Minister on DTI 2012 Strategic Plan

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Trade and Industry

15 March 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

Minister Rob Davis spoke about the importance of the promotion of industrial development, saying the activities to be rolled out under the Industrial Policy Action Plan 2 would be launched at the start of the financial year and the Cooperative Amendment Bill was on its way to Parliament. He also spoke about incubator programmes, the BEE Amendment Bill, Industrial Innovation, DTI administration and  financial management and management of its agencies. The presentation by the Department of Trade and Industry covered the department’s key achievements and challenges.
 
Members questioned the small amount of money allocated to the National Consumer Commission, arguing that it was not enough. They asked about the Walmart process and how the DTI had represented consumers. Members argued that cooperatives needed to be expanded in the country and the notion of them as small operations needed to be rectified. There were questions about the Intellectual Property legislation as well as the Legal Metrology Bill. Comments were made about resolving the steel price issue and the film industry as a means of job creation. Members asked for clarification on the NTembi National Tooling Initiative and the Saldhana IDZ initiative. Members raised concerns about management in the DTI. The need for transformation of the economy was raised with members arguing that there was a need to de-racialise the economy.

Meeting report

Minister on Department of Trade and Industry (DTI) 2012 Strategic Plan: introduction
Dr Rob Davis, Minister of Trade and Industry, stated that what would be important today was that the committee would look at the administrative performance of the Department over the past year and how they planned to move forward in Mid Term Expenditure Framework (MTEF) period. Often when the Department met with the Committee, what was discussed were policy issues and not administrative performance and this gave a chance to do that.

Dr Davis said the flagship programme of the Department, which rose to their contribution to the new Growth Path, was in the area of promotion of industrial development and industrialisation. He felt that they had exhausted the arguments of the Committee as to why this was important. There had never been a case of a country moving from being a developing economy to a developed economy that had not had a manufacturing sector and value added activities driving that process.  A number of developing countries which had lost industrial capacity were regretting this fact. That was the focus.

Dr Davis said the Department had already discussed the main directions of their industrial policy work. Manufacturing in South Africa remained seriously affected by the economic crisis and it had not recovered to the extent of being where we were before the onset of the economic crisis.  However 2011 had seen an improvement and a general increase in production at around 7.5%. He would be happy to share this data with the Committee if they liked. The country also saw stablisation of employment in 2011. What was interesting in analysis was the sub sectors which were the subject of certain departmental programs did better than those that were not - which told an important story.
 
Industrial Policy Action Plan (IPAP)
Dr Davis said that the Industrial Policy Action Plan (IPAP) was in the midst of going through its processes and he was confident that this would be launched at the start of the financial year as well as tabled in Parliament as had been done every year. It would seek to build on and relate to the very important work done by the Presidential Infrastructure Coordination Commission which had set a framework for the infrastructure programme. It would also build on lessons learned in the clothing industry production sector. The Manufacturing Competitiveness Enhancement Programme (MCEP) would be seeking to work with enterprises in order to enhance their competitiveness as the Department thought this was the only way forward and not just to sit out a period of stagnation. The best thing was to do the work now and prepare for better times. The MCEP was thus one of the key programmes. The Special Economic Zones (SEZ) Bill was also well into the consultation stage on the part of the DTI and was drawing closer to the point when it would be tabled in Parliament. One of the new elements that would eventually come out on the African Continent and in terms of the approach to regional integration (which included everything from SACU, SADC, the Tripartite and Continental), was that everyone was realising that Africa needed to promote industrial development and this had to be a key leg of a development integration approach. In the next installation of IPAP, there would be a key section that dealt particularly with that.

Dr Davis said that a lot of the budget that had been made available to the Department was to support particular programs. These programs were managed, designed and implemented by a division, that did not get a great deal of prominence, which was called The Enterprise Organisation. It was important that the Committee followed closely The Enterprise Organisation. The turn around time, efficiency and effectiveness of these programs was very much  part of the bread and butter work of the Department. It was important that the Committee paid attention to that as the Department was committed to making sure the management incentives work efficiently and there were not big delays. One saw on some of the indicators that there was some progress on that.

Trade
Dr Davis said that in terms of trade the priority was Africa and African integration. Next was the interaction with BRICS (Brazil Russia India China South Africa) and in the coming summit there would be the laying of the foundation for the inter-BRICS cooperation program. There was also quite a bit of work done in other fast growing emerging economies. Due to the nature of the world economy there were the conditions favourable to long standing discussion on European Union’s Instrument for Pre-Accession Assistance (IPA) which was acceptable and met the various requirements that had been put down.

