Deputy Speaker, hon President, Deputy President and hon members, on Thursday evening, President Zuma set out a vision for South Africans that placed jobs at the centre of our efforts as government and called on all South Africans to join hands and work together to achieve that vision.
Mr President, you set the tone in the state of the nation address with the call for action and implementation.
We heard earlier that the Leader of the Opposition was setting out his party's philosophy. I accept his view that we need policies that promote the path to prosperity, but not prosperity only for the few, the privileged and those with no idea of what it means to have no bread or earn too little to feed their families. South Africa cannot afford to go back to those policies that benefit the minority. We have been there in 1994 and before.
The constituency of the ruling party is the poor, the unemployed and the low-paid in society. For this reason, we have chosen a path to prosperity, but one founded on bringing more South Africans into employment to achieve the goal of five million new jobs by 2020. This year, we will take steps that will facilitate immediate job creation and also lay the basis for long- term sustainable job creation.
Our strategy is to build on our natural resource base, our location on the continent and our technological capacity and know-how in order to enhance national wealth creation and employment. Our focus is to rebuild the productive sectors of the economy, to use the major investment commitments in the private sector and public enterprises to support a new growth path and to connect policy, resources, institutions and partnerships into a coherent package.
We have seen a historic rebalancing in the global economy, with a shift of growth and economic power to major developing countries, and we are positioning South Africa to benefit from this. We will focus on the opportunities on the African continent. It has one billion consumers. In a recent survey, the continent's additional growth potential was estimated to be R7 trillion by 2020, with growth in consumer goods, infrastructure, mining and agriculture. We are positioning ourselves to seize these opportunities.
Our approach recognises that programmes that combat poverty, inequality and unemployment are sources for economic growth and that, aside from the intrinsic benefits to the poor, the marginalised and the excluded, well- designed measures to promote development also support and stimulate growth and employment.
The state will clearly play an important role in the new growth path, but we can only achieve the five million new jobs if we also unlock the employment-creating capacity in the private sector. I would like to share with hon members some elements of our strategy that addresses the "how" of job creation and growth.
Let me use the example of the auto sector, where government's industrial incentive schemes and the solid platform for investment we created are now attracting investment by major multinational corporations. Mercedes Benz will use South Africa as one of only four locations globally to build the next-generation, popular C-class vehicle at its East London plant, creating about 1 500 new jobs in supplier industries. [Applause.]
General Motors will produce the Spark entry-level passenger car at its Port Elizabeth plant, creating 500 additional jobs. Volkswagen is now producing the new Polo left-hand-drive in Uitenhage for export markets.
Ford Motor Company will produce a new-generation pick-up truck at its Pretoria plant and increase the local content of its vehicles from 35% to more than 60%. [Applause.]
BMW will produce the new 3-series all-wheel drive in South Africa from this month and, in fact, the first vehicles are coming off the production line this week. [Applause.] Toyota has announced a major expansion of its warehouse capacity to take on the opportunities elsewhere on the continent.
These announcements involve close to R10 billion of new investment and will create additional decent work opportunities. It is also a massive vote of confidence in the economy. We are now working to deepen the component manufacturing sector that supplies the major auto manufacturers.
In other sectors, too, companies have announced major investment projects, one of the largest being the R350 million Proctor and Gamble expansion of its manufacturing plant for baby care products. My colleague, Minister Rob Davies, is leading government work to create conditions for faster growth in manufacturing. Indeed, the Industrial Policy Action Plan, whose implementation he co-ordinates, is now the critical platform that we are using to drive the manufacturing goals of the new growth path.
President Zuma noted that we are changing from analogue to the more advanced, digital signals for radio and television broadcasting. We are now incentivising the manufacture of set-top boxes, locally, that can convert old technology televisions to the new digital platform. This is where our approach on jobs and localisation comes in.
Minister Padayachie has finalised the standards for set-top boxes and production will start in South Africa within 12 months. More than 2 000 jobs will be created in the sector in manufacturing, packaging, distribution and installation, and in the associated initiatives in the communication and creative industries. It will also boost small businesses and is a good opportunity to bring young people into decent employment. Private investment is held back in a number of cases by constraints and bottlenecks in energy, transport, water and communication infrastructure.
