Access to land for Agricultural SMMEs and Cooperatives in Sector: input by Contralesa, Ingonyama Trust, House of Traditional Leaders

Meeting report

The Chairperson welcomed the delegations from the National House of Traditional Leaders (NHTL) and the Congress of Traditional Leaders of South Africa (CONTRALESA). An apology was received from the Minister, Ms Lindiwe Zulu. Through miscommunication, the Departments of Small Business Development and Cooperative Governance and Traditional Affairs (COGTA) were not represented at the meeting.

The Chairperson said the role played by traditional leaders in communities was a valued one. South Africa was part of the African continent with structures in society that could not be overlooked. The meeting was called to listen to each other and to share a common understanding of the task of the newly established Department of Small Business Development and the role of the Portfolio Committee. This was an exciting venture and the Committee had had the opportunity since to engage with small businesses and to go to different provinces. Through these engagements it became clear that the challenges experienced by most small businesses were access to finance, access to markets, access to adequate infrastructure and acquiring adequate skills.

The Committee invited Mr R Mavunda (ANC) from the Portfolio Committee on Energy, because through these engagements it became clear that energy was a critical component of infrastructure lacking in the development of small, medium and micro enterprises (SMMEs).  Transport infrastructure, communication infrastructure and water infrastructure had been identified as equally challenging to the development of SMMEs. Accessibility to land had been highlighted as a key factor for small business development. The Committee Programme attempted to address these concerns through interaction with relevant structures to create conducive environments for small business and cooperative development.

The Committee had met with the retail sector the previous week with good discussion on challenges such as unemployment, poverty and inequality. The starting point was usually agriculture and she showed the Committee a handkerchief she recently bought at Woolworths. The composition of the handkerchief was 70% bamboo and 30% cotton. There was bamboo in KwaZulu-Natal (KZN) and the Eastern Cape (EC) and cotton fields in Limpopo, but the handkerchief, which was not a difficult item to make, had been made in China. The retail sector said there was a programme called ‘Replacement of Imports’ in place and part of the solution to challenges of poverty, unemployment and inequality was to ensure that even people in rural areas were able to participate in the mainstream economy, which was in fact radical socio-economic transformation. Working with the retail sector was important, because replacing imports with local content related to the government policy of 70% local procurement. During the 2015 State of the Nation Address (SONA), the President specifically said that 30% of goods and services procured in the country should come from small businesses and Cooperatives. There should be an intense focus on where unemployment and poverty were the highest and what could be done to address these issues utilising the helpful policies developed by the government. The number of people depending on grants and free services should be reduced which would lessen the tax burden on South Africans and broaden the revenue base of municipalities. This meeting was a start to the way forward to ensure poverty alleviation and to attain the goal of the creation of 11 million new jobs by 2030. The goal was that 8.8 million of those jobs should be created in the small business sector. At the end of the meeting with the retail sector, it was agreed to form a working group; the Committee needed to decide on both the composition and mandate of the working group.

Input by CONTRALESA
CONTRALESA National Organiser, Mr Zolani Mkiva, briefed the Committee.
There were approximately 860 Traditional Councils in South Africa, chaired by senior traditional leaders. These were the primary offices of governance where rural people resided and it was their first point of call when they required assistance. The Councils needed to be capacitated and empowered to do their duties and inefficiency of these Councils was usually as a result of a lack of proper support. Part of the capacitation of Traditional Councils would be part and parcel of the broader investment that was required in rural areas. It was necessary to look at the issue of road infrastructure as a matter of urgency and priority. For too long rural communities had been referred to as ‘dead economies’.  In terms of the Gross Domestic Product (GDP), what happened in rural areas was normally not accounted for, simply because there was no mechanism to look into those economies to see what production was happening and at what level. It would be of great help if infrastructural investment would be looked at, in particular the road network. Government had done a lot in terms of electricity (above 80% in rural areas), but Internet connectivity was essential. Access to information was very important especially for schools, because schools were institutions that would have the capacity to translate and relay information flowing from national government.

