strategic plan and app presentation to select committee on communications and public enterprises

STRATEGIC PLAN AND APP PRESENTATION TO SELECT

COMMITTEE ON COMMUNICATIONS AND PUBLIC ENTERPRISES

09 JULY 2014

PRESENTATION OUTLINE

• Introduction

• Programmes and their functions

• Organisational structure

• Strategic context

• Vision and mission

• Strategic objectives

• Approach to implementation

• Key performance areas

• Budget overview

• Capacity of the Department

• Conclusion

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INTRODUCTION

The Department is required by legislation to develop a Strategic Plan that outlines

the objectives to be pursued by the Department over the MTSF period

The Strategy development process was informed by the following principles:

Coordination and coherence with government overarching policy frameworks

Identifying clear outcomes to be pursued by the Department

Delivering in the constrained economic environment

Focusing on cross-cutting outcomes within the Department and Government

The Strategy has been presented to the Executive Authority and extensively

discussed with senior management

The focus is now on the implementation through the Annual Performance Plan

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INTRODUCTION

Who is DPE

The DPE through the Minister is the shareholder representative for government,

with oversight responsibility for eight State Owned Companies (SOC)

The 8 SOC are Eskom, Denel, SAFCOL, Broadband Infraco, Alexkor, Transnet,

South African Airways (SAA), and South African Express Airways (SAX)

The mandate of the Department is embedded in the founding legislation of the

SOC, PFMA and Companies Act

The mandate of the Department is to ensure that the SOC within its portfolio are

directed to serve Government’s strategic objectives as outlined in the NDP and

further articulated in the New Growth Path, and the Industrial Policy Action Plan.

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PROGRAMMES’ FUNCTIONS

PROGRAMME 1: ADMINISTRATION

•The purpose of the programme is to: • Provide strategic management, corporate management and administrative support to the

Department, which enables the Department to meet its strategic objectives, and

• Over and above the administration function, the programme also comprises of units that are critical for the development of systems, plans and processes that will aid the Department in executing its mandate and enhancing coordination in the delivery of its plans.

PROGRAMME 2: LEGAL AND GOVERNANCE

•The purpose of the programme is to: • Provide legal services and corporate governance systems, and facilitates the

implementation of all legal aspects of transactions that are strategically important to the Department and the SOC, and

• Ensure alignment with Government’s strategic intent by, amongst others, monitoring key risk factors that may affect the achievement of key performance indicators contained in the shareholder compacts.

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PROGRAMMES’ FUNCTIONS

PROGRAMME 3: PORTFOLIO MANAGEMENT AND STRATEGIC PARTNERSHIPS

•The purpose of Programme is to:• Align the corporate strategies of the SOC with Government’s strategic intent, and monitor

and benchmark their financial and operational performance and capital investment plans

• Contribute to the implementation of overarching economic, social and environmental policies focused on building strategic partnerships between SOC, strategic customers, suppliers and financial institutions

•The programme comprises of the following sub-programmes:• Energy and Broadband Enterprises is responsible to oversee Eskom and Broadband

Infraco • Manufacturing Enterprises is responsible to oversee Alexkor, SAFCOL and Denel • Transport Enterprises responsible is to oversee Transnet, SAA and SAX• Strategic Partnerships’ main role is to develop innovative models to ensure financial

sustainability of SOC; as well as project oversight for infrastructure projects• Economic Impact and Policy Alignment aims to build the capacity to monitor national

economic policies to determine areas in which the SOC can make strategic contributions

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ORGANISATIONAL STRUCTURE

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STRATEGIC CONTEXT

• The South African economy remains constrained and growth over the past 5 years has been low

• This has resulted in slower employment growth and the economy’s ability to absorb more people into the labour market has been limited

• While significant progress has been made to transform the economy, there are major structural constraints that exist

• The government has develop a suite of policy interventions targeted to accelerate growth, and ensure that its inclusive (Investment driven growth)

• The Strategic Plan is informed by this overarching objective as outlined in the:

• National Development Plan

• Medium Term Strategic Framework of the new administration

• New Growth Path

• National Infrastructure Plan (SIPs)

• Industrial Policy Action Plan

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VISION AND MISSION

VISION:

To drive investment, productivity and transformation in the Department’s portfolio of State Owned Companies (SOC), their customers and suppliers so as to unlock growth, drive industrialisation, create jobs and develop skills.