Baie Suid-Afrikaners word uit die ekonomiese hoofstroom gehou as gevolg van leemtes in infrastruktuur, 'n gebrek aan paaie wat landelike gebiede met markte verbind en die kragnetwerk wat nie alle gebiede bereik nie. (Translation of Afrikaans paragraph follows.)
[Many South Africans are kept out of the economic mainstream as a result of deficiencies in the infrastructure, a lack of roads that link rural areas with markets and the fact that the electricity network is not reaching all areas.]
We need to fix this. We will use infrastructure as a key trigger for growth and jobs. Over the four years to 2014, our infrastructure expenditure estimates provide for more than a quarter trillion rands a year. Money is not all we need. It also requires careful planning and execution to ensure we achieve the largest number of jobs and promote economic sustainability.
To give effect to this, national departments, state-owned enterprises and development finance institutions are beginning to work in a much more strategically co-ordinated way. My colleague Minister Gigaba has led a discussion with a number of state-owned enterprises in transport, energy, aerospace manufacturing, broadband provision and mining and forestry, to spell this out.
Our mandate to the state-owned enterprises are clear: speed up the core areas, build roads and railway lines, construct power stations, provide flights that link us to key economic zones and reduce the cost of broadband.
However, it also involves building a South African supply base that can manufacture the turbines, boiler components, locomotives and train carriages for the infrastructure programme and so deepen the level of localisation. The industry that emerges from this initiative will be able to supply the massive infrastructure programmes on the African continent as a whole, worth an estimated R1,4 trillion annually by 2020.
We have now set clear goals for artisan training, jobs to be created and projects to be completed. For example, by 2015, Eskom will have enrolled 8 000 apprentices and expects to have 6 800 new qualified artisans. I wish to emphasise that the jobs that Eskom and Transnet will directly create are part of a broader role. By providing a solid and reliable energy supply and transport networks, they unlock investment projects that will create decent jobs on scale.
Infrastructure can also play a key role in expanding farming output and drawing smallholder farmers into the economic mainstream, as Minister Nkwinti is pursuing. However, we will also need finance, competitive market conditions and focused support if we are to become a larger food producer.
This support package, co-ordinated by Minister Tina Joemat-Pettersson, will include help with seeds tractors and storage facilities such as silos; setting up rural co-operatives; and identifying access to water.
Organised agriculture has welcomed our focus and committed to partnering with us. Complementing our efforts on the farms, we will support efforts to expand agro-processing industries for our domestic market as well as for exports.
Investment is critical. The Industrial Development Corporation, IDC, will therefore make R5 billion available over the next five years for investments in the agro-processing activities in partnership with the private sector. Nestl is building factories for the manufacture of cereal, noodles and specialised proteins in a half-a-billion rand investment that will create hundreds of new jobs. Pioneer Foods is increasing its investment to R2 billion over the next two years.
What this indicates is that the business community recognises that we have laid the platform for solid growth and strong job creation. We have created the platform and the investment is flowing now. We have initiated successful efforts through the Competition Commission to combat price fixing and monopoly behaviour and improve competition in the food sector, with actions on fertilisers, bread, flour, poultry, maize and wheat.
Minister Shabangu is working with the mining sector to expand mineral output, and I note that the latest mineral production statistics have shown the first year-on-year rise in output since 2005. According to the chamber of mines, mining created about 17 000 new jobs in 2010. Further increases to our mining output require that we address infrastructure and skills bottlenecks, which we are doing now.
In order to achieve the greatest employment and development benefits, we cannot simply rely on selling raw materials to the rest of the world. Government is finalising a beneficiation strategy to incentivise the greater processing of minerals locally, where possible to final consumer or capital goods. Some of the key value chains include iron ore, coal and platinum.
We are working on a project to set up the world's first integrated metals plant beneficiating titanium, zirconium, vanadium, magnesium and silicone which, if it is confirmed through the feasibility study currently being undertaken, will involve a R15 billion investment and can create more than 7 000 jobs in construction as well as the operation of the plant. There are also significant job opportunities in sectors such as the green economy, which is growing on the back of the new tide of green industrialisation that is reshaping industries and energy generation across the world. Minister Peters is finalising the Integrated Resource Plan, IRP 2, and it includes a substantial commitment to renewable energy. The regulatory framework for renewable energy feed-in tariff will be implemented during this year. We have compiled a database of potential projects in green energy, manufacturing, waste-management, eco-tourism, agriculture and mining.
