Industrial Development Corporation on its 2014 Strategic Plans; Committee Report on Economic Development 2014 budget

Economic Development

10 July 2014
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Committee was briefed by the Industrial Development Corporation (IDC) on its strategic plan for the financial year 2014/15. The IDC occasionally partnered with the Landbank where some agro-processing business linkages could be found.  For the first time in its history the IDC would have an indicator on funding to black industrialists (men, women, youth and people with disability). It would prioritise the development of black industrialists going forward. In the State Of the Nation Address (SONA), the President of SA had said that there was space in the economy for DFIs to align themselves better and to work better to ensure that there was no duplication and that they were broad-based. The IDC had for the first time set up a distress fund for struggling companies through the NEDLAC process during the global economic recession. It would also for the first time would start measuring youth owned companies.

There had been a legislative change that had affected quasi-equity, which was one of the IDC funding products that would be elaborated on in the future. The green Industries portfolio had increased to around R13 billion and was expected to increase going forward.  Under a base case, IDC expects to approve R71 billion over the next five years.

Members asked how the IDC dealt with applicants who had been blacklisted. They commented that the IDC was very small in relation to the banking sector, and asked what percentage of development funding it represented, how this compared to other institutions, and whether, in view of its involvement in many sectors, it was not spreading itself too thinly. They wondered if it was modelled on any other international equivalent. Members asked if it had any involvement in arms manufacturing, its involvement with Strategic Infrastructure Projects, and how it measured the facilitation of indirect employment. They wanted more information on its input into the agricultural and agro-processing sectors, and the Chairperson commented on what the previous Committee had discovered during oversight visits, that partnerships were not working and IDC was not offering enough support to ensure that new entrants were not being marginalised or exploited. They asked about its sources of funding, and whether this went to operating or fixed capital, as well as how it would withdraw, and asked for more detail on accumulated reserves.  Members sought clarity on IDC’s support to the National Youth Development Agency. They questioned if there was conflict or duplication between different funding agencies. Several Members made the point that although the IDC had made achievements and progress, it was still insufficient and stressed that the marginalised, and those in the Presidential Poverty Nodal Areas, should have been specifically targeted and assisted, and wanted to know if any deliberate strategies had been formulated for Eastern Cape and Free State. They wanted to know how IDC linked with citizens in the performing arts. They questioned how recent downgrades of South Africa’s ratings had affected the IDC, Mr N Nkwankwa (UDM) asked whether there were any deliberate strategies undertaken by the IDC to enhance the number of jobs expected to be created, for rural provinces like the Eastern Cape and the Free State. In addition they asked for further detail on how it would identify new opportunities and expand the economy and enable localised jobs and opportunities. Specifics were required of how much time IDC took to process applications, and whether there had been improvements over the last five years in investment in some provinces. Members stressed that development finance institutions must align themselves with government policy. Some questions stood over for written responses.

The Committee was unable to take the planned briefing from the Small Enterprise Finance Agency, and it was postponed to 29 July 2014.

The Committee then considered its draft Committee Report on the budget vote 28, Strategic Plan and Annual Performance Plan of the Economic Development Department (EDD). The DA Members took issue with the Report, and reserved their right to comment in detail in the House, because they did not feel that the budget had been fully debated in the Committee, and repeated these comments when certain sections of the Report were deleted. The DA also felt that there were problems with some expenditure. However, other Members took the view that the Strategic and Annual Plans were intrinsically linked to the budget, and that the Committee had not discovered inconsistencies. The EFF said that it could not support the Annual Performance Plan because it had a different idea of how the EDD should be acting. Members discussed whether the wording of the Report did not place too much emphasis on the New Growth Path (NGP) as opposed to the National Development Plan (NDP). The Chairperson confirmed that differences of opinion expressed in previous meetings would be minuted, that the objections would be noted, but that this Report essentially had to be approved as a reflection of what had been presented. Members made some additions, particularly on the observations and recommendations, and the Report was adopted by the majority, as amended.

Meeting report

Chairperson’s opening remarks
The Chairperson noted that the House Chairperson had asked all Committees to adopt their Budget Vote Reports by 11 July 2013, so that they could be printed in the ATC. After that, Extended Public Committee (EPC) meetings would be held, where budget speeches were tabled by Ministers and budget votes were debated. She noted that, in this year, due to the timing of the elections, the work of the Committee was behind, and so at this stage the Committee would only consider the Strategic Plans (SPs) and Annual Performance Plans (APPs) of entities, without adopting them. The Committee had not deliberated upon the budget vote of the Economic Development Department (EDD) and she assumed that the Committee had nothing to debate from that document.

