Economic Development Department on Quarter 3 performance; with Minister and Deputy Minister

Meeting report

Minister’s overview

Mr Ebrahim Patel, Minister of Economic Development, introducing the Department’s third quarter performance and expenditure report, said the economy grew by 3.1% during the period, compared to the previous year. The highest growth industries were agriculture (37.5%), trade (4.8%) and manufacturing (4.3%). Contraction occurred in construction (-1.4%) and mining (-4.4%). The annual gross domestic product (GDP) for 2017 was estimated at 1.3%, which was higher than earlier anticipated. Agriculture saw the highest growth (17.7%), followed by mining (4.6%) and business services (1.9%), with contractions in manufacturing, construction and trade. Government and public enterprises’ capital expenditure was 1% less than in 2016 in real terms, but encouragingly the private sector spent 1.2% more after two years of decreases. The GDP results contained provincial breakdowns for 2016. Gauteng, KwaZulu-Natal (KZN) and the Western Cape remained the largest provinces by output value, and together made up 65% of the GDP.

In this quarter, 21 000 jobs were lost, reducing the number of total jobs to 16 171 000. The number of unemployed also decreased by 330 000, taking it to 5 880 000. As a result, the unemployment rate decreased from 27.7% to 26.7%. However, the number of discouraged job seekers increased by 103 000. For the year as a whole, 102 000 jobs were created, against the labour force increase of 202 000. As a result, the unemployment rate at the end of 2017 was 26.7%, slightly up from 26.5% at the end of 2016.

The Minister said that the New Growth Path (NGP), adopted in October 2010, had set an original jobs target of 13.6 million by 2020, which had meant five million new jobs in 10 years. The National Development Plan (NDP), adopted in September 2012, had set a new target of 23.8 million jobs by 2030, incorporating the NGP targets. Although it extended the period over which targets were set by a further 10 years, it had raised the number of new jobs to 9.2 million over an 18-year period.

Department’s main focus areas

Minister Patel said there were five main focus areas for the Economic Development Department (EDD). These were:

• Old Mutual’s return to South Africa;
• Regional integration (with focus on Zimbabwe);
• Inclusive Growth Symposium;
• Competition legislative changes;
• Cross-cutting initiatives.

Old Mutual’s return to SA

Old Mutual, which was currently headquartered in London, had engaged government on a plan to shift its headquarters and primary listings to South Africa. A significant agreement on public interest commitments had been reached to facilitate Old Mutual’s return. The move back home of one of South Africa’s premier financial institutions would help to inject investor confidence into the economy and grow the economy, unlocking the country’s potential for job creation and economic inclusion.

The agreement reached between the EDD and Old Mutual included:

• Enterprise development commitments -- a new R500 million fund to promote small business and job creation, and support for preferential procurement from black-owned businesses, small, medium and micro enterprises (SMMEs), and enterprise development programmes.
• Black Economic Empowerment (BEE) -- increasing its BEE shareholding to at least 25% within three years, including through employee share ownership, and improving its BEE shareholding thereafter to be equal to the best in the industry.
• Employment – no retrenchments as a result of the transaction, and the relocation of high-level skills to South Africa, with 50 new jobs created locally.

Regional Integration

The Minister stressed that mutually beneficial trade between South Africa and the rest of Africa was an important dimension of regional solidarity and a key way to enhance South Africa’s economic opportunities. In 2017, exports to the rest of Africa totalled R314 billion, representing 26% of all SA’s exports, and the total value of trade had been R430 billion -- a strong positive trade balance of R116 billion. Regionally, only Asia had a higher level of SA exports. In 2017, 7% of cars made locally, 28% of trucks and 48% of machinery and mechanical appliances, went to African countries. There was, however, stiff competition in the region, especially from China. African Foreign Direct Investment (FDI) stocks indicated that in 2010 China held a comparatively small amount of investment stocks in the continent, but this had almost trebled by 2015, making China a larger investor than South Africa and the fourth largest overall.

