MACRO-ECONOMIC IMPACT ASSESSMENT OF THE CONTRIBUTION OF THE EPWP ON THE SOUTH AFRICAN ECONOMY. Date: 19 June 2018

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1 MACRO-ECONOMIC IMPACT ASSESSMENT OF THE CONTRIBUTION OF THE EPWP ON THE SOUTH AFRICAN ECONOMY. Date: 19 June

2 Table of Contents 1. PURPOSE AND BACKGROUND AIMS OF THE PROJECT OBJECTIVES SCOPE OF WORK EXPECTED OUTPUTS PROPOSAL AND QUOTATION TIME FRAME CONSULTANTS QUALIFICATIONS CONTRACTING DETAILS REVIEW CRITERIA AND PROCESS REPORTING RESEARCH WORK PLAN DRAFT RESEARCH REPORT FINAL RESEARCH REPORT ASSIGNMENT CHAMPION P a g e

3 1. PURPOSE AND BACKGROUND The purpose of these Terms of Reference (ToR) is to provide clear guidelines for the economic modeling programme for the Expanded Public Works Programme. Unemployment and poverty remain the most significant challenges in South Africa, with millions of people with limited education and skills and those living in more marginalised and rural communities facing few ways of generating income. The South African government has developed a number of strategies in response to this problem including, a. Substantial investment in increasing the education and skills of the work seeker population; b. Providing social grants as a safety net for those with the most economic need; c. Implementing a range of measures to stimulate economic activity; d. Implementing the Expanded Public Works Programme (EPWP), which is an example of Public Employment Programmes (PEPs). PEPs have a long history internationally, as an effective response by governments to large scale and entrenched unemployment. Generally, programmes focus on delivering core services to vulnerable populations, building public infrastructure or improving physical environments, while providing secure work at a basic minimum wage. The way in which PEPs are implemented reflects the context that they seek to address and the trade-offs that must be managed. The EPWP is a nation-wide government-led initiative aimed at drawing a significant number of unemployed South Africans into productive work in a manner that will enable them to gain skills and increase their capacity to earn income contributing towards the development of their communities. South Africa s EPWP requires that public funds are spent in a way that more actively creates opportunities for the continually unemployed to secure work and an income. The EPWP is implemented through different sectors which are: 3

4 a. Infrastructure sector: The sector aims to contribute to the overall objectives of the EPWP by increasing the labour intensity of government expenditure public funded infrastructure construction and maintenance projects through the use of labour-intensive methods. b. Environment and Culture sector: The sector aims to build and protect South Africa s natural resources and cultural heritage, and in doing so, dynamically uses this preservation work to create both medium and long term work and social benefits. c. Social sector: The sector aims to draw significant numbers of the unemployed into productive work through the delivery of social services to enable them to earn an income, and to provide as many EPWP participants as possible with education and skills; to enable them to set up their own businesses/ service or become employed. d. Non state sector: The sector consists of two set of programmes: (1) the Non- Profit Organisations Programme (NPO Programme) and (2) the Community Work Programme (CWP). The objective of the EPWP Phase 3 is: To provide work opportunities and income support to poor and unemployed people through the delivery of public and community assets and services, thereby contributing to development. The EPWP Phase 3 has a goal of creating 6 million work opportunities over the 5 years of implementation, which commenced in April Between April 2014 and March 2018, the programme has created 3.5 million work opportunities and 1.37 million FTEs (See Annexure A). The Monitoring and Evaluation Chief Directorate within the EPWP unit is responsible for the collection, analysis and reporting of progress of the EPWP toward the 6 million target as well as evaluating the impact of the EPWP. To determine the developmental impact of the EPWP Phase 3, the DPW must quantify its costs as well as its effects on growth, employment, poverty and income distribution in South Africa. To achieve these, the department needs to design economic modeling scenarios to quantitatively identify the contributions of the EPWP Phase 3 to growth, employment, poverty and income distribution over its five year life span. 4 P a g e

5 Moreover, the model used for the above project should also be used to design alternative scenarios and produce likely impact of alternative scenarios for the implementation of the Phase 4 of the EPWP which is expected to start in April 2019 until AIMS OF THE PROJECT The aims of the project are two folds: First to use economic modeling techniques to run EPWP Phase 3 consistent scenarios in order to provide a quantitative assessment of the contribution of the EPWP Phase 3 programme to the South African economy and its development objectives. Second, to use economic modeling techniques to design policy scenarios for the next phase, Phase 4, of EPWP and simulate their potential future impact. The scenarios that are planned and specific. 3. OBJECTIVES The objectives of the study are the following: 5

6 3.1. To provide quantitative assessment of the contribution of the EPWP Phase 3 programme to the South African economy and its development objectives, 3.2. To design policy scenarios for the next phase, Phase 4, of EPWP and simulate their potential future impact looking at the following scenarios: Continue as we have been doing currently just expanding the current strategy Having a Hybrid model which includes a combination of: Piloting the employment guarantee scheme for all unskilled and unemployed Youth (16-35 years) Current model for adults from 36 years Implementing the employment guarantee scheme for all those unemployed and living below the poverty line Implementing the employment guarantee scheme for all unskilled and unemployed To provide training and build capacity of 10 team members to effectively use existing economic models of South Africa to support policy formulation, monitoring and evaluation of the effectiveness of EPWP. 4. SCOPE OF WORK The support programme should provide the EPWP unit with a research study that use economic modeling techniques to quantitatively identify the EPWP s contributions to growth, employment, poverty and income distribution of various future scenarios related to EPWP. 6 P a g e