Industrial Development Corporation (IDC): Expanding Industrial capacity for development: 2014 Strategic Plans
Mr Geoffrey Qhena, Chief Executive Officer, IDC, tabled and presented the Strategic Plan for 2014. The IDC occasionally partnered with the Landbank where some agro-processing business linkages could be found.  For the first time in its history, the IDC would have an indicator on funding to black industrialists (men, women, youth and people with disability). It would prioritise the development of black industrialists going forward. In the State of the Nation Address (SONA), the President had said that there was space in the economy for DFIs to align themselves better and to work better to ensure that there was no duplication and that they were broad-based. The IDC had for the first time set up a distress fund for struggling companies through the NEDLAC process during the global economic recession. It would also for the first time would start measuring youth owned companies.

There had been a legislative change that had affected quasi-equity, which was one of the IDC funding products that would be elaborated on in the future. The green Industries portfolio had increased to around R13 billion and was expected to increase going forward.  Under a base case, IDC expects to approve R71 billion over the next five years.


Mr H Kruger (DA) wanted clarity on the process followed in dealing with blacklisted applicants at the IDC.

Mr R Chance (DA) said that, compared to the South African (SA) banking sector, the IDC was very small, even though it was trying to increase its base. Given this, he asked what percentage of development funding it represented in SA, and how this compared to commercial banks and international finance corporations. He also asked if the relative ratios caused concern to the IDC, or whether it had specifically taken the decision to remain small. He wondered if it was spreading itself too thinly, seeing that it was involved in many sectors of the economy.

Mr Chance asked if the IDC had modelled itself on any international equivalent, and if so, which ones. He also asked that the Key Performance Indicator slide be provided to the Members.

Mr S Marais (DA) asked what current involvement the IDC had in arms manufacturing.

The Chairperson asked whether Mr Marais’ question was based on anything that had been presented on that day.

Mr Marais replied that he was speaking to the clients and the sectors where the IDC was involved.

Mr Marais asked to what extent the IDC might still be involved in Strategic Infrastructure Projects (SIPs), and, if there was involvement, asked for details of those projects.

Mr Marais asked if Mr Nimrod Zalk was still a director on the IDC Board.

Mr Marais asked how the IDC measured its strategic outcome to “facilitate indirect employment”.

Mr Marais wanted to know whether the sources of funding mentioned had included any equity funding which IDC raised from the State shareholding. In addition, across all the projects in which it had invested, he asked how much was held as operating capital and how much was in fixed capital.

Mr Marais wanted to know if the IDC was funding the National Youth Development Agency (NYDA) in any youth development projects, or whether it was funding any of its operating costs. He asked if the IDC was satisfied with the performance of the NYDA?

The Chairperson interjected and ruled that the IDC did not need to respond to the question on the NYDA, because a debate on that had already taken place in Parliament, and the DA had partaken in that. It would not be fair to ask the IDC to respond on any issues outside of its mandate.

Mr Marais noted that the IDC had indicated, in respect of its net inflow of funds to 2019, that there would be a baseline deficit and asked if that would be funded through accumulated reserves.

Mr Marais asked whether, in relation to the Development Finance Institutions (DFIs) there was any conflict between the equity contribution funding for black entrepreneurs, and the National Empowerment Fund (NEF) which assisted black businesses.

Mr S Tleane (ANC) wanted to put his remarks into context, and emphasise that South Africa had reached its current state through a negotiated settlement. Throughout the past 20 years there had been much patience shown by those who were victims of the previous regime. DFIs had been created to facilitate empowerment of the formerly marginalised. The current aim of the SA policies was to ensure a visible and tangible empowerment of the formerly marginalised. Whilst the IDC needed to be commended for the work it had done, these individuals were now running out of patience. He repeated that the kind of development that IDC should be pursuing must be focused on the formerly-marginalised, not the kind of industrialisation that was used in Germany and Belgium. He asked if the IDC thought it was making an impact that would ensure peace in SA both now, and 50 years into the future.

Mr Tleane was concerned about what was happening in the agro-processing sector, as there were serious monopolies there which were barring access for the black farmers into that market. He wanted to know what IDC planned to ensure empowerment in such sectors.

Mr Tleane also asked how IDC was linking with citizens who had been involved in the performing arts and culture in the townships, apart from the media and motion pictures that had been benefiting from IDC, and wanted also to hear specifics on which intellectual property programmes in universities it was supporting.

Mr P Atkinson (DA) asked whether the IDC’s Moody’s credit rating had been affected by SA’s sovereign rating downgrading, and whether this had affected the cost of capital for the IDC.

Mr Atkinson asked if the IDC offered better rates than the banks when providing financing to its clients.

Mr N Nkwankwa (UDM) asked whether there were any deliberate strategies undertaken by the IDC to enhance the number of jobs expected to be created, for rural provinces like the Eastern Cape and the Free State. 

