African Continental Free Trade Area Agreement; SADC Protocol on Finance & Investment amendment; DTI Annual Report

NCOP Trade and International Relations

07 November 2018
Chairperson: Mr E Makue (ANC, Gauteng)
Share this page:

Meeting Summary

The Committee was given some context on the global environment in which SA found itself in. Growth was slowing down in China and SA was being affected by the interest rates and policy of the United States of America (USA). Domestically, SA was starting to turn the corner as there was more confidence in the economy. Unfortunately, unemployment in SA was increasing. Manufacturing jobs had declined in Quarters 2 and 3 of 2018.On trade with the rest of the world SA had a trade deficit as it was importing more than what it was exporting. SA however had a negative trade balance with its Brazil, Russia. India, China and SA (BRICS) partner countries. It had to be improved. The three main areas of work for the DTI were industrialisation, regulation and transformation. The Committee was provided with insight into the efforts of the DTI in meeting its strategic goals. Initiatives in various sectors were elaborated upon. For instance a total of 849 enterprises had been financially supported across all incentives which would result in over 28 000 jobs projected to be retained and over 15 000 new jobs projected to be created through the approvals. Six Black Industrialists projects were also launched. On Special Economic Zones (SEZs) and transformation the number of investors in four operational SEZs increased from 72 to 84. Under the Industrial Parks Revitalisation Programme (IPRP) for Phase 1 twelve Industrial Parks were targeted and R229m had been approved for the year. The Committee was provided with a schematic provincial breakdown on performance for incentives for 2017/18. On financial performance the DTI had spent 99% of its budget. The DTI had managed to obtain an unqualified audit opinion with no finding from the Auditor General’s Office.

Members stated that the concentration of economic activity in the Gauteng Province was a matter that needed attention. Economic activities should be spread across SA. Members asked about the absence of the DTI’s Executive from the meeting. The DTI on incentives was asked to provide the Committee with a breakdown in writing of allocations per provinces. What incentives were there for the automotive industry? Members also asked for a breakdown of Black Industrialists per province. Members on economic outflows asked domestically what was affecting the decline in the construction industry. Members observed that the construction industry was said to be in a decline yet construction was taking place everywhere. How far was the process on the IDZ’s transformation to SEZs? Members felt that an integrated approach was needed on the development of Small, Medium and Micro Enterprises (SMMEs). The DTI was further asked to provide a provincial spread of the 28 000 jobs created and of the 15 000 projected jobs. A provincial spread of the Manufacturing Competitiveness Enhancement Programme (MECP) Grant was requested as well. What percentage of the DTI’s budget was for work towards SMMEs? Members pointed out that small business had complained about the difficult requirements of the South African Bureau of Standards (SABS). Members asked for details on progress around the revitalisation of Industrial Parks in Mpumalanga Province. What provincial incentives and initiatives were planned for the Mpumalanga Province? The DTI was asked to provide the Committee with the actual amounts that were transferred to its agencies, foreign governments and to international organisations. Was the purpose of the transferred funds being achieved? The Chairperson asked for a status report on the recapitalisation of the National Empowerment Fund (NEF). The DTI was asked on SEZs why it had under spent by 12.2%. Why was there a virement of R9.4m from SEZs to other programmes? Whose responsibility was the industrial development area at Ga-Rankua? He asked which province was responsible for the area. The DTI was asked to what extent was private sector buying into the Manufacturing Circle. Was return on investment on it good? The DTI was asked to provide an update on the amendments to the Companies Act. How did the DTI intend to turn things around on the matter of SA’s trade imbalance with its BRICS partner countries? The Chairperson asked if DTI staff was placed at South African missions abroad to which ministry would they report to. Members pointed out that if Black Industrialists had been prioritised years ago when it was mentioned in the 2008 State of the Nation Address (SONA) then greater progress could have been made. Members noted that Black Industrialists was after all a platform for black people to move ahead. The Chairperson emphasised the important role that the NEF played in SA’s economy and was anxious about its recapitalisation. The DTI was lauded for the good work that it was doing. The DTI was instructed to provide the requested information to the Committee within seven days.

