Economic Development Portfolio Committee: Committee's Limpopo Oversight Report adoption & deliberations on Departmental Entities' Strategic Plan Report

Economic Development

12 October 2010
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Committee met to consider and adopt three of its reports. The Committee’s Report on its Oversight Visit to Limpopo, on 5 and 6 August 2010, was adopted, with some minor grammatical changes, and the insertion of recommendations adopted at the meeting. Members commented that the Industrial Development Corporation (IDC) should be giving more attention to named companies, that companies should be improving and fast-tracking absorption of labour, and that the number of jobs created should be stated, with the importance of job creation being emphasised. Members also noted conflicts between beneficiaries and ongoing medication attempts, and recommended that community members who claimed mining rights should be reminded to renew leases that were about to expire. The Committee Secretary was asked to check the position in respect of the Mineral and Petroleum Resources Development Act and report back to Members. Members noted some mismatch between what they had been told and written information in brochures, noted the need for women’s empowerment and suggested that the Department of Environmental Affairs should investigate the situation with poisonous plants and the risks posed to communities. Youth empowerment was also raised, as well as the need for information desks in municipalities, and promotion of the opportunities offered by the International Trade and Administration Commission (ITAC), the Competition Commission, Khula and Samaf. Members recommended that the Department should be holding roadshows to inform people about tendering processes, and inquiries into land issues and IDC interest rates.

Members then tabled and began to discuss the Committee’s draft reports on the Strategic Plans on the entities reporting to the Department of Economic Development. Although the Committee did not finalise these reports, Members commented that Industrial Development Corporation (IDC) needed to clarify some figures, and clarity was also needed on whether 100% local meant local components or local content. Clearer headings were needed in the report. The functions and mandate of the Competition Commission and Consumer Council were discussed, and some issues were raised that would be clarified with the Commission on the following day. The mandate of ITAC was also raised, and Members stressed the need for cooperation between the institutions, and the need for more detailed information around statistics on outputs. A Member suggested that closer monitoring was needed over the Industrial Development Corporation, in view of the amounts it handled, and Members discussed whether Khula needed more funding. The Committee noted that it was still expecting a report on the Development Finance Institutions. Members resolved to finalise discussions on the Report on the Strategic Reports of Entities, as well as the Committee Report on quarterly performance of entities, at the next meeting.

Meeting report

Consideration and adoption of Committee Oversight report on the visit to Limpopo 5 and 6 August 2010
The Chairperson tabled the Committee’s report on the oversight visit to Limpopo on 5 and 6 August.
At the outset, some suggestions for grammatical corrections were made and adopted.

Ms D Tsotetsi (ANC) said the Industrial Development Corporation (IDC) must give more attention to the named companies, and this should be specifically mentioned in the report, because some companies were not aware of IDC.

The Chairperson noted that in Limpopo, companies received a lot of aid from parastatals, such as the Limpopo Development-Limdev. Their challenges in that province were not the same as in North West. Complaints about IDC in Limpopo were mainly concerned with the alleged arrogance of managers but accessibility of funding was not a problem. Limdev was well-known at ground level.

Mr P Rabie (DA), Mr Z Ntuli (ANC) and Dr S Huang (ANC) stated that they were not present in Limpopo, and therefore could not comment on the issues being raised.

Ms Tsotetsi made some remarks about corruption in the province. She also noted that unemployment was still high and the companies should improve and fast-track labour-absorption.

The Chairperson said these companies needed to be reviewed.

Dr Huang noted that R263 billion was a huge amount for building the coal to liquid plant, and he believed that the report should state how many jobs were created, which should be a substantial number in view of the large sums involved.

The Chairperson agreed that job creation must be emphasised.

Ms Tsotetsi enquired about tourism.

The Chairperson said that tourism was explained during the Committee’s visit to Limpopo. There were marketing strategies in place. This question had been raised by Members during their observations but had been responded to well. The Chairperson also emphasised that the mining cluster must be popularised.