Mr M Lekota (COPE) commented that the work of economic development would have to be informed by the Committee’s understanding of the SA economy.  The game “Monopoly” was a classic example of how capitalist free market economies worked, and South Africa, as a miniature capitalistic State, had to respond in a way that would not hinder what it ha started. In countries like the United States (US) there had been legislation introduced, for example, to dissolve trusts, so that the economy could grow in those spaces In South Africa, it would be viable to expand the economy in the small business sector. He asked IDC to comment on the concept of identifying new opportunities and expanding the economy, and how it intended to do so.

Ms N Bhengu (ANC) said that the presentation enabled the Small Business Portfolio Committee to develop the foundation for the Department of Small Business (DSB). The Government had identified poverty, unemployment and inequality as the biggest challenges facing SA. In the past, urban infrastructure was designed to attract investment, but in the rural areas, very little investment had happened, and that spoke to why high levels of poverty and unemployment were prevalent in rural and township areas. There was also a housing challenge in urban areas, because rural migrants were moving to cities in search of employment. The SA Government had committed itself to building a developmental State, although currently it was a welfare State.

Ms Bhengu stressed that IDC was established to finance and support development, and it had to be mindful of the uneven levels of development in the country. She therefore wanted to know how IDC was influencing and directing investment to take place in underdeveloped areas, seeing that there were 23 Presidential poverty nodal points in SA. She asked how many of the “expected jobs to be created, by province” (as contained in the presentation) were in the Presidential nodal points. She pointed out that since these had been identified already in 2001, it should be expected that the gaps between these nodal areas and the developed urban areas should have been gradually closing. If it was not, then no solution would be found to the current spate of service delivery protests. She asked whether, for instance, IDC had funded any factory to be established in a rural area, and what tools it might have used to identify whether a rural or urban factory would be a better investment.

The Chairperson appreciated the maps in the presentation, since they showed the Committee where the IDC was investing its resources. There was good support for the argument that, amongst the sectors it was supporting, the agriculture and agro-processing sectors were losing momentum. She agreed with the new mandate of the IDC, as the President had pronounced, but was not satisfied with what the IDC was planning to do, and what was happening in industrial sectors, although it had accomplished a lot. She pointed out that although there seemed to be better outcomes for agro-processing and agriculture in the Western Cape, very little was being accomplished where there were emerging farmers.

The previous Committee, visiting one tomato puree processing plant project that IDC was working with in Tzaneen, had found that although the plant was supposed to be partnering with emerging farmers, it was actually taking them for granted. She had expected that IDC must ensure that black emerging farmers were being taken care of, and were not exploited by the established farmers. Furthermore, the previous Committee had directed the IDC to investigate what could be done in terms of partner agreements between the processing plant and black emerging farmers who had originally had shareholding in those plants, which later became translated into machinery ownership and not equity. She asked how far the process had gone, to assist those emerging farmers to become meaningful shareholders. That was a typical example of resistance by the established farming sector, where it was suggested that black emerging businesses did not want to participate, whereas in fact underlying issues prevented participation. She asked IDC to expand further on issues effectively barring participation in established industries.

The Chairperson also sought more detail on what was meant in the presentation when it referred to black women owned and empowered companies, and what was meant by  “non-Black Economic Empowerment (BEE) shareholding”

The Chairperson asked how much time the IDC actually was taking to process project applications, since it noted that turnaround times “had improved”.

The Chairperson noted, looking at the figures for IDC’s investment support, that this was still lagging in some provinces, and asked for improvements in comparison to the last five years.

Mr Qhena stated that some of the replies would be supplied in the form of documents, at a later stage, to the Committee. He noted that the slide on the Key Performance Indicators was included in the Corporate Plan document.

Mr Qhena said that the IDC admitted that there was still a lot to be done. It was true that IDC, overall, was relatively small but it was the largest DFI, in terms of asset base. Of the R230 billion worth of DFI finance in the country, IDC held R138 billion. The commercial banks were able to leverage themselves multiple times in terms of the whole financial sector. IDC, however, had limitations in terms of what it could borrow and thus had to decide carefully how best to leverage what was available.  The IDC normally would try to ‘crowd in the banks’, so that they took higher risk in projects that they believed they could fund on a sustainable basis. IDC, when it wanted the banks to participate in the new green industry, had agreed to fund the portion for the communities, whilst the banks took the senior debt alone. When the project became bankable, IDC would probably take equity.

The Chairperson interrupted Mr Qhena at this point, asking how much the community equity would be.

Mr Qhena replied that, in terms of the requirements, it would be at least 2.5%. However, IDC tried to increase the total percentage of the project to 5%. It would also allow the regulators to do “vendor financing”, whilst it topped up the remainder, just to ensure that promoters of the green industry were on board too.

He emphasised that IDC was aware that it was small in comparison to the needs, and thus used leverage where it could. That also addressed concerns of whether it was widespread enough, and its impact into the various different sectors.

