Brief by Portfolio Committee on Small Business development on economic transformation [awaited]
The Committee on Small Business Development met to discuss feedback on non-payment of Boniswa Corporate Solutions invoices by Cell C; maintenance of contracts between big business Ericsson and small businesses Neala Trading Company and Mobile Diesel Power Systems; and lack of implementation of radical economic transformation policies of the South African Government in promoting small business.
Feedback from Cell C indicated that it had resolved issues between it and Boniswa Corporate Solutions. Despite confirmation to the Committee that Cell C had paid the invoices owed Boniswa, the Committee observed that the payments had been delayed, and Cell C would not have paid if Boniswa if it did not involve the Committee. The Committee questioned Cell C on why it had not paid Boniswa initially, its payment terms and how subcontracting work had affected its contractual relationship with Small businesses.
Minister Lindiwe Zulu observed that the entire value chain in the process of conducting business was lengthy and the Small Medium and Micro-enterprises did not have experience. Hence, stakeholders needed to dialogue on the process to deal with Small, Medium and Micro Enterprises. Contracting and sub-contracting terms make big businesses hide, and she established the need for stakeholders to engage in order to create an enabling environment for small businesses in the enterprise process for all business sectors.
Committee Members remarked that delayed payment was an issue. However, the Committee and the Department could not concentrate on resolving business relationship problems when it had other mandates, and agreed with the proposal for stakeholders to engage to resolve the issues because the gap existed.
Feedback on Neala Trading Company indicated that Ericsson had not fulfilled its obligation to the company and had played ‘lip service’ to the agreement it had with Neala during the meeting of 7 October 2016 in Parliament. This was evidenced by not allocating additional passive sites to Neala Trading Company; reducing its passive sites by 36% and allocating the passive sites to white owned companies; owing invoices for work done in January, June and September 2017 respectively; asking Neala not to use the generators it acquired. The situation led to loss of credit rating and turnover and laying-off staff for the company. Vodacom was involved because the passive sites belonged to it initially but were contracted to Ericsson. Ericsson indicated that Neala Trading Company had not participated in any monthly governance forums, had not submitted any invoice, had not followed specific structures to address payment issues, and this made it difficult to pay its invoices.
The Committee questioned Ericsson on why it had not complied with contractual terms; had not paid invoices owed for January and June; did not want Neala Trading Company to use its acquired generators; made inconsistent statements about the status of the passive sites and observed that Ericsson was doing an injustice to its image. The Committee also noted that CEO’s did not pay attention to the business of Small Medium and Micro Enterprises and condemned the practice of owing small business. The Committee resolved to fashion out ways to incentivise big businesses to pay small businesses and empower them on occupational safety issues. The Committee observed that Vodacom was the owner of the contract initially and questioned Vodacom on its monitoring and evaluation processes, project management services and the proposals on how to resolve the matter. The Committee asked Ericsson to make commitments on the timeframe for paying of invoices and mandated both companies to give feedback reports on their communication. The Committee made commitments to follow-up on the resolution of the business relationship between Neala Trading Company and Ericsson after two weeks, based on the commitment of Ericsson to resolve payment of invoices owed in January and June after one week.
The Committee engaged the Telecommunications sector on lack of implementation of radical economic transformation policies of the South African Government in promoting small business The engagements sought to achieve whether the issues raised on relationship between big and small businesses existed or not, identify if there was a need to resolve these issues, establish the need to resolve the issues if existed, identify if the policies designed to promote small business were being implemented, establish if policy gaps existed and design a way forward if the policy gaps existed. The Committee reminded the sector to consider that the country was facing challenges such as poverty, inequality and unemployment and the National Development Plan had identified small business as the key to job creation. The meeting was not convened to blame any party but to recognise the need to promote and protect small business and resolve ways to achieve the growth of small businesses. The Committee appreciated what big business was doing to empower small business but noted that big business had not addressed what the Committee hoped to achieve with the engagement. However, it observed that stakeholders had been specific in addressing how to resolve issues that arose as a result of new technology which led to loss of jobs when CEOs had met with the Chairperson after they had received invitations for the meeting. Some of the stakeholders agreed that a workshop was needed to address business relationship issues between big and small businesses.