The DTI explained the one of the objectives of the AFCFTA was to create a single market for goods and services in Africa. There would also be the harmonisation of trade regimes and to establish a single rule book for trade and investment in Africa. Intra-Africa trade sat at 18% whilst Africa’s share of world trade was estimated to be 3%. Africa therefore had to do more to expedite market integration. 22 out of 26 countries had signed the AFCFTA. Some of the countries that had not signed were Ethiopia, Sudan and Eritrea. Benefits of the AFCFTA included achieving larger economies of scale, a bigger market and improved prospects for the African continent to attract investment. On the flip side there were also potential threats to SA. There was a possibility of transhipment whereby third party imports could gain access through neighbouring countries. There could additionally be an influx of substandard goods.

Members seemed to be on the same page about voting in favour of the Agreement. The DTI was asked why Ethiopia had not signed the Agreement. Some members felt that perhaps it would have been appropriate if the Minister of Trade and Industry answered members’ questions relating to the Agreement. Members observed that the United Nations had a lot to say about institutional reforms. What was the United Nations Economic Commission for Africa (UNECA) doing to reform Africa per se? How was Africa being empowered in terms of development? The DTI was asked what could be done to increase intra-Africa trade from the 18% that it was. Members asked whether SA exported processed or unprocessed gold. Members were concerned that not much was happening in SA’s steel manufacturing industry. The DTI was asked to update members on what was happening. What underpinned the decision to go with a Free Trade Agreement? Members asked whether Nigeria had signed the Agreement. The DTI was asked what the point of having regional structures like the Southern African Development Community (SADC) and the Southern African Customs Union (SACU) was when there was the AFCFTA. Members took it for granted that there would be institutional arrangements for the implementation of the AFCFTA. The DTI was asked what the financial implications of the institutional arrangements were. Members on value added products observed that there was always talk of beneficiation but it was never done. The DTI was asked how the trade imbalances with the BRICS Bloc countries would be dealt with.

The Chairperson read out the Committee Report which essentially stated that the Committee recommends that the House in terms of section 231(2) of the constitution approves the said Agreement. The Committee agreed to what was contained in the Committee Report.

The purpose of the FIP was to ensure harmonisation of investment policies amongst SADC member states in line with the region’s economic integration efforts. Challenges with Bilateral Investment Treaties (BITs) including investor to state disputes, reducing policy space and regulatory autonomy necessitated the SADC to review the Protocol. Investors were targeting SA‘s transformation laws. SA was therefore modernising and reforming its investment policy in the region. There were eleven SADC countries that were signatories to the FIP, ten had signed the amendment. SA had signed in August 2016. The amendment came into force on 24 August 2017.

Members asked what the implication to Article 25 would be if the South African constitution was amended. The DTI was asked whether the use of the word, “adequate” in Article 5 which spoke about compensation for expropriation to be “fair and adequate” was appropriate. Members questioned whether the use of the word “adequate” was not subjective in that who would determine what   adequate was. The DTI was urged to refrain from using the word “adequate” in the future.

The Chairperson read out the Committee Report which essentially stated that the Committee recommends that the House in terms of section 231(2) of the constitution approves the said Agreement. The Committee agreed to what was contained in the Committee Report.

The Chairperson noted that the ratified Agreements should find its way to provinces.

 

 

Meeting report

Briefing by the Department of Trade and Industry (DTI) on its 2017/18 Annual Report