MISSION

To provide decisive strategic direction to the SOC, so that their businesses are aligned with the national growth strategies arising out of the NDP

KEY OUTCOMES TO BE SUPPORTED

•Unlock economic growth and employment

•Industrialisation

•Transformation

•Regional development

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DPE STRATEGIC OBJECTIVES

• Review the shareholder oversight to ensure alignment of SOC to developmental outcomes

• Promote good corporate governance • Build internal capacity to enhance Department’s ability to execute its

strategic plan and fulfill its mandate • Stabilise our SOC looking at strengthening of balance sheets and funding

options • Drive economic infrastructure investment to enhance the capacity of the

economy with emphasis on the Strategic Integrated Projects • Leverage SOC procurement spend to support industrialisation and

transformation

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APPROACH TO IMPLEMENTATION

• The Department has clearly defined its objectives over the MTSF period

• Key strategic initiatives or areas defined within the current fiscal framework

• Engagement with Executive Authority to ensure alignment

• To achieve the objectives, the Department would need to enhance coordination and collaboration with other Departments and state entities

• Ensuring that the Department is appropriately resourced to execute the strategy

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KEY PERFORMANCE AREAS

Issues to Address

Strengthening of legislation that foregrounds Department’s mandate

Strategic Objective Key Performance Areas

Review Logical Planning, Monitoring and Evaluation Framework (LPMEF)

Objective 1: Review the shareholder oversight to ensure alignment of SOC to development outcomes

Government Shareholder Management Bill developed

Streamline the logical planning framework

Enhance compliance to current legislative framework

Enhance Isibuko Dashboard Enhance rapid access to accurate

information

Modernisation of the oversight function

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Issues to Address

Improve level of compliance within the Department and its SOC to PFMA provisions


Business Processes Mapped, re- engineered and automated

Annual Plan for public participation programme

Taking DPE to the people and ensure increased accountability

Objective 2: Promote good governance

Enhance compliance with legislation

Integrate business processes

Improve efficiency within the organisation

Provincial engagements Coherence of SOC Plans to provincial economic development strategies

Enhancing inter-governmental relations

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Issues to Address

Continuous repositioning of DPE as an employer of choice

Maintaining vacancy rate below 10 percent


DPE Competency Model

Mentorship and Coaching Enhance the learning culture within the organisation

Objective 3: Build internal capacity to enhance Department’s ability to execute its Strategic Plan and fulfill its mandate

Human Resources Plan

Define critical capabilities

Re-alignment of talent development initiatives

DPE Leadership Framework

Accelerate implementation of actions identified in the Climate survey

Review values and define organisational identify and culture

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Culture & Diversity Management


Issues to Address

There is a need to assist SOCs mobilize additional funding from outside the state


Monitor implementation of the Turnaround Strategies in the Airlines

SAFCOL Strategy developed Improve financial viability of the company

Expansion of operations through vertical integration

Land Claims Model

Objective 4: Stabilise our SOC looking at strengthening of balance sheets and funding options

Funding strategy for SOC developed

There is a need to ensure commercial and financial sustainability of the state-owned airlines by 2017

Enhanced monitoring

Alexkor Strategy developed Refocusing of the company

Sustainability of the Pooling and Sharing JV

Diversification and revenue growth

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Issues to Address

Invest in capacity and ensure that it enhances efficiency and overall competitiveness of the economy

Timely delivery of projects within budget


Implementation of Africa Strategy

Develop Private Sector Participation Framework

Augment investing capacity of the SOC

Objective 5: Drive economic infrastructure investment to enhance the capacity of the economy with emphasis on the SIPs