Feedback on maintenance issues with Mobile Diesel Power Systems also indicated that Ericsson had not respected rules and breached the sub-contract. Mobile Diesel Power Systems had increased staff and acquired new generators based on the contract, but the breach by Ericsson resulted in a negative situation for it. Mobile Diesel Power Systems informed the Committee of the exit of Ericsson from Vodacom and suggested that it be re-instated while both companies were resolving their issues. Mobile Diesel Power Systems proposed urgent engagements between the small companies and the big companies to forge better business relationships. Mobile Diesel Power Systems also suggested the revival of Small Claims Courts in every region to deal with administrative issues without lawyers, to ensure that small business did not incur expenses in resolving issues that affected business relationship between small and big companies.
The Committee resolved that there was need to engage on how to ensure that there was compliance on maintaining the principles of business relationships since there was a need to protect small business against bullying by big business. The Committee observed that outstanding issues existed between Neala Trading Company and Ericsson and between Mobile Diesel Power Systems and Ericsson. The Committee mandated Vodacom to ensure a smooth transition for the exit of Ericsson and stated that it would have more engagements with Mobile Diesel Power Systems and Ericsson on the way forward.
The Chairperson welcomed the Minister, Ms Lindiwe Zulu, Members, CEO’s of companies and the team from the Department of Small Business Development (DSBD). The purpose of the meeting was to deal with issues affecting small businesses. She reminded all present that the DSBD had been created recently by Government to introduce programmes that would focus on reducing poverty, unemployment and inequality to ensure that the impact of reducing people on welfare packages and social grants was achieved. Hence the Committee had a mandate to champion the programmes that focused on these areas as outlined by Government.
The Minister apologised that she would leave the meeting early to attend a Cabinet meeting, Apologies were received from Boniswa Corporate Solutions and Screamer Solutions.
Mr R Chance (DA) asked for clarity on timing for the meeting because of the Parliamentary sitting.
The Chairperson stated that there was a change on the timing based on the Parliamentary sitting.
Mr X Mabasa (ANC) said he would need to confirm his apologies at another Committee meeting.
Mr Mojalefa Mohoto, Chief Director: Enterprise Development, DSBD presented the DG’s apologies.
Mr Chance asked questions concerning correspondence that was outstanding to the Committee.
The Committee Secretary acknowledged correspondences received and stated the correspondence that was outstanding.
Boniswa Corporate Solutions
Mr Sherhaad Kajee, Chief Procurement and Property Officer, Cell C, said Cell C had resolved issues between it and Boniswa Corporate Solutions.
The Chairperson confirmed that Boniswa Corporate Solutions had sent a letter confirming that Cell C had paid the invoices owed. She observed that the payments had been made after a lengthy period and Cell C would not have paid if Boniswa Corporate Solutions had not involved the Committee.
Mr M Dirks (ANC) asked Cell C why it had not paid Boniswa Corporate Solutions initially and asked Cell C to confirm that it did not pay Boniswa Corporate Solutions because it had brought the case to the Committee.
Mr Kajee responded that Cell C had not paid Boniswa Corporate Solutions initially because it was not contracted to Cell C. Huawei subcontracted the work to Brolaz, who also subcontracted it to Boniswa Corporate Solutions but Brolaz became insolvent. Cell C paid Boniswa Corporate Solutions when it received the information.
Mr Chance asked Cell C how subcontracting work had affected its contractual relationship with Small businesses since Huawei insisted on a direct relationship
Mr Kajee explained how subcontracting had affected its relationships with small businesses.
Mr Chance asked Cell C to state its payment terms to small businesses.
Mr N Capa (ANC) appreciated Cell C for paying Boniswa Corporate Solutions and noted that Cell C had indicated that a normal relationship would exist between it and Boniswa Corporate Solutions henceforth.
Dr N Dlamini-Zuma (ANC) asked for clarity on what had happened in the transaction.
Mr Kajee explained what had happened in the transaction and its payment terms.
Minister Zulu said she was not familiar with what happened but it was important to maintain the principle of business relationships between big and small business. The entire value chain in the process of conducting business was lengthy and the Small Medium and Micro-enterprises (SMMES) did not have experience. Hence, stakeholders needed to dialogue on the process to deal with SMMEs. Contracting and sub-contracting terms make big businesses hide. Hence, stakeholders need to engage in order to create an enabling environment for small businesses in the enterprise process for all business sectors.
Mr Dirks agreed with the Minister that enterprise process issues between big and small companies needed to be resolved, but the Committee could not focus on such issues alone because it had other commitments. Also in implementing the principle of giving 30% contracts to Broad-Based Black Economic Empowerment (BBBEE) the steps needed to empower small businesses should be regulated.