Angola imported a wide range of manufactured goods from Portugal and Brazil, and applied high tariffs on manufactured imports from South Africa. South Africa faced tough competition from international companies. Its market share needed to be continuously supported and it had to to enhance its competitiveness.

Zimbabwe’s economy had been through an extended period of volatility. A contributor to the weak average growth had been the price volatility. South Africa dominated in many exports to Zimbabwe. Its trade with Zimbabwe in 2016 included R29.3 billion in exports and R5.7 billion in imports, representing a R23.6 billion positive trade balance. Zimbabwe’s main export to South Africa was nickel, which at R3.6 billion accounted for almost a third of SA imports from the country, followed by tobacco and chromium.

In 2016, South Africa had exported just more than R1 billion worth of trucks to Zimbabwe. This was South Africa’s third largest export item after electricity and maize. It was the largest truck supplier to Zimbabwe, providing half of Zimbabwe’s trucks in 2016, with Japan and the United Kingdom (UK) also playing prominent roles. Together, these three countries had accounted for 84% of truck imports in 2016, but both Japan and the UK had increased their share over this period at SA’s expense: Japan had had only 1% in 2009, and 27% by 2016, while the UK had gone from 2% in 2009, to 8% in 2016.

In February 2018, the Zimbabwean Reserve Bank had given a 2018 growth forecast of 4.5%. This would mean that higher growth in Zimbabwe could generate more SA export earnings and open up new opportunities. South Africa could expect strong demand for cars, trucks and other manufactured items as the Zimbabwe economy recovered. However, competition would come from Japanese and Chinese products.

Inclusive Growth

The EDD, together with Wits University, had hosted Nobel Laureate Joseph Stiglitz at an Inclusive Growth Symposium in November 2017. The symposium had been well attended by around 70 stakeholders. Professor Stiglitz’s presentation had highlighted the need for an emerging development strategy, the key elements of which included:

• Manufacturing -- niche manufacturing; more complex products; strengthening links between modernised agriculture and manufacturing; and maximising learning from industrialisation through South-South cooperation (trade) and taking advantage of natural resources
• Natural resources -- maximise revenues from natural resources; contracts to be complemented by excess profit taxes; a sovereign wealth fund to manage cycle variability and prevent exchange rate appreciation; and an industrial policy to exploit a variety of forward, backward and horizontal linkages.
•  Agriculture – a robust agricultural sector was needed to provide full employment, including by stimulating manufacturing and services; adding a learning dimension to agriculture and other sectors, as modern agriculture can be very “advanced;” and focusing on non-labour saving innovations and learning
• Service sector – a move to the service sector may have many implications, such as smaller production units with lower productivity growth; less research and development (R&D), requiring more cooperative and government R&D; an increased need for government to push “creating a learning society” to reduce productivity differences across firms; and compensation linked to individual productivity, with greater differences in productivity within and between firms, may lead to greater inequality.

Key issues raised during the symposium discussion included the need for competition regimes to address new technological challenges; for Africa to trade within the continent; and for improved coordination and cooperation on tax matters. Also highlighted were the importance of educational reforms to prepare the country for the 21st century; the importance of developing country specific and further measures to address inclusion, including corporate reforms; and ensuring trade negotiations not only pursued shareholder interests but represented society and labour interests.

Competition: Legislative Changes

During February 2017, the government had announced that changes would be made to the Competition Act to address high levels of economic concentration in SA. In May 2017, the Ministry had publicised the terms of the proposed review of the Act. An expert panel had been set up, and based on its findings, a Bill had been developed for discussion within government.

Areas for improvement from the review of the Competition Act, 1998 (Act 89 of 1998) included strengthening the capacity to address the abuse of dominance and high levels of concentration, strengthening and formalising the market inquiry system, and enhancing the capacity and efficacy of the competition regulatory authorities and their processes.

