmes, DPE will monitor the implementation of its Localisation Strategic Framework (LSF) to ensure SOCs’ contribution to the achievement of national imperatives. This is intended for increased local content, investment, technology accumulation and establishment of trading partners so that in the medium to long term they can buy from local service providers than multinational Original Equipment Manufacturers (OEMs). This will support SMMEs development, transformation, localisation, reduce the trade imbalance and create jobs.

 

In this regard, the programme will:

 

(a) Ensure achievement of high local content in SOCs’ procurement expenditures

(b) Facilitate the implementation of Supplier Development and Localisation in

SOC Capital Expenditure Programmes

(c) Ensure SOCs invest in Research and Development activities directed at increasing the country’s industrial capabilities.

Environmental Alignment
  • Environmental Alignment co-ordinates the Joint Working Committee engagements on a quarterly basis to discuss environmental issues that affect SOCs. Unlock bottlenecks to ensure that SOCs fully comply with relevant legislation.
  • The Air Quality and Compliance Forum takes place on a quarterly basis to address challenges and accounting purposes related to Eskom.
  • Develops the Environmental Implementation Plan, as required by Chapter 3 of the National Environmental Management Act, (NEMA Act 107 of 1998 as amended) on SOCs’ strategic projects.
SUB-PROGRAMME: ENERGY AND RESOURCE

 This sub-programme involves:

 

Management – the office of the Deputy Director-General, which provides strategic leadership and management of programme personnel.

Eskom – shareholder management and oversight of Eskom’s financial performance.

Alexkor – shareholder management and oversight of Alexkor, including review of its strategy to enhance financial sustainability and overseeing implementation of the Richtersveld Deed of Settlement.

SAFCOL – shareholder management and oversight, including forestry management, timber harvesting, timber processing and related activities, both domestically and internationally, as well as oversight of the entity’s restructuring.

 

Responsible for the following SOCs:

Eskom SOC Limited

Supports the security of supply by:

  • Examining on an ongoing basis Eskom’s maintenance plans, operational practices, electricity generation and distribution efficiency, as well as its reserve margin.
  • Ensuring on an ongoing basis that Eskom supplies electricity by monitoring, evaluating and engaging Eskom on system security and the new Build Programme to alleviate constraints.
  • Facilitating on an ongoing basis engagement between Eskom and other spheres of government to address municipal debt.
  • Monitoring on an ongoing basis the rollout of the capital investment programme to ensure that it is delivered on time, is of appropriate quality and within budget.
Alexkor SOC Limited
  • Ensuring increased diamond production and promoting the financial stability of the joint venture by monitoring the implementation of Alexkor’s strategy to promote financial sustainability and monitor the pooling and sharing joint venture turnaround strategy on a quarterly basis.
  • Ensuring collaboration and alignment of the SOC to provide a clear indication to market by developing a collaborative model with the African Exploration Mining and Finance Corporation over the medium-term.
  • Contributing to developing sustainable economic activities linked to the agricultural sector by continuously supporting and coordinating the joint efforts of the Department of Public Enterprises with the Department of Mineral Resources and the Department of Rural Development and Land Reform. To stabilise the Richtersveld region and make use of revenues.
SAFCOL
  • Oversight of the implementation of the land restitution strategy for claims over the Komatiland Forests Land Claims Settlement Model, to ensure meaningful benefits to successful land claimants over the medium-term.
  • Oversight of the implementation of SAFCOL’s corporate strategy over the medium-term.
  • Engagement with the Department of Rural Development and Land Reform, Agriculture, Forestry and Fisheries, and Trade and Industry, to ensure the warehousing of the shares held by SAFCOL and shares in the four privatized forestry companies.
  • Reduction of reliance on the sawlog market by supporting the development of the new business strategy over the medium-term.
SUB-PROGRAMME: TRANSPORT AND DEFENCE

 This sub-programme involves:

 

Management – the office of the Deputy Director-General provides strategic leadership and management of programme personnel.

Transnet – aligns the corporate strategies of Transnet with government’s strategic intent and monitors financial and operational performance.

SA Express – aligns SA Express’s corporate strategies with government’s strategic intent and monitors financial and operational performance.

Denel – shareholder management and oversight of Denel’s financial performance and strategy implementation.

SAA – aligns SAA’s corporate strategies with government’s strategic intent and monitors financial and operational performance.

 

Responsible for the following SOCs:

Transnet SOC Limited

Provides oversight on Transnet’s implementation of the Market Demand Strategy including the 4.0 Strategy to optimise the economic impact of infrastructure investment on the economy by monitoring the rollout of Transnet’s Capital Expenditure Programme, quarterly and annually; and by assessing any significant deviations from corporate plans and potential cost overruns and possible time delays on major capital projects.

South African Express Airways SOC Limited
  • Develops a strategic proposal for the optimal group structure of the State owned airlines to assist in rationalising the structure of these airlines as well as to unify their operations.
  • Monitors the implementation of the company’s multi-year turnaround plan over the medium-term
Denel SOC Limited
  • Oversees the development of a long term growth strategy to achieve financial stability and the growth of manufacturing export products on an ongoing basis.
  • Monitors the implementation of the multi-year turnaround plan over the medium-term.
  • Ensures alignment with key government stakeholders on the strategic capabilities to be maintained by Denel and the funding thereof;
  • Works with Denel to identify non-core businesses which could be sold or where strategic equity partners could be introduced and facilitates the process for doing so.
South African Airways SOC Limited
  • Develops a strategic proposal for the optimal group structure of the State owned airlines to assist in rationalising the structure of these airlines as well as to unify their operations.
  • Monitors the implementation of the company’s multi-year turnaround plan over the medium term
  • Develops a holistic approach to the policies affecting the aviation sector through engagement with the relevant policy departments.
SUB-PROGRAMME: RESEARCH AND ECONOMIC MODELLING

 This sub-programme involves:

 

Management – the office of the Deputy Director General, which provides strategic leadership and management of the programme.

Economic modelling – to provide specialist economic modelling and sustainability services.

Research modelling – conduct topical research to inform the development of policies and strategies.

 

Programme Overview & Objectives

  • Conduct cost benefit analysis reviews of proposed business enhancement and transformation initiatives.
  • Develop economic sustainability models for proposed work packages and projects.