Media briefing by President Thabo Mbeki on Cabinet lekgotla

24 July 2005

BACKGROUND NOTES ON THE CABINET LEKGOTLA

Cabinet held its mid-year lekgotla from 19 to 21 July 2005. In addition to the national Cabinet, Deputy Ministers, national Directors-General and advisers, the meeting was attended for the first time by Provincial Premiers and Directors-General.

The decision to include provincial leaders and officials in the national makgotla was taken earlier this year, in order to improve co-ordination and integration of government work across the spheres.

Indeed, their presence ensured that provincial perspectives were brought to bear on reflections regarding both the development and implementation of national strategies.

The lekgotla reflected on the implementation of the government's Programme of Action (PoA) and expressed appreciation at the progress being made. While the detailed issues in each Cluster were noted, Cabinet reflected on a few strategic questions in each sector.

Decisions on these issues will inform the content of the Medium-Term Strategic Framework which in turn will guide the budgeting process for the next three years.

CAPACITY AND ORGANISATION OF THE STATE

A critical element in the discussions was the question of the organisation and capacity of the state. While work is continuing on comprehensive proposals in this regard, the lekgotla paid particular attention to the following issues.

Local Government Challenges

The meeting reflected on the experiences that have been gained thus far in the implementation of Project Consolidate. This project, which is aimed at assisting targeted (136) municipalities in dire need, affords government a detailed picture of the situation at local level, to better devise strategies to improve service provision.

The diagnostic assessments undertaken have focussed on such performance criteria as institutional development, financial viability and management, service delivery infrastructure, local economic development and good governance.

On each of these performance areas, detailed action is required which includes systematic action to stabilise administrative and political components of municipalities, through careful selection and systematic upgrading of personnel.

A comprehensive programme of capacity building will be introduced, including recruitment and training in management, finance, engineering, information and communications technology and other staff levels.

Linked to these interventions is the need to ensure that the performance management system is put into practice and strengthened, including in the implementation of the Municipal Finance Management Act (MFMA).

There are instances in many municipalities where basic services are not provided to citizens, not on account of lack of resources, but because of poor planning. For instance, some new settlement projects with formal housing, water and electricity lack sanitation facilities; others suffer from ageing electricity networks and unreliable refuse removal services.

These challenges call for close monitoring of the content of Integrated Development Plans and their implementation, including support to Ward Committees and speedier roll-out of the Community Development Workers (CDW) programme. Further, national and provincial governments will jointly develop a strategic infrastructure plan based on Integrated Development Plan (IDP) hearings.

The lekgotla agreed that, in the immediate, an intensive programme of interaction with the public should be undertaken, building on the current Presidential municipal imbizo programme and involving Ministers, Premiers, MECs and local leaders. Such interaction would help identify concrete challenges for immediate concrete action.

Improving Capacity to Implement Integrated Programmes

The challenges identified in some of the municipalities also attest to weak capacity at national and provincial levels to implement integrated programmes. This applies to issues of leadership at management level, community involvement and poor vertical integration.

A study specifically on capacity in the area of housing, at national and provincial levels, has identified concrete challenges with regard to skills, staff turnover, discrepancies in conditions of service among spheres of government and public entities inhibiting staff mobility, an excessive vacancy rate and so on.

The study also points to high rates of success in instances where political leaders play a visible role, and where communication with communities is optimal. The same applies to instances where officials across the three spheres agree on feasibility of targets, correctly interpret policies and translate executive decisions into concrete projects for implementation.

Confirming the central importance of building partnerships across society, the study also found that such issues as reliable supply of materials for infrastructure by the private sector, capacity in the Deeds Office, skills among emerging contractors and community involvement are critical to the success of projects.

Cabinet agreed to develop a joint project between the housing departments and the dpsa to address the weaknesses identified with regard to skills, organisation and systems so as to improve implementation of the housing strategy.

It was agreed that a rolling programme would be put in place to conduct similar research in other sectors, starting in the next six months with health, education and justice.

