Speeches & Remarks

Medium Term Budget Policy Statement 2013 - Speech by Pravin Gordhan Minister of Finance

23 Oct 2013

Honourable Speaker
Mister President Deputy President
Fellow Cabinet Colleagues and Deputy Ministers Governor of the Reserve Bank
MECs of Finance Mayors
Members of the Diplomatic Corps Directors-General
Honourable Members Ladies and Gentlemen

I have the honour to present the fifth Medium Term Budget Policy Statement of President Zuma’s administration, the fourth democratic government of the Republic of South Africa.

Over the past 4½ years, this government has steered our country through the worst global recession in 70 years. We have made bold, and correct, decisions which have restored growth, supported our industries, and maintained a sustainable fiscal policy.

This MTBPS outlines government’s intent to:

Pursue a fiscal path that balances the requirements of counter- cyclicality with a commitment to medium term consolidation
Keep government debt on a sustainable long-term path Implement the National Development Plan
Direct public spending to reignite inclusive growth and complement increased private-sector investment
Support job creation and skills training, particularly for the unemployed youth
Create a climate for investment
Manage the risks emerging from the current and potential global economic turbulence
Cut waste and extravagance in government
Support black entrepreneurs as investors and partners in our industrialisation and broadening of economic participation.

Securing inclusive growth

Honourable Speaker, we must be frank with our fellow South Africans. This is a tough period, both globally and for the South African economy – but one with many possibilities and opportunities!

We are developing and implementing solutions to the challenges facing our economy:

Growth is too slow.
Unemployment is high and many households are over-indebted.
Government expenditure substantially exceeds our revenue. Since 2008, we have issued more than R1 trillion in debt.
Our level of savings is too low to finance the investment we need. We import considerably more than we export.

Unless we save and invest more, unless we expand and diversify our economy, unless we accelerate job creation, our aspirations will remain unfulfilled.

Above all, we need faster, inclusive, job-creating growth. Without growth we cannot increase the number of enterprises or create more jobs. Without growth we cannot generate the revenue needed to fund our social programmes, infrastructure investments, and incentives to support important industries.

We have a duty to broaden opportunities for those who do not have secure incomes, formal jobs, solid homes, electricity, water or access to health care. We have to share the benefits of growth, so that those of our people who are most vulnerable and disadvantaged can say “This economy works for me”.

Faster and more inclusive growth calls for greater cooperation and better alignment between labour, business, government and other actors to get things done – hearing each other out, finding solutions, encouraging innovation, building a “smart” South Africa.

Nineteen years of democracy

Honourable Speaker, it is also appropriate, 19 years into our hard-won democracy, to celebrate our achievements as a young nation.

Our economy has grown by over 80 per cent since 1993. National income per capita has increased by 40 per cent in real terms.
Total employment has increased by more than 3.5 million.
Fixed investment increased from 15 per cent of GDP in 1993 to an average of 20 per cent over the past five years.
A new tax administration has been established in the South African Revenue Service, and an overhaul of the tax structure has allowed tax rates to be lowered while improving revenue performance.
Over R600 billion in BEE transactions have been recorded since 1995.
More than 15 million people are now eligible for social grants.
We have built more than 3 million homes and have substantially increased the number of households with access to electricity, water and sanitation.

However, our work is far from done. As President Mandela once said, “After climbing a great hill, one only finds that there are many more hills to climb…”. We must continue our process of transformation against a backdrop of global economic uncertainty. Despite this uncertainty, we must be steadfast, creative and bold.

Implementing the NDP

Honourable Speaker, the central message of the National Development Plan (NDP) is clear – To accelerate progress, deepen democracy and build a more inclusive society, South Africa must translate political emancipation into economic wellbeing for all. It is up to all South Africans to fix the future, starting today. This MTBPS demonstrates government’s resolve to implement the NDP through, among other things:

Expanding electricity, transport and communications capacity Promoting industrial competitiveness and job creation
Addressing challenges in mining and community development Supporting growth of our cities and special economic zones
Broadening rural development and expanding agricultural opportunities, and
Strengthening public service delivery while combating waste and corruption.

As the President noted in his Budget speech, “We have moved to the implementation of the plan. Going forward, all delivery agreements, sector plans, departmental strategic plans, as well as provincial and municipal plans will be aligned to the National Development Plan.”

So we have a plan, and we now have to track progress, year by year, in its implementation.

Let me highlight some of the projects that are in progress:

Construction of the Medupi and Kusile power stations is well under way.
Rail capacity is being expanded to support manganese and coal exports.
Over the next twelve years, we will replace more than 300 trains for the two million people who use Metrorail every day.
Tax incentives for industrial development projects amounting to R10 billion have been approved over the past 3 years, which will support investment amounting to R35 billion.
The manufacturing competitiveness enhancement programme has approved 387 applications since mid 2012, with a value of R2.6 billion.
In support of regional infrastructure development, the Development Bank of Southern Africa has provided almost R1.5 billion for road projects in Angola this year and committed funding of R3 billion to energy projects in Tanzania and the Democratic Republic of Congo.
The expanded public works programme created 970 000 work opportunities last year. The Jobs Fund has approved allocations of R3.4 billion to more than 60 projects, which will generate 90 000 permanent jobs and about 100 000 training opportunities over the period ahead.
The President recently launched the Bridge City project, which brings together public and private investment to create a new urban centre linking the communities of Phoenix, Inanda, Ntuzuma and Kwamashu, north of Durban.
Another excellent example of partnership between the public and private sectors is the Renewable Energy Independent Power Producer Programme. A total of 47 projects have been approved, to be completed between 2014 and 2016. The first 75 megawatt solar plant in the Northern Cape was connected to the Eskom transmission grid last month, three months ahead of schedule. Two wind farms in the Eastern Cape will be connected by May next year.