Monitor delivery of the build programme focusing on key projects outlined in the MTSF

Coordinate investment activities of SOC into the continent

Promoting regional development

Develop a Project Management Framework and Process for Mega Projects oversight

Project life cycle mapping

Define, Select, Plan, Implement, Evaluate

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Issues to Address

Promote locally manufactured components (maintenance, repair and operations)


SAA/SAX aircraft acquisition

Special Development Zone (SDZ) for manufacturing of timber and timber-frame products

Need to establish downstream enterprises in partnership with SAFCOL

Objective 6: Leverage SOC procurement spend to support industrialisation and transformation

Establishment of Maintenance, Repair and Operations (MRO ) Hub for the airlines industry

Promote acquisition from local advanced manufacturing entities

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Issues to Address

Enhance demand for domestic products and services


Review procurement rules to aggressively implement the Competitiveness Supplier Development Program (CSDP)

Develop SOC Transformation Strategy, Plan and Measurement Tool

Maximise the spend on domestic products and services

Support development of industrial capabilities


Economic transformation objectives not fully met by SOC

Better leverage SOC procurement expenditure

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Develop a DPE Transformation Plan to achieve the 75 percent expenditure target on domestically produced products and service


Issues to Address

Enhance alignment of SOC Youth Intervention to the national youth development agenda


Optimise SOC training facilities and enhance partnership with other Departments

Develop a tool to measure SOC Contribution to economic growth and job creation

Maximise contribution towards developmental outcomes


Develop M&E tool for Youth Empowerment Program

Increase training capacity of SOC to lead in the delivery of Skills Accord commitments

Support implementation of the National Skills Development Strategy

Develop Guidelines for SOC Corporate Social Investment (CSI)

CSI programmes and impact by SOC not fully understood and consolidated

Alignment with developmental goals

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BUDGET OVERVIEW

• The Department's budget has decreased from R1.4 billion in 2012/13 to R259 million in 2014/15. However it continues to increase by 9.9% to 2016/17. The decrease from R1.4 billion was the result of transfers to the SOC's.

• Over the medium term, Compensation of Employees is expected to increase from R149.6 million in 2014/15 to R169.9 million in 2016/17 as a result of the expansion of the establishment over this period

• Goods and Services including Payments for Capital Assets is expected to increase from R110 million in 2014/15 to R115.7 million in 2016/17 to support the increased establishment

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ComponentsR’000

2013/14Actual

2014/15Forecast

2015/2016Budget

2016/17Budget

Compensation of employees

127 771 149 600 159 500 169 900

Good and services 144 697 110 200 119 800 115 700

Total 272 468 259 800 279 300 285 600

STRENGTHENING CAPACITY

• The structure of the Department increased from 168 in 2009 to 210 in the 2012/13 financial year and will increase to 227 over the MTEF period

• The Department has also succeeded in reducing its vacancy rate from 11.9% in March 2013 to 1.8%.

• The increased scope requires the Department to enhance its capacity

• The Department still faced with challenges in respect of retention of specialists skills

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CONCLUSION

•The SONA has re-emphasised the Government’s commitment to address the developmental challenges •The NDP provides the long term vision and the Department will ensure alignment of SOC activities to support the achievement of the vision •Over the medium term, implementation of actions aligned to the NDP contained in the NGP and IPAP to deliver on the radical socio-economic transformation programme •The Department continues to improve its oversight mechanisms to ensure implementation of MTSF targets by SOC•The Department will work with SOC and DFIs to improve its project management capacity to improve monitoring of the build programme•The resourcing of the Department remains a challenge that needs to be addressed as the scope continues to expand 22

strategic plan and app presentation to select committee on communications and public enterprises

Documents

strategic management

strategic plan

strategic customers

department conclusion

introductionthe department

governments strategic

programmes functions

corporate management