Ms Tsotetsi noted that there were some conflicts between beneficiaries that arose because of in-fighting for opportunities, but noted that this was not mentioned in the report.  The beneficiaries lacked information and seemingly did not know about all the opportunities available.

The Chairperson added that people in this province were fighting about things that they did not fully understand themselves. Apparently, there were mediation attempts ongoing, as there were people who wanted to be given mining opportunities although they did not have the necessary skills.

Dr Huang noted that the mining industry was important, because of the substantial amount it would contribute to the Gross Domestic Product (GDP).

Ms Tsotetsi said the community members who claimed mining rights faced financial challenges. She recommended that they be reminded to renew their leases when these were about to end.

The Chairperson acknowledged that she was not familiar with the Mineral and Petroleum Resources Development Act (MPRDA), and she was not sure if these issues were covered in that Act. She was concerned about issues such as how people would access mining rights, and how they could be given these rights when they were unable to access them.

Dr Huang found it notable that the province had its own development strategy.

The Chairperson explained that the strategy was called a plan, but that there was also an indaba planned for growth and development. She recommended that the information, from the level of Premier down to local government, be worked upon. The Chairperson also said that she had compared the written brochure with what had been said, and the information did not match.

Ms Tsotetsi said she was not sure about the procedure for certificates. There were people who held such certificates, but did not know about them until they expired.

The Chairperson asked the Committee Secretary to revisit the MPRDA to check what it said about mining licences, and give this information to the Committee at the next meeting.

The Chairperson then asked Members if they thought that any response was needed on matters highlighted by the Department.

Members did not indicate that there was anything needed.

The Chairperson noted that observations made during the oversight visits helped the Committee in making recommendations.

Ms Tsotetsi stated that women were not satisfactorily empowered, because they tended to follow rather than initiate.

The Chairperson said that it was the responsibility of provincial government to ensure women’s empowerment. She added that there was a need to expand the projects, although their growth rate was reasonable, because, as Ms Tsotetsi had correctly pointed out, women tended still to be reserved and withdrawn, and needed assistance to realise their full potential. Women needed to be better resourced, in order to help their prospects for growth.

The Chairperson pointed out that one of the entities visited claimed to be rotating the manager’s post, but Members had observed during their site visit that the current manager was quite domineering and appeared to have been acting as the manager for some time.  They need to go all out and unleash their potential. They said they are rotating the manager post but the man who filled the post when they went for the site visits seemed dominant and had been manager a while.

The Chairperson suggested that the Department of Environmental Affairs be approached for help with poisonous plants.

Mr Z Ntuli (ANC) said that the provincial Department of Agriculture in Kwa-Zulu Natal had a programme for eliminating alien plants.

The Chairperson said that if these plants were poisonous to animals then they were probably poisonous to humans too. This matter must be investigated, to ascertain the risks to the community.

Ms P Bhengu (ANC) said that the youth must also be empowered because they also had minimal involvement in these projects.

The Chairperson stated that the youth basically wanted money, and not work, and could best be empowered by equipping them with business skills.

Ms Tsotetsi added that the youth must distinguish that these projects were not similar to those in big companies, and needed perseverance and commitment.

The Chairperson noted that the community had asked for an information desk in each municipal office, to assist people who were interested in business. The International Trade and Administration Commission (ITAC) and the Competition Commission (CC) should be accessible, and there must be roadshows. ITAC had made follow-up visits three weeks after the Committee had visited, and she hoped that the same had been done by the Competition Commission. She suggested that the funding institutions Khula and Samaf should be opening offices in more smaller towns, not simply in capital cities, since people were not generally aware of their services.

Ms Tsotetsi urged the need for transparency in relation to tenders.

The Chairperson agreed that the Department must embark upon  roadshows to inform people about the tendering process.