Enterprise and Empowerment
Dr Davis said that in terms of enterprise and empowerment, Small, Medium and Micro Enterprise (SMME) programs had been focusing on incubators in an attempt to promote real productive entrepreneurship in South Africa. Of all these programs DTI had run, the most effective one was identified as incubation. This was also the international experience. The problem in South Africa was that there were too few. The division had identified 31 programs the Department had been involved in but there was a further 28 in the pipeline. The objective had been to roll this out even further and the Department was looking to the private sector to aid in rolling this out even more.

BEE Act
Dr Davis there had also been some changes in terms of the BEE Act and once the consultation period ended the Department would be bringing the BEE Amendment Bill to Parliament in the near future. Changes in the Codes would also be put out for public comment in the near future.

Cooperative Amendments
Dr Davis said that Cooperative Amendment Bill  was also well on its way to being tabled in Parliament. He advised those present not to confuse this Bill with the Cooperative Second Amendment Bill that dealt with intergovernmental relations. One had been tagged Section 76 and the other Section 75 and there was a reason for that. The two bills were however part of the strategy document and the DTI was looking to create a foundation for more effective programs to support cooperatives.  The Department had also talked in its internal discussions about how best to allow for exchanges between different divisions.

Support Programme for Industrial Innovation
Dr Davis said the DTI’s work on support and promotion of industrial innovation was an area not given enough prominence. It was working hand-in-hand with the division in Science and Technology that did the research. DTI’s job was in turn to promote the industrial innovation of that research. Sometimes there had been some quite interesting innovations that emerged supported by the Department’s programmes and many were not necessarily new scientific insights but they were adaptations that caused improvements in competitiveness and so on.

Administration, financial management and agency management
Dr Davis said that administration, financial management and agency management was the work of the Group Systems and Support Services Division (GSSSD), Chief Operating Officer and the Chief Financial Officer). Most of the indicators that would be presented showed movement in the right direction but there were a few things that had been picked out to focus on such as retention strategies and the need for a succession strategy. He argued that the Department was a little thin on the top and did not have that much in terms of succession for leadership. There was a need to think of what was the pool from which the next generation of leadership would come.

Dr Davis said there was also the issue of agency management and the overlapping of various agencies. The Department had identified that a great deal of misconduct had not occurred from within the Department but had emerged from within agencies.
Certain measures had been put in place to tackle this problem and the Department was about to sign off on a set of firewalls. For example, any agency tender over a certain value, the DTI needed to be informed and consulted.

Dr Davis said the Department was reflecting on the issue of agentisation of the state. He asked why were there these various agencies when there was an equivalent one in the Department, particularly the regulatory agencies. The Department was going to make proposals, some of which might include legislative changes, but the general move was to restructure some of the agencies as divisions of the department rather than stand alone agencies with boards and the like. This was a piece of work which was ongoing.


The Chairperson thanked all the senior management of the DTI for being present.

Department of Trade and Industry (DTI) 2012 Strategic Plan
Mr Lionel October, Acting DTI Director General, presented the details of the DTI’s Strategic Plan. The presentation covered the DTI’s key achievements as well as key interventions. It showed its allocated resources as well as outlining the challenges (see document).

Discussion
Consumer protection and the National Consumer Commission
Mr W James (DA) asked why the voice of consumers had not been heard in the Walmart matter. There was need for more consumer protection in the budget allocation. Although Walmart was good for consumers, how did consumer protection come into play in the DTI’s budget and in its work.

Mr G Hill-Lewis (DA) said that he had considered tabling a formal motion in the Committee meeting to request the DTI to reconsider the budget of the National Consumer Commission (NCC) and give it the money it needed. A discussion with the Chairperson had led to a decision that this was not the best course of action and instead there should just be an interaction. He would however have liked to discuss the issue of this budget in more detail as the NCC did critical work and had budgetary shortages. They had only been allocated R41 million which was less that the amount allocated to the DTI’s Communications department. The work of the NCC was far more important than the work of the Communications department.

Mr A Alberts (FF+) stated that the NCC did crucial work and one needed to ensure that they had an adequate budget.