During the quarter, discussions had taken place within the Economic Cluster. Cabinet had considered the Bill and, with changes, had approved that it be released for public consultation. The bill had been gazetted on 1 December 2017. Sixty days had been provided for members of the public to comment before Cabinet resubmission and tabling in Parliament would occur.

Cross-cutting initiatives

A number of actions had impacts across more than one key performance indicator (KPI). A few examples of these included actions on the unblocking of the land purchase conditions for the Saldanha Industrial Development Zone; support for the City of Cape Town on the water crisis; and engagement with the Massmart Supplier Development Fund and the announcement to continue its programme beyond the mandatory period.

Public advocacy efforts included the Ministerial visit to Highveld Steel and Industrial mills, engagement with the Standard & Poors ratings agency, a strategic session on the African Growth and Opportunity Act (AGOA), a labour law conference to engage the legal fraternity on the key issues related to competition law reform, and engagement with business leaders on economic confidence.

Fourth Industrial Revolution

In the first quarter, the EDD had reported to Parliament that it would host a symposium on the Fourth Industrial Revolution, and in the third quarter the Minister had hosted it with speakers that included Ministers, Deputy Ministers and chief executive officers (CEOs). The objective of the symposium was to discuss the Fourth Industrial Revolution’s impact on economic development in South Africa and to develop a country agenda with a collective view from all stakeholders, including opportunities and threats. Among the issues discussed were jobs, information communication technology (ICT) infrastructure, knowledge and skills, research and development, big data storage, start-up culture, entrepreneurship, market data inquiry and ethics.

The following 14 key work streams areas were identified:

• The mapping and monitoring capability of the Fourth Industrial Revolution in SA;
• The need to monitor the impact and opportunities for industry;
• E-government - delivery of services, cooperative governance, democracy, participation and accountability;
• The range of private and public services, such as health and education;
• Issues of spatial dimensions -- urban planning and its impact on transport systems;
• Infrastructure requirements for ICT and energy;
• Skills -- coding, new careers, how to learn with new technologies;
• Investment -- increasing R&D funding, science and technology capability, industrial funding for commercialisation;
• Jobs -- social policy, wages, participation in the economy;
• SMMEs and entrepreneurship - large and small businesses;
• Smart regulation -- information ethics, big data, perhaps a conference on competition in the digital age, financial innovation;
• African strategy;
• Global partnerships – engaging global players, harnessing domestic capital;
• Communication – inclusion.

Mine Rehabilitation

There had been an increase the number of mines shutting down their operations in South Africa, mainly due to the subdued global demand. Government had promulgated tighter regulations to prevent the problem of abandoned mining operations, which reduced the socio-economic opportunities in mining communities and had a negative impact on the environment as a whole. In the third quarter of 2017, mining had contributed 2.8% to employment.

The Department of Mineral Resources (DMR) had reported a total of 5 976 derelict mines in February 2017, and estimated it would cost R2 billion to rehabilitate 245 former asbestos mining sites and R45.9 billion as the estimated closure cost for other derelict mines. The mine rehabilitation unit within the DMR rehabilitates an average of 10 historically abandoned mines per year. R27.5m had been spent in 2016/17, along with 189 jobs created on rehabilitation. Economic opportunities associated with mine rehabilitation included the rehabilitation of mines for socio-economic use; agromining; and rehabilitation for agriculture and brick production, using mining waste.

Agriculture

Nationally, at the beginning of 2015, agricultural jobs totalled 891 000. Jobs had remained fairly constant during the course of 2015, with job losses occurring only in 2016 and in 2017. In the third quarter of 2017, total agricultural jobs stood at 849 000 -- 5% fewer than at the height of the drought in the second quarter of 2015.

The EDD, in collaboration with the Ndlambe Local Municipality in the Eastern Cape, had convened a conference to identify economic opportunities and challenges in the area. Before the conference, the Department had visited chicory, beef and dairy producers as part of stakeholder engagements to assess their needs and challenges. Chicory had been identified as a key driver of growth for the local economy and stakeholders needed increased access to markets. There were over 200 participants.