Honourable Speaker, these are just some ways in which implementation of the National Development Plan is proceeding. In many cases, it builds on initiatives that were already under way. In other areas, new programmes or reform proposals are being introduced.

To support job creation in special economic zones and for young workseekers, a revised Employment Tax Incentive Bill will be formally introduced in parliament tomorrow. This forms part of the multi-pronged approach to expanding work opportunities, especially for young people, envisaged in the national youth accord. The evidence on this is very clear: if young people find work within a reasonable timeframe after leaving school, this greatly improves their lifetime career prospects.

These are steps towards faster, more inclusive growth - and these are all areas in which private sector and civil society involvement is no less important than the role played by government.

The economic outlook

Honourable Speaker, in crafting our fiscal strategy for the next three years, Cabinet has taken careful account of global and local economic circumstances.

Global economic activity remains subdued. In the euro area, which is our main trading partner, GDP growth of 1 per cent is expected next year, after negative growth during much of 2012 and 2013. The IMF has revised down the 2013 growth outlook for developing countries from 5 per cent to 4.5 per cent.
Our economic prospects are interconnected with these global trends. As the United States tapers its quantitative easing programme and starts to raise interest rates, this will impact on our debt costs and might cause further volatility of the rand. And so we have emphasised in recent engagements with our international partners that progress towards a better future requires greater global cooperation and greater respect for the interdependence of industrialised and emerging economies.
We now expect growth of about 2.1 per cent in the South African economy this year, rising to 3.5 per cent by 2016.
Gross fixed capital formation will increase by about 4 per cent this year, mainly driven by public sector infrastructure projects. Private sector investment growth remains subdued, but should gather momentum over the period ahead.
Consumer price inflation is expected to average 5.9 per cent in 2013, and to remain within the 3 to 6 per cent target band next year.
A trade deficit of 2.6 per cent of GDP was recorded in the first half of 2013, contributing to a deterioration in the current account of the balance of payments to about 6½ per cent of GDP.
Muted economic growth has translated into limited gains in job creation. The quarterly labour force survey indicates an increase in employment of about 275 000 in the year to July, but formal non- agricultural employment growth has been slow.

Boosting confidence and building stability

Over the past year, government has been working with business and labour in several sectors to build a better investment climate. A recent JSE/UBS roadshow in New York brought government ministers and leading South African CEOs together on the same platform, presenting a balanced perspective on South Africa’s economy.

Deputy President Motlanthe and Minister Shabangu responded quickly to allay concerns of investors in the mining industry. Ministers Shabangu and Oliphant have also made progress in resolving labour disputes in this sector.

Minister Davies has engaged with senior executives and labour representatives to improve cooperation and restore confidence in the automotive sector. Constructive cooperation between government, business and organised labour also characterises the work of the task team on infrastructure, which aims to get these crucial projects moving.

Meanwhile, a wide range of measures are in place to give greater impetus to investment:

Ministers Gigaba and Peters are overseeing substantial improvements in road and rail logistics, including reductions in container handling charges at our ports.
The special economic zones framework introduced by Minister Davies provides new opportunities for supporting industrial development and exports.
Under Minister Patel’s leadership, action has been taken to ensure that competition is not undermined by collusive practices.
Improved administration of work permits for skilled foreign workers will be implemented next year by Minister Pandor.
Reforms are also under way to enhance private-sector participation in the electricity sector and improve the structure of support programme to firms.
Work is in progress on a new promotion and protection of investment bill and a policy framework to address investor concerns relating to ownership, tax, industrial support measures and exchange controls.

Government remains committed to macroeconomic stability, supported by prudent fiscal management and sound monetary policy. We are aware of the risks posed by the deficit on our current account, which has so far been mitigated by our flexible exchange rate but which over the long term requires fundamental change to the structure of our economy.

These policies ensure that the country’s finances are sustainable; that wages, social benefits and savings are not eroded by high inflation; and that the economy can absorb external shocks.

Financial sector reforms are now in the implementation phase, with the Twin Peaks legislation to establish two new regulatory authorities to be submitted to Cabinet shortly. The retirement reform programme is also progressing, with the consultation process on retirement fund costs at its final stage. Draft regulations will soon be released.

Fiscal policy and the budget framework

Allow me to turn, Honourable Speaker, to the fiscal policy framework set out in the MTBPS.

We remain committed to counter-cyclical fiscal management and long-term sustainability. A sustainable expansion of public services is an important developmental goal and cannot be achieved without economic growth. A larger economy means higher revenue.

The 2013 MTBPS balances fiscal consolidation with support to the economy. The proposed fiscal framework will:

Meet the 2013/14 deficit target, as defined in the new format presented in the 2013 Budget Review
Narrow the deficit going forward in order to stabilise public debt
Grow expenditure at 2.2 per cent in real terms within a clear expenditure ceiling
Contain spending growth on wages and goods and services in order to stabilise debt and begin rebuilding fiscal space.

Expected gross tax revenue for 2013/14 has been revised down marginally by R3 billion to R895 billion. Personal income tax collection remains strong as a result of high wage settlements, and corporate income tax has been robust. Lower revenue growth is expected over the medium term as a result of slower economic growth than we projected in February.
The Tax Review Committee established earlier this year is mandated to inquire into the role of the tax system in promoting inclusive economic growth, employment creation, development and fiscal sustainability. Its first report, on small and medium-sized business, will be submitted before the end of this year.

The budget deficit will narrow from 4.2 per cent in the current year to 3 per cent in 2016/17. This will stabilise debt over the medium term and begin to rebuild fiscal space.

Government's approach to improving provision of public services is therefore focused on better use of existing resources and shifts in the composition of spending, rather than raising overall expenditure.