Dr Davis answered that consumer protection was not discussed in the Walmart transaction because the Walmart transaction took the form of a merger which was dealt with under the Competition Regulator otherwise there would have been no other regulatory matters required other than the merger control which was handled by the Competition Authority. The Department had indicated on a number of occasions why the DTI were involved in that. He said that the judge had put it perfectly when he said “there are international value chain retailers who are playing major roles in determining production conditions in individual countries. This is not a transaction given that it involved the largest retailer in the world that was going to have no impact on the South African economy therefore it was incumbent that adequate account was given of that before one decided on any remedies that were going to benefit local production in the country.” Thus there was this order of the court that there should be a research panel appointed with a time frame which would return to the court and decide on a variation of the order of the R100 million to support local supply development.

Dr Davis answered more generally on the NCC that the DTI was in support of this entity following the precepts of the National Consumer Act. The Department also supported it robustly doing its work to support and protect consumers. They had engaged with the NCC and Dr Davis said that if some of the agencies were working closer together some important results could be achieved

Dr Davis answered that the Department was not immune from budget cuts. However he did say that the budget increases the DTI had made, were a deliberate decision by government to put more support into productive activities within the country and most of the increase had been focused on the Manufacturing Competitiveness Enhancement Programme (MCEP). This money was not going to be spent on conferences and hotel meetings. Everyone had had to experience a cut in budget and what was important was how the Department budgeted. Even the Department had not got everything it had wanted for the MCEP. Every agency and department had to submit a budget proposal and not everyone had gotten everything one had wanted. Through that process, the decision was taken that there would be certain allocations. An increase in budget was not the decision of the DTI but a collective decision of the government through the budgetary process. Parliament had improved the fiscal framework which meant that if Mr Hill-Lewis wanted to vote for an increase in the NCC budget, the money then needed to be taken from someone else. If one was to do that then one needed to look carefully at what they had done with their budget up till now, what kind of financial controls they had put in place, what was the state of their financial management and then, on that basis, engage with DTI and discuss from where money was to be taken. He was willing to have that debate in some detail, the Department was not against more resources for consumer protection but the process was important. 

Mr October replied that for the NCC budget, one needed to be sure that the controls and financial skills needed were calibrated in terms of the budget allocation and how the NCC had spent their previous budget. The issue within the DTI was all entities needed to put in place proper financial systems, an independent audit committee and proper skilled staff to be able to spend its allocated budget - it was important to see that those things were calibrated.

Mr Hill Lewis said that he appreciated the Minister being willing to have a vigorous discussion on the NCC as they did far too vital work to simply say that the financial controls were not good enough. They had been honest about that. It was the mandate of the DTI to help them fix those issues and the mandate of the Committee to make sure the issues were fixed. They did critical work and in their first year, they had taken on some big companies and scored major victories for consumers. Too little money was allocated to the NCC in comparison to every other sector such as Communications or Accommodation and Travel. There was a need to capacitate them to do the work they needed to do.

Dr Davis replied that the DTI wanted the NCC to be effective and take up a range of issues brought to them by consumers. There were however some strategic interventions that could be made. It needed to be properly capacitated. The budget allocation within the DTI worked by each entity making a budget submission and then budget allocation went through a process. There were choices and priorities within this process.

Mr James asked on the Walmart issue, what had been the signal to the international investor community when three government departments had tried to challenge and restrain actions after the fact. He argued that the message was that South Africa conducted itself in a ‘round-about, about face’ manner. Also in whose interest did the DTI act? Was it organised labour, organised business or the needs of the consumers?

Dr Davis replied that the DTI did not represent organised labour. Their priority, which had been identified in IPAP and the New Growth Path, was sustainable decent work creation in South Africa. They were about supporting value-added activities in manufacturing in South Africa. They had indicated that the problem with South Africa before the recession was the production sectors of the economy had been growing at half the rate of the consumption driven sectors. This was not a developmental growth path and needed to be changed. Thus the Walmart transaction was approached by asking what did it mean for production activity and small business development as these were the guiding principles. The process had sent negative images to foreign investors and the DTI had some work to do to explain it was not like that. They had worked energetically with many other investors. The Department unapologetically favoured interests in terms of the production sectors and in favour of manufacturing and small business.

Cooperatives
Mr James argued that the place of cooperatives needed to expand in society. He was impressed with the work the DTI had done on this front, especially on the role of credit unions and how they drew on community assets.

Mr Mabaso said there was a need to do away with the prohibitive attitude that bred the thought that cooperatives needed to be small. This would help the DTI and Committee close the gap between rich and poor. Most people thought of cooperatives as small operations that sold a few items.