National Planning Framework

After a review of planning processes across the three spheres, the lekgotla agreed on the need more systematically to ensure articulation among the horizontal and vertical cycles. These relate to policy strategising, development of programmes and their public announcement, budgeting, and monitoring and evaluation.

The meeting approved a detailed planning cycle that brings together these various elements within and across the spheres. Among others, critical in this regard is ensuring that submissions of departments and provinces in the budgeting processes are based on, and assessed in accordance with, the integrated strategic imperatives of government as a whole.

It was also agreed that, in the same measure as national strategising makgotla now include provincial leaders, the same should characterise such strategising at provincial level - to include participation by the district/metro leadership.

Monitoring and Evaluation System

The lekgotla agreed on a detailed process to set up a Government-wide Monitoring and Evaluation System, which will not only provide accurate and reliable information on the implementation of government programmes; but also ensure the optimal integration and utilisation of current systems in The Presidency, national treasury, the dpsa and the dplg.

The system will be informed by output, outcome and impact indicators, the broad framework of which was identified in the Ten Year Review.

The Presidency, which will take responsibility for the setting up and operation of the system, will in the next few months work with the dpsa and StatsSA to start phasing the system in: including developing principles to inform departmental structures and systems, designing of formats, developing IT architecture and ultimately rolling it out to the whole public sector.

Among the urgent challenges in this regard is the capacitation of The Presidency and Premiers' Offices to lead the process.

SPEEDING UP ECONOMIC GROWTH AND DEVELOPMENT

Over the past few years, government has initiated various measures to speed up economic growth and job creation. These include the Microeconomic Reform Strategy (MERS), decisions of the Growth and Development Summit (GDS), new infrastructure projects, initiatives to lower the cost of production including telecommunications and other input costs, and programmes in respect of the Second Economy.

The challenge is how to build on these programmes and take advantage of the positive domestic environment to spur the country onto a higher growth path.
The lekgotla reflected on some of the binding constraints across the whole of the economy and identified broad interventions required to catalyse the desired "lift-off".

Macroeconomic Environment and Long-Term Cutting Edge Interventions
The meeting reaffirmed the approach of government on such major indicators as the fiscal deficit, interest rates, inflation and the exchange rate.

While recognising that some of the indicators are impacted by factors beyond the control of government, the lekgotla agreed that both the fiscal and monetary authorities need to continue working together in pursuit of a stable and competitive exchange rate.

Appreciation was expressed of the consistent growth in the rate of fixed investments by both the private and public sectors - but it was emphasised that this needed to be ratcheted up at a faster rate, with particular focus on labour-intensive sectors.

Many of the interventions required in this regard are contained in the government's programme and in the agreements reached at the GDS, including the commitment to plough 5% of investable capital into productive investments.

It was agreed that consideration needed to be given to long-term strategic initiatives that would place SA at the cutting edge of the global economy. These include the speeding up of the work on Pebble Bed Modular Reactor (PBMR) technology, including strengthening international partnerships in this regard.

Some of the issues that require further investigation are: a broad-band backbone for the information super highway and intensive Research and Development in the area of the hydrogen economy and fuel cell technology.

With regard to such nuclear, hydrogen and fuel cell technologies, SA occupies a unique global position in that it has the world's largest reserves of platinum and other minerals critical to these sectors.

Higher Rates of Investment in Specific Sectors

About twelve sectors have been identified in the recent past for special attention, on account both of their growth potential and labour-absorption attributes. It was agreed, in line with the government's Programme of Action, that concrete work should be intensified in all these areas so as to complete and implement relevant sector strategies.

For instance, concrete measures need to be put in place urgently to support Business Process Outsourcing, and finalise plans for the chemical, agriculture and agro-processing, ICT and telecommunications, tourism and so on.

At the same time, consultations on clothing and textile and mining industries need to be completed without delay, in order to address the challenge of job losses.