Mr Lionel October Director General DTI stated that from a global perspective growth was erratic. Growth was slowing down in China and SA was being affected by interest rates and policy of the United States of America (USA). Domestically, SA was starting to turn the corner as there was more confidence in the economy. Unfortunately, unemployment was increasing. Even though the DTI was creating 200 000 jobs per year annually SA’s labour force was increasing by 300 000. There were 1.7m people employed in manufacturing. Manufacturing jobs had declined in Quarters2 and 3 of 2018. The biggest problem was on the demand side. On trade with the rest of the world SA had a trade deficit as it was importing more than what it was exporting. SA did however have a positive trade balance. Exports were increasing though. SA however had a negative trade balance with its Brazil, Russia. India, China and SA (BRICS) partner countries. It had to be improved. The three main areas of work for the DTI were industrialisation, regulation and transformation. The Committee was provided with insight into the efforts of the DTI in meeting its strategic goals. Initiatives in various sectors were elaborated upon. For instance on industrial development with a view of facilitating transformation in the economy exports had doubled in the last ten years and there had been R45bn worth of investment by the majority of the world’s leading global vehicle manufacturers ie Mercedes Benz, Toyota, VW,BMW, Ford, BAIC,BAW, Isuzu etc. In addition 22 new factories had opened up in the leather sector which created 2 200 jobs. A total of 849 enterprises had been financially supported across all incentives which would result in over 28 000 jobs projected to be retained and over 15 000 new jobs projected to be created through the approvals. Six Black Industrialists projects were also launched, one of which was a microfinish automotive factory in Pinetown. On trade, investment and exports export sales of R5.129bn were recorded against a target of R3.75bn. On Special Economic Zones (SEZs) and transformation the number of investors in four operational SEZs increased from 72 to 84. The number of total direct jobs in SEZs increased from 10 443 to 13 948. A total of 25 Black Industrialists had participated in outbound trade missions during the year under review. Under the Industrial Parks Revitalisation Programme (IPRP) for Phase 1 twelve Industrial Parks were targeted and R229m had been approved for the year. On legislation and regulation in March 2018 the National Gambling and Liquor Policy Council meetings had been convened the purpose of which was to consult on the Liquor and Gambling Acts. From an administrative side the DTI had made all creditor payments within 30 days the bulk of which was made in 15 days. The Committee was provided with a schematic provincial breakdown on performance for incentives for 2017/18. On financial performance the DTI had spent 99% of its budget. The bulk of the budget went towards incentives. The DTI had managed to obtain an unqualified audit opinion with no finding from the Auditor General’s Office. It was the DTI’s third clean audit in four years.

 

Discussion

Mr M Rayi (ANC, Eastern Cape) said that the concentration of economic activity in the Gauteng Province was something that needed to be looked at. He was aware that there were challenges of migration from other provinces to the Gauteng Province. Economic activities should be spread across SA. It was a good start that the Eastern Cape Province was receiving a greater investment than the Gauteng Province was. He would have liked the DTI’s Executive to have been present in the meeting. It could have been either the Minister or Deputy Minister of Trade and Industry. The DTI on incentives was asked to provide the Committee with a breakdown in writing of allocations per provinces. For instance what incentives were provided for the automotive industry? The Committee had visited a Toyota Plant in Durban and they were unclear as to where they stood on incentives. The current incentive period was nearing its end. The Committee had also visited a clothing factory. He also asked for a breakdown in writing of black industrialists per province. On economic outflows he asked domestically what was affecting the decline in the construction industry. He however seemed to be observing that construction activity was taking place everywhere yet the industry was said to be in decline. How far was the process of the Industrial Development Zones’ (IDZs’) transformation to become Special Economic Zones (SEZs)? He was aware that the SEZ Act had come into operation in 2016. The Committee on its visit to Durban had also visited small enterprises and they had complained that it was difficult for them to meet the requirements of the South African Bureau of Standards (SABS). An integrated approach was needed on the development of Small, Medium and Micro Enterprises (SMMEs). On the Tripartite Agreement if only 22 of the 26 countries had signed it he asked what the progress was. The DTI was asked to provide a provincial spread of the 28 000 jobs created. Projected jobs was 15 000 to which a provincial spread was also needed. He asked for a provincial spread of the Manufacturing Competitiveness Enhancement Programme (MCEP) Grant as well. What percentage of the DTI’s budget was for work towards SMMEs?