There was great potential for small business development in rural communities. Each and every week cattle were slaughtered for different functions and ceremonies in rural areas yet the hides and skins were not utilised. Perhaps it was an issue of a lack of access to finance and markets, because people did not have access to information on where the skins could be taken for processing or taxidermy. The process of small business development should create an enabling environment for communities, because processed hides and skins were imported from China. The majority of livestock did not reside with commercial farmers, but with communities and yet there was no mechanism to ensure that there was proper commercialising of that resource. A coordinating mechanism needed to be created to ensure radical socio-economic transformation of people on the ground. Livestock, under the guide of sustainable farming could be transformed into a commercial activity where communities could create jobs and generate an income. People were selling manure in urban areas that was readily available in rural areas. The amount that people in urban areas paid for manure for their gardens was ‘ridiculous’. It showed once again how great the opportunities for small business development were in rural areas, but support was needed in terms of finance, capacity and coordination. Even beef was imported by retailers from neighbouring countries, but a channel should be created for those retailers to access local beef. There were various examples from the agricultural landscape and arts and craft. Genuine beadwork was created in this country, yet there was an avalanche of imported beadwork. There was local skill and production, but these people got outcompeted by less genuine productions. The local products were quality products and should fare well competitively, both locally and internationally.

CONTRALESA and NHTL worked together because they presented the same sector. Infrastructure was emphasised because it formed the base of what the sector wanted to achieve. Radical socio-economic transformation meant that business and planning should be done in a different way. Urban areas would get saturated, because big malls continued to be built around those areas, but the older malls got closed down. Rural areas should be seen as new areas for investment so that people did not have to take transport to town to access a small resource such as an ATM. The poorest of the poor have to take a taxi to town to withdraw R100 from an ATM, which could have been spent in their locality. In the final analysis, small business development should create access for rural people at local level. Even though colonialists took the majority of land, the little land retained should be made available for developmental purposes. The National Development Plan (NDP) spoke to communalism, because it spoke to the interest of people with common goals to work together. Traditional leaders were not ‘anti-development’, but as representatives of rural communities, they needed to be recognised in these developmental approaches. More often than not traditional leaders were misrepresented, because they were open and welcoming to opportunities to better the lives of their people. Business people wanting to invest in rural areas just wanted the land with no benefit to the people in the area, but people should be able to fully participate in the economic activities in their area and they should be able to find expression in the initiatives. He expressed his appreciation to the Committee for the opportunity to talk to the issues in this forum and also expressed the commitment by traditional leaders to the process of small business development.

Foreword by the Chairperson of the National House of Traditional Leaders
NHTL Chairperson, Mr Maubane Pontsho, said Cooperatives were being established, but the challenge was in registering those Cooperatives. Communities could not afford the amounts necessary for registration. Enabling environments in rural communities were important to allow businesses to flourish and to communicate with the world. Rural communities were ready for development and the intention was to use Traditional Councils as information hubs, but most government departments were some distance from the Councils. People produced, but did not know where to take their products; support in accessing the markets was essential. White companies were still controlling markets and it was difficult to get proper market access.

Presentation by the NHTL on access to land for SMMEs and Cooperatives in Agricultural Sector
NHTL Secretary, Mr Abram Sithole, said NHTL was a statutory body established in terms of section 2 of the National House of Traditional Leaders Act of 2009. NHTL was composed of 23 members and three traditional leaders were elected by their provincial houses to serve in the National House. However, Gauteng had only two senior traditional leaders. Section 4 of the Act provided that where there were three or a lesser number of traditional council performing functions of a local house, the chairpersons of such traditional councils should be ex officio members of the House.

NHTL functioned in terms of sub-committees. Led by the Executive Committee, the land, rural development and tourism sub-committee as well as the social development committee were spearheading economic transformation related matters. The primary objective was to shape parliamentary Bills and other policies that had a bearing on, amongst others, land and agriculture, disaster management, rural economic development, restitution of land, nature conservation and environmental affairs. Its goals were the following:

-Identify and act on socio-economic issues of traditional communities in conjunction with Houses of traditional leaders.

-Contribute to the social upliftment of the traditional communities by playing a major role in initiating, assisting and participating in rural projects.

-Liaise with Government and other organisations in fighting rural poverty.

