PC Economic: Committee's Draft programme and study tour discussion –

Economic Development

20 June 2011
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Committee discussed three items during the meeting. Firstly, the Chairperson noted that some of the items originally scheduled for the Committee programme for the second term would need to be moved, and asked Members also to suggest other likely topics. Members noted meetings would be held with the banking sector around funding for small, medium and micro enterprises, and a report on the merger of SAMAF, Khula and Industrial Development Corporation financing bodies. The Millenium Development Goals (MDG) summit had been postponed from its June date, but Members agreed that they would need to study the report and make a Report to the House on the issues, which had been outlined by both the Department and the Financial and Fiscal Commission. They also agreed to submit a report on the oversight role that the Committee was playing over the MDG mandate of the Department. Other issues to be discussed included Broad Based Black Economic Empowerment (BBBEE) from an economic development perspective, issues picked up on oversight to North West, a decision on what provinces still to visit, and the Committee’s request for a briefing on the proposed amendments to the BBBEE legislation. The Members agreed that it would be useful to have a tracking system on entities. They also agreed that it would be necessary to consider the Industrial Development Zones, both existing and proposed, and get an update on their status, and on what the Department of Trade and Industry had planned, as well as on the Maputo Corridor, and industrial parks.   

The Committee then outlined the suggestions that the Committee could visit India, Brazil, Russia, China, Bangladesh and Kenya on its international study tour. The Researcher had been asked to provide details of what each could offer. Although Members cautioned that they would like to limit travelling time, they agreed that all the countries offered good opportunities for South Africa to benchmark itself, and, being developing countries, faced similar issues to those of South Africa and were those with whom South Africa was likely to trade. Further feedback would be given at subsequent meetings.

The Committee tabled, but postponed final adoption of the draft Committee Report on the 2011 – 2016 Strategic Plans of entities of the Department of Economic Development, until 28 June 2011.

Meeting report

Chairperson’s opening remarks
The Chairperson welcomed Members of the Committee and gave a brief introduction to the purpose of the meeting. This meeting would address the items that were not finalised in the previous meeting of the Committee. The Committee’s programme was tight, and had to be implemented as discussed during the strategic planning workshop if the Committee was to meet its targets in this year. It would be necessary to move some of the items scheduled for the second term into the third term, and appealed to Members to be prepared for a challenging and congested term, and to try to attend meetings to allow the Committee to finish its programme.

The Chairperson also informed the Committee that she had, for the first time, attended the MinMEC meeting on Economic Development. The Ministers of Economic Development and of Trade and Industry had briefed the meeting on issues related to key economic plans and developments in the country, and the New Growth Path implications for provinces and local municipalities. Municipalities were represented at the meeting by the South African Local Government Association (SALGA) and Metro mayors, and they were able to interact with the presentation. There was also a presentation on the Industrial Policy Action Plan (IPAP 2), also highlighting its implications for provinces and local government. It also focused on the New Provincial Procurement plans, clarifying the mandate. The Economic Development Department (EDD) and National Treasury (NT) would oversee implementation of this project, whose intention was to promote local content. There was supposed to be a discussion on the Industrial Development Zone (IDZ) policy but it could not take place, so a follow up meeting on that would be held on 1 July 2011. Although this was not an open meeting, the Chairperson had been invited to attend. At this, the Industrial Development Zone policy document would be discussed.

The Chairperson also informed members that she had circulated a communiqué from the House Chairperson, clarifying the issue around overseas study tours, and asking why this Committee had not arranged to take a tour. This Committee could take a visit in about November, and it was necessary to decide which countries to visit. The Chairperson had requested the Committee Researcher to research suggested countries, of India, Brazil, Russia, China, Bangladesh and Kenya, to give the Committee enough material to make an informed decision on which countries would provide the most material for study. There was no harm in requesting to visit all, because they all dealt with a variety of issues that would help the Committee’s decisions around economic development of South Africa.

Mr Arico Kotze, Committee Secretary, informed the Committee that he had received apologies from Mr S van der Merwe and Mr B Holomisa who were unable to attend the meeting.

The Chairperson noted that Mr Holomisa had never yet attended a meeting of this Committee. However, his work in the Military Commission, which had taken a lot of his time, was recognised. A request had been made to him either to delegate another Member to take his place, or recuse himself from the Committee completely. She asked the Chief Whip of the Committee, Mr Z Ntuli, if there was any response to that request,

Mr Z Ntuli (ANC) responded that he had spoken to Mr Holomisa, who indicated he would not be able to attend the meetings of this Committee, and requested that he be officially relieved of his duties here.