Major Infrastructure Projects and PGDS Initiatives

Already, projects have been put in motion to spend R180-billion in public sector resources in infrastructure projects in the national logistics system, energy and water. Indications are that, as expected, these initiatives have great potential to crowd in private sector investments.

Other initiatives are being investigated to further improve freight and passenger transport in the major metropolitan councils. In this context, provinces have been asked to identify major projects in each of their Provincial Growth and Development Strategies (PGDS), which would be incorporated into an integrated national programme.

At the same time, work is continuing in accordance with the government PoA to complete guidelines on development of PGDS and municipal IDPs, in line with the National Spatial Development Perspective (NSDP).

Second Economy Interventions and SME Development

Major interventions in the Second economy include the Expanded Public Works Programme (EPWP), micro-credit, land reform, skills development and communication support.

Latest data from the Expanded Public Works Programme shows that government is on track to create a million work opportunities in five years as planned. By May 2005 at least 223 400 gross work opportunities were created, about 174 800 of which are a direct value addition from using labour-intensive methods, particularly in infrastructure.

The meeting also received a report on work in the Social Sector to introduce EPWP methods in the setting up of the Early Childhood Development Programme (ECD). Detailed plans in this regard will be presented to Cabinet soon. It was also agreed that resources would be allocated to speed up implementation of this programme as well as other community workers initiative such as home-based care and community care-givers.

Given the potential that this programme has shown, it was agreed that the EPWP Project Team should present to Cabinet options on how it could be scaled up. While such options should take into account experience in the small-scale projects thus far implemented, consideration should be given to incorporating some new large construction initiatives under the EPWP rubric.

Progress with regard to the operationalisation of micro-credit and SME support institutions was noted. The meeting also underlined the role of affirmative procurement, by both government and the private sector, in assisting Second Economy communities.

The project being undertaken by The Presidency, labour, the dti and national treasury to assess the tax regime and regulatory burdens on small and micro enterprises will be speeded up, so as to ensure that its outcome, if necessary, is incorporated into future budgeting.

Labour Market and Skills Development

In principle, government is of the view that the current labour market regime is appropriate in that it strikes a delicate balance between the major role-players in the economy.

However, in order to protect the rights of workers and to expand the space for job creation in the economy as a whole, it is necessary to conduct research on issues such as casualisation, collective bargaining as it impacts on small and micro enterprises and probationary arrangements for young first-time employees. This work is continuing, and consultations will be held with all role-players in finalising any proposals in this regard.

In view of the major infrastructure projects either planned or under way, the issue of skills arises in even bolder relief in the current period. A combination of learnership training, improvement in the work of training authorities, strategic immigration measures and other interventions is required to address this issue.
It was agreed that the team dealing with the comprehensive programme on skills development would report regularly to Cabinet on these issues.

IMPROVING SOCIAL COHESION AND SOCIAL SERVICES

In addition to the governance issues raised above, as they pertain to the improvement of provision of social services, the lekgotla reflected on major strategic interventions in this sector both in terms of services and social cohesion.

A project-by-project report on the implementation of the Rural Development and Urban Renewal Programmes was noted. Critical lessons arising from this report relate to matters of both vertical and horizontal integration in the work of government.

As indicated above, the contribution of the Social Cluster to the Expanded Public Works Programme, through the ECD and community care projects was also discussed.

Macrosocial Environment and Challenges

The lekgotla noted the Report on the Macrosocial Environment and Challenges.
It noted progress in the improvement of material conditions of especially sections of society that were neglected under apartheid. More and more South Africans are moving from the lowest levels of income and expenditure.

However, large sections of society remain imprisoned in the poverty trap of the Second Economy; and racial profiles persist in terms of ownership and control of wealth, access to social services and public opinion on public policy issues.

The country also faces a challenge in terms of building a caring society, particularly in the midst of an economic system that encourages individualism, greed and unhealthy competition.

How we address this challenge, in the context of fighting corruption and strengthening the moral fibre of the nation, is a continuing challenge that needs to be attended to by society as a whole. This has to be addressed at the same time as we encourage a culture of entrepreneurship especially among Second Economy communities.