Mr Capa said an approach to enterprise development for SMMEs needed to involve the Minister, the Committee, big businesses and the DSBD.
The Chairperson remarked that the Committee appreciated that Cell C paid Boniswa Corporate Solutions but the issue was not the payment but the delay in payment. She explained what happened in the case between Cell C and Boniswa Corporate Solutions. The Minister was correct in saying that the relationships between big and small businesses needed to be examined. She observed that Boniswa Corporate Solutions supplied in 2015 but was paid in 2017, and delayed payment was an issue. However, the question was who would resolve the issues because the Committee and DSBD could not concentrate on resolving the issues when it had other mandates. Stakeholders need to engage to resolve the issues because the gap exists.
Mr Mabasa said the critical message from the brief of the Minister was that big businesses must use the right principles when dealing with small businesses. Most big businesses were involved in such practices, it was just coincidental that Cell C’s case was the first to be discussed. He hoped big businesses had taken the point because Government alone could not have the sole responsibility of developing small businesses.
Mr H Kruger (DA) said the mandate of the committee was to look after small businesses hence the Committee needed to protect small business from being bullied by Big businesses. Members’ could not deny this role.
Mr Dirks said Mr Kruger’s’ comments were political.
The Chairperson said the Committee did not entertain such statements and observed that there was a miscommunication between both Members. Mr Dirks did not say that the Committee did not care about small business only that Committee had other mandates and did not have the time to continually resolve such issues. Mr Kruger had misinterpreted the point made by Mr Dirks. It was her responsibility as Chairperson to give clarity on such matters. The Committee had the responsibility to listen and find the best possible way to resolve its challenges. In doing this the Committee had to find appropriate structures to resolve the issues. She asked Mr Dirks if he still wanted to respond to Mr Kruger’s’ comments.
Mr Dirks replied that he was covered.
The Chairperson said the matter was closed. There was a gap created that needed to be addressed and the Minister had stated that an engagement between stakeholders was needed to resolve the issues. She invited Neala Trading Company to brief the Committee.
Neala Trading Company
Attorney Anthony Walther, Walther Attorneys, representing Neala Trading Company, gave feedback on the last meeting between Ericsson and Neala Trading Company in Parliament. During the meeting, Ericsson had agreed to continue business with Neala Trading Company, allocate additional passive sites to it and pay money owed for providing Internet services (ISPs). Since the meeting in December, 2016, Ericsson had not allocated any additional passive sites to it and had reduced its passive sites by 36%. The passive site taken from his client were allocated to white owned companies and Ericsson still owed his client invoices for work done in January, June and September, 2017 respectively. Vodacom is involved because the passive sites belonged to it initially but were contracted to Ericsson. Ericsson also asked Neala Trading Company not to use the generators it acquired. This situation had led to loss of credit rating and turnover and laying-off staff. Ericsson has not fulfilled its obligation and Ericsson just played ‘lip service’ when it signed the agreement during the meeting of 7 October, 2016 in Parliament.
Mr Mabasa expressed concerns on the phrase ‘lip service’ used to qualify the meeting of h December, 2017. He asked Adv Walther to clarify that the Committee was not part of the lip service.
The Chairperson asked Adv Walther to address the issue.
Adv Walther, clarified that it was Ericsson that paid lip service to the agreements made during the meeting of 7 October 2016, and not the Committee.
Mr Capa asked Adv Walther to state the present response of Ericsson on the matter.
Mr Kruger remarked that the issues were still centred on big businesses still bullying small business. He observed that Ericsson had not honoured its agreement to pay Neala Trading Company within 14 days based on the agreement during the meeting of 7 October, 2016 in Parliament. Hence, the Committee needed to examine how to force big business to pay invoices it owed small businesses.
Mr Dirks said it was a tricky issue because Ericsson had not responded yet. However, the Committee needed to enact laws that would ensure that big businesses treated small businesses fairly. Small businesses incurred costs but big businesses did not honour contractual agreements. Ericsson was probably victimising Neala Trading Company because it brought its case to the Committee.
Mr Chance said the Committee needed to hear Ericsson’s response.
Rev K Meshoe (ACDP) asked Ericsson to confirm if it was playing lip service to the Committee. He also asked Neala Trading Company to clarify if it had engaged with Ericsson and Vodacom to find out why it could no longer use its generators.