The Chairperson stated that it would be preferable to start the mechanism to remove Mr Holomisa immediately. She also appealed to all Members that if they could not attend, they should try to ensure that an alternate attended, to avoid the situation where the Committee did not have a quorum.

Committee Programme
Mr Kotze outlined the issues to be taken over to the third term. The Committee would meet with the banking sector around assisting Small, Medium and Micro Enterprises (SMMEs) with funding. There would also be an update by the Economic Development Department (EDD or the Department) with regard to the merger between South African Micro-Finance Apex Fund (Samaf), Khula Enterprise Finance and Industrial Development Corporation (IDC).

The Chairperson informed members that the Millennium Development Goals (MDGs) Summit was supposed to be held in June, but was postponed.

Mr Kotze said that he did not have the relevant documents with him and could not give further information for the moment.

The Chairperson said that even though the Summit had been postponed, Members should familiarise themselves with what was in the MDG Report, and prioritise it for the third term.

Mr S Marais (DA) asked for clarity if the MGDs and figures should be compiled into a report by this Committee, so that it could be moved to the third term, and be referred to the House Chairperson.

The Chairperson noted that the EDD had provided figures during the strategic workshop, and there was also a presentation in the previous week by the Financial and Fiscal Commission (FFC). The Committee had thought it should deliberate on the FFC report, after the EDD had followed up on some of the issues as requested. The Committee had sent a preliminary report to the House Chairperson, based on the presentation by the Department. In the next meeting, the Committee Secretary should bring that Report for Committee approval.

The Chairperson added that there was also a request that a report be submitted on the oversight role that the Committee was playing over the MDG mandate of the Department. Certain information had been provided by the Department, but the report would be provided to Members. However the FFC had also provided an opportunity to get a global picture of the MDGs.

Mr X Mabasa (ANC) suggested that the Committee should also focus on Broad Based Black Economic Empowerment (BBBEE) from an economic development perspective, particularly examining what elements contributed to BBBEE.

Dr P Rabie (DA) said he agreed with Mr Mabasa. He also added that, following the oversight visit to the North West Province, the Committee should make sure of continuity, with follow up meetings with the spokespersons on the progress they were making on issues raised.

The Chairperson noted that the Committee still had some oversight visits still to perform, in terms of the programme. She was intending to set aside one week for those oversight visits. Members would need to decide what provinces to visit, or perhaps to revisit North West and Limpopo to check progress made on issues raised by the Committee.

Mr Marais also referred to Mr Mabasa’s suggestion, and noted that the Committee would need to consider the fact that the legislation was to be reviewed. From an economic development perspective, BBBEE could play a major role. However, if it was implemented in the wrong way, it could equally spell disaster and not support the objectives and goals. He felt that the full implications of BBBEE needed to be considered. He was not sure whether this would fall under the EDD or Department of Trade and Industry (dti). However, he still felt that this Committee would need to address the economic development angles and make some proposals and suggestions. He was not sure how the EDD felt or what role it was playing in that regard.

The Chairperson said the Committee needed to revisit the documents, especially the strategic planning document of the Department, around that issue. She thought that the EDD did have a role to play, as an overarching department dealing with economic development. During the Committee’s previous visits, it had, from time to time, come across issues such as the Checkers and Industrial Development Council (IDC) issue, a BBBEE deal, which did fall under this Committee because of IDC funding. This Committee could deal with such issues if they affected policy. She suggested that it would be necessary for an approach to be formulated as to how the Committee would deal with the issue, and could get further briefings on the proposed amendments.

Mr Mabasa also suggested that another element of BBBEE that this Committee should consider was to formulate some sort of tracking system for all the entities visited, to emphasise to the Department that the Committee would be checking on entities supported. If this Committee had its own system it would ensure that an approach that was non-sporadic would be followed.

The Chairperson responded that the Department had a tracking system through one of its units, but agreed that it would be useful for this Committee to develop one of its own.

Mr N Singh (IFP) asked if the Committee had ever looked at what was happening at the Coega IDZ. Significant fundings had been channelled there, and he wondered what was being done in terms of job creation, what its economic impact was in the Eastern Cape, and what was happening in its environs. This was surely something that this Committee must consider.

Mr Marais added that he thought the IDZs, from the point of view of job creation and development of the economy, were very important. This Committee had not visited the three existing IDZs. Government was also apparently investigating another new IDZ in Saldanha, with a view to job creation, and this also needed to be considered by this Committee. He suggested that a visit to the IDZs could be combined with visits to motor component manufacturers and agri-business, so as to look at what government could do to support those companies with job creation as an element of economic development.