Participants asked for some time to consolidate their local collaboration and develop their local Economic Development Plan. They would identify opportunities for which there was local capacity and those that might require interventions in other spheres and by external investors. They asked the team led by the provincial Department of Cooperative Governance and Traditional Affairs (COGTA) to assist them in this process The Deputy Minister had stressed the need to map out an agriculture value chain and develop the chicory industry; craft a plan to integrate commercial and emerging farmers to leverage on each other’s resources; support other economic sectors within the agriculture value chain; and revitalise and transform the trade sector to reflect the demographics of Ndlambe and adequately meet the needs of residents.

Social Accords

The October 2012 Social Accord had established processes to address socio-economic challenges and social unrest in the mining towns. Signing of the Social Accord with government, business and labour had led to the following commitments:

Part 1: Restoring confidence in labour market institutions, addressing income inequalities and building social cohesion.

Part 2: Action to combat violence and lawlessness.

Part 3: Addressing socio-economic challenges.

Strategic Infrastructure Projects

18 construction update reports had been prepared for Cabinet and provided information on financial, employment, localisation and construction activities. They identified progress and actions that Cabinet needed to consider, ensuring the the infrastructure build programme would be implemented and would be able to boost jobs and growth.

CISCO, a steel factory in Cape Town, employed more than 100 people and planned to employ 500. They would be able to do so if they had scrap metal to melt. CISCO had contacted the EDD for help to purchase scrap metal at the Preferential Pricing System (PPS) price because it cost less than the export price for scrap. It had reported that the International Trade Administration Commission (ITAC) would not allow them to do so. The EDD interacted with the ITAC to understand the challenge, and had then advised CISCO on what actions to take. The result was that CISCO had addressed the challenges. ITAC had visited the plant and issued the company with approval for CISCO to purchase scrap metal at PPS prices. The outcome was that the substantial industrial infrastructure project was unblocked and had commenced operations

Industrial Finance

The EDD had evaluated and submitted a report on the Clothing and Textile Competitiveness Programme (CTCP). There were key findings of 148 respondents, representing 29% of the companies funded, were that growth between 2011 and 2016 had amounted to 61% in value added, 17% in employment and 24% in production. Customer return rates had improved from 3.6% to 2.2%, and on-time and full-delivery to customers had improved from 88.1% to 94.4%. Lost production time due to change-overs had dropped from 82 to 72 days. Companies that received funding had out-performed the sector.

Competition and Public Interest

The EDD had gazetted the Competition Amendment Bill. It had also intervened in mergers and assessed compliance with conditions in mergers. Its compliance report had covered Massmart and the Walmart Supplier Development Fund, AgriFund and the Clicks/ Netcare merger.

The Department’s report on its interventions in mergers included DENEB Investments Limited and New Just Fun Group (Pty) Ltd; Isuzu Motors (SA) (Pty) Ltd and General Motors (SA) (Pty) Ltd, and Dimension Data Holdings Plc and Hatch Investments (Mauritius) Ltd.

Compliance with AFGRI merger conditions: R90 million over four years to benefit emerging farmers; broken down into R60 million for farmer development and R30 million for other projects targeted at community and rural development. 40% Discount on storage for grain stored in AFGRI’s storage facilities for emerging farmers. R125 million was made available by the Land Bank to AFGRI for on-lending to emerging farmers. No retrenchments as a result of the transaction and no change of head office address.

In March 2014 the Competition Tribunal had approved the merger between Agrigroupe Holdings and Afgri with a number of conditions. Since then, AFGRI had trained 179 medium to large emerging farmers in areas such as farm business management, financial management and livestock and crop farming. A total of 324 micro-farmers had been trained in farm practices. The storage discount had amounted to R100 000 in logistical support to emerging farmers, and in 2016/17 the discount had been extended to 14 larger farmers, a benefit valued at another R200 000. Community/rural development projects had included 23 education projects that had benefited 7 443 learners, 21 food and water security projects that had benefited 8 476 community members, and six poverty alleviation projects that had benefited 1 094 community members.