Mr Capa asked Neala Trading Company if it had communicated with Ericsson on the issues.
The Chairperson noted that two proposals were put forward: to give Ericsson an opportunity to respond, or allow the attorney to brief the Committee on what steps he had taken to address violation of the terms of the agreement.
Adv Walther said there were no issues with the old procurement officer of Ericsson. However, despite ongoing engagements with the new procurement officer and the agreement Ericsson has not performed its obligation to Neala Trading Company. Ericsson should be allowed to respond.
The Chairperson invited Ericsson to respond.
Response from Ericsson
Mr Shiletsi Makhofane, Head Government and Industry Relations, Ericsson, gave an overview of its focused strategy on enterprise and supplier development in South Africa. Enterprise and supplier development for SMME’s included training and certification on Ericsson equipment, occupational health and safety training, governance and compliance. Ericsson worked with SMME’s through contracts and provided governance forums through weekly operational and monthly business meetings.
Mr Marends van Berg, CEO: Ericsson, indicated the scope of work on Neala Trading Company’s contract. 375 sites were allocated to Neala Trading Company, Ericsson agreed to increase the passive sites but opportunity did not arise to increase the sites of passive maintenance because it has other contractors already executing the passive sites. In reducing payment terms to 14 days, Ericsson had assisted Neala Trading Company on health and safety readiness and putting governance issues in place. Ericsson is working on improving payment terms with Neala Trading Company.
Mr Mahomed Essof, Country Manager, stated that Ericsson had governance meetings but Neala Trading Company had not participated in any monthly governance forums. He had not received any invoice from Neala Trading Company. It had not followed specific structures to address payment issues and this made it difficult to pay its invoices. If Neala Trading Company adhered to payment structures it would be paid on time. Payment structures are the same for all contractors working with Ericsson. He assured the Committee that Ericsson was not bullying Neala Trading Company. Neala Trading Company is now on Level two compliance on occupational safety. Neala Trading Company was approached to take some passive sites but it refused.
Dr Dlamini-Zuma observed that Ericsson had not responded to the question of why it had not paid Neala Trading Company and it had not indicated that Neala Trading Company had not complied with the contractual terms. The statements from Ericsson officials are inconsistent and its officials had not answered the question on generators. She requested specific and straight answers.
Mrs N Mthembu (ANC) observed that Ericsson was doing an injustice to its image. Ericsson had made commitments when it attended the meeting in December 2016, but is not performing its obligation. The compliance issues being raised now were new and not part of the agreement in December, 2016.
Mr Chance observed that the points raised by Members were right. CEO’s do not pay attention to the business of SMME’s and do not see the business from BBEEE as a competitive advantage. The main objective was not to develop supplier enterprise because it has been provided for on BBBEE companies. The challenges were beyond the scope of DSBD and the Committee had to involve the Department of Trade and Industry (dti) to fashion out ways to incentivise big businesses to pay small businesses and empower them on occupational safety issues. Owing small business about R650 thousand was unacceptable.
Mr Capa observed no sign of sympathy on Ericsson’s part and it had not responded to the questions. He also observed that there were signs of bullying in this case. He asked Ericsson why it did not fulfil the obligations of the agreement. He did not appreciate the team from Ericsson lecturing the Committee on its policies.
Mr S Bekwa (ANC) asked how Ericsson dealt with payment of invoices and how it counted its 14 days payment to service providers. Ericsson could not say that Neala Trading Company did not attend monthly meetings on governance issues. Adv Walther had indicated that the passive sites that Ericsson was supposed to allocate to that Neala Trading Company have been assigned to other companies. The working relationship was not right because Ericsson stated it did not allocate the passive sites due to lack of opportunity.
Mr Kruger observed that Ericsson saw small businesses as children that could be given dummies such as level two occupational safety accreditation. He appealed to Ericsson to pay Neala Trading Company for services rendered because it needed the cash flow. He asked for clarity on whether the additional passive site maintenance contracts awarded to other parties was before Ericsson signed the agreement in December, 2016 or after. He asked Ericsson to state the challenges it had in paying Neala Trading Company and give an update on its accumulated invokes.
Rev Meshoe said it was apparent that Ericsson was bullying Neala Trading Company. He asked Ericsson to clarify if Neala Trading Company had really ignored invitations for monthly occupational compliance Governance meetings or if Ericsson had ignored agreement because the old Chief Procurement Officer left Ericsson.
