Department of Trade and Industry 2003/4 Budget & Strategy

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
26 March 2003
DEPARTMENT OF TRADE AND INDUSTRY 2003/4 BUDGET & STRATEGY

Acting Chairperson:

Powerpoint presentation on DTI budget
DTI Medium Term Strategy Framework 2003-2006 (email [email protected] for document)
DTI Legislative Programme 2003 (Appendix 1)
Black Economic Empowerment Strategy

SUMMARY
The Department of Trade and Industry briefly explained the department's strategic plan and how the department was structured to implement the plan and with what funds. The department's intertwined goals of equity, growth and job creation were highlighted.

The Committee's concern was whether sufficient focused funding and attention is being given to address the marginalised section of the economy.

MINUTES
The Director General of the Department of Trade and Industry (DTI), Dr. A Ruiters, addressed the committee on the department's budget allocation. The presentation is on the Powerpoint presentation attached. He added that DTI's three goals - growth, job creation and equity - were intertwined and that each one could and should not happen without the other. Measurement of these goals was done according to the key performance areas. As part of the marketing division, Dr. Ruiters noted that the DTI was opening its parliamentary information centre that day at 13h00. The Marketing Division was a new program and that everything would happen through this division. He stressed that the DTI was more efficient and was close to the targets it had set in the budget. Referring to the International Trade Division, 80% of the travel budget was into African countries which he was very pleased with. He explained that the increase in operational costs for the 2002/03 budget year was because the DTI was building a new building which they hoped to occupy by April 2004.

Discussion
Ms. Hajaij (ANC) referred to co-operatives and wanted to know whether the R3,5 million allocated was enough. Since one of the aims of the AU and NEPAD was to strengthen economic blocks in Africa, she asked what the DTI was doing about this and how it was preparing for trade between countries.

Mr Ruiters replied that it would seem as if the funds were not enough. The DTI had promised to come with a strategy and policy regarding co-operatives and this was in the process of being done. Once this was complete, it would be presented. He pointed out that the amount allocated was just the initial commitment. He then went on to explain that the DTI had called all SADC Directors General to a meeting in Cape Town the previous day. They planned to meet again at the World Economic Forum in June. They had learnt about strategies in other countries. The DTI had representatives all the AU regions. He admitted that inter-African trade was the lowest in the world if one compared it to trade between countries on other continents. There were problems however which had to be overcome such as the infrastructure in other countries. There were developments however, for example, they were giving money to build roads to Mozambique.

Mr P Nefolovhodwe (AZAPO) asked why there was no money allocated to assist stokvels, which had sustained black people for years. Referring to credit unions, he said that they were mainly in the Western Cape and wanted to know what was being done about this.

Mr Ruiters replied that stokvels were doing well and therefore it was difficult to get involved. He admitted that more could be done, but that they were cautious not to disrupt something which was doing well. They were looking at supporting credit unions. He pointed out that Khula supported stokvels and credit unions through their retail financing intermediaries.

Mr C Lowe (DA) commented that the DTI had an enormous task to create jobs. He wanted to know what has been achieved thus far and how they would make sure these things targets are achieved. There had been complaints that the DTI was not giving support. He also wanted to know what the DTI was doing about the skills shortage in South Africa.

Mr Ruiters replied that most business people would argue that they were receiving no support. He said that it was not always easy to give people what they wanted. He admitted that there was still a long way to go. There had been improvements and cited the call centre which had been established and the many new enterprises that had also been started. Equality was a big issue and that the DTI needed support in this area. Referring to the skills shortage, Mr Ruiters said that the DTI was involved in setting up a skills program in Atlantis and Saldanha Bay, where there was an imbalance between the skills needed and that present in the area.

Mr Lowe referred to public entities and wanted to know if they reported to the Director General.

Mr Ruiters replied that public entities submitted their budgets to him and that he assisted the Minister to see that they followed their mandates.

Mr Smith (IFP) referred to 8% that had been allocated to Administration. He wanted to know whether it included or excluded the transfer of payments. He agreed with the DTI's strategic goals. However it was a well known fact that there was a net loss of jobs and that whites were still benefiting economically. Had these goals been there since 1994 or were they new?

Mr Ruiters replied that between 1994 to 1997, the DTI was trying to understand its capabilities and its mandate. In 2000 the Committee had asked for a strategy and they had now become more focused. Inequality in South Africa was a priority for the department. Growth without equality was not acceptable.

Ms. J Moloi (ANC) referred to the R2 million allocated to support the South African Women's Enterprise Network (SAWEN) and said that support for rural women was very sparse.

Mr Ruiters replied that the DTI wanted to put money wherever it was needed but that they were in an infancy stage at present. He added that a Chief Director for Women's Enterprises was recently appointed and that black economic empowerment (BEE) was important to the DTI. He referred the member to its BEE Strategy.

Ms. M Ntuli (ANC) referred to the previous year's goals and wanted to know how the DTI's spending was reflected in the provinces regarding markets, black economic empowerment etc. She also wanted to know what reporting system the DTI was using.

Mr Ruiters replied that he was confident that they could deliver on their promises. There are lots of projects in place which would generate domestic and foreign investment. It was important that they go into the small towns and rural areas.