-Ensure that job opportunities are created for traditional communities;

-Ensure that traditional communities receive infrastructure development including low and medium cost Housing

-Ensure that local economic development, planning and other processes are inclusive of traditional leadership

-Partner with government departments in line with the Traditional Leadership and Governance Framework Act of 2003.

The allocation of land to SMMEs and Cooperatives should be done within the confines of the law. The principles of mutual respect should apply in the sense that consultation with the institution and all other affected parties should take place from the onset. Traditional leaders had been allocating land for development projects and small scale farming in order to assist SMMEs and Cooperatives. Many of the existing Cooperatives were found in areas of traditional leadership and the issue of sustainability for SMMEs and Cooperatives was the main challenge rather than land allocation. Land allocation for SMMEs and Cooperatives was done through applications for land use.

NHTL proposed that Fetsa Tlala and other related projects be spread to all rural communities and unused land should be identified and turned into a source of food production with opportunities for SMMEs and Cooperatives. Traditional leaders should partner with the Department of Agriculture, Forestry and Fisheries (DAFF) to revive SMMEs and Cooperatives in agriculture. Traditional leaders should actively lead in land issues and agricultural schools should be revived where government and businesses should provide bursaries to students.  NHTL wanted to tailor development projects aimed for rural communities in support for SMMEs and Cooperatives. This could happen with support from the Committee to facilitate engagements with the Department of Traditional Affairs (DTA) as the lead Department, DAFF and the departments of Sports and Recreation, Rural Development and Land Reform, Tourism, Trade and Industry and other development agencies. NHTL could also use support in ensuring that traditional leadership participated in programmes relating to land and its profitable use and in the mobilising of government funding for Traditional Councils in line with the National Programme of Support for the Institution of Traditional Leadership. A follow-up engagement with the Portfolio Committee was needed to address issues in support of traditional leadership as well as in support of the SMMEs and Cooperatives.

Input by the Deputy Chairperson of the National House of Traditional Leaders
NHTL Deputy Chairperson, Mr Sipho Mahlangu, thanked President Zuma and government for establishing the Department of Small Business Development. The President mentioned in the SONA that 70% of government procurement would be set aside for small businesses and Cooperatives, which should be commended. NHTL identified quite a number of challenges that might have led to most SMMEs to suffer. Traditional Councils have not evolved and the Councils needed to be supported. Another challenge was not putting value to the land in traditional communities. It often happened that government negotiated with white farmers and paid up to R20 million for 100 hectares of land, but wanted land for development for free from Traditional Councils with just a promise of job creation for the community. It did not necessarily mean the Councils wanted R20 million from the government, but the land had value and the R20 million paid to the farmer was his alone but R1 million would be money for a whole community. Land was sold cheaply to people, because there was an understanding that people were poor, but it also impacted negatively on the community, because the selling of the land created no financial profit or benefit.

Since 1994, a consumerist society had been built where people were too dependent on government. There was a general feeling of entitlement with too much dependence on social grants and it should change. There was an article in Business Day by a farm owner who stated he advertised for a mature couple that would live and work on the land. The respondents on the advert were 50% foreign applicants, about 22% from South African whites and 12% from black people. Most of the black respondents did not provide the information specified by the advert and the article speculated whether it could be because of lack of access to ICT resources. There were many opportunities, but it seemed that people were so focused on what government could do for them that ‘they were dropping the ball” when opportunities arose. It was not xenophobic to state that the small business sector was being taken over by foreigners, who in most cases received support from their own governments. It was proposed that government should enforce partnerships where foreign businesses had to go into partnership with South Africans. Xenophobic attacks would end if communities had ownership in the businesses and it would have a positive impact on the economy. It was important that people feel a sense of ownership in community development projects. Municipal Local Community Development Forums were of no use because communities had no influence on what was prioritised. Corporate social investments or social labour plans submitted by mining companies all looked the same with no plan tailored to the specific needs of the community. There was also no way of ensuring that these mining companies do what they promised in their plans. NHTL, with CONTRALESA have started engagements with the Chamber of Mines and a representative from the Department of Mineral Resources would be appreciated through these engagements. NHTL had partnered with Samsung to build ICT villages where young people would be trained and capacitated.  