The Minister had attended the Special Dispensation Pardon (SDP) showcase event held on 23 October 2017 to support the work of the Wallmart and Massmart Supplier Development Fund (SDF). Products that had resulted in import replacement included:

• An ITC ladder (aluminium inputs locally produced);
• An active factory (toilet seats previously imported from India);
• A noodle factory, which initially had 25 employees and a 25 000-ton capacity, and now had 170 employees and a capacity of 175 000 tons;
• Pearl coral,

Export penetration had been achieved for aerobotanics ethnic hair care products and Umlilo charcoal.

An analysis of the SDF showed that administration costs were regarded as too high. After an engagement, however, the company had agreed to lower them. 1 755 jobs had been supported, including 682 in clothing and textiles, and 320 in bricks.

Regarding administrative efficiencies, there had been Ministerial oversight engagement in the process leading to the appointment of Mr Meluleki Nzimande as Chief Commissioner of ITAC, of Mr Dumisani Mbambo as Deputy Chief Commissioner, and the reappointment of part-time Competition Tribunal members, Prof Imraan Valodia and Mr Anton Roskam

The Department had exceeded it human resources target of 50% for gender equality, and met the 2% national target for people with disabilities of 2%.

Financials performance

By 31 December 2017, the Department had spent R611.1 million of its adjusted allocation of R914.2 million, which amounted to 67% of the budget. For the third quarter, it had spent R187.8 million of the targeted R220.7 million (85%), made up of transfers of R155.3 million to entities, and R32.5 million spent directly by the Department.

The main cost drivers in non-core functions were office accommodation costs in corporate services; legal fees in corporate services; travel and subsistence; and audit costs in financial management for the Auditor General.

Discussion

The Chairperson thanked the Minister for the detailed report and the extent of information that was given, especially when looking at the economic performance and trade data, and for sharing the information on the symposiums that had been held regarding the fourth industrial revolution. She appreciated the extent of the explanation regarding the mining rehabilitation and the associated research being done, especially the comparative information with other countries which would serve to the benefit of other committees as well, such as the Portfolio Committee on Mineral Resources. The drought information was very important, especially regarding the agricultural sector’s performance and job losses in that sector.

Mr P Atkinson (DA) asked whether the increased GDP figures of the third quarter would result in the restating of the GDP figures going forward, and how this would that affect future forecasts. What was the reason for the significant contraction in the North West of about 3.4% to 3.6%, what mitigation was being done? He was unsure if the Council for Scientific and Industrial Research (CSIR) had been invited to the fourth industrial revolution seminar, but thought it would have been a good organisation to have there, as it would be vital to anything regarding a fourth industrial revolution. He commented that earlier on in the term, mention had been made of the dam that was being built in the Eastern Cape, and wanted to know about progress on that dam, as the Eastern Cape was also facing a drought.

Mr I Pikinini (ANC) welcomed the work done in the Eastern Cape that had created jobs, as well as the issue of Old Mutual, which would bring some kind of investment and change their situation around; while empowering some aspects of BEE. He said there was a crisis facing the mine rehabilitation process. A child had died after falling into an open hole, and although that issue was not a matter for the Department, when people saw these holes they used them, and this promoted illegal mining. In Johannesburg, between 500 and 10 000 could be found sometimes underneath those holes, due to illegal mining. People stayed there for days. Killings took place. People were coming from all over Africa, and there was an entire process and system going on. It was a major issue, as it was killing the resources, and there was a need for effective intervention.

Mr STleane (ANC) commended the Ministry for the work that it did for CISCO, the steel company, which had culminated in the company getting the preferential pricing system. He had a concern about the Northern Cape regarding the effect of the economic contraction on the miners there. It was a wide area with long distances between the various communities, and he wanted to know what ideas and projects were being initiated and generated to improve the economy in that province, as the conditions were really bad there. He thanked the Minister for updating the Committee on what was happening on the African continent, but wanted a specific update on the dam and the Grant Income Project in the Democratic Republic of Congo (DRC). Regarding the Supplier Development Fund, he was happy that Massmart wanted to continue beyond the period that had been agreed upon, and asked what companies were benefiting from that fund, and where they were located. Was the funding for clothing and textile projects focused mainly on the Western Cape?