Ms P Bhengu (ANC) added that there must be an inquiry on land issues.

The Chairperson agreed, and added that some people complained that not sufficient use was being made of the available land.

Ms Tsotetsi raised an issue about fair competition. The community complained that illegally operating Somalians were chasing away local businessmen.

The Chairperson replied that it was a difficult issue to tackle, because the allegations were impossible to prove.

Ms Tsotetsi recommended that survivalists who sold similar products should group together so that they could save when buying in bulk. She also noted that the IDC charged interest at commercial bank rates.

The Chairperson added that IDC interest rates were sometimes even higher than commercial bank rates.

Ms Tsotetsi said that IDC was supposed to be a cheaper alternative to banks.

The Chairperson agreed that the Competition Commission must investigate land issues, and that the Department of Rural Development and Land Reform must also get also get involved.
 
Ms Tsotetsi and Ms Bhengu moved to adopt the report, as amended in the meeting.

The Report was adopted, with amendments.

Committee report on the Strategic Plans of the entities
The Chairperson tabled the Committee’s report on the Strategic Plans of the Department of Economic Development’s entities.

Firstly, some grammatical changes were suggested and agreed to.

Dr Huang noted that there is a large difference in the amounts being compared, citing the example of R2.4 billion in the 2009/10 financial year.

The Chairperson noted that R1.265 billion from the Department of Economic Development was committed for the first and second quarters. IDC might need to give some clarification and it was important that the Department verify this information.

Mr R Coetzee (DA) asked for clarification whether the reference to 100% local referred to components, or content. It was important to ascertain whether automotive components were imported, then assembled locally, or made from scratch locally.

The Chairperson agreed, and said that this information must be obtained from the plants.
 
Mr Coetzee stated that if people did not know that raw materials were imported, they would expect more job opportunities.

The Chairperson asked the Secretary to insert clear headings in the report, pointing out that since they were circulated to a number of stakeholders, it was vital that their meaning be clear, and that, for instance, in respect of “property” it was important to specify what type of property was involved.

Ms Tsotetsi said she thought this referred to “rental property”.

The Chairperson still maintained that there was a need to revise and contextualise the headings.

Dr Huang asked for the meaning of the phrase “6, 8, and 10 over the next three years”.

The Chairperson replied that this referred to “6, 8, 10 interns” and asked that this be corrected.

The Chairperson then asked Members what recommendations should be included.

Mr Rabie said that the role of the Competition Commission (CC) was to protect consumer rights, since it would act against unsavoury business practices. This Commission must therefore sustain a reasonable business standard.

The Chairperson asked, when uncompetitive behaviour had been found, what impact the verdict of the Competition Commission would have on consumers.

Mr Coetzee replied that the Consumer Protection Act provided that a consumer could lay a complaint in response to the exposure.

Mr Ntuli noted that it was difficult for an individual to take action.

Ms Tsotetsi noted that the CC was unfortunately a reactive institution, which only responded to a complaint. Ms Tsotetsi suggested that it could perhaps embark on road campaigns.

The Chairperson said that this was not the function of the CC.

Mr Coetzee agreed, saying that instead the Consumer Council should conduct consumer education campaigns.

Ms Tsotetsi added that the campaigns could include comments on basic foodstuffs such as milk or bread.

The Chairperson noted that consumers, when they became aware of the outcomes of collusion, should demand that price fixing be corrected. The Consumer Council and politicians must educate citizens.

Dr Huang maintained that the CC had the mandate for control of pricing. He asked whether the CC’s inability to meet its mandate was due to internal factors like morale and motivation, and whether the personnel were corrupt.

The Chairperson said that the type of clientele with whom the CC dealt demanded that its staff must have high morale and not tarnish its reputation.

Dr Huang asked why there appeared to be internal factions, questioning whether this resulted from leadership.

The Chairperson replied that the Committee would have to raise that with the Competition Commission, at the meeting due to be held on the following day. She also noted that the CC had complained about lack of capacity.