Discussion       
Mr T Ramokhoase (ANC) noted from the presentations that there was a lack of support from government and a lack of capacity. The Department needed to take note, because it was an ongoing issue. The Intergovernmental Relations (IGR) framework had been put in place to allow local government to work with traditional leaders. It was a prime example of the good policies government had put in place, but was not being implemented. There had been many problems with the relationship between commercial farmers and subsistence farmers and it centred on mentorship where mentors did not do the job properly. Participatory democracy involved consultation and consensus and the legislation should drive the processes. The Department of Small Business Development committed to discipline and implementation of the laws of the country.

Mr R Chance (DA) said when the Committee went to KZN and the Eastern Cape on an oversight visit; they met with a traditional leader with an innovative agricultural project for growing vegetables under a greenhouse. It was a model that possibly needed to be explored to unlock potential. Up to 20 million South Africans lived in rural areas and a lot of people were affected by underdevelopment. It would seem that by developing communities, traditional leaders were essentially eroding their power base. The moment communities became developed, educated and more aware of their rights, not only as members of a traditional community, but also constitutionally, they would become emancipated. They would then also possibly question the relationship they had with traditional leaders, which would impact the system or structure. Gauteng had only two senior traditional leaders and it proved that development led to a breakdown of the traditional structures of governance. He asked what the relationship was like between traditional leaders and ‘their people’ and what kind of relationship traditional leaders had with the municipalities they resided in. There was potential for constitutional friction between the governance structures of traditional leadership and the governance structures of municipal leadership. It was clear from the Eastern Cape and KZN that rural development did not happen because of the power struggles between traditional leaders and municipalities. He asked that the relationship between CONTRALESA and NHTL be clarified. He said he read the same article in Business Day and the article asked the question whether uneducated black people were too dependent and did not take control of their own lives. It might be why the areas governed by traditional leaders were so underdeveloped. In terms of small business development, he asked which of the retail chain, wholesale distribution or even both were most challenging and where the Committee should drive their attention. He asked where Mr Mkiva got his information from on the number of livestock in communities and commercial farmers. He also wanted to know what the roles of women were in traditional communities and whether there were female chiefs and how the rights of women were protected.

Mr Mkiva replied that CONTRALESA was a union of traditional leaders, whether on the state payroll or not. All the members of royal families in South Africa were accepted and welcomed to join CONTRALESA as individuals. CONTRALESA went beyond the 860 senior traditional leaders; it also accepted family members of those traditional leaders, as well as chiefs. CONTRALESA was present in all provinces, whether part of a formal government recognised structure or not. CONTRALESA mobilised traditional leaders to come up with policy directives to be submitted to NHTL. NHTL was established with the intention of being the third house of Parliament, because it was a legislative body. All the laws that resonated with traditional communities should not be passed without having gone through NHTL. Most members of NHTL were also members of CONTRALESA. NHTL was established through an Act of Parliament and CONTRALESA was a non-governmental organisation (NGO) that determined the policy direction. Gauteng and the Western Cape did not have provincial houses, but CONTRALESA would engage government for the establishment of provincial houses. There were traditional communities in the Western Cape and in Gauteng and those communities also required an institution like NHTL to service and articulate the aspirations of the communities. Traditional leaders were pro development, because development would better the lives of people and those people would not turn around and undermine their custodians once their lives were bettered. Traditional leaders were not only the custodians of land; they were also the custodians of the cultures of people. If people could turn against traditional leaders then it would just be a continuation of the legacy of the colonialist approach. Instead, the opposite happened, because traditional leaders were in the forefront of development and people saluted that. South Africa was liberated less than 25 years ago and there would be challenges, in part inherited from the legacies of the country’s past. At the same time the goal was to mainstream which had been relegated for many years and there would be power struggles. In the main, traditional leaders were working harmoniously with municipalities. CONTRALESA encouraged these harmonious relationships, because traditional leaders did not have terms of office, unlike municipal councillors. The first point of call for an elected councillor was to go and introduce him or herself to the traditional leader of the area. In many traditional communities, the only office readily available was that of the traditional leader and councillors were encouraged to hold meetings where traditional leaders were to ensure harmony and purpose. The current legislation that defined what a ‘traditional leader’ was, was colonialist and needed to be relooked, because it defined traditional leaders as those on the state payroll. The African definition defined a traditional leader as a custodian of his family, but also identified the siblings and wife as traditional leaders. The mother that gave birth to a traditional leader was a traditional leader with certain responsibilities in the community, led by cultural rituals. Legislation that established Traditional Councils stated that each Council should have a female representative. It was upfront that the traditional society was patriarchal, but opposed the exploitation and suppression of women. Patriarchy did not rescind the role women had to play in traditional communities. Women were the pillars of families and managed family compounds. In traditional communities land tenure security was given to women and a man had to be married to request a site. If he wanted to leave that woman, he had to leave the site.