Dr Davis answered that co-ops did not need to be small, they could be big or small. What defined them was that they were a different form of enterprise. The problem until now was DTI had treated cooperatives as a subset of small business, and very much the after-thought of small business. New legislation was attempting to rectify that by putting into place a cooperative specific support programme. The legislation had gone through a great deal of consultation and discussion in NEDLAC and so on and was now being put forward to Parliament. The Cooperative Act was also being put into line with the Companies Act. It was right to make the point that cooperatives in South Africa were not where they needed to be. One could go to countries such as Kenya where cooperatives could give good lessons. This experience of having sectors of production was also the experience of commercial farms in South Africa in the pre-1994 period. KWV was a cooperative that made the wine but the grape farms were not in a cooperative. If one saw what could be produced under difficult conditions within cooperatives one would be amazed. There was a need to identify areas where cooperatives could be the form of business used.

Intellectual Property Legislation
Mr James said that his understanding was that the Intellectual Property legislation would be returned to Parliament as it was a ‘dinosaur’ and needed to be re-drafted. He asked what the DTI’s understanding was of where the Bill was.

Dr Davis replied that the Intellectual Property Bill was in the hands of the Parliamentary Law Advisors, who had had to translate it into a second language, and then it was on the way to the Presidency for approval.

Steel
Mr B Radebe (ANC) said that the issue of the steel price needed to be resolved. There was a lot of steel being shipped out and this was the antithesis of what we were fighting for. There was a need for SA to benefit from raw materials. There was a need to create small steel mills in order to access the raw material the country had.

Dr Davis replied that there were two forms of iron ore. One was a valuable resource found in Beeshoek in the Northern Cape. The other, which was bigger and lower grade, was the byproducts of other mining activities which was the larger quantity. This was the subject of work done by the Industrial Development Corporation of South Africa (IDC) and there were negotiations for the introduction of what was termed ‘mini mill technology‘ in order to turn that into steel. This was one part of the equation. There was a need for more than one steel maker in South Africa. The other part was that was the country needed to make sure it got the benefits The country also needed to get the benefits from the high value-added resource in Beeshoek. One could take it for granted the process for infrastructure development announced around the Beeshoek-Saldhana line would not be indifferent to the question of trying to ensure that there was a sizeable part of that overall resource available at a discounted price to support steel manufacturing. The formula being worked on was 21.4% must be available at cost and there was continued work to try and achieve that. There were some delicate processes and negotiations that were to happen in the near future but this was still being sought as a fundamental objective.

Under-expenditure
Mr Radebe looked at the financials of the DTI which had experienced a 32% increment. However when one looked at previous years, the DTI had been going the wrong way in terms of expenditure. For example in 2009 there had been 2% under-expenditure. Thus would this increment increase under-expenditure or would there be measures in place to circumvent that happening?

Mr Davis responded that avoiding under-expenditure was fundamental and that was why the MCEP worked by tier and would be completed by 1 April. There had been an effort to have it rolled out at the appropriate moment to avoid under-expenditure.

Film Industry
Mr Radebe said that the DTI needed to be commended for the work they had done in this field. Safe House was a very good movie and good marketing strategy for the country. He appealed for local productions to be promoted abroad as this type of talent needed to be exported abroad.

Mr Alberts said that the film industry was a sector in which jobs could be created quickly and easily. It could also provide people with skills easily. He asked if the DTI was in communication with Minister of Finance about tax incentives to grow the sector.

Dr Davis replied he was glad that the movie industry had been mentioned. He agreed with what had been said. What DTI sought to do was get DTI credited not at the end of the film but at the beginning. He had had to sit till the very end of the movie credits to see the Department get credit. What DTI had done was try to stretch the package in certain ways. Marketing of the country had been utilised in the movie Safe House. The scenes had been set in Cape Town which was a good marketing tool for the city and country. The original script was going to be set in Rio. The Department also stretched out on films that were major iconic stories from South Africa which was also a form of marketing South Africa within this package.  There was a need to see the film industry as an industry that included a whole host of jobs in the background behind the artistic aspect. There was also a discussion to bring some of the computer work for sci-fi into the country. The Department had attempted to deepen the presence of the film industry and tailor the Department’s support in that way. There was a need to move away from locations pretending to be something else and also support the industrial activity around the film. In that sense there had been some successes.