The Chairperson said the Committee became involved in the matter because Neala Trading Company was a valued and old service provider to Vodacom. She reminded all present how the issues started and that Vodacom and Ericsson had agreed to work out the sub-contracts with Neala Trading Company. During the meeting, Ericsson had agreed to upskill Neala Trading Company to ensure its scope of work increased because it could not pay it for income lost. Ericsson had not responded to why Neala Trading Company was told to acquire generators and is now saying it could not use its acquired generators anymore. During the resolution, it was agreed that Neala Trading Company would not be victimised by Ericsson for bringing the case to the Committee. The Committee needed to consider if it would initiate laws to stop big business from bullying small business.
Mr Mabasa said stakeholders needed to fashion out ways to incentivise big business to assist in enterprise development of small businesses.
Mr van Berg clarified concerns raised and indicated that Neala Trading Company did not understand the process of presenting invoices
The Chairperson interjected and remarked that the Committee wanted specific answers. She recalled that the commitment of Ericsson was that undisputed invoices would be paid within 14 days while disputed invoices would be paid in 30days. Hence an excuse of mismatch could not be the reason why invoices of January and June were not paid. She asked the CEO to state how long it took Ericsson to correct mismatch and pay invoices which should be paid in 30days.
Mr van Berg stated that it was not part of the contract that Ericsson would pay within 30days.
The Chairperson said it might not be part of the agreement that Ericsson would pay within 30days but Ericsson had made commitments to the Committee to pay disputed invoices within 30days. Since Parliament was the highest decision-making body in the country Ericsson needed to honour verbal agreements.
The CEO assured the Committee that it took the Committee seriously and would expedite payments soon but Neala Trading Company needed to comply with its payment terms.
Mr Capa said the Committee wanted a clear commitment that Ericsson would pay Neala Trading Company.
Dr Dlamini-Zuma said it was disappointing that the CEO was not specific on the issues of payment. She asked Ericsson why it was treating Neala Trading Company as if Ericsson was the first company that it worked for.
The Chairperson said the Committee was committed to championing the cause of small businesses and would not relent until small business was treated fairly by big business.
Mr Dirks observed that Neala Trading Company had raised specific issues but Ericsson had spoken in general. He asked the CEO to address the issues raised.
Mr Kruger said Ericsson was wavering and remarked that Government needed to show its might. He proposed that the Committee needed to discuss with Ericsson via Vodacom.
Rev Meshoe indicated that since Ericsson had the capacity to pay Neala Trading Company it should state the timeframe of paying the owed invoices.
Mr Makhofane responded that when it came to paying invoices, Ericsson would examine the issues and make a submission on when it would pay the owed invoices. He confirmed the number of passive sites allocated and stated that Neala Trading Company had compliance issues. Also, Neala Trading Company must make commitments to attend monthly governance meetings. Vodacom was implicated concerning generators acquired, Ericsson would engage with Vodacom on the way forward. Ericsson made commitments to train Neala Trading Company on occupational health and safety and would fulfil its commitments.
The CEO stated that Ericsson had not allocated new work to its other sub-contractors. Hence, he had stated that there was no opportunity to allocate passive sites to Neala Trading Company.
The Chairperson asked the CEO to clarify inconsistent statements. The CEO had indicated that Ericsson was not opportune to allocate passive sites to Neala Trading Company but his colleague stated that Ericsson had been approached but had refused.
The CEO explained that Neala Trading Company did not want to receive the sites allocated because of the terrain of the area.
The Chairperson asked the CEO to clarify why Neala Trading Company was given only 375 out of the 585 passive sites it had with Vodacom when it signed contracts with Ericsson.
Ms Numsu Sowru, Director, Neala Trading Company, said she handled all invoices given to Ericsson and no passive sites were offered to Neala Trading Company. Also, the company had approached Ericsson many times for monthly governance meetings but Ericsson had declined.
Mr Dirks appealed to Ericsson to pay Neala Trading Company on time because it could not survive under the lengthy payment periods. Also, small business did not have resources to take Big business to court. He encouraged Ericsson to resolve matters with Neala Trading Company amicably because small business needed good working relationships with big business.
Adv Walther indicated that the 375 passive sites were arbitrarily reassigned after the sub-contacting to Ericsson. He did not accept that payments and site allocation were based on standards outside the contract. He asked Ericsson to explain how 585 passive sites became 375, why payment of invoices had not been sorted and why the promised new passive sites have not been allocated.