Mr Qhena added that IDC also was looking at ‘project evolve’. This identified certain key sectors affecting the SA economy, such as manufacturing, where a great deal was being put into that one value chain. IDC took the view that it needed to be more proactive and also placed priority on other sectors where people were still coming in. Its balance sheet had limitations, but there were certain sectors that needed the IDC’s proactive drive.

The IDC was aware that there were other Government institutions like the Development Bank of SA (DBSA) and the Land Bank, which had, respectively, been created to look at infrastructure and primary agriculture. To avoid overlap, IDC tried to cooperate rather than compete, even though it was not always successful.

Mr Qhena told Mr Marais that as far as he was aware, the IDC was not giving any funding to arms manufacturing.

Mr Qhena noted that the IDC coordinated two SIPs as part of the Presidential Infrastructure Coordinating Committee (PICC), namely SIP2 and SIP8. It had also identified localisation opportunities, where it was still deciding what role it, together with other DFIs, could play.

The Chairperson asked Mr Qhena to expand on those localisation opportunities for the Committee.

Mr Qhena replied that the PICC had looked at Government infrastructure across all three spheres and State Owned Companies (SOCs), and considered how it could ensure coordination, and what opportunities there could be for local production to support the infrastructure spend. The IDC team had assisted the PICC Secretariat in identifying local production opportunities for all eighteen SIPs. IDC had also looked at SA’s capacity and whether it would need to assist in overcoming any constraints.

Mr Qhena noted that Mr Zalk was still engaged in the work of the Department of Trade and Industry (DTI), and when he sat on the IDC Board, he acted in the IDC’s interests.

Mr Qhena said that the questions on equity, funding sources and job creation were inter-linked and related to the IDC’s ratings. IDC did borrow from both the local market and the international DFIs, and that allowed the IDC to have foreign currency, as some of its investments were outside of SA. IDC had access to long term funding. In local terms, it had, for the first time, in 2013 issued a R1.5 billion bond, which had been oversubscribed. IDC lent money, and when the borrowers repaid, interest was paid as well. In some investments, IDC had taken equity and, on maturity, sold.

Mr Qhena noted that there were three ratings agencies: Moody’s (which rated the IDC overall), Standard and Poor (S&P) and Fish. S&P had downgraded the SA Government, which was why the effects had been felt by Transnet and Eskom. Moody’s had been busy with its interactions and had not yet made a pronouncement, but the IDC rating was the same as that of government. The lenders did consider what the rating agencies said, when deciding whether to lend,  but the IDC had noted over time that lenders also used other factors. Since S&P did not rate the IDC, it had not been affected by that rating.

Mr Qhena noted that the NYDA was a partner of the IDC. However, IDC had changed its approach and now offered support only, and did not advance funding. IDC and the Small Enterprise Finance Agency (SEFA) would be providing funding to clients. IDC provided a grant, which the NYDA administered, for development through identifying opportunities and mentoring of young entrepreneurs.

He explained that when receiving applications, IDC generally would observe the behaviour of the applicant. If the applicant had been blacklisted by another finance provider, the IDC would ask for the reasons, and what that individual had done to remedy the situation. If a satisfactory response was given, the IDC would not exclude the applicant. There were instances where entrepreneurs who engaged with the IDC had not behaved, and if the IDC found that it had been defrauded, it would place the names on a list, to guard against financing those individuals again with State funding.

Mr Qhena conceded that the IDC was not making as much impact as it should in the agro-processing sector, although it was attempting to encourage players who had not formerly participated. In the Eastern Cape, the IDC had partnered established citrus growers with black citrus farmers, to help the latter access the export market.

Mr Qhena explained the IDC’s calculation of jobs, saying that the IDC used a ‘development scorecard’ tool to make calculations on the profile of the entrepreneur, the location of the project and how many jobs would be directly created. When considering pricing mechanisms, entrepreneurs in rural areas would be assigned more points than those in the urban areas. Some provinces were not benefiting, and IDC was trying to use that scorecard to push those percentages up. IDC was unable to run businesses, but could arrange for partnerships.

Mr David Jarvis, Head Strategist, IDC, said that the IDC continuously kept an eye on international DFIs and the role they played within their economies, and would benchmark against them. IDC specifically focused on the big development banks from the Northern and Southern hemispheres, like the Kreditanstalt fur Wiederaufbau (KfW) in Germany and Banco Nacional de Desenvolvimento Economico e Social (BNDES) in Brazil, although it was difficult to compare them, as they were so divergent. However, it was able to learn lessons about the role that a DFI could play in an economy./ Most of these DFIs had an advantage over IDC, because they were funding both from their balance sheet and some kind of subsidy. Sometimes, these DFIs impacted through intermediaries, as opposed to IDC, which worked directly with its client and thus had a better sense of the opportunities in which it had invested, and how it would want to shape them. On the whole the IDC did have a comparable impact with those DFIs, even though it was a lot smaller. In many other economies, there were no coordination issues between different DFIs.