Division of revenue & medium term expenditure framework

As Members of the House will know, preparation of spending plans for the 2014 Budget is now in progress and will be aligned to the NDP. The MTBPS provides a summary of the expenditure framework which Cabinet has approved, and within which national and provincial budgets are being prepared.

Our Constitution requires an equitable division of revenue between the national, provincial and local spheres of government. Over half of all revenue raised by national government through taxes and borrowing is transferred to provinces and municipalities.

The MTBPS proposes a national appropriation of R1.1 trillion in 2014/15, R1.2 trillion in 2015/16 and R1.3 trillion in 2016/17.
Just under 10 per cent of the total, or R110 billion next year, will be spent on debt service costs.
The budget framework includes a contingency reserve, which is R3 billion next year, R6 billion in 2015/16 and R18 billion in 2016/17. This allows for unforeseeable claims on the fiscus, and future policy considerations.
This leaves R1 trillion to be allocated next year, rising to R1.2 trillion in 2016/17. The proposed division of revenue allocates R484 billion to national departments, R453 billion to provinces and R93 billion to local government next year.

The provincial share is largely determined by the requirements of education and health services and public service remuneration. Salary costs and infrastructure requirements are the main adjustments to national votes.

New planning requirements were announced in the 2013 Budget for provincial grant allocations for health and education infrastructure. All provinces have submitted the required asset management plans. Incentives to reward value-for-money in infrastructure delivery will take effect in the period ahead. In cooperation with the Department of Performance Monitoring and Evaluation, a programme of expenditure reviews is in progress, focused on housing, broadband access, industrial development zones, in-service training of teachers, amongst others.
The NDP recognises capable municipalities as the bedrock of a capable state. National Treasury will continue to closely monitor and engage – and if need be intervene – in those municipalities that fail to live up to the standards of public service established in the Constitution.

Minister Tsenoli, correctly, emphasises the need for more people who can afford to pay for municipal services to do so. We must also appeal to citizens not to damage public property during protests.

In supporting municipalities over the MTEF period, a strong focus on economic development is proposed. From next year the implementation of the City Support Programme will be accelerated, including incentives to encourage more compact and efficient spatial planning and investment.

The regional bulk infrastructure grant receives an additional R934 million over the spending period to finance bulk water projects. By 2014, responsibility for the housing function will be devolved from provincial to local government in six metropolitan areas.

As a result of these and other additions, allocations for provinces are increased by R11.2 billion over the 2014 MTEF and allocations for local government are increased by just over R1 billion.

Public expenditure growth has remained well within the limits set by government over the past two years. We have again put every effort into finding savings, eliminating waste and reprioritising spending towards key social and development objectives. Over the MTEF period ahead, R10 billion in spending has been reprioritised.

To achieve value for money in these initiatives, Honourable Speaker, we need improvements right across government in financial management. This applies equally to provinces and municipalities, where we have to see much better accountability and discipline in the stewardship of public resources. Wasteful expenditure on expensive cars and overseas trips is unacceptable. I will say more about this shortly.

Rigorous procurement reforms are being initiated, especially in infrastructure project management, to strengthen service delivery, eliminate waste and root out corruption. In reviewing the procurement system, we will also ensure that its contribution to broad-based black economic empowerment and local industrial development is reinforced.

The NDP recognises that we need a better education system to address poverty and build a more capable workforce. Education is the largest single category of government expenditure. It is projected to increase by an annual average rate of 7 per cent over the next three years to R287 billion in 2016/17. The school infrastructure backlogs grant and education infrastructure grant will grow strongly over the spending period.

Employment and social security is the fastest growing function over the MTEF period, increasing by 14 per cent to R75 billion in the outer year. The Community Work Programme will be operational in every municipality by the end of the spending period.

Under the oversight of the Presidential Infrastructure Coordinating Commission, the rate of public investment will gather further momentum next year and beyond, supporting social delivery, industrialisation and skills development. Projects that will get under way soon include a new dam in the Eastern Cape, rehabilitation of the main roadway between Eastern Cape and KwaZulu-Natal, and a new coal-fired power station.

We are reviewing our financing and regulatory procedures to make them more flexible where needed, to provide for multi-year approvals and to shorten decision times. These efforts will need to be accompanied by strengthened technical capacity at municipal level in particular.

The PICC is focussing on maintenance of infrastructure, with proposals to ring-fence budget allocations to ensure that we retain the usability and value of the infrastructure over the planned life-cycle.

The rollout of infrastructure has been accompanied by programmes to support the local manufacture of components, ranging from buses to energy components. These create sustainable, decent jobs and are part of the legacy that the infrastructure rollout plan will leave.

In the past twelve months we have also seen new projects announced by private sector investors in the auto sector, television, film and agro- processing, building on government's investment programme and supported by our development finance institutions.
These initiatives signal our shared commitment to invest today for the expansion of the economy and more inclusive growth.

Adjustments appropriation

Honourable Speaker, allow me to comment briefly on the 2012/13 outcome and the revised numbers for 2013/14.

Both nationally and in provinces, there has been a commendable moderation in spending growth. I would like to acknowledge the support of Cabinet colleagues and the provincial executives in adhering to budget limits.

For the present year, the February budget provided for an appropriation of R1.06 trillion. After taking into account the changes proposed in the Adjustments Appropriation Bill and the Division of Revenue Amendment Bill, expenditure this year will be R1.05 trillion, or 9 per cent more than the 2012/13 outcome.

The budget adjustments this year include

R2.3 billion for national departments and provinces to cover inflation-related salary increases
R894 million rolled over from unspent balances in 2012/13
R500 million for expenditure financed by departmental revenue
Earmarked amounts for broadband connectivity in schools, troop deployments in the Democratic Republic of Congo and repair of flood-damaged infrastructure.

Details are set out in the Adjusted Estimates of National Expenditure.