In order to address funding challenges in this new sector, the IDC will allocate R25 billion to new investments in the green economy over the next five years. In addition to this, Minister Gordhan will next week announce further financial commitments that will be made in the Budget Speech to promote opportunities in this sector.
There are some immediate successes we can show. We have started with the installation of solar water geysers in new low-cost houses and to date 25 000 units have been installed in a partnership that includes the IDC. With a further 170 000 units planned, this project will contribute to employment creation, strengthen the local manufacture of components and provide renewable energy. This is an example where we are moving from vision to action.
The spending by the state is a big driver of economic activity. We are therefore finalising a major overhaul of our procurement system to place more focus on local procurement. The state will require major supplies for infrastructure, state agencies and government departments to be manufactured locally. Longer-term contracts are envisaged in order to provide investors with certainty and with the necessary scale to make it attractive to establish manufacturing facilities in South Africa.
As President Zuma indicated in the state of the nation address, we expect development finance institutions to step up the pace of job creation. Investment is a key driver of growth and of jobs and the IDC will be a critical agency to provide co-investment and loans to entrepreneurs.
I am pleased to note that the first of a series of development bonds was issued by the IDC during 2010 for the sum of R2 billion. It has had a positive impact, with R1,2 billion already approved, which will account for 9 000 new jobs created and 5 000 existing jobs saved.
We, however, expect more from the IDC. It has been asked to review its pricing of loans and the period it takes to finalise applications and to ensure that it has an optimal internal structure to achieve our ambitious goals.
I am pleased to advise this House that our development finance institutions will focus and expand the investment across all the priority sectors identified in the state of the nation address, in addition to the R10 billion new facility announced by President Zuma.
We have taken steps to make the resources available. It will, however, require viable projects and we invite the private sector to work closely with us to identify such opportunities and to tap into these resources.
Cutting across all the job drivers is the emphasis on skills development. We have set concrete targets for state-owned enterprises; and Minister Nzimande has referred to the very important dialogue we had with both business and labour recently and the commitment they have made.
In the past year the President has emphasised the importance of youth employment and the urgent need to draw young people into training, community service and employment. We have identified a number of measures and will be rolling these out in the course of the year. In some cases, these will be done in partnership with the private sector and consultations are under way. We will also work with all social partners to ensure that good ideas about youth employment find the necessary support from the state.
In the year ahead, we will promote enterprise development, cut unnecessary red tape and support small businesses and entrepreneurs in the informal economy. President Zuma has announced the merger of three small business funding and microfinance agencies.
In the next phase we see a better connection between these funding agencies and the mentoring and support services such as in the Small Enterprise Development Agency, Seda, with the intention eventually to combine these into a one-stop shop.
But why are we doing so? It is to make access easier for small businesses and the many South Africans in the informal economy. Through a single infrastructure, we will cut down on administration costs, avoid waste and duplication and make sure that more money reaches the small entrepreneur. Together with this, we will roll out a new direct small business funding programme this year on a pilot basis, with details to be announced next week.
All these elements will benefit from partnerships. A week ago, we held a meeting with our social partners - the leaders of business, labour and community organisations. The meeting confirmed the joint commitment to create five million new jobs by 2020 and to work together to achieve this.
We agreed we would start with some low-hanging fruit - areas where we could immediately work together. Business and labour made commitments on skills development, the green economy and strengthening the schooling system. This is an important step in mobilising society behind the vision of jobs as the key priority.
Instead of policies that we are urged by some to adopt, that will plunge us into decades of industrial strife and conflict, we seek instead to develop partnerships at the workplace, founded on improving productivity, promoting innovation and supported by skills enhancement. Therein lies the opportunity for South Africa to build a shared commitment to what is required to achieve five million new jobs by 2020.
In this debate and in the budget speeches over the next few weeks and months, government will provide members of this House with more details of the actions we are undertaking to achieve our goals, including in other important areas such as tourism, the creative industries, the social economy and co-operatives, public works and action by the competition authority.
In responding to the vision set out in the state of the nation address, Mr President, in government we are rolling up our sleeves and getting South Africans working. Thank you.
Business suspended at 16:30 and resumed at 16:48.