Mr van Berg said regarding the payment of invoices, Ericsson would send written reports on timeframes for payment.
The Chairperson observed that the passive sites were allocated originally to Neala Trading Company. She asked the CEO to explain when it would reassign the sites back to Neala Trading Company. If it were easy to take sites from Neala Trading Company and allocate them to another contractor it should also be easy to ask the contractor to release the sites because the sites were allocated in error. She mandated Ericsson to reassign the sites to Neala Trading Company.
Mr Kruger asked the CEO to confirm if the new contractors allocated Neala Trading Company sites were not family or friends.
Mr Mahomed Essof confirmed that Ericsson did not have any relationship with the new contractors
Mr Capa stated that he heard vague commitments by Ericsson hence, he asked it to inform the Committee on time frames for paying Neala Trading Company its owed invoices.
Rev Meshoe supported the Chairpersons’ proposal that if it was easy to take sites from Neala Trading Company and allocate it to another contractor it should also be easy to ask the contractor to release the sites because the sites were allocated in error.
Mr Makhofane indicated that Ericsson would go back and address the issues that did not make it pay Neala Trading Company.
The Chairperson observed that even if there were disputed invoices they should have been paid in the time that had elapsed since invoices were presented in January and June, 2017. Ericsson did not have an excuse for not paying hence, she requested Ericsson to commit itself on the time frame for payments. If Ericsson owed a big company it would have incurred legal costs but Ericsson was wavering because small businesses could not afford legal representations. The Committee would not rest until Neala Trading Company was paid.
Mr Makhofane assured the Committee that Ericsson would pay outstanding January and June, 2017 invoices in 14 days and would look at ways to pay the R650 000 subsequently.
The Chairperson observed that Vodacom was the owner of the contract initially. She asked Vodacom what monitoring and evaluation processes it had in place to ensure that small businesses were paid on time. She also asked how manufacturing companies provided project management services.
Mr Andries Delport, Chief Technical Officer: Vodacom, said Vodacom worked with Level two companies. As part of its monitoring and evaluation it had working review sessions with suppliers to discuss operational matters. However, it did not intervene in legal issues between its level one and two contractors. Vodacom has monitored operations between Neala trading Company and Ericsson but was not aware of the payment issues between both companies. Its project management arm has grown SMME base through its enterprise management drive. Vodacom enforces fair and preferential treatment between its contractors. Vodacom has achieved a payment timeframe of 14 days on invoices. Vodacom would buy the acquired generators from Neala Trading Company at market related prices and intervene to resolve the payment issues between it and Ericsson.
The Chairperson observed that it was obvious that big and small companies had business relationship challenges. She supported Mr Chance’s stance that the issue of CEO’s being responsible for enterprise development had to be revisited. The problems of South Africa were poverty, inequality and unemployment and only small business had the potential of solving these problems. Only small businesses could create jobs because big businesses used equipment. Also, small businesses were started by unemployed people and had the potential to created other jobs, reduce inequality and poverty. An economy that was built on social grants could not be sustained by Government. Increasing the tax paid by big business to continually fund social grants and welfare packages to address poverty, inequality and unemployment would only lead to such big business leaving the country. Hence, the best way to address dependence of citizens on Government through social grants and welfare was to find a way to ensure that big business empower small business enterprises.
Mr Dirks indicated that he had not heard Neala trading Company’s response to Vodacom’s commitment.
The Chairperson said Vodacom had offered to buy Neala trading Company’s generators at market related prices but the Committee would not get involved because it had an attorney to negotiate on its behalf.
Mr Dirks asked Neala Trading Company if 14 days was enough to deal with issues of payment.
Adv Walther replied that 14 days was enough but Ericsson had not replied to the question of allocation of passive sites.
The Chairperson said she was not sure that Ericsson would give an answer yet but she stated that after 14 days the Committee would invite Neala Trading Company for feedback on the case.
Mr Dirks asked for the party that would be responsible for the cost incurred.
Mr Mabasa indicated that the Committee would not want to invite the parties again but this would depend on whether the issues were resolved.
Mr Kruger said the Committee wanted to ensure that Neala Trading Company would not be victimised and asked Ericsson for its assurance in that regard.