Mr Qhena said that the IDC would have to send a written response to the question on fixed and operating capital, seeing that it had not included that in the presentation.

Mr Qhena explained that the National Empowerment Fund (NEF) was an empowerment fund which had a R75 million lending limit, whereas the IDC went beyond that. There could of course be areas of overlap, but the IDC was working towards ensuring that those were eliminated. 

Mr Qhena described some of the IDC inputs into the agricultural sector. Firstly, it was involved in the Nguni cattle project. For farmers who had always been involved in cattle farming, the IDC had intervened, by identifying an opportunity to possibly increase the head of cattle, but the successes depended on the interests of the provincial Governments. In Limpopo and the North West, the IDC was doing very well. There had been some “stop / start” challenges in Mpumalanga.

Mr Qhena explained the references to “non-BEE investments”, by saying that they related to companies where there was less than 10% BEE equity. That differentiation was chosen because there were big companies that had not achieved that figure. For the others, where there was black empowerment, there had been between 25% and 50% empowerment. In many sector Codes (other than for finance), companies needed to have at least 26% percentages to be identified as “empowered”. Black women-owned companies were those where black women had more than 51% ownership of the company.

Mr Jarvis said that where the IDC did  not any longer have a role to play, in investments that it had initiated, it would exit. That provided some income for the IDC, together with its reserves. It was hoped that the IDC would be profitable over the next five year period from 2014 onwards. It was key for the IDC to create sustainable business opportunities, or those where the IDC, after supporting a business for a time, could exit and the business could continue. In the short term the IDC looked at whether it had saved or created jobs, as well as breaking these down into rural and urban jobs.

The Chairperson said that question was quite important. The New Growth Path (NGP) had suggested that the tourism sector alone had to create more than 300 000 jobs on its own, and if the IDC did not finance tourism projects, it would not have assisted this aim. Wherever IDC funded, jobs must be created and local economic activity should happen.

Mr Chance said that, to his understanding, the IDC had been tasked by the National Treasury (NT) with administering the Jobs Fund. If that was correct, he asked what projects had been approved, how many jobs had been created, and what the prognosis was for the next few years.

Mr M Mbatha (EFF) was interested in the various financing schemes which the IDC had initiated with district municipalities. He wanted to know how the funding vehicles were set up, how they operated across the spheres, and who made up the technicians deciding on the projects. He wondered if it would not make more sense to involve provincial based DFIs, where possible, to enable districts to get support from their provincial counterparts, and grow further without the IDC only being involved, to limit the IDC’s exposure.

Mr Mbatha asked where the black industrialists to whom reference was made in the presentation were found.

Mr X Mabasa (ANC) asked if any of the small enterprises, and any co-operatives, that were funded by SEFA who had qualified to move beyond SEFA to become clients of the IDC.

Ms Bhengu said that there was a need for everyone to understand what the ANC was seeking to achieve, and how entities were expected to respond to Presidential directives by implementing programmes. She reiterated that the Presidential poverty nodal points had, in 2001, been identified as areas that were underdeveloped, severely poor, and requiring priority development. The Presidential Task Team made provinces and district municipalities aware of the spatial National Development perspective for each area, to assist provinces and district municipalities to develop their own local economic development plan. When she had been Deputy Mayor of Ugie District Municipality she had led the development of that strategy, but no funding for infrastructure development had been forthcoming. Even though there were some potential investors, the lack of infrastructure meant that Ugie, despite possessing a coastline longer than Durban’s, still remained a poverty nodal point, having been unable to develop either the coastline or its manufacturing. She and other entities with sound business plans had approached the IDC, but none had been funded. She said that its funding policy was questionable if it failed to take into account the priorities, inequality, development perspectives and support systems.

The Chairperson said that after reviewing of the role of the DFIs in SA, it was clear that they must align themselves with the vision of Government, since previously they had been operating as private entities. Over the past five years the Portfolio Committee had been trying to get the DFIs in line to follow the vision of Government. The IDC had, so far, done good work. It had increased its visibility and had always come along on oversight tours with the Committee, so that it could explain opportunities to communities. The Committee’s participation could make the IDC known to people, and the Committee’ engagement with its work would influence IDC’s success.

Mr Qhena said that the IDC valued the Committee’s inputs.

Mr Qhena explained that the Jobs Fund was driven by the DBSA even though the IDC had tried (unsuccessfully) to find ways of working with it. The IDC had created a Development Agency unit at the IDC to be able to use the existing infrastructure in local Government. In some instances this had been successful, but in others there were challenges in the local municipalities. The IDC assisted in setting up the infrastructure, which would then offer opportunities.

The Chairperson noted that, because of time constraints, unanswered questions would be answered writing by the IDC.