The Chairperson noted that the dti had come up with various useful programmes, and it was necessary for the Committee to hear more on them, so that it would be aware of what it should be looking at in terms of responses to programmes. She suggested that the dti should brief the Committee on IDZs, and the policy issues, so that the Committee could then come up with an informed approach and home in on the important issues. Currently, she did not think this Committee had enough clarity on the policy, other than those Members who might serve on the Portfolio Committee on Trade and Industry. This Committee would also have to investigate what had been done in other countries around IDZs. At some stage, there had been a moratorium on further IDZ development in South Africa, and it was necessary to know the current status.

Dr Rabie noted that the Committee needed to do the same around the Maputo Corridor. The last time this was mentioned was around three to four years ago. It was important to get an update briefing about it, because a lot of money was invested for infrastructure in the project.

The Chairperson stated that the Committee needed to revisit all the corridors, and find out who could brief the Committee. She agreed that these corridors were very important for the growth of the country and for job creation and integration.

Mr Mabasa noted that another issue to be evaluated by the Committee concerned the industrial parks, both in rural and urban areas. The Committee also needed to check what Samaf and Khula were doing in supporting and sustaining cooperatives.

The Chairperson reminded Members that she had asked them to add issues in to the third term programme to get a clear idea of the aim of their visits. Management should assist in developing a standard approach for every visit. This Committee could, if allowed by the House Chairperson, utilise the three weeks for visits, and have specific targets allowing for various issues to be covered in each trip.

She added that the fourth quarter programme already had made provision for public hearings on cooperatives.

Update on the International Study Tour of the Committee
The Chairperson requested Members to indicate their preference as to what countries to visit.

Mr Marais said that he fully supported the countries already suggested, as they had set a benchmark, against which South Africa had to measure itself in order to be a fully-fledged member of BRICS (Brazil-Russia-India-China-South Africa). South Africa must know what it was dealing with, how business was done in these countries, in order to be able to draw the necessary comparisons. In addition, South Africa needed to know more about job creation, and could do so only by knowing what those countries were doing with their business. The biggest market was still the North. However, South Africa must be rated with other emerging markets that would confront it in the future – and these were the markets with biggest economic growth and job creation potential. He also suggested that the programme should be structured so that the Committee gained knowledge around all its strategic targets and objectives, including hearing how these countries were creating jobs, growing their economy, developing cooperatives, dealing with agri-business and IDZs. Each of these countries could offer information that would enable South Africa to become a successful global partner, and specifically also to deal with the free trade barriers. It was necessary to become fully informed on these issues and learn the realities.

Mr Singh noted that if this Committee was to visit five countries, it should focus on the particular strengths of each, be this job creation, IDZs, pro-poor growth, or financing, or other opportunities, and establish the best practice and ideas. For instance, he knew that Bangladesh was especially experienced in cooperatives.

Dr Rabie said he agreed with his colleagues that South Africa should benchmark itself against the BRICS countries, and not compare itself to developed countries. It was also important to look at the value of the State, and Parliament, in encouraging economic growth in those countries, and at job creation. The Committee should identify certain issues where the Parliament and State played a very important role in encouraging economic development. It was important to look at currency issues, and how they influenced trade, and take the necessary steps as many export companies were complaining that the rand was too strong.

Ms D Tsotetsi (ANC) noted that on the matter of cooperatives, the Committee researcher was mandated to look into the issues and produce comparisons with other countries, to help identify the causes of failures of cooperatives in South Africa. However, the Committee could not engage on the issues at the moment as it was still waiting for the report.

Mr Ntuli cautioned that the Committee should consider the distances to be travelled, to avoid a situation where more time was spent in travelling than in learning.

The Chairperson suggested that it was possible to split the work, so that some Committee Members focused on certain issues and others on different issues. She agreed that travelling time should be limited as far as possible. Another briefing would be given at the next meeting, taking into account what had been said.

Committee’s draft Report on the Strategic Plans of Entities falling under the EDD, for 2011/12 to 2015/16
The Chairperson reminded Members that the Committee, when adopting the budget and strategic plan of the EDD, had not been able also to adopt the report on the strategic plans of entities falling under the Department, because there were numerous errors. The Committee Researcher ha been asked to deal with this, and the Report was now ready. However, Members had not had time to look at the changes made. She therefore asked Members to study the report, and suggest any changes to it at the next meeting, on Tuesday 28 June 2011.
The meeting was adjourned.


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