The Chairperson said follow-up did not necessarily mean being invited to Parliament. If the parties communicated and a meeting is scheduled in any Province, Members residing in such Provinces would be delegated to attend such meetings. The Committee had ways and means to implement its decisions to protect Neala trading Company.
Mr Mabasa pleaded for ideal solutions between all parties, it was only when failure occurred in resolving the crises that the parties would be invited to Parliament again. He asked each party to give feedback to the Committee.
Mr Makhofane agreed with the Committee that both parties did not need to come back to the Committee on the matter and made commitments that the situation would be resolved.
The Chairperson proceeded to address all present on the purpose of the meeting with the Telecommunication sector. She stated that the establishment of DSBD had raised a lot of expectations for SMMEs and Cooperatives. DSBD is dealing with challenges as a result of the introduction of new technologies by big businesses and lack of regulation of business by Government. Engagements with the Telecommunication sector sought to achieve whether the issues raised on the relationship between big and small businesses existed or not. Also, the meeting sought to identify if there was a need to resolve these issues, establish the need to resolve the issues if existed, and identify if the policies designed to promote small business were being implemented, and also establish if policy gaps existed and design a way forward if the policy gaps existed. She asked the sector to consider that the country was facing challenges such as poverty, inequality and unemployment and the National Development Plan had identified small business as the key to job creation. The meeting was not convened to blame any party but to recognise the need to promote and protect small business and resolve ways to achieve the growth of small businesses. She invited comments.
Mr Kruger supported the Chairperson’s proposal but without electricity small business could not operate. Hence, the Committee needed to address situations where State enterprises bully small business.
Mr Mabasa observed that some companies had responded to some of the concerns during the meeting. He pleaded with other big businesses not to make the same mistakes in its business principles and relationships with small companies.
Mr Joshua Moela, Managing Executive Government Relations: Cell C, observed that enforcing the principles of business relationship lay with the Department of Trade and Industry (dti) while the policies were made by DSBD. Enforcement should reside with DSBD. Although, there are legislations on BBBEE the regulations were not aligned hence, Parliament needed to find ways to make the regulator enforce legislation.
Mr Lucas Ndala, Chief Operating Officer, Telkom Society Limited Open Serve, stated that big companies needed to ensure that small companies were carried along in the new industrial revolution. Also, infrastructure and regulations need to be put in place to ensure that the public sector tackles the challenges of employment, inequality and poverty. He outlined the various initiatives launched by Telkom to empower SMMEs for enterprise development.
The Chairperson asked big businesses to be specific in their responses and admit if it saw challenges in the relationships between big and small businesses. She asked big businesses to confirm if a workshop was needed to resolve the challenges.
Mr Ndala indicated that Telkom had identified the challenges and had engaged with SMMES to address the challenges.
Mr Siyabonga Mahlangu, Group Executive Regulatory Affairs, Telkom, said partnerships needed to exist amongst stakeholders to ensure that good relationships were developed between small and big businesses.
Ms Taki Netshitenzhe, Chief Officer Corporate Affairs, Vodacom, said the Department of Telecommunication and Postal Services and ICASA had published a Policy and Regulatory Alert summary on the White Paper on National Integrated Information and Communication Technologies (ICT) policy on SMME issues in March, 2017. She acknowledged that policy making was the purview of Government but partnerships were the only way to address the issues of relationships between big and small businesses. The Minister for Telecommunication and Postal Services published a White paper on ICT on 28 September 2016, and Vodacom supported the White paper on oversights in ICT. Vodacom supported workshops to address the issues of relationships between big and small businesses. Hence it would be organising an Open day before the end of the year. She invited the Committee to the Open day.
Mr Trevor Msimang, General Manager BBBEE Compliance, MTN SA, agreed with the Chairperson’s stance that there were challenges in the relationships between big and small businesses and supported a need to fast track transformation.
Mr Jacky Zhang, Deputy Chief Executive Officer Huawei, said it complied with local laws and regulations and had put programmes in place to develop small business. Huawei had identified the business relationship challenges between big and small businesses because it had started out as a small business. He outlined the initiatives used by Huawei to develop SMMEs and stated that Huawei was committed to giving SMMEs support.
The Chairperson stated that although the Committee appreciated what big business was doing to empower small business the aim of the meeting was to identify if there were challenges in the relationships between big and small businesses. These challenges were evidenced by complaints received by the Committee daily on relationship issues between big and small businesses. Hence, the Committee identified that there was a challenge in resolving these issues and convened the meeting to confirm if these issues existed and find ways to combat it.