Mr Coetzee asked whether the capacity constraints arose through the structure, or incorrect staffing.

The Chairperson replied that the reasons were apparently financial, and noted that the CC was unable to fill the vacant posts.

Mr Coetzee explained that the mandate surely determined the strategic plan. He suggested that if there was lack of funding then the Minister must review the situation and revise the budget to accommodate the Commission’s concerns.

The Chairperson asked the Committee to give recommendations on the Competition Tribunal.

Mr Rabie said that it was difficult to make recommendations to the Tribunal, since it was a reactive body.

The Chairperson added that the programme of the Competition Tribunal was huge and therefore it wanted to increase the number of interns and learnerships. She suggested that there was a need to partner with other Universities in addition to the University of Pretoria.

Mr Coetzee added that there must be continuous feedback on how the interns were doing.

Ms Tsotetsi asked what ITAC could do where goods were being imported and sold for less than they would retail in their country of origin. If this was not within the mandate of ITAC, then ITAC should be referring the matter to the relevant institutions, to protect traders.

The Chairperson agreed, and added that there should be cooperation between these institutions. She also said that the Committee should be aware of the instruments that were available.

The Chairperson asked Members for recommendations on the IDC.

Ms Tsotetsi referred to the statement that the IDC “has allocated 75% of its franchise support budget to black entrepreneurs” and said that more information was needed, such as how many of the 75% had succeeded. She thought that generally, more detailed information was needed when giving statistics on outputs.

The Chairperson replied that the IDC had said that franchise support was not part of its focus, and asked if in that case there should be a transfer of matters to Khula.

Ms Tsotetsi added that there must be clear lines of responsibility.

The Chairperson agreed, saying that companies like Kagiso Trust could aid in franchising.

Dr Huang noted that the R800 million invested by the IDC was substantial, and suggested that the IDC needed monitoring.

The Chairperson noted that the money was for technology.

Dr Huang still maintained that this was a large amount, justifying more oversight and monitoring.

Ms Tsotetsi asked why the IDC did not help municipalities in determining which projects to embark upon, and whether this was a marketing problem.

The Chairperson replied that sometimes the municipalities lacked capacity and it was not necessarily a marketing problem.

Ms Tsotetsi said that projects were needed to capacitate local government.

The Chairperson replied that such projects did exist, but that they needed to be fast-tracked.

Dr Huang said that provinces needed to provide oversight over local government and IDC.

Dr Rabie, commenting on Khula, said that Khula needed to fast track and simplify its wholesale model. He also noted that, since 2006, Khula had received no capital infusion from government, but was clearly in need of funding, and that the Committee should support its request for funding.

The Chairperson agreed.

Mr Ntuli said that Khula had reported that it obtained money from clients and that it had sufficient unutilised funds.

The Chairperson added that Khula received funding from Retail Financial Institutions (RFIs) and grants.

Mr Ntuli suggested that Khula must clarify the money issue.

The Chairperson asked if any Member wished to comment about the R100 million fund that Khula had set up with the Foundation for African Business and Consumer Services (FABCOS).

Ms Tsotetsi asked what the functions were.

The Chairperson clarified that FABCOS provided funding to Small Medium and Micro Enterprises (SMMEs) directly. She asked if the Members thought the Committee should express support for the collaboration between Khula and FABCOS.

Ms Tsotetsi replied that if there were opportunities for more funding, then this was positive. She added that Khula should be wider spread, particularly in the smaller towns, rather than concentrating only on capital cities.

The Chairperson noted that there had not yet been any report submitted on the Development Finance Institutions (DFI) review, and suggested that the Committee should call for this.

The Chairperson noted that Members should consider whether they wished to add more recommendations at the next meeting.

She also noted that the Reports on the quarterly performance reports of the entities would be dealt with at the next meeting.

The meeting was adjourned.

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