Progress of National Industrial Participation: briefing

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
11 June 2003
BRIEFING BY THE DTI ON PROGRESS OF NATIONAL INDUSTRIAL PARTICIPATION

Chairperson: Dr. R Davies

Relevant documents
 

 

Progress Report on National Industrial Participation Programs[PowerPoint Presentation]
DTI Report on Projects of National Industrial Participation Programme (June 2003) shortly available on DTI website

SUMMARY

 

The progress report presented by the DTI informed the committee about the various projects undertaken through the National Industrial Participation Program. It emerged that the projects were running and that investment was taking place and new jobs created. It was anticipated that more jobs would be created until the program ended in 2011. The DTI pointed out that most projects were non-defence in nature.

MINUTES
Mr. L October, the deputy Director-General, addressed the committee as in the Powerpoint presentation attached. He pointed out that at last year's meeting, the committee had raised questions about the number of jobs created, geographic equity and BEE. The report presented attempted to address these issues. In summary, 74 projects were currently running and 6543 jobs had been created. Most of the projects were non-defence. One of the conditions placed on obligators were that sales and exports be part of the project and that it be sustainable. He pointed that contracts do not include BEE and SMME involvement, but since last year, obligators had to submit a report on this. The DTI did not control purchases, but ensured that the programs benefited South Africa. Eight provinces were currently benefiting except the Northern Cape. Non-defence obligators flow mainly from purchases made by SAA and Telkom. Out of the SAA contracts, Boeing and Airbus were now involved in projects. From the Telkom contracts, Siemens, Alcatel and Ericson were involved in projects. One of the key pillars of the program was job creation although the 6000 crated would not seem much to people.

Prof. Turok (ANC) asked how firms participated in the program. It was not clear if the DTI found them or how firms found out about them. The projects also seemed very technological. He wanted to know whether the DTI had this kind of expertise. Mr. October said that companies would normally look for a project in South Africa. The government had also identified areas in which there were gaps. Some South African companies also approached the DTI to become involved in projects. The DTI worked with a committee of sector experts on the technology needed. Other experts such as MINTEK and the CSIR were used to help.

The Chair said that according to the tables in the report, 9 000 jobs were created yet it had been mentioned that 6543 were created. He wanted clarity around this and also about the milestones for 2003/4 which was estimated to be 4 billion at the Joint Investigation Report hearings. The Chair also wanted to know what steps had been taken to tighten legal matters with obligators and credit which were given. These had also been raised at the Joint Investigation Report hearings. Mr. October said that the number of jobs were not stipulated in contracts but companies had to report about them. The 6 000 jobs quoted were actual jobs that exist at present. It was hoped that 9 000 would be created once all the projects, that were running at present, were completed. The milestone for 2003/4 was 3.9 billion. This would be achieved . The DTI had obtained legal opinion concerning contracts. It was found that they met standards. Penalties of 5% - 10% were enforced for non-delivery. Referring to the credit given, Mr. October said that the bulk of the projects would not have happened if these companies were not involved and therefore credits were justified.

Mr. Rasmeni (ANC) said that the geographic spread was an improvement. He asked whether the projects in the rural areas were targeting the poor and whether SMMEs and BEE companies were being used. He also wanted to know what informed the geographic spread and how communities are identified for projects. Mr. October said that the DTI tried to influence locations ,but that economic viability was normally the deciding factor.

Prof. Ripinga (ANC) said that it seemed as if the projects were mainly in the urban areas. He was also concerned that the fact that most projects were of a technological nature, that it would exclude previously disadvantaged individuals since there was backlog here because of the past. He asked for a demographic breakdown in the projects. Mr. October said that the high technology projects in the rural areas added value to the area. There was also a focus on agriculture and tourism in the projects in rural areas. No demographics had been asked for when the DTI had approached companies for the number of jobs. Most companies were however employing previously disadvantaged individuals. It was possible that in the high technology field, previously disadvantaged individuals were under represented. This however must not be seen in isolation of the government's job creation policy.

Mr. Lowe (DA) wanted to know how the number of jobs compared with the targets set. There had also been reports about the Corvettes being wired incorrectly. He wanted to know how this had affected South Africa. Mr. October said that the targets set in 2001 was 14 000 direct jobs for the full program. The program ended in 2011 and new jobs would have to be identified. The wiring of Corvettes had had no effect on the obligations of the company involved and that these still had to be delivered.

Mr. Rhoda (NNP) wanted to know whether the gold beneficiation could be done cheaper in South Africa and whether this would be expanded. Mr. October said that it was an advantage doing the beneficiation in South Africa and that local mining technology was being used. There was also plans to expand the project.

The meeting was adjourned.