Mr Mahlangu replied that the wholesale distribution was probably the most challenging, because big conglomerates dominated the sector.

Ms N November (ANC) said it was even more important now that the Committee met with COGTA, because there were clear linkages. It was reported that a district municipality in Limpopo had problems with foreigners getting land and illegal service connections; traditional leaders in that area should look into that. Giving seed funding to communities was a good thing but there should be a mechanism in place that monitors what happens afterward. Access to information was crucial and she confirmed that the Committee fully supported traditional leaders.

Mr Mahlangu replied that the biggest problem was that land was given to members of the community who then sold their land to foreign nationals. Any traditional leader, who sold land to foreign nationals or not doing what they were supposed to be doing, should be reported to NHTL. In any institution people were found to do things they were not supposed to and everybody was usually “painted with the same brush”. He agreed that some mechanisms needed to be put in place for community members receiving seed funding in terms of skills development and drawing up business plans.

Mr S Mncwabe (NFP) asked what criteria traditional leaders used to allow foreign nationals to run businesses, because it was understood it would have to go though the Council. He also wanted to know how the Council then ensured that there was no friction between local and foreign business owners. A proposal had been made to develop chiefs’ villages into heritage sites. He asked how the existing sites benefited the community and small business development. He asked if there was a cooperative dealing with manure as a business venture and if not, it should be prioritised as a development opportunity. Skills development was important in terms of the processing skins and hides of cattle.

Mr Mkiva said that traditional palaces were regarded as heritage sites, because these sites were important in terms of the cultural outlook. A process of engagement with the National Heritage Council (NHC) had started to ensure that at a local level, royal compounds were also declared local heritage sites.

Mr Mahlangu replied that these foreign nationals did not acquire businesses from traditional leaders, but rather from members of the community. It was however an issue that needed to be dealt with collaboratively.

Mr S Bekwa (ANC) – [this member’s comments is in Zulu. PMG not able to translate at this time, but the comments start at 23:32 of the second part of the recording.]

Mr T Mulaudzi (EFF) asked if there were Traditional Councils not affiliated with CONTRALESA. Municipalities had reported that some traditional leaders sold land to foreign nationals without consulting municipalities. He asked what type of relationship traditional leaders had with municipalities. Traditional leaders should encourage small business owners to form Cooperatives to contribute to job creation. The road in the Eastern Cape from Port Alfred to Umtata was full of potholes and without road infrastructure small business development in rural areas would become a fruitless exercise. He asked what the roles of the kings were and whether they fell under NHTL. Traditional leaders should look at the land taken from them where ports and harbours had been established and claim their rights and benefits for their communities.

Mr Mkiva replied that the 860 Traditional Councils were government structures established in terms of a particular Act of Parliament, composed by members of communities and chaired by senior traditional leaders. These senior traditional leaders were not members of CONTRALESA and were on the state payroll.

Mr Mahlangu said it had been a challenge, especially in cases where land had been redistributed to black ownership. It was difficult offloading produce, because it was now labelled as ‘black produce’ and hampered beneficiation. This was however still a transitional period and traditional leaders of the areas were trying to make people come together. A few companies, black and white owned, had been coming to the traditional areas and had been slowly integrating. Kings were members of NHTL and some senior traditional leaders ‘belonged’ to certain kings thereby representing the royal house in NHTL.