Cutting costs and abuse

As government, we acknowledge that we too must provide value for money. Although most government spending is effectively managed, there are many opportunities to cut or minimise costs and stop abuse. In these difficult times, Cabinet has decided to take a number of initiatives which will apply both to members of Cabinet and to officials in national, provincial and local government. This will include state entities and state-owned enterprises.

As the former president of Brazil, Lula da Silva, said, “Poor countries must give an example of honesty, of ethics, so that we truly deserve the solidarity from millions and millions of people who would like to contribute but sometimes are not sure their money will go where it should go.”

In respect of the Executive, including provincial and municipal Executives, Cabinet has of its own accord has decided the following:

Cars:
- The cost limits for official cars will be standardised
- Bulk purchasing will be used to reduce costs
- Security features will be a consideration
- There will be no compensation for use of personal cars.
Overseas delegations:
- Business Class only for Ministers
- Assistants to Ministers will be limited to two
- Direct routes will be used
- Number of officials to be kept to a minimum.
Housing:
- Ministers awaiting allocation of houses will be accommodated in rented apartments not hotels
- New refurbishment guidelines for limiting costs will be developed.
No new credit cards to be issued and existing ones to be cancelled immediately.

Our approach to reducing costs and eliminating wasteful expenditure in the rest of government will focus on six areas over the period ahead:
1. The largest is consultant services. There are of course necessary engineering and advisory services employed by government departments. However, we need:
a. Better contract management
b. Stricter control of consultancy fees
c. Each government entity to develop a consultancy reduction plan over the course of this financial year.
2. No credit cards.
3. Travel and related costs:
a. Hiring of cars to be restricted to B Class except for special instances such as rural travel
b. The number of officials travelling to Cape Town offices will be limited
c. The Leader of Government Business will engage with Parliament on measures to reduce costs, such as the size of delegations appearing before parliamentary committees, and the cost implications of the current Pretoria-Cape Town arrangements
d. Business class for overseas travel for DGs and DDGs only
e. Business class for DGs only on domestic flights.
4. Advertising:
a. Guidelines to limit non-essential costs and for better use of GCIS facilities will be developed.
5. Catering and event costs:
a. Guidelines will be developed for reducing event costs, including better use of government facilities rather than outside venues for meetings
b. No public funds to be used for purchase of alcohol
c. The entertainment allowance will be limited to R2 000.
6. Following the review of accommodation leases initiated by Minister Nxesi, steps are under way to reduce long term office accommodation and government housing costs and make further savings from electricity demand management measures in government buildings.

Conclusion

Honourable Speaker, I thank President Zuma for his wise and steadfast leadership, and Deputy President Motlanthe for his valued guidance. I am grateful for the support of the Ministers Committee on the Budget, members of the Treasury Committee, Cabinet colleagues, Premiers and provincial finance MECs, during a difficult but hopeful time.
My sincere appreciation to the following for their invaluable and constructive contributions:

Mr Thaba Mufamadi, Mr Mshiyeni Sogoni, and Mr Charel de Beer and Mr Teboho Chaane, who chair the standing committees on finance and appropriations, and the select committee on finance.
The chairperson of SCOPA, Themba Godi.
Parliament for the crucial role it plays in processing and overseeing legislation and we would like to call upon all parties to support government in the implementation of the NDP.
Governor of the South African Reserve Bank, Ms Gill Marcus and her team, for a supportive monetary policy,
The Auditor-General, Terence Nombembe, who retires. I would also like to welcome his successor Kimi Makwethu and wish him and his staff well for their future work.
Mr Ivan Pillay and the staff of the South African Revenue Service for their creative and valiant efforts to collect the revenue we need,
Deputy Minister Nene for his invaluable support and sharing of duties,
Director-General Lungisa Fuzile, who has provided erudite and prudent leadership, and the dedicated and patriotic Treasury team which has consistently done what is in the best interest of all South Africans.
Directors-General of all departments – for the cooperation and help

Honourable Speaker, we are living through turbulent global economic circumstances. Taking the National Development Plan as point of departure, Cabinet has agreed to a budget framework which protects our fiscal position and supports policies and programmes that support inclusive, sustainable growth.

This is a framework that acknowledges that there is hard work ahead – and recognises that a faster growing economy is in everyone’s interest. We all gain, when more people have work. We all gain, when our firms can compete on international markets. We all gain, when rising incomes contribute to greater capacity for public service delivery. We all gain, when our divisions and inequality fade into history and we celebrate a shared more prosperous future.

As we head towards two full decades of freedom, let us reaffirm our commitment to the ideals that our leaders have stood for. In the words of former President Nelson Mandela: “Overcoming poverty is not a task of charity, it is an act of justice. Like slavery and Apartheid, poverty is not natural. It is man-made and it can be overcome and eradicated by the actions of human beings. Sometimes it falls on a generation to be great. YOU can be that great generation. Let your greatness blossom.”

Honourable Speaker, I hereby submit the Medium Term Budget Policy Statement 2013, and I table:

the Adjusted Estimates of National Expenditure, the Adjustments Appropriation Bill 2013,
the Division of Revenue Amendment Bill 2013, for consideration by Parliament.

I thank you.

Issued by: National Treasury

ADDRESS BY HIS EXCELLENCY PRESIDENT JACOB ZUMA AT THE LAUNCH OF FETSA TLALA INTEGRATED FOOD PRODUCTION INITIATIVE, KURUMAN, NORTHERN CAPE PROVINCE

24 October 2013

Honourable Premier of the Northern Cape,

Minister of Agriculture, Forestry and Fisheries,

MECs, MPs and MPLs, Executive the Mayor of John Taolo Gaetsewe district,

Members from House of Traditional Leaders

Religious leaders,

Fellow South Africans

We greet you all on this important day.