Dr M Cardo (DA) asked for an update on two issues involving the Competition Commission and the Competition Tribunal. The first was the banks’ collusion case, and the other involved the Data Market Inquiry -- when could an interim or even final report be expected from the Competition Commission? He was curious about the draft Competition Amendment Bill, and stress how the Minister, President Ramaphosa and former President Zuma were all in agreement in using the competition authorities as institutions to drive radical economic transformation. He was curious as to the formulation of the Bill, which had been gazetted in December, and wanted to know to what extent it was a product of the ministerial panel that the Minister had appointed, or how much it was shaped by external stakeholders. Since the Bill’s gazetting and the receipt of public comments, was the Bill still going in the same direction, or had it changed shape since?

The Chairperson said that protection would be given to the Minster with respect to the question by Dr Cardo. Matters were still at the Cabinet and executive level, and she would not find it appropriate to deal with things prematurely before they even came before the Committee.

The Chairperson said she was worried about China’s position in relation to imports to Africa when compared to South African imports, but she also believed it was due to international relations and how South Africa related to and dealt with those African countries. She agreed that there were issues with Angola, and one was the high tariffs, but relations had been improving between South Africa and Angola, and both Presidents had visited both countries and had shown great interest in building the relationship between South Africa and Angola. The export of trucks to Zimbabwe was good, but how was South Africa positioning itself to be prioritised above other countries such as Japan and the United Kingdom? She also wanted to know which companies were benefiting from the SDF. Regarding AFGRI, she wanted clarity regarding the R90 million spent over the years benefiting emerging farmers -- did it include the provision of land for emerging farmers and the R60 million for farmer development? To what extent were these programmes covering the regions and helping with the cultivation of land to meet agricultural requirements?

Minister’s response

The Minister said that at the current stage, the revised GDP data had not yet led to any revision of the forecasts. Forecasts tended to be fairly conservative, as it was better news to restate figures up than to overestimate performance and then have to restate figures down. He was fairly confident that some of this would positively impact on South Africa’s future growth, and emphasised that when neighbouring countries’ economies improved, the demand for products from South Africa would also increase, and exports were a very big driver of the GDP. The challenge would also be to retain as much of the domestic market as possible.

The principle reason for the contraction in the North West province had interestingly been the effect of the drought on agriculture, even though it was very mining dependent. As the drought was beginning to break across the country, there had been a resurgence of commodity prices, the province would benefit.

He connected that to a question asked about the Northern Cape, and said that agriculture had also been the principle reason for the contraction there. However, as soon as the agreements with the independent power producers (IPPs) were signed by the government, it would be likely to cause a short to medium term positive impact, due to the number of new solar panel plants increasing, which would directly result in increased employment. He explained, however, that the model was short to medium term, because after the power plants had been built there would be a relatively small impact on the economy, as solar and wind required very few people to operate the plants. A strategy was needed for diversification, and agriculture normally provided that counter balance.

Regarding the Fourth Industrial Revolution, he said the new technologies would increasingly make human memory redundant. Even at schools, people did not have to remember as much, as most facts were easily accessible via Google. He suspected that the CSIR had been invited and been present at the symposium, as they were seen as a very significant partner. He was grateful to Telkom and Wits University for their contributions towards the costs of the symposium

On the issue of the Umzimvubu Dam, a new Minister of Water and Sanitation had been appointed and he had identified the resolution of all the challenges as a key priority. As soon as he was ready to announce his plans, these would be shared. The main challenge had been to get a funding model that considered the fact that unlike the traditional dams that lead to well established areas, where a guarantee could be made that water would be bought at a sustainable price and rate, in the case of Umzimvubu it was aimed at really poor areas where there was not much money.