She added that, because of time constraints, the SEFA presentation would have to be rescheduled for 29 July 2014.

Draft Committee Report on Budget Vote 28 and Annual Performance Plan for Economic Development Department
The Chairperson noted that the Committee must now deal with the draft Committee Report (the Report) on the EDD, and Members must indicate any changes of mind on the budget.

Mr Marais said that his party, the DA, fully respected the Minister and Department for Economic Development, but was not in support of either the budget or Annual Performance Plan (APP) and reserved its rights to differ. He asked that this be captured in the minutes.

The Chairperson said that the Committee also had a right to understand what the reasons were behind the DA not supporting both documents.

Mr Marais said that the Budget vote 28 had never been presented to the Committee, and because of that, the DA was reserving its rights to support that.

The Chairperson reminded the Committee that the APP included the budget and that the Minister had invited questions after he had tabled it previously, and that no party had asked questions then.

Mr Mbatha said that the EFF could not support the APP, because it had a slightly different idea of what was supposed to be the journey of the EDD. The APP was based on the National Development Plan (NDP), which the EFF did not agree with.

Mr Tleane said it was unfortunate that the opposition parties differed from the views of the majority party. The Minister’s presentation had explained why the budget was not so large. He had said that the EDD’s main task was to coordinate and interact with other Departments. Given that explanation, Mr Tleane had thought that the Committee was being offered a chance to engage on the budget. He felt that the Committee had engaged with the APP in its entirety. The ANC was in support of all those documents.

The Chairperson asked if Mr Marais want to share with the Committee his party’s issues with the budget.

Mr Marais said that there were a number of issues on which his colleagues could give input. However, in principle, the way EDD spent its money was seen as problematic. Moreover certain deliverables in the Strategic Plan were not measurable, and that would affect the determination of the EDD’s success. Given that some of its functions were being moved, that would make things even more difficult. He emphasised that this related to the PICC issues, and the strong emphasis on the NGP; the DA did not believe that the EDD spoke clearly enough to the National Development Plan. Finally, the budget vote had not been discussed on its own, as was usual in Parliamentary committees.

The Chairperson said that, unfortunately, the DA was not helping the Committee. Since she had chaired the Committee, it had not dealt with the budget as a stand-alone consideration. Discussion on to whether the mandate was relevant or not was not within the prerogative of the Committee, as it was only the President of SA who could decide on such mandates.

Ms Bhengu said that she was a little confused as to the attitude of the DA. She had understood that the Committee, when dealing with the budget Report, needed to check whether there was congruence between the KPIs and the mandate of the EDD, and to check whether the allocations spoke to the KPIs. If such congruence was not found, then the Committee would make suggestions and decide whether to support the budget or not. Where the KPIs, mandate and allocations were in line, there was no reason not to support the budget. Members had to differentiate between campaigning as parties, and holding a Department accountable in a Committee setting. The EDD could only be judged on its mandate and its KPIs, which were informed by the challenges identified by the ruling party.

The Chairperson said that all other issues could be raised by parties during the debate in the House on the EDD budget.

The Chairperson asked Members to comment on the content of the Report. She confirmed, in answer to questions from Mr Marais, that spelling errors should also be highlighted.

As Members were going through the Report, they noted grammatical, spelling and sentence structure improvements, as well as commenting on repetitive wording and proposing amendments. .

Mr Tleane noted that there was a strategic objective left out of the Report, even though it was in line on the rest.

Mr Atkinson noted the omission of any reference to the NDP, and there was an impression that there was competition between it and the NGP. The Minister had explained that the NGP was an implementation mechanism of the NDP, but the DA would feel happier if the NDP was included in the report.

The Chairperson said that the NGP was indeed an enabler of the NDP and asked Mr Atkinson to suggest where and how references to the NDP could be inserted.

Mr Tleane agreed that Mr Atkinson had a point, but it was reflected later in the report.

Mr Atkinson read a suggested formulation, which was re-phrased by Ms Bhengu.

Mr  Chance said that inserting a reference to the NDP under “strategic objectives” suggested that it was subsidiary to the EDD’s overall vision, whereas it applied to all those objectives. His suggestion therefore was that it be stated as part of the EDD’s vision.

Mr Mabasa agreed.

Mr Nkwankwa asked whether that was the Committee’s perception of the mandate of the EDD, and the importance of the NDP to the EDD, or the perception from the EDD itself. He had understood what was stated on the first page to be a statement of the EDD’s mandate and its strategic objectives, as stated in its own document, rather than as perceived by the Committee.

The Chairperson said that this page defined the EDD’s perspective. The Committee obviously could not recommend how the EDD needed to define itself.

Mr Mbatha said that, if the Chairperson and Mr Nkwankwa were correct, then the Committee could only check spelling and the grammar of the first page of the Report. Only later in the Report could the Committee contribute.