We are happy that you have joined us to celebrate yet another milestone in government’s programmes to fight poverty and hunger.

Cabinet has proudly approved the country’s national food security programme, the Fetsa Tlala Integrated Food Production Initiative. The thrust of Fetsa Tlala is to produce enough food to meet the population’s food needs now and in the future.

There was a time in our history, not too long ago, when households had gardens and grew their own vegetables and fruit. They kept chickens and livestock. That is what Fetsa Tlala seeks to revive.

Through Fetsa Tlala, all under utilized agricultural land must be put under production.

We are encouraging people to go back to farming.

We are encouraging every household to develop a food garden. We want to see women’s cooperatives and community groupings focusing on vegetable production, livestock or chickens to earn a living and fight hunger and poverty.

We live in difficult economic times. We have to do more with less and the poor and the working class feel the difficulty more.

You heard this from Minister Pravin Gordhan when he presented the Mid-Term Budget Statement on our behalf as Cabinet in Parliament yesterday.

We still have the scourge of

poverty and hunger staring us in

the face and we have to do more.

According to the Stats SA General

Household Survey, the

percentage of households that

were vulnerable to hunger

declined from 29,3% in 2002

to 12,6% in 2012.

We are encouraged that the overall food insecurity figure is declining due to government programmes.

However, we still have families that live in poverty and our country also remains a net importer of food instead of being a major food producer.

This makes such a programme critical.

Compatriots

I trust that you are aware of the National Development Plan, the country’s new socio-economic development programme.

The Plan expresses a vision that every family must be able to confidently state and reaffirm every day that: There is food on the table.

It then outlines various methods and targets to eradicate poverty, reduce unemployment and eliminate inequality by 2030.

These include the expanded use of irrigation, security of land tenure, especially for women, and the promotion of nutrition education.

By this launch today, we are implementing the National Development Plan.

Compatriots

We have seen the impact of a mass-based food security programme.

During 2012, the Department of Agriculture, Forestry and Fisheries together with the Department of Rural Development and Land Reform implemented an accelerated agricultural production programme in seven provinces.

These are the Eastern Cape, Free State, KwaZulu-Natal, Northern Cape, Mpumalanga, Limpopo and North West.

Through this initiative we managed to mobilise additional resources from different government departments. As a result, about 135 000 hectares of underutilised agricultural land was put under production with maize and beans being the main commodities.

The programme has been an amazing success. We have worked further on the programme and reached this phase when we are ready to take food production to a national level, and to launch Fetsa Tlala.

We are making an amount of R2 billion available for this programme, as part of comprehensive support to farmers, for distribution to provinces.

The initiative intends to put one million hectares of land under production of maize, beans and potatoes. There is a significant amount of land that still lies fallow especially in rural areas and some of the land that has been acquired through land reform.

Smallholder farmers, communities and households will be assisted through the provision of mechanisation support and distribution of production inputs and technical services.

In some provinces, the focus will be on livestock instead of vegetable production, for example here in the Northern Cape.

Ultimately we want to see an increase in the food production capacity of both subsistence and small holder producers. We want to increase the availability and access to locally produced food products. We also want to create opportunities for SMME development at local level.

More especially, we want to create job opportunities within the agricultural sector.

While we begin accelerating this journey towards food security, we are aware of obstacles such as disasters. These include drought, veld fires and floods.

Government departments provincially and nationally will continue to support households to prevent and deal with such weather related calamities which can impact on our efforts.

Compatriots

Fetsa Tlala forms one aspect of our food security policy.

Another aspect, which is non-productive, is the Household Food and Nutrition Security Strategy that is driven by the Departments of Social Development, Health and Basic Education.

This non-productive aspect focuses on social assistance safety nets like food parcels, food banks and soup kitchens.

It also includes nutritious meals to children between the ages of 0- 4 years through the early childhood development centres and for more than eight million children in schools.

Government assists chronically under-nourished households with food parcels.

We also have the Food Fortification and Nutrition Education Programme and the introduction of “micro-nutrient sprinkles” which can be added to food that is already prepared.

Let me add that the food security interventions do not replace the transformation processes that are underway in agriculture and land reform, which remain key imperatives.

We know that for most communities land remains a scarce resource as this question is still being resolved. Another issue is the development of black commercial or small holder farmers.

South African agriculture continues to be characterised by a racially skewed distribution of assets, support services, market penetration, infrastructure and income.

Some 36 000 large-scale farmers control over 86 million hectares of farmland, while 1.4 million black farmers have access to about 14 million hectares of farmland.

Much of the worst poverty is concentrated in the former homelands. The homelands, which occupied 13 percent of the country, were home to half of the black population of South Africa before 1994.

These areas are still characterised by low incomes and high rates of infant mortality, malnutrition and illiteracy.

These areas have remained extremely poor and underdeveloped, and are heavily dependent on remittances from workers in industrial South Africa.

Thus, land reform programmes aimed at changing the land ownership patterns are continuing under the leadership of the Department of Rural Development and Land Reform.

In the meantime, government proceeds with promoting food production amongst communities and households, under the leadership of the Department of Agriculture, Forestry and Fisheries.

In rural areas, government will work closely with traditional leaders as land in the former homelands is almost entirely held under communal tenure, controlled by traditional leaders. The traditional leaders will be key partners in promoting community food production.

Compatriots

Today we are also making a call to the youth that they should consider taking up agriculture as a career so that they can manage the country’s food security programmes as envisaged in the National Development Plan.

Our schools should also promote agriculture as a school subject so that we can popularise food production at an early age amongst our children.

Ladies and gentlemen

With Fetsa Tlala, we also intend to shift perceptions about agriculture and farming in general.

There appears to be a perception that commerce and industry are more important and that this is where the investment of time and resources should be.