Our planning also has to take into account the reality of massive migration to areas that are perceived to have higher economic potential. This is a matter that relates both to the age and gender demographics in various parts of the country as well as spatial planning.

The meeting noted the fact that, in comparison to many other countries, South Africans were quite active in civil society structures and belonged to social networks that were supportive of individual endeavours. However, with regard to both social attitudes and culture of organisation and mobilisation, improvements are required in ensuring that young people - otherwise the most optimistic and confident in the future - are optimally involved especially in political activity.

It also welcomed the pre-eminence of a common national identity in the primary self-definition of South Africans. This, research attests, does not mean the death of other identities such as language and nationality, which in some instances assume a critical role in public discourse.

Tasks arising from these and other challenges in the Macrosocial Report include: building a people's contract in actual practice in all social activity; speeding up programmes of transformation especially job-creation; encouraging social solidarity and the role of the community and the family unit in improving social cohesion; dedicated programmes to address youth aspirations; intensification of the programme to build a non-racial and non-sexist society; multilingualism and so on.

The Social Cluster will work on a Macrosocial Strategy which integrates the various policy implications of the Report.

Social Health Insurance

The lekgotla reflected on the issue of Social Health Insurance (SHI), and it reaffirmed the principle that government needed to pursue a health system which ensures that all South Africans are adequately cared for.

This requires, among others, the creation of structural linkages between public and private sectors, minimum guaranteed packages to all, and the prevention of unfair exclusion of low-income groups.

It was agreed in principle that, in the immediate, measures should be introduced to ensure Risk Equalisation among the various private medical schemes. This and other issues pertaining to a broader SHI system will be canvassed with social partners.

IMPROVING CONFIDENCE IN THE JUSTICE SYSTEM

Cabinet noted the progress being made in bringing down the levels of crime and in improving the functioning of the Cluster as a whole. Special focus was dedicated to reflections on the challenge of transforming the judiciary.

Some Specific Programmes

Broad statistical trends point to successes in meeting the target to reduce particularly contact crime by 7% - 10% per year. However, the lekgotla noted, much more work needed to be done in integrating the work of socio-economic and crime prevention sectors in government to ensure that the combating of crime is effectively combined with efforts to root out its social causes.

Work continues in such areas as reduction in the number of illegal firearms within society, improved co-ordination in border control, facilitating implementation of the Victims Charter, building additional correctional services facilities, amendments to the Foreign Military Assistance Act and so on.

The lekgotla noted that the terms of reference for a comprehensive review of the "criminal justice system" had been completed. An implementation programme is being finalised to ensure that the review is concluded within 18 months.

Transformation of the Judiciary

In discussing the issue of transformation of the judiciary, the lekgotla premised its approach on the principle that such transformation should be informed by, and conform to, the prescripts of our Constitution. It is appreciated that, given the doctrine of the separation of powers, issues pertaining to transformation of the judiciary, more than with regard to any other branches of the state, have to be handled with due circumspection.

The meeting noted progress in the past ten years to assert the supremacy of the Constitution and its humane philosophy. Appointments to the judiciary are conducted in a transparent manner, and government has always sought to protect the independence of the judiciary and to ensure that the integrity of this institution is appreciated by society at large.

Welcome changes have taken place in the demographic composition of the judiciary - though much more needs to be done especially with regard to gender balance.

It was agreed that, in order to address this challenge, government as a major procurer of legal services would need to play its role in terms of setting clear targets for its own briefings in legal cases.

Consultations will be intensified to develop a legal services charter, so that a final draft, developed in a consultative manner is finalised in about two years. The process to identify more black and/or female candidates will also include more acting appointments, allowing for magistrates to qualify for judicial appointments and sustaining consideration of academics and attorneys for such appointments.

The lekgotla confirmed the broad principles contained in the pieces of legislation aimed at improving the functioning of the judiciary.
Firstly, the Superior Courts Bill seeks to rationalise various Superior Courts and consolidate laws relating to these Courts into a single Act.