Mr October stated that Minister of Trade and Industry Mr Rob Davies had apologised for not being able to attend the meeting as he had just returned from China. Minister Davies on his arrival back had to attend a cabinet meeting dealing with the Automotive Programme issue. The Deputy Minister of Trade and Industry Mr Bulelani Magwanishe was unfortunately ill. He assured the Committee that whatever was requested would be provided. A detailed breakdown of incentives to provinces with details of companies would be provided. He agreed that the automotive and the clothing & textiles industries were important and that a new plan up until 2035 had been developed. The plan would give certainty to the sectors. The Committee had to put its support behind the automotive and the clothing & textiles programmes which was currently with cabinet. The intention was to double production and employment by 2035. A breakdown of the Black Industrialists Grant would be provided to the Committee. He noted that in terms of statistics the construction industry had been in a recession for almost a year. The reason could be that government and State Owned Entities (SOEs) had stopped spending. Transnet and the Passenger Rail Agency of SA (PRASA) etc had stopped spending. It was bad for the economy when spending stopped. Government and parastatal spending needed to pick up. Business spending was also not what it should be. However business spending had picked up for the last quarter. Even municipalities were not spending. In terms of the SEZ Act there was a three year transition period. All SEZs were on track. Eastern Cape had the most successful SEZ. 

He said that the DTI had noted the problems at the SABS. The DTI had made an intervention. Mr Garth Strachan Deputy Director General: Industrial Development, Policy Development Division had been seconded to the SABS to implement a turnaround plan for the SABS. Mr Strachan was currently Acting Chief Executive Officer (ACEO) of the SABS. On work done around SMMEs the Clothing, Textile and Footwear Scheme helped around 1000 businesses. Most of which were small. Small companies even supplied components to the Automotive Industry. The DTI was engaged in the growing of small companies too. Every sector had large and small businesses. There was a big push for higher local content in the automotive sector.     

The Chairperson pointed out that some of the matters raised by Mr Rayi might be contained in the Annual Report itself.

Mr M Mhlanga (ANC, Mpumalanga) agreed that the principals of the DTI should have been present in the meeting. On the revitalisation of Industrial Parks (IPs) he asked what was happening at the Kangala, Highveld IP. It seemed as if no progress was made. People were invading open pieces of land. Was the IP to be utilised as was planned. On provincial incentives and initiatives he asked where the planned projects in the Mpumalanga Province were. He asked for a breakdown of the jobs created. If 23.61% (R2.2bn) of the budget of R9.3bn had gone for transfer payments to departmental agencies, foreign governments and international organisations he asked for a breakdown of the amounts. Was the purpose of the funding being achieved? 

Mr October said that prioritisation was taking place at Kangala in the Mpumalanga Province. There was also public consultation taking place on the Komaas SEZ. Industrial Parks were high priority. 

Ms Stieneke Jensma Acting Deputy Director General (Chief Director: Regional Industrial Development) said that there was work being done on three IPs in the Mpumalanga Province. On the Highveld IP the DTI was still engaged in a scoping exercise.

Mr Shabeer Khan Chief Financial Officer (CFO) said that page 233 of the Annual Report reflected all the transfer payments made to entities. The DTI also paid SA’s membership fees to international bodies like the World Trade Organisation (WTO). Detailed breakdowns were found on pages 233, 234 and 236 etc of the Annual Report.

The Chairperson asked for a status report on the recapitalisation of the National Empowerment Fund (NEF). He noted that the budget of the SABS to be R285m but the Annual Report gave the figure of R302m. Why had the DTI under-spent on SEZs by 12.2%. The DTI was also asked why there was a virement of R9.4m from SEZs to other programmes. He pointed out that he was still awaiting a response from the DTI around the industrial development area at Ga-Rankua. Whose responsibility was it? Which province was responsible? The DTI had shown that there was a decline in the manufacturing sector. To what extent was the private sector buying into the Manufacturing Circle? Was return on investment on it good?

Mr Khan responded that the virement to the SABS had been approved so that capacity could be built to verify local content. Hence there was an increase in the SABS’ budget.