That is because of the view that commerce and industry generate significantly more jobs per hectare, more rates and more taxes, more multipliers and GDP contribution per hectare.

The impression that agriculture is regarded as less important is wrong. Agriculture is a key priority for our government.

Agriculture forms part of the six job drivers that we identified in the New Growth Path. The other five are mining, tourism, the green economy, manufacturing and infrastructure development.

This demonstrates the seriousness we attach to agriculture for both food security reasons as well also job creation and economic development.

Compatriots,

Achieving food security is in our hands, all of us. We must get back to the land and start working to produce food.

It is my honour and pleasure to launch Fetsa Tlala, the government integrated food production programme.

I thank you.

Issued by The Presidency

Pretoria

ADDRESS BY PRESIDENT JACOB ZUMA TO THE LAUNCH OF THE CONSTRUCTION PHASE OF THE DE BEERS VENETIA UNDERGROUND DIAMOND MINE

MUSINA, LIMPOPO

22 OCTOBER 2013

The Premier of Limpopo Province, Mr Stan Mathabatha,

The Minister of Mineral Resources, Ms Susan Shabangu,

Mayors of Vhembe and Capricorn Districts,

The Chairman of Anglo American, Sir John Parker,

The Chairman of De Beers and CEO of Anglo American, Mr Mark Cutifani and members of the Boards,

Representatives of labour,

Ladies and gentlemen,

We have gathered today to mark another important milestone in the development of our diamond industry, and also our country’s mining sector.

Mining has been the foundation of economic development in South Africa for well over a century.

Despite a considerable diversification of our economy in the recent past, the mining sector remains the cornerstone of the economy, due to the number of direct and indirect jobs, its export earnings and other benefits.

Our mineral-rich country continues to host significant known reserves of mineral commodities, with almost 60 minerals being actively mined.

Estimates suggest that our mineral resources will be exploitable for over a century to come.

Limpopo on its own is endowed with a variety of minerals, with an estimated 70 mines operating in this province.

It is for this reason that as government we are investing time and effort in strengthening the mining sector so that it can contribute to inclusive growth and jobs as envisaged in the National Development Plan.

Thus, our mining industry is definitely poised for growth, especially if we continue working together to promote the industry in various ways.

This R20 billion investment in the diamond industry, the biggest single investment in the diamond industry in decades, signals that indeed our mining sector is poised for growth, and that it has a bright future.

The investment will no doubt boost diamond production, from which the country has lost its eminence in recent years.

This project is also significant because it demonstrates confidence in South Africa as an investment destination of choice by both foreign and South African companies.

Ladies and gentlemen

Our research shows that our economy has the potential to create employment through a few sectors such as infrastructure development, mining, agriculture, manufacturing, tourism; the green economy and knowledge-based sectors.

With mining being one of these main job drivers, we are pleased that this operation employs more than 2,500 people, and indirectly benefits thousands of people in the community and the Province.

In addition, I am informed that 3000 people will benefit from employment created during the peak of this construction phase and that the mine will sustain approximately 2500 full time jobs over the life of the mine.

Working together, we have to ensure that our mining sector grows even further.

We must therefore provide the right environment for growth. This includes the implementation of transformation measures and also to promote labour market stability in the sector.

We are encouraged by the positive response of business and labour to government’s intervention to bring about labour peace and stability, a project led by Deputy President Kgalema Motlanthe.

While there is relative peace, we condemn the isolated incidents of violence such as the killing of a National Union of Mineworkers branch leader in Rustenburg last week. Such incidents have no place in a democratic society like ours.

In addition, the labour relations mechanism in our Constitution and the laws of the land are advanced enough to ensure a peaceful and orderly management of labour relations.

But we need also lasting solutions.

The horrific Marikana tragedy last year sharply reminded us of the need to deepen longstanding work directed towards improving the lives of mineworkers and surrounding communities.

It reminded us of the need to speed up the transformation journey that began in 1994 with the dawn of freedom and democracy.

Accordingly, the implementation of the Mineral and Petroleum Resources Development Act, the Social and Labour Plan mechanisms and the Mining Charter remain immensely important to ensure the growth and sustainability.

Fortunately, investors in the mining industry are aware that they should, in terms of the law, redress past imbalances in the industry.

These past imbalances are related to the failure of the colonial system to re-invest in the local human resource base and the regeneration of the local economy and protect the environment.

Our legislation requires investors to commit to the Mining Charter, the Social and Labour Plan, and sound environmental management.

In terms of the Mining Charter, mining companies are required to improve housing and living conditions of workers.

They must attend to mine community development, human resource development, employment equity, local procurement and enterprise development, upstream and downstream linkages, and sustainable growth and development in the mining industry.

Companies have to meet certain targets for the conversion and upgrading of single sex hostels formerly used by migrant workers into family units by 2014 or an occupancy rate of one person per room for those with no families.

Companies are also expected to facilitate home ownership by 2014.

It is necessary to create such living conditions to ensure the dignity of workers who produce such precious metals that keep our economy strong and vibrant.

The local procurement plans are geared to expand participation in the mining supply industry by black people and women and to ensure re-investment in the local economy.

I am informed that De Beers is already working on the Social and Labour Plan for the mine with the Department of Mineral Resources and that some of the projects that will be implemented include the following;

• Electrification

• Road construction

• Building schools

• Mathematics and Science programmes and

• Ventilation pipes.

I am aware that you are already in discussion with government in relation to education and skills development as investing in the youth of this province is absolutely critical for economic growth and development.

Government will play its part as well nationally to develop mining towns, working through the Presidential Package for mining towns unveiled in October 2012, following my meeting with business and labour after the Marikana tragedy. Our intervention is geared towards building viable and decent human settlements. This is in addition to ordinary state development programmes.