Mr R Mavunda (ANC) said this country was taken from indigenous people through political means and as politicians it should be talked about. The settlers, when they got here, were on a trade mission, not to live here. Before settlers even arrived there were businesses and the people were led by Amakhosi (chiefs). He stated that he was from a rural community in Limpopo, a few kilometres from the Kruger National Park and that the community had never benefited from the Park. The forefathers of the indigenous people used to sell produce from animals. [Sections of this member’s comments is in Venda. PMG is not able to translate this part at this time. The comments start at 41:00 of the second part of the recording]. FOSKOR Mines in Limpopo also produced manure, but it was not available or visible on the market.

Mr X Mabasa (ANC) said it was important to aspire to beneficiation of products and to determine how many agricultural and farming education schools there were. It was equally as important to encourage black youth to do agricultural subjects at high school level, because if land was successfully reclaimed, the youth needed to be ready to work and develop that land. It was the duty of the Committee and the Department to assist communities that want to use Cooperatives as a way to participate in economic activities. Small business and cooperative development cut across all departments. In terms of soil analysis, chiefs needed to know their land and what agricultural activities were suited to the soil. Building malls in rural areas should be done in such a way that ownership of that mall was communal. Burial societies in a specific community could cooperatively build a mall and effectively the mall would belong to the community. He asked what recourse people in rural communities had if the chief of the village was corrupt.

Mr Mahlangu thanked the Committee for the opportunity and said another engagement was necessary to fully explore some of the questions the Committee had. This had given the traditional leaders the chance to see how they were viewed and it was a learning experience. He asked that this type of meeting be cascaded down to other Committees.

The Chairperson said it was a pity that the Department was not present in the meeting, but the Committee was happy that the officials from the Ministry were present. The Department of Small Business Development had presented a Strategic Plan, which was adopted by the Committee on condition that the Department went back to assess the relevance of the programmes in the Strategic Plan to the mandate of the Department. She personally did not believe that the current Strategic Plan reflected the needs on the ground. It was based on the needs as perceived by the officials; there was no process of engaging with the affected target groups except for the policy colloquium organised by the Small Business Development Institute. The Portfolio Committee was never invited by the Department to sit in a conference room with traditional leaders, the retail sector, or small businesses themselves. The structures that had been invited to Parliament to represent small businesses and talk about issues affecting small businesses and Cooperatives had their own internal fights. The Committee took a conscious decision to not invite them anymore, but to go out and identify key leaders in the society and engage with them – as today with NHTL and CONTRALESA.

The Committee would have to relook the issue of giving seed funding to communities, because it needed to be accompanied by skills development to do soil analysis and other infrastructure support systems that could be offered. All the presentations suggested community ownership of rural malls and the Committee would start discussion on the possibility of legislation around that. There was a consumer society and a trader society in the country. Having visited a number of countries, in most countries the majority population of a country dominated trade in that country. Radical socio-economic transformation would be facilitating the majority of South African citizens to participate in the economy. The Committee proposed that the name of the Department should be amended to include the word ‘Cooperative’. Five big companies dominated infrastructure development and participated in building the stadiums for the 2010 World Cup. There was a number of emerging construction companies, but these companies lacked the capacity to buy big excavation machines to participate in infrastructure development. A small company might not be able to do it on its own, but a number of companies could collaborate and buy an excavating machine that would belong to the ‘cooperative’, renting the machine out to the smaller companies. The Committee also adopted a Cooperative Development Model that focused on poverty reduction and job creation with the aim to create a permanent exit for the poor on the social grant and indigent registers, in line with the NDP. All departments should understand the Model so that there was movement from the same direction toward a particular goal. Through engagement with the retail sector the Committee learnt that R77 million circulated through the retail sector related to agriculture. The Committee decided to establish a working group, because of the programme running in the retail sector that aimed to replace imports with local procurement. The working group would establish the percentage going into every market and collaboratively engage with other departments so that through the development of SMMEs, people could be directed. The Committee also wanted to look at policies and legislation, as well as best practices form other countries such as Brazil, Ghana and Kenya in terms of cooperative development. The concern that foreign nationals were taking over business needed to be debated, not from an emotional perspective, but with the goal to deal with the root causes of the problem, not at the symptom level.

The Chairperson thanked everyone for their input and promised further engagement on these issues.

The meeting was adjourned.