It also abolishes the remnants of apartheid spatial divisions, and decentralises the appeal system.

Secondly, draft legislation on judicial education and training sets out a new education framework and governance structure.

In addition, better relationships would need to be built with tertiary institutions providing training in law. Such training would need to include, among others, diversity and social context issues.

Thirdly, a framework for handling complaints against judicial officers is to be introduced.

In addressing all these issues, government will consult as widely as possible, and ensure that none of the legislative changes impinges on the independence of the judiciary. As such, government will seek to achieve consensus with the judiciary on all the major issues.

It was also agreed that transformation imperatives would need to be introduced in the legal profession as a whole, including matters such as content of tertiary education and language framework in the Courts.

AFRICAN AGENDA AND GLOBAL ISSUES

The lekgotla noted progress in the implementation of government's programme with regard to the challenge of promoting the African agenda and building a better world. Steadily, the stature of South Africa as a critical player in global relations is appreciated far and wide.

Peace and Stability on the Continent

The lekgotla noted developments in the DRC, Burundi, Sudan and Cote d'Ivoire where steady progress is being made to attain peace and put in place popular democratic systems. In each of these countries, SA has played and is playing an important role as part of the AU collective.

The major challenge in all these areas is to ensure that the peace and democratisation processes are not derailed; and continually to adapt our facilitation to changing conditions as progress is made: with emphasis where applicable on capacitating these states to cement national unity, entrench popular participation and implement socio-economic programmes to improve citizens' quality of life.

On the issue of developments in Zimbabwe, the lekgotla reaffirmed SA's principled position to assist the people of that country in finding a solution to the socio-economic and political challenges that they face.

Reform of the United Nations and Global Co-operation

The meeting was briefed on the dynamics in diplomatic engagement around the issue of the reform of the UN. It reaffirmed the positions of the AU which include:

• Declaration on UN Reform dealing with issues such as sustainable development, collective security, conflict prevention and strengthening of the UN General Assembly, Secretariat and ECOSOC;
• reform of the UN Security Council proposing expansion to 26 members including 2 permanent and 5 non-permanent seats for Africa; and
• An AU Follow-up mechanism to negotiate with other regions and stakeholders on these issues.

The meeting agreed that, both in the context of UN Reform and in pursuit of a developmental global agenda, SA need to strengthen efforts aimed at consolidating South-South co-operation.

The meeting also registered SA's repugnance of the acts of terrorism in various parts of the world, which not only claim the lives of civilians but also undermine efforts to build global solidarity around issues of eradicating poverty and underdevelopment.

Assessment of NEPAD Implementation

The lekgotla noted the work that is being done to realise the objectives of NEPAD. The discussion was premised on the understanding that NEPAD is a long-term development programme.

As such, a balance has to be struck in dealing with this issue between its conception as a guiding framework and the need to show tangible progress on programme and project implementation.

In this regard, the progress being made in matters of peace, stability and democratisation, as indicated above, constitutes a critical element of NEPAD implementation. Further, Africa is showing positive economic trends which, more than before, not only show consistency but reflect a promise of sustainability.

As shown in the outcome of the recent G8 Summit, which includes concrete decisions on partnering Africa in terms of investment, human resource development, debt cancellation, peace-keeping capacity, development aid and so on, confidence in the continent across the globe is improving; and Africa is better able to build partnerships on the basis of its own imperatives.

Among the challenges that need to be addressed, in order to improve NEPAD implementation, is the mobilisation and alignment of resources and institutions including AU structures, African development institutions, technical committees and the NEPAD Secretariat. We also have to strengthen regional mechanisms (and in our case, the institutions of SADC).

The lekgotla agreed that SA needed to enhance its contribution to intra-continental efforts on such issues as market access, bilateral relations, cross-border infrastructure development, facilitation of South African outward investment and technical assistance.

Issued by: Government Communications (GCIS)

24 July 2005