Mr October on the status of the NEF explained that National Treasury had said that it could not assist the NEF. As a consequence National Treasury recommended that the NEF become a subsidiary of the Industrial Development Corporation (IDC). There was agreement on the process. National Treasury had a proposal which went to cabinet. Cabinet had asked for a repositioning of the NEF to be done. A revised proposal would go to cabinet. It would be discussed in the last cabinet meeting to be held. On SEZ’s the DTI had gotten an allocation. Applications came from the IDZs. Once investors were brought to the DTI, then the DTI provided incentives on IDZs. The Coega IDZ for one was doing well. Some IDZs were progressing slower as there were no applications forthcoming. In certain instances reallocations needed to be done. He noted that Industrial Parks were mainly found in the former homelands. The DTI had reallocated SEZ funding to Industrial Parks which was the virements referred to. Industrial Parks were being turned into SEZs. He explained that Ga-Rankua fell under the North West Development Corporation. The DTI directly supported Ga-Rankua. Efforts were being made to resolve issues. He added that Babelegi was under the Tshwane Metro. The DTI tried its best to get everyone to work together. The DTI had a good partnership with the Manufacturing Circle. The DTI supported the Manufacturing Circle. He noted that many companies had made investments in technology. The important thing however was that customers needed to buy the products. The demand was as yet not there. There was a stimulus package in place to assist on the demand side. He did note that export markets was picking up, especially in the European Union and Africa. Hopefully domestic demand would also pick up. Only then would the manufacturing sector recover. He added that an additional transfer was made to the SABS on laboratories.

Mr Strachan explained that the DTI had deployed three administrators to the SABS. The DTI had done a diagnostic analysis of the problems at the SABS. There were issues on governance, institutional issues, management failures, policy problems and operational problems. A turnaround plan was being implemented. The additional investment into the SABS had been inter alia for the reinstatement of third party testing. Without the SABS doing third party testing it had lost R70m in revenue. Measures had been put in place to deal with institutional issues. Policy alignment had also been done. Additionally, performance management and human resource planning had been done to get the SABS up to speed operationally. Everything was on track. Standards would once again play an important role on industrial policy and trade. A long term strategy needed to be developed.

Mr Rayi asked for an update on the amendments to the Companies Act. On the matter of SA’s trade balance with the Brazil, Russia, India, China and SA (BRICS) Bloc countries how did the DTI intend to turn things around.

Mr October explained that the amendments to the Companies Act were of a technical nature. Cabinet had approved the amendments. The amendments were out for public comment. The amendments would perhaps be dealt with in the sixth parliament.

A female DTI official responded that it was correct that SA had a trade balance in favour of BRICS countries. The problem was that SA imported a great deal from BRICS countries. There had not been many exports. The good news was that from 2015-2017 the deficit was decreasing. SA was starting to export more. DTI promoted an investment led trade strategy. Investment into SA was being encouraged. The strategy with BRICS countries had been changed. The emphasis was now more on value added trade.

The Chairperson asked the DTI to provide the requested information to the Committee within seven days. If there were DTI staff at missions abroad who were they responsible to? Which ministry?

Mr Rayi pointed out that the Chief Executive Officer (CEO) of the NEF had referred to the 2008 State of the Nation Address (SONA) in which the then President Mr Thabo Mbeki had emphasised the importance of black industrialists. If at that time black industrialists had been prioritised then things could have progressed much further. Black Industrialists was a platform for black people to move ahead.

The Chairperson was anxious about the recapitalisation of the NEF. The NEF had an important role to play in SA’s inclusive economy. The DTI was lauded for the good work that it was doing.

Briefing and ratification of the Agreement establishing the African Continental Free Trade Area (AFCFTA)

Ms Xolelwa Mlumbi-Peter Deputy Director General: International Trade provided the Committee with insight into what the AFCFTA was all about. One of the objectives of the AFCFTA was to create a single market for goods and services in Africa. There would also be the harmonisation of trade regimes and to establish a single rule book for trade and investment in Africa..According to the United Nations Economic Commission for Africa (UNECA) the AFCFTA promises to unlock intra-Africa trade to grow by 52% by 2022. Intra-Africa trade sat at 18% whilst Africa’s share of world trade was estimated to be 3%. Africa therefore had to do more to expedite market integration. SA was the largest contributor to intra-Africa trade, accounting for over 24.9%. Its trade with the rest of the continent had increased by 8.6