NTeMBI National Tooling Initiative
Mr G Hill-Lewis (DA) said he tried to look on the internet for details on the NTeMBI National Tooling Initiative which had been given R49.2 million. He needed clarity on this project.

Mr Zalk Nimrod, DTI Deputy Director General for Industrial Development, replied that the Tooling Initiative was a skills based program to help develop the skills base in the tooling industry and was crucial for bringing about competitiveness. What it did was, with the National Skills Fund, develop skills centres and the necessary curriculum to rebuild the tooling skills capability in South Africa.

Administration Costs
Mr Hill-Lewis said he was confused about the DTI’s administration costs which went down in the next financial year and then proceeded to leap back up again. He asked what caused the fluctuation in administration costs.

Mr Kumaran Naidoo, Chief Financial Officer for the DTI, replied that the previous year was a unique year in terms of spending in the DTI. Over 60% of the budget relied on external people to submit their claims but what they had found was in some areas the claims were extensive and in others they were less than expected. What was happening now was that they were managing the budget in terms of incentives. The budget was managed on a daily, weekly and monthly basis. He said that when the MTEF was done, there was a directive that there should be a decrease in budget across the DTI and it had consciously chosen to do that in terms of administration rather than in service delivery. What had also caused the decrease was that a number of leases for the DTI were coming to an end and capital had also reduced substantially.

Improved conditions of service
Mr Hill-Lewis asked about the R57.1 million allocated to improved conditions of service in the DTI. What exactly was to be improved?

Mr Alberts said three reports had been submitted on the regulation of business. He asked for clarity on whether they procured reports for every piece of legislation and amendment that the DTI wanted to process?

Legal Metrology Bill
Mr Alberts asked when the Legal Metrology Bill would be tabled, what was envisioned in the Bill and how would this be different from the existing legislation?
 
Mr October replied that the Legal Metrology Bill would be introduced to Parliament by the end of August. The current Trade Metrology Act covered weights and measurements but this needed to be extended to such things as measuring environmental impact and health and safety, for example. It sought to extend the scope of the Metrology Act.

North-South Corridor
Ms S van der Merwe (ANC) asked if there could be more information on the North-South Corridor. She asked if there were time frames for that development as there had been some difficulties. The project was relevant to the current infrastructure drive.

Dr Davis clarified that the President was not the SADC champion but the AU champion of the North South Corridor. Various infrastructure projects throughout the continent had been identified as priorities and this was one. Once a project was made a priority, a certain Head of State was made the champion of it and the President was the champion for this one. This project had been going for some time and various issues were being grappled with. There had been about 80 projects outside South Africa within the continent which caused some of the issues. The Trans-Kunene Spatial Development Initiative was also a focus of the DTI. Angola would be ready to engage on a ministerial level around April or May.  This would be a connection that went through Angola through Namibia and linked up with the trans-Kalahari. When he had gone to Angola recently for the SADC meeting he had observed how many ships were outside the port of Luanda as most of the trade had been outside the region. If the region wanted to build inter-regional trade there needed to be a building of road and rail connections and those could be the basis of spin-off industrial development.

Codes of Conduct for South African Companies
Ms van der Merwe said although there were the Codes of Good Practice for BEE there was also a need for Codes of Good Practice for SA companies conducting business in rest of Africa. There had been complaints and comments about the way South African companies had conducted themselves abroad.

Dr Davis said there had been a discussion about Codes of Good Practice and this issue had not been taken up very actively recently. He had been in support of the idea of codes of good practices by companies. Although companies carried their own personal brand they also carried the brand of the country, South Africa. There had been some South African companies, fly by night operations, which had conducted themselves badly and then the whole reputation of South Africa was at stake. The Department did want to encourage that and their general thrust was towards that but he was not sure any more work had been done.

Internships and Development programs
Ms van der Merwe asked if there were internship opportunities or development programmes as there was a need to develop people.

Ms Sarah Choane, DTI Deputy Director General of Financial Management and Corporate Services, replied that there was a rolling plan and there were 53 interns which was not the number DTI had at the beginning of the financial year. In April, 71 graduates would be welcomed in and also learners to be interns. This would be used as a feeder in absorbing and building capacity. There was a robust internship programme. Mentorship would become a cornerstone as the Minister had talked about succession planning and taking it forward.