Ms Bhengu said that she understood the EDD to be defining itself, within the context of the NDP. Following Mr Chance’s suggestions meant that the Committee also understood the EDD.

Mr Nkwankwa said that the reference to the NDP could be put anywhere in the Report, but he was emphasising that the Committee needed to first consider the implications of moving this reference to where Mr Chance had suggested, without having consulted the EDD, because the Committee could possibly end up misrepresenting the EDD if it made too many changes to the Report.

Mr Atkinson said that the reality was that the NDP was a State plan and if the EDD was trying to underplay that in any way, it would be going against government policy. He agreed with Ms Bhengu that the NDP needed to be elevated to become the defining factor for everything that happened in the EDD.

Mr Marais said that the Minister had also been very clear on that, and he also supported Ms Bhengu’s suggestion.

Mr Tleane said that his understanding was that the EDD was a small cog within Government, whereas the NDP spoke to the entire government. If a Department referred to the NDP as one of its guiding policies it further needed to specify what in the NDP was useful for that Department. He suggested that the Committee continue and reserve the decision on all suggested changes to the end of the discussion.

The Chairperson agreed that everybody needed to be talking about the NDP and that it was a guiding policy.

Mr Chance said that his comment previously was that there seemed to be disagreement within the tripartite alliance regarding the NDP.

The Chairperson said that the Minister would be judged by what he had developed in achieving the EDD mandate.

The Chairperson then asked the Committee’s Content Advisor to speak to the EDD budget allocation nominal changes.

The Content Advisor said that the staff had decided to analyse the documentation that had been circulated by the EDD, so that more information on budget issues was available, and to verify it. The staff’s initial analysis was inconsistent with the EDDs’ budget for 2014/15 after looking at the Estimate National Expenditure (ENE). She asked the Committee’s permission to remove a table from the draft Report.

Mr Marais said that the parts following that would then also need to be changed, as they referred back to the table, and if this was removed, the Report would not be saying anything about the budget.

Ms T Mahambehlala (ANC) noted that it was actually the following two pages that referred back to the able, and she suggested that perhaps the Report needed substantive re-writing, instead of merely removing the table, which had wider implications.

Mr Tleane said that this was an unexpected development, which could derail the Committee’s work for that day. The budget formed a key component of that Report. The Committee may, in view of the limited time, review its plans.

The Chairperson said that the reason why she had asked the Content Advisor to speak to the budget, because the staff had deviated, and inserted its own analysis into the Report, not what was said by the EDD. Members would get a copy of the EDD remarks shortly.

Mr Mabasa suggested a swap of word sequence.

Mr Tleane, supported by Mr Chance, said that the sequence was fine as it was referring to two APPs.

The Chairperson asked Members to focus now on the section dealing with the Committee’s observations.

Mr Mbatha agreed with the first two paragraphs.

Mr Mabasa noted that the Report must be consistent in making reference to the EDD.

Mr Tleane said that even though job creation always targeted the youth, it was imperative that the Committee understood that women were not yet fully empowered. He proposed that a reference to women also be included wherever there was reference to job creation and youth.

Ms Bhengu said that the youth, women and people with disabilities were the three vulnerable groups in the country, and that they were all a priority for development.

The Chairperson asked where Ms Bhengu would like to insert that. The Committee’s recommendations could say that the EDD had to include all three vulnerable groups, if they were to mention them at all.

The Chairperson asked the Committee’s view on the paragraph on unemployment.

Mr Marais said that he read the sentence to mean that there needed to be more innovation, even in policies and strategies.

The Chairperson asked if implementation could not be put before policies and strategies.

Mr Tleane agreed with the Chairperson that mechanisms could be developed, but policies and strategies could not be developed with mechanisms, therefore the reference policies and strategies should be removed from that sentence. Mr Tleane said it would be folly to suggest that the Committee was not sure about the policies and strategies that the EDD had. However, he and Mr Chance agreed that policies and strategies could not be in the same sentence together with mechanisms.

The Chairperson said that she felt that what was lacking was innovative mechanisms to enhance the implementation of current policies and strategies.

Ms Bhengu rephrased the sentence by putting implementation before policies and strategies. This was approved by the rest of the Committee.

Ms Mahambehlala suggested that the entire paragraph speaking to the NGP and the number of new jobs targeted by 2020 needed to be restructured. Firstly, it made no sense, and secondly, the sentence was t long.

The Chairperson said she understood that sentence, since she had read the document relating to that sentence.

Mr Chance said the sentence could be simplified and proposed how that could be done.

Mr Tleane asked whether that document was referring to direct jobs or job opportunities.

Ms Mahambehlala said that the reference to statement was incorrect, because the goal was already there, and “seek to create” would make better sense.

Members discussed, and improved, a sentence, noting that it was essentially saying that infrastructure development laid the basis for higher growth.