The Chair commented that South Africa was a dual economy - a modern one and one that was marginalised. It seemed as if the DTI had addressed the modern one, but the marginalised one was the big issue. He said that enterprise development would seem to be the priority. He felt though that the agency Ntsika was imbalanced as it was focusing on foreign investment. The fact that Khula was due to receive less in 2003, did not seem to fit in with the DTI's goals. The National Enterprise Fund (NEF), which had addressed the committee the previous week, seemed not be following its mandate. He wanted to wanted to know whether there was enough drive and co-ordination so that the economy could be developed.

Mr Ruiters responded by mentioning that the DTI had 21 agencies to manage. This was a huge task, yet it was achieving its goals. Ntsika's mandate was about to be changed as it was too broad. For this reason, it was receiving less funds. The NEF's mandate should also be looked at as they could do more. He pointed out that the NEF Act was difficult to administer. DTI recognised that there was a dual economy and was trying to address this through its agencies. They were trying to encourage start-ups, but were questioning how small they should go. Referring to the vacillation in project finance, he note that as a project draws down, less money is given. They could not rollover project money from one year to the next. If some projects did not use all their money, it could be given to other projects.

Mr B Ngiba (IFP) wanted to know which department was doing the capitalisation of the taxi industry as the taxi industry was confused about the process.

Mr Ruiters replied that there was enormous progress with the capitalisation process. The process was the responsibility of the DTI and the Department of Transport. The Department of Transport was responsible for the regulating, licensing, rules and development of the industry. The DTI was responsible to work with the manufacture of an acceptable vehicle which he said would be delivered in 2004 and 2006. The DTI was also responsible for establishing an electronic managing system which would ensure the safety and ethical behaviour of taxi drivers.

Mr Smith (IFP) asked what the geographic spread of the DTI was as he was concerned that there was a decline in the rural areas.

Mr Ruiters replied that the cities had the wrong ratios as more and more people were moving out of the inner cities. He said that they were working with the municipalities on this.

Mr Rasmeni (ANC) said that the DTI had said it had problems with the NEF yet it seemed as if it was depending on it for BEE. He also wanted to know what external relations there were between the DTI and other departments.

Mr Ruiters said that the department had a specific policy on BEE and would be providing funding for this. There was co-ordination with other departments which was all part of the DTI's strategy.

The Chair thanked the Director-General for the presentation and adjourned the meeting.

Appendix 1:
DEPARTMENT OF TRADE & INDUSTRY LEGISLATIVE PROGRAMME FOR 2003

1. The National Small Business Council (NSBC) was liquidated in 1998. It is, therefore, necessary that all references to the NSBC in the National Small Business Act be deleted and that a provision providing for alternative means for achieving the aims of the NSBC be inserted in the Act. Additional smaller amendments to the Act are also necessary to refine and clarify the role of Ntsika vis-a-vis the Department of Trade of Industry.

   The bill will empower the Minister to issue codes of practice on Black Economic Empowerment and will authorise government to enter into sectorol charters. It will furthermore clearly define the relevant policy objectives and will establish an empowerment reporting and monitoring system for the public and private sector.

   To provide for the formation, registration and winding up of co-operatives and for matters incidental thereto.

   This Bill is a new draft encapsulating the policy principles previously agreed to with stakeholders, but addressing the constitutional matters raised by the Constitutional Court in its judgement on the Bill. In particular, the Bill does not seek to regulate matters in the exclusive jurisdiction of provinces, such as the licensing of the retail and micro-manufacture of liquor, although it does set out matters of principle. It further creates a national licensing function for the manufacture and wholesale of liquor, in line with the Constitutional Court judgement, and sets out national norms and standards. Finally, the new bill provides for a policy formulation and coordination mechanism in the form of a Policy Council, which consists of the Minister of Trade and Industry and the Members of the Executive Council of the provinces, giving expression and content to the concept of co-operative governance.

   To enhance co-operative management of the gambling industry between national and provincial government.

   To review the necessity for the Board and its functions and to accommodate the new industrial needs in terms of incentives.

   A lack of capacity results in very few inspections being performed on the large number of unregistered micro-lenders. This lack of action is leading to increased resistance amongst registered lenders and is increasingly pushing lenders from the regulated market into the unregulated market. The Bill proposes to rectify this problem through widening the scope for inspectors considerably.

   To make provision for natural persons to be entitled to receive funds.

   Appendix 2:
   DEPARTMENT OF TRADE AND INDUSTRY - 2003 LEGISLATIVE PROGRAMME

   CCES: Cabinet Committee for Economic Sector

   PC/NA: Portfolio Committee on Trade and Industry (National Assembly)

   SC/NCOP: Select Committee : National Council of Provinces

   SLA : State law advisers

2. BLACK ECONOMIC EMPOWERMENT BILL
3. CO-OPERATIVES BILL
4. LIQUOR BILL
5. NATIONAL GAMBLING AMENDMENT BILL
6. MANUFACTURING DEVELOPMENT AMENDMENT BILL
7. USURY AMENDMENT BILL
8. LOTTERIES AMENDMENT BILL
9. INTELLECTUAL PROPERTY LAWS AMENDMENT BILL

The respective principal Acts directly and indirectly regulate how state emblems should be used or be registered as part of trade marks. However, the Draft Policy on the use of State Emblems will necessitate amendments to these Acts. There is a need to amend the Intellectual Property Laws Amendment Act, for example, to provide that the use of the national flag is subject to the Minister's consent. As the Act stands, the national flag is in the public domain.