Beneficiation
Mr Mabaso said it was critical that the Minister of Higher Education and the Minister of Science and Technology and the Minister of Trade and Industry worked on the notion of beneficiation together. The way they worked together and cooperated together would reflect on the impact this area could make.

Agencies
Mr Mabaso said he appreciated the stance taken on agencies as it would be easy to end up with duplication where department officials and agencies did the same thing. The way the Minister put it one could go a long way towards correcting ‘over-agentising’.

Management
Mr Mabaso said that the DTI was weak in terms of management. This was a point that had been observed in many departments and the DTI needed to be aware of it. There was a need to know what was going on at all levels of a department.

Mr October replied that attention had been paid to the issue of management and the need to maintain and retain skilled staff to manage DTI resources. The development of a management core was key to the DTI’s work.

Corruption
Mr Mabaso said that although there was a need to look at corruption in terms of BEE there was also a need to look at it within the realms of highly skilled industries. There was very sophisticated corruption present and the department needed to figure out how to tackle this. They needed to be a step ahead, not only with the BEE instances of corruption but also that of big economic players.

Stand-Alones
The Chairperson asked if the stand-alones “were this way” because the DTI had not found partners for them or was it a feeling that these areas must be kept within the DTI.
 
Dr Davis replied that on the issue of incubators and stand-alones, the DTI would have liked partnerships and had been saying that the overall objective was to reach 250 incubators and this needed partnerships. Sometimes there were partnerships with other bodies such as universities. However the ones the DTI wanted were businesses that worked to develop suppliers. They had decided they had wanted local suppliers and then worked actively to build those local suppliers. There were a few of those in South Africa and some of those were some the best programmes the Department had.

Gender program
The Chairperson asked how effective was the Gender, Woman and Economic Empowerment strategic framework and fund. Was it effective or was it merely cosmetic? What was being done within the Department that was effective in respect to that issue?

Dr Davis replied that there was a great deal of restructuring going on with women empowerment. The argument was that without the specific focus on women, the empowerment of women did not happen. There were a number of proposals on the way.

Mr October said that the DTI had tried not to look at the politics of business but to get real entrepreneurship going. The women’s program had been to stimulate women entrepreneurs and provide support on the supply and demand side. The focus on gender and the women’s empowerment programme was about entrepreneurship for women.

Government entities
The Chairperson said that government entities needed to have a clear understanding of the priorities of government. One needed to ensure that they were not working according to their own mandate and merely producing a document that showed a tentative link to government. There needed to be the assurance that they were delivering on government priorities and not their own priorities.

Dr Davis replied that the DTI engaged with the entities and tried to bring them into alignment. However many worked independently and the DTI could only embark on moral suasion. Parliament needed to be part of the oversight of this process. Problems of mismanagement had not come from within the DTI but from the agency. This was why new firewalls were being put in place.

The Chairperson said that there had been instances where people had been in charge of co-op activities with no understanding of the field. She wondered if this divide had been bridged and if those people had been persuaded to go out into the field and find out what was happening on the ground.

Transformation

Mr Radebe stated he had a problem with the way things were as the Constitution said all sectors of society must be transformed. He argued that historically disadvantaged people were still excluded. Was this the failure of the department that it had failed to communicate that there was a need to de-racialise the economy? He asked if SMEs with a historically disadvantaged background were taken into this initiative of support by the DTI.

Mr Mabaso asked what was being done to close the gap between big business which was mostly white and small business which was mostly black. What was being done to visit the sites of inequality such as former homelands?

Dr Davis replied that there was a communications department not for lots of advertisements, but in order to take the DTI’s products into disadvantaged communities and areas and this was where a great deal of the money went. A lot of money also went to soliciting views on different pieces of legislation as they were doing now with the SEZ Bill and as they had also done with the BEE Bill. When it came back to where the money was going to come from in the Department’s budget Dr Davis would argue that one looked at the opportunity cost. The quest was to de-racialise the economy and when there were comments made about ‘tenderprenuers’ and the like it did not mean there was no need to bother about that. The President had said where were the black manufacturers. This was what was needed. The Department was not being slow in terms of trying to bring about change and empowerment. They were trying to do it in ways that built real capacity and entrepreneurship.  Even for people who had been beneficiaries of deals and this was what the legislation they were bringing was about: to build capacity and entrepreneurship amongst people. When the Department took people on trade promotion activities, Dr Davis argued that the delegation was pretty representative of the population. The Department needed people who were going to benefit from these such as those who were getting export-ready and the like.