7 The work will comprise but not necessarily be limited to: 4.1. Analysing EPWP performance data from April 2014 to March Using modeling techniques to quantitatively demonstrate the direct and indirect contributions of the current EPWP in terms of economic growth, employment, poverty, and inequality Specify and simulate impact of alternative policy scenarios for the EPWP Phase Build capacity of officials in the department to ensure that the department can effectively conducts its future analyses of the impact of alternative what if scenarios for the EPWP. 5. EXPECTED OUTPUTS The expected outputs of this study includes the following: 5.1. Two sets a detailed reports on the quantitative assessment of the contribution of the EPWP Phase 3 programme to the South African economy and its development objectives which will include: 5.2. Two sets of a detailed reports of the policy scenarios for the next phase, Phase 4, of EPWP and simulate their potential future impact Training and build capacity plan of 10 people to effectively use existing economic models of South Africa and to be able to train others A PowerPoint presentations of the project and its findings. 6. PROPOSAL AND QUOTATION The service provider is required to provide a proposal setting out the basis by which the assignment will be undertaken within the budget specified. The Service Provider is required to provide the following detail of the relevant experience of the individual/s that will be undertaking work, including: 7

8 6.1. A detailed CV of the individual/s identified to perform the assignment; 6.2. The consultancy rate charged by the individual/s identified 6.3. A proposal which sets out what will be addressed in the assignment (data analysis plan, modeling methodology, project plan) and the proposed timeframe for the work A fixed bid price (including disbursements) should be provided specifying person hours or days for each phase of the work. In addition the bid price should clearly indicate the cost for the work inclusive of VAT. Disbursements should be clearly specified The proposal should include price per deliverable 6.6. An electronic copy of all documentation and data produced must be provided to the IDT 6.7. All intellectual property as a result of the study belongs to the Department of Public Works The IDT reserves the right to approve any replacement of the individual team members of the proposed project team. A plan indicating time frames for each component of the work should be included in the proposal. 7. TIME FRAME The study will be conducted between August 2018 and November 2018 for the report and December 2018 to March 2019 for training and capacity building. The assignment will commence immediately after appointment. 8 P a g e

9 8. CONSULTANTS QUALIFICATIONS 8.1. The service provider should be led by a team leader with at least a Master s degree in Economics, Statistics or related fields. A PhD will be an added advantage The team leader should have 10 years experience in similar work The study is expected to be conducted by a team that have extensive experience in developing macroeconomic models for poverty, development and government interventions research The company should have extensive research experience in similar work Should there be a replacement of the proposed resource, similar calibire of persona should be provided. 9. CONTRACTING DETAILS The Service Provider will be contracted by the IDT to undertake the assignment. This will be based on the proposal and quotation submitted and any amendments made after the Initiation meeting. The Service Provider shall be accountable to IDT and the Steering committee in terms of fulfilling the actions set out in the proposal. Payment will be in terms of the fulfilment of agreed milestones and confirmation by the Steering Committee. 9

10 10. REVIEW CRITERIA AND PROCESS The following criteria will be applied in the review of the tenders: Approach and Methodology Qualifications of team leader Previous experience of the team leader Previous Experience of the bidding team Qualifications of the bidding team Relevant experience of the bidding company Training strategy and plan 11. REPORTING The service provider will be expected to prepare a consolidated work plan that will operationalise and direct the evaluation. The work plan will describe how the evaluation is to be carried out and provide a clear research methodology and research tools. The consolidated draft work plan will address the following elements: Specific set of issues and questions to be addressed by major project component Relevant documentation which will be reviewed Indicators and data to be used to address program/project issues Model framework and methodology to be used Work schedule in Gantt chart format Outline for the research Report. 10 P a g e

11 12. RESEARCH WORK PLAN A final research work plan will incorporate comments on the draft work plan and will be submitted for approval within two weeks of receiving comments from the Steering Committee. 13. DRAFT RESEARCH REPORT The appointed service provider will be expected to provide the IDT with two written interim reports on intervals to be determined in the work plan. A final summary report of preliminary findings and conclusions will be presented to a workshop that will be organized by IDT and Steering Committee to be attended by the management of EPWP and a steering committee. Subsequently, a draft evaluation report will be submitted to IDT that addresses all issues identified in the Terms of Reference and work plan. 14. FINAL RESEARCH REPORT The Service provider will submit two complete final research reports (impact of phase 3 and policy scenarios for Phase 4) incorporating comments and including an abstract, an executive summary (not exceeding four pages) and a complete report within four weeks of receiving comments from the Steering committee on the draft reports. A PowerPoint presentation of all the slides will also be required together with the reports. 15. ENQUIRIES Technical Enquiries relating to this project may be addressed to the designated representative who is the departmental project manager: a. Ms Kgomotso Zantsi Tel: Kgomotso.zantsi@dpw.gov.za b. Mr. Maphutha Makhura Tel:

12 c. For tender related enquiries contact: Mr. Papi Duiker Tel: P a g e

13 ANNEXURE A: EPWP PERFORMANCE Figure 1: Work opportunities created against targets. Target Performance Total Figure 2: Work Opportunities created per year per Quarter Q1 Q2 Q3 Q4 2014/ / / / /19 Figure 3: Full Time Equivalence created per year per Quarter. Q1 Q2 Q3 Q4 2014/ / / / /19 13