Ms Bhengu asked why “job drivers” was in inverted commas, as it was surely not a concept.

The Chairperson commented that the “cut and paste” method of report-writing had disadvantages, that the Committee’s comment were based on knowledge of where the issues emanated and asked the Committee Staff to ensure that the Report more correctly reflected the Committee’s input.

The Chairperson said that the Committee was now emphasising to the Committee’s staff the importance of proper minute and report writing. Politicians should  need only to concentrate on correcting the context and the philosophy around issues within Reports, and not the grammar, punctuation and spelling. She asked the Committee to recommend any institutions that offered training to complementary staff.

Ms Mahambehlala followed up on that, saying that Reports were very different in style to newspaper articles, and the Report must accurately and strictly record the Committee’s views.

The Chairperson reminded the Committee that even though the heading of one section of the Report was ”Observations / Findings of the Committee”, recommendations must also be made under this heading. The Committee Section dictated how the Report should be structured but this was a challenge.

Following up on this, she said that she would prefer to do away with two sentences at the beginning of that paragraph, so that the Committee’s recommendation remained. The two sentences  were repeating something already captured earlier.

Ms Mahambehlala said that since the “Conclusion” should come at the end, no recommendations should appear after it.

The Chairperson asked Members to ignore that section, as she was going to write the conclusion herself. She asked if the Committee agreed on the recommendations.

Mr Marais asked that, in relation to the recommendation on approval of the budget, it should be recorded that the DA reserved its rights on approval or otherwise.

The Chairperson read the final recommendation of the Committee.

Mr Tleane said that this essentially meant that if the Committee recommended to Parliament to “approve” the budget, it could not advise Parliament to adopt the budget if the Committee itself had not done so first. The Committee had to “adopt the budget with the amendments” before taking it to the House.

The Chairperson asked if she was correct in thinking that Mr Tleane was agreeing with her, on the  addition of amendments to the recommendation.

She noted that there were also amendments under the “Findings” heading.

Mr Marais reiterated that the Committee must please note the DA’s reservations.

The Chairperson said that those would be taken care of in the debate, but it was not appropriate to note these in the Report. The Report was not a piece of legislation, although the lack of support by the DA would be reflected in the minutes of the meeting.

Ms Bhengu agreed that minutes reflected what each political party said, but the Report only reflected the decision of the whole Committee.

The Chairperson amplified that it seemed that the DA was not in disagreement on any part of the Report itself, but had a fundamental difference on the policies of the parties.

Mr Chance said that it was his first time to participate in such a process, but what the Committee had done that day was to go through a Report on the previous week’s meeting. However, the objections that he had raised in that meeting, on the troubles in the tripartite alliance, was not included, and he suggested that reference should be made to that, to give a complete account of the meeting. Moreover some of the fundamentals of the EDD mandate which the DA opposed were not reflected in the Report. That was why Mr Marais was adamant about reflecting the DA’s reservations.

The Chairperson said that all the issues arising from that meeting would be reflected in the Committee Minutes. This meeting was giving Members the opportunity to raise issues that they felt had not been covered by the Report. The DA could not hold the Committee to ransom, because of difference in party views.

Mr Mabasa agreed with the Chairperson’s summary of the function of the Report. The House was indeed where debates occurred. He thus proposed the adoption of the report.

Ms Mahambehlala said that the opportunity for contributions into the Report had been afforded to all Committee Members, and she seconded Mr Mabasa’s proposal.

Mr A Pikinini (ANC) said that the Chairperson was lenient but if she continued to allow political comment on positions, it would not assist the Committee. The Committee needed to adopt the Report with amendments so that the budget could be debated.

Mr Marais said that there was a difference. The corrections made to the Report were not problematic for the DA. However, the DA was concerned that nothing on the budget had been included in the Report. The DA felt that this was a serious omission. It was acceptable that its right to report was reserved, and that its objections would be captured in the minutes.

The Chairperson asked the DA again, to talk to the matters that it found troubling in the budget of the EDD.

Mr Tleane said that even though the Committee Member had differing political ideologies, these had not, so far, hampered the work of the Committee. He agreed with Mr Chance that the grievances of the DA as expressed in the previous meeting needed to be captured in the minutes of that meeting. He reiterated the Chairperson’s question for the DA to specify the problems.

Ms Bhengu said that the Committee had considered a Report on EDD’s mandate, together with its KPIs. The Committee had agreed that there were no contradictions, even with the financial implications of that mandate. The only issue raised by the DA, in all the meetings leading up to that day, was the disagreement within the alliance over the NDP. That could not be used as a reason not to adopt the Report, because the Report dealt with the mandate of the EDD. The alliance was the responsibility of the ANC.

The Chairperson thanked the Committee for the contributions and asked for a motion to adopt the report. The majority of Members moved, seconded and adopted the Report, with amendments.

The meeting was adjourned.

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