South Africa in world economic forums.
Mr Radebe said South Africa could not export because of the African horse disease but other countries had diseases that were not being managed. He asked if international economic forums were built in a way to protect South African interests, for example the WTO. Also what was DTI doing to ensure that SA entrepreneurs got a chance in the world?

Dr Davis said that the issue of sanitary measures were part of the trade negotiations. They were sometimes in place for real reasons and other times as a trade barrier. South Africa was trying to develop some of these issues with fellow developing countries on a complementary basis. Trade negotiations were no longer just about tariffs.

Saldhana IDZ
Mr Hill-Lewis said he could not find any allocation for the Saldhana IDZ (Industrial Development Zone).

Dr Davis replied there was some funding to support the Saldhana IDZ but what was seen in the IDZ Bill was there was no dedicated fund. It was an ad hoc budget allocation but this could be addressed more comprehensively in the SEZ Bill.

Mr October replied that under the general allocation of the SEZ the DTI had been given R500 million for this year, R750 million for the second year, and then R1 billion in the third year. Under those allocations, the DTI would fund the feasibility studies and some of the initial programs for the IDZ. In addition to this there was the hope that the Bill would provide a dedicated SEZ Fund which would give incentives exclusively for SEZs and IDZs.

Spheres of Government
Mr Mabaso asked what was happening in terms of the degree of working together between the three spheres of government in industrialisation. If this was not done well, there would be duplication, missing out on certain things and a loss of economies of scale.

Mr October replied that in terms of the three tiers of government, the SEZ legislation defined the roles, responsibilities and cooperation between all the tiers of government. This was the reason for the need for legislation on the SEZs because there needed to be a buy-in of the municipalities, provinces and national government working together on the SEZ. The new procurement regulations covered not only the national level but the metros and provinces under the designations.

Communication to Small Business
Mr Mabasao as if there was an adequate budget for communicating on the issue of cooperatives and small businesses. He argued that if this message was not taken all over the country, then there might be a biased economy emerging. To what degree had the DTI gone to former homelands and informal settlements? One needed to go to those small businesses and not only have small businesses come to the department.

Dr Davis stated this was done by using the communications sector within the DTI.

High Cost of Capital
The Chairperson said that reference had been made to the high cost of capital as one of the challenges and she asked about the measures being developed in that regard.

Mr October replied that part of IPAP would address financing, as there was the challenge of the very high cost of capital.

Disability
The Chairperson commended the DTI on having a higher more than 2% of employees being people with disabilities, but hoped it was not a form of cosmetic disability.

The Chairperson thanked all those present. She emphasised that time was not a friend of this Committee and thanked all those who had participated.

Committee submission to Presidential Review Committee (PRC) on State Owned Entities on DTI State Owned Entities
Mr James said he did not know the history to the preparation of the document but at a glance the recommendations seemed consistent with the Committee’s experience of previous couple of years.

Mr B Radebe (ANC) said that the report went to the heart of what the Committee had done in the course of its oversight. However what was lacking on the part of the Committee was more of the DTI public entities needed to present their strategic plans to the Committee at the time of the Budget Vote. When it came to imports it was important to ensure that South Africa was receiving quality goods into the country. There was a need to know the plans of the various DTI public entities in order to see if they needed an increased budget to increase capacity. What had been critical for the Committee was to hear the strategic plans of these companies so when the Committee considered the DTI Budget Vote, they could give guidance on these institutions.

Mr X Mabaso (ANC) said it was important that the entities identified areas that allowed them to complement each other. He argued that several entities had some common areas and needed to move like there were common areas between them. It was also necessary that at all times the entities were reminded of the five priorities of government. They also needed to be reminded that Southern Africa and Africa was also in play.

The Chairperson wanted to question how the Committee was going forward: were they going to give more and more money to various DTI public entities without the certainty of the entities giving value. There was also the question of what the purpose of the state owned entities was. In countries such as Britain and Canada, they were present to fill an identified niche and take the nation forward positively. Thus the question was had these various entities achieved this mandate. She stated that many present, even those in the Committee for only a short while, would see that the entities had not been giving full value. She suggested taking a broader report to the House, not specifically on budgets but on entities in general and what value they added. There was a need for an overarching oversight report in respect of all the entities. The Chairperson stated that the issues raised by the Committee should be added to the report.

Once the Committee achieved a quorum, this submission was adopted by the Committee.

Meeting adjourned.

 

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