Mr Dirks indicated that the first challenge he picked up on joining the Committee recently was how the relationship issues between big and small businesses could be resolved, because the Committee could not sit every day to resolve these issues as it had other mandates. Although, the Committee would continue to champion the cause of small business, the DSBD needed to find another way to deal with these issues at another level.
Mr Bekwa observed that big businesses were pretending not to understand the challenges that small business was facing. Government wants to radically transform the economy; hence, big business need to commit to provide enabling environment for small business to grow the economy to ensure jobs were created.
The Chairperson observed that when the invitation to attend the meeting was sent, companies had discussed one on one with her but there was a disjunction now because big businesses were not addressing the issues raised. Telkom had explained the way forward in a simple manner during its earlier engagements. She asked the companies to address how to resolve issues that arose as a result of new technology which led to loss of jobs because new skills were needed.
Mr Themba Kinana, Managing Executive Corporate Affairs, Vodacom, stated that in the townships and rural areas, it had embarked on transfer of skills to promote the growth of the economy. He agreed with the proposal to convene a workshop to find ways to develop enterprises, create jobs through re-skilling and resolve business relationship issues between big and small businesses so as to address the three main challenges in the country.
Mr Kruger appreciated Vodacom for the solution offered.
Mr Makhofane stated that Ericsson would examine internal operations to address the issues.
The CEO Ericsson said Ericsson was looking at initiatives to empower companies.
Mr S Mncwabe (IFP) was pleased that big business was making commitments to assist with local enterprise development. Big business benefited from rural/township areas. He asked Telkom for clarity on whether ig removed money for airtime from employee salaries.
Mr T Mulaudzi (EFF) asked why DSBD had not organised an indaba to ensure all big business assisted with radical transformation of the economy.
The Chairperson said the Committee was pressed for time because of the house sitting. She invited the representative for Mobile Diesel Power Systems (MDPS) Mr Hilton O’Dwyer to give the Committee feedback on the maintenance issues with Ericsson.
Brief by Mobile Diesel Power Systems
Mr Hilton O’Dwyer, representative for MDPS, highlighted how Ericsson had not respected rules, how MDPS had been affected by the contracts between Vodacom and Ericsson and addressed the issues that the Chairperson had presented. He indicated that Vodacom maintained the rules of the contract it had entered with MDPS 20 years ago. However, Ericsson had breached the sub-contract it had entered with MDPS one and a half years ago. These challenges occurred when the new management had not followed the obligations on the contract. Disputes occurred because about 50% of the contract was breached by Ericsson itself. MDPS had increased staff and acquired new generators based on the contract but the breach by Ericsson resulted in a negative situation for MDPS. Administrative challenges had been ongoing because of the contract breach.
He proposed that while Ericsson and Vodacom were resolving its challenges MDPS had to be re-instated. He informed the Committee that one of the parties was about to end the contract. Hence MDPS wanted assurance that if Vodacom had a new contractual party its services would be retained. He suggested urgent engagements between MDPS and Neala Trading Company the small companies, and Ericsson and Vodacom the big companies, to forge better business relationships. Challenges occur because big companies were not respecting the rules. He suggested the revival of Small Claims Courts that dealt with administrative issues without the presence of a lawyer. These Small Claims Courts would ensure that small companies table their relationship issues with big companies and receive favourable resolutions. Also, the Small Claims Courts needed to be in every region to ensure that small business did not incur travelling expenses in resolving relationship issues between it and big companies.
Mr Kruger agreed with the Committee’s proposal that Ericsson and Neala trading Company resolve its challenges in a week’s time and the Committee follow-up after two weeks.
Mr Dirks agreed with Mr Kruger that the challenges needed to be resolved but emphasised the need for engagement on the issues through a workshop.
The Chairperson said there was need to engage on how to ensure that there was compliance on maintaining the principles of business relationships. There was also a need to protect small business against bullying by big business. She noted that Vodacom had made a proposal on the way forward that did not involve the Committee. There were still outstanding issues between Neala Trading Company and Ericsson and between MDPS and Ericsson. Ericsson would be quitting the contract between it and Vodacom, hence she mandated Vodacom to ensure a smooth transition for the exit by making sure that it handled the exit better than when Ericsson came in. The Committee would have more engagements with MDPS and Ericsson on the way forward.
The meeting was adjourned.
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