With regards to environmental sustainability, this mine operates within the buffer zone of the Mapungubwe World Heritage Site.

The Mapungubwe site and the buffer zone are legally protected through the National Heritage Resources Act, the National Environmental Management Act and the World Heritage Convention Act.

Considerable care must be taken to prevent any possible harmful effects to the area through mining. We appreciate therefore your decision to change the mining method from open cast to underground mining.

This will ensure that the outstanding universal value of the Heritage Site is not endangered.

Ladies and gentlemen,

Let me also hasten to add that this wonderful occasion reminds us of the need to promote our mineral beneficiation strategy.

We have been exporting diamonds for more than 100 years but have not been able to develop local diamond cutting and polishing jewellery industries.

We have therefore not been reaping the full benefits of our commodities. We have thus identified jewellery manufacturing as a priority area.

We are looking at a win-win formula for both government and the mining sector. Minister Shabangu will be hosting the first Jewellery Forum this week, which should generate ideas that will help take the process forward.

Compatriots,

We also wish to bring to your attention again the matter of the Kimberley Process.

This initiative bears testimony to the adage that “working together we can do more”. International partners have worked tirelessly to significantly reduce the trade of illicit diamonds that funded campaigns to destabilise legitimate governments in Africa.

To date, Africa is increasingly enjoying the benefit of democratic governments and transparent governance.

Delegates will gather on our shores for the second leg of the meeting in November this year, following the first meeting in June.

The South African Chairmanship is coming to an end in December this year and I am confident that through partnerships with key stakeholders of your calibre, we would leave yet another indelible legacy for the Kimberley Process and the diamond industry.

Ladies and gentlemen,

Tomorrow the Minister of Finance Mr Pravin Gordhan will unveil the Medium Term Budget Statement.

It has been drawn up under difficult economic conditions.

As agreed with all colleagues in Cabinet, Minister Gordhan will deliver on our behalf a Budget that the country needs at this point, to stimulate growth under difficult conditions while also encouraging fiscal discipline. I will not steal the Minister’s thunder. Let us wait for the presentation tomorrow.

Compatriots

Let me again welcome the launch of this construction phase of the Venetia underground project.

With production set to continue into the 2040s, Venetia will sustain and underpin South Africa’s diamond industry as well as the related industries of South Africa and many other countries, including India.

Our message to you and the world today is that South Africa is open for business. It is open for both domestic and foreign investments.

Our mining sector is poised for growth and expansion.

Whatever difficulties we have experienced in the mining sector will be resolved through working together, taking us towards achieving the vision for the mining sector outlined in the National Development Plan.

I wish you success with the project.

I thank you.

Issued The Presidency

Pretoria

Media Remarks by International Relations and Cooperation Minister Maite Nkoana-Mashabane at the Conclusion of the Joint Commission for Cooperation with the Republic of Angola, Pretoria, 18 October 2013

Your Excellency, My Dear Brother, Minister Chikoti,

Honourable Ministers,

Members of the Media,

Good day,

We have just concluded our bilateral discussions which have been characterised by the usual friendliness and comradeship.

Ladies and gentlemen,

We have been holding the meeting of the Joint Commission for Cooperation between South Africa and Angola. The main objective of the Joint Commission is to promote political, economic and social cooperation between our two countries.

Ladies and gentlemen,

During our discussions, we reviewed progress in the bilateral cooperation between our sister Republics. In this regard, we have noted with great appreciation the noticeable progress that has been achieved in strengthening of the bilateral cooperation. To date, we have signed over twenty-two (22) bilateral agreements and memoranda of understanding covering a wide range of sectors including trade and industry, energy, science and technology, sport, arts and culture, mining, tourism, defence, etc.

Ladies and gentlemen,

You will note that this is indeed a great achievement in our cooperation. While we salute the signing of such a high number of agreements and memoranda of understanding, we also noted that the implementation of these legal instruments is not at the level we wanted it to be. In this regard, we have agreed to prioritise full implementation of all signed agreements. We have decided to establish a Mid-Review Mechanism between the two Foreign Ministries which will meet twice a year to assess progress in the implementation of agreements and make necessary follow-up and interventions. We have additionally decided to create a Technical Task Team of relevant Departments and Ministries to meet twice a year in order to follow up on implementation. It is imperative that all relevant Departments and Ministries continue to meet at regular intervals to work on implementation of agreements for the mutual benefit of our two countries.

Ladies and gentlemen,

We have noted with great appreciation the increasing economic cooperation between our two countries. In this regard, we have noted that Angola in 2012 became South Africa’s number one trading partner on the Continent. The total South African imports amounted to R23 billion while exports amounted to R8.7 billion. We have agreed on the need to further increase and expand our economic cooperation for the benefit of respective countries and peoples.

Ladies and gentlemen,

We are working towards creating a Special and Strategic Cooperation between our two countries. This means we will be paying particular focus on certain key sectors to ramp up our bilateral cooperation and partnership.

In conclusion, during our discussions we also exchanged views on the latest political developments in the region, the continent and the world, paying particular attention to the security situation in the East of the Democratic Republic of Congo. In this regard, we have reiterated that need for the SADC/ICGLR Summit as decided by the Lilongwe SADC Summit.

Honourable Minister, let me invite you to make your remarks.