The EDD recognised that not enough effort had been put into the policy framework for small-scale mining, also known as artisanal mining. However, the person responsible for that was the Minister of Mineral Resources, Mr Gwede Mantashe.

The Minister clarified that the dam in the DRC was the Grand Inga Dam. The dam consisted of a number of phases, as it was an enormously large project which would take many years before it would be completed. The Phase which was meant to be built now was called Inga 3. However, last year the government of the DRC had made an announcement that there would be delays in the completion of the programme. It seemed that it was principally funding-related, due to the World Bank suspending one of the DRC’s loans that it was meant to make for ‘Inga 3’. The Minister said that South Africa’s role had been principally to guarantee an offtake – if the dam produced electricity, South Africa would buy the electricity. It had no say over the pace at which it was going, but could only be supportive and keep an eye on it.

The Massmart SDF projects were not only in one province, but due to the mass industrial area being Gauteng, the project was principally in Gauteng. On the clothing and textile programmes, these were programmes that were done on behalf of the Department of Trade and Industry (dti). They were not loans, but were like grants and were called production incentives, and were spread across the provinces, with the Western Cape, Gauteng and KZN receiving the most respectively. A more detailed breakdown would be made available.

In regard to the bank collusion case, there were two processes. The first was when the Competition Commission had originally concluded its work and referred the matter to the Tribunal. There had been a number of banks which had filed exception applications, and these first had to be decided by the judicial process, and once they were resolved then the main case could proceed. Some banks had already admitted to participation and therefore the judicial process of the application had largely been resolved. However, two new banks had been added in December 2017 in a supplementary affidavit, which the Competition Commission had filed. The data market inquiry had already commenced and the EDD was now awaiting a progress report from the Competition Commission. This would be completed in the new financial year, as there was urgency for it.

The Minister supported the Chairperson’s decision to not speak prematurely about the Competition Bill, saying that when the time came, the questions would be answered. Once the Bill was tabled in Parliament, he would be at liberty to discuss the substance of the Bill.

The Minister said the Chairperson was accurate with her statement that trade between South Africa and the rest of Africa did not depend on price but also on international relations; and it would be an area that would be worked on. South Africa needed to sharpen its relations with the rest of Africa to ensure that it received much better value for its money. Nigeria remained an important long-term partner for South Africa. because African unity between other fairly fast-growing countries such as Nigeria, Egypt, Angola and Kenya were imperative for its long-term interests, as larger economies needed diversification, which led to exporting from South Africa.

With regard to AFGRI, the Minister explained that the principle conditions had been left to AFGRI, and that the EDD had just had the one request for the R90 million be made available for emerging farmers, of which R60 million had to be directly for farmer development and the other R30 million for projects aimed at empowering emerging farmers. He explained that up until March 2017, R44 million of the R60 million had been used. Of the R30 million, R21 million had already been allocated by AFGRI. It had made R90 million worth of loans available, and had provided storage discounts to date of approximately R100 000. AFGRI’s head office had remained in South Africa to date, as per the conditions, and it had not reported any retrenchments to date.

The Chairperson wanted to know with whether the R90 million included the land acquisition.

The Minister replied that it did not.

Mr Madala Masuku, Deputy Minister, EDD, referred to the issue of illegal mining, and said the rehabilitation of mines was linked to illegal mining, and action was being taken, especially with regard to private owners. The rehabilitation of mines forced private owners to close the mines when they were not using them any more, and they had to follow proper procedures.

With regard to Sarah Baartman, the practice that had been adopted was to look at energies within a space, and mobilising the economic players in that space. Those participants had decided that they wanted a space to work in until March, and they would be called on to create a concrete solution of their plans.

He said that in the cases of some countries that had overtaken South Africa, historical factors were also at play, as many of them had big economies before South Africa. He emphasised that the approach by China was a demand approach. He also indicated that South Africa’s own private companies had begun to move into other areas due to the changes occurring.

The meeting was adjourned.