I thank you

ISSUED BY THE DEPARTMENT OF INTERNATIONAL RELATIONS AND COOPERATION

Speech by Ambassador Keitumetse Matthews at the Portuguese Parliament in celebration of Nelson Mandela International Day 2013

THE SPEAKER MS. ASSUNÇÃO ESTEVES

MR MENDES BOTA MP CHAIR OF THE COMMITTEE ON ETHICS, CITIZENSHIP & MEDIA

MEMBERS OF THE POLITICAL PARTIES REPRESENTED HERE TODAY

MEMBERS OF PARLIAMENT

EXCELLENCIES AMBASSADORS ACCREDITED TO PORTUGAL

MEMBERS OF THE DIPLOMATIC CORP

MEMBERS OF NGOs

LEADERS OF BUSINESS

MEMBERS OF THE CHILDREN'S ORCHESTRA

MADAM CELINA PEREIRA

OTIS (HAPPY BIRTHDAY, OTIS)

DISTINGUISHED GUESTS

LADIES & GENTLEMEN

FELLOW SOUTH AFRICANS

Madam Speaker, may I thank you most sincerely, and through you, the government of Portugal, the members of Parliament and the staff who helped with all the preparations for graciously including us in Parliament's Tribute to Mr. Nelson Mandela for his 95th Birthday tomorrow 18th July commemorated all over the world as Nelson Mandela International Day.

The Tribute here in Parliament is particularly touching this year because tomorrow marks the start of the EU-South Africa summit which takes place in South Africa. It is completely apt bearing in mind not only the significance of the date for my South African compatriots and all Africans but also because it was Mr. Mandela himself who cemented the relationship between the European Union and South Africa. This Strategic Partnership incorporating a wide variety of mutual interests aside from matters of trade is the 6^th meeting between the parties. I’m also reminded that in 2007 the EU-Africa Summit was held here in Lisbon.

Madam Speaker, as you may know each year on this day the principles and values Mr. Mandela lives by are encapsulated around a particular theme and for 2013 the theme is: Take Action; Inspire Change; Make Every Day A Mandela Day. There are three sub-themes - shelter, food security and literacy.

We are all requested to take at least 67 minutes of our time to make a contribution to the homeless, the hungry and those who cannot read or write by engaging in activities in orphanages such as reading to children, undertaking maintenance tasks where required, attending to the needs of the elderly and any number of simple acts of kindness. That is what Mandela is all about.

Yes, he is about the big actions of peace, forgiveness and reconciliation but if one dwells on that it becomes an impossible ideal, one feels too small for such huge gestures, the actions of a statesman up there in the heights. But actually that is not it. If you think that's what he is about you do not understand the real man: a gentle, humble, caring, respectful, loving person, always quintessentially regal in the best sense of the word.

He believes in small actions from the heart whose effect changes situations and the lives of people and children in particular; quiet mediation with positive results for both proponents; listening to the other side with respect to gain understanding; accepting differences of opinion with grace. That is why the Nelson Mandela Centre for Memory promotes Dialogue for Justice - to allow all voices a hearing in order to arrive at a common understanding.

Tomorrow millions of South Africans will heed the call of our dear former President Mandela. En masse they will leave their comfort zones early in the morning to travel to different areas of the country to paint and upgrade schools or houses in poor neighbourhoods, rural communities, informal settlements; take food to the poor, plant trees, vegetables and numerous other tasks to uplift the lives of the less fortunate.

And, our Department of Foreign Affairs and Co-operation is no exception. Led by our Minister Mrs Maite Nkoana-Mashabane thousands of our officials have been collecting and donating food, books and other items from their own salaries to take to identified Children’s homes. Others will perform tasks to improve the fabric of the lives of the less fortunate in poor areas nearest to the Department's headquarters. We are all committed to volunteer and we do it - we walk the talk - we take action, we hate poverty it's our new liberation struggle and in the spirit of Mandela and his comrades it is a battle we intend to win. We have to. That is South Africa.

It is my fervent hope that likewise in Portugal many thousands will heed the call and give at least 67 minutes of their time to help the poor and aged in their various communities.

I know that in this very room there are committed people working tirelessly with communities in Setubal and other places, mediating conflict, promoting education and self empowerment. I see Mrs. Andrelina Cardoso and I think Mrs. Carla Marie Jeanne is also here. To me they are heroes and embody perfectly the values and principles of our great icon. I am sure if Mr. Mandela was here they would be his heroes too. There are many changes taking place in Portugal and I think you would agree that change is a challenge. It requires a change of mind-set and resolve. But, it is possible. It begins with you, the individual and it is a slow process of daily personal growth. I must change before I can make a change for the better elsewhere.

Later we will be entertained by international artist Otis. Otis today is your birthday but you gave up your special day to be here and you have generously agreed to perform without charge. We thank you sincerely and wish you a wonderful year of blessings with lots of gigs. Your saxophone rocks!

Mama Celina Pereira you have been an activist all your life and in 1987 you sang for the release of Mr. Mandela from prison. Then you sang for him in person. And you very kindly sang to raise money for a project very close to his heart: the Nelson Mandela Children’s Hospital to be built in Johannesburg. We are grateful to you for your unstinting support and example.

Madam Speaker, children are Mr. Mandela's passion. He adores them. That beautiful smile lights up his face when he is around them. We have here with us today an orchestra of young musicians and speakers, wonderful talented children, our future. With your permission Madam Speaker, I will address the children directly.

Young friends, Mr. Mandela lives for you, he believes in you and your capacity to surprise us and to make us happy just by being happy yourselves. The best advice he has given you is this: «Education is the most powerful weapon which you can use to change the world».

Education can change your life and the lives of others. I am sure you have heard all these adults talking about how hard it is to find a job. But did you know that when things get better and jobs increase anywhere in the world, the first people to get jobs are those with an education and skills?

So, I would encourage all of you to take the picture of Mr. Mandela where he talks about the power of education and keep it in your desk at school or in your favorite file to inspire you never to give up. And never ever allow anyone to tell you, you don't count. You count, you counted the minute you were born and you have a right to be counted. It's up to you, it's up to us. So, make the change. Become a Mandela Engine of Change to make the world a better place for yourself and for the less fortunate. We, in this room are very lucky, we can make the change. Are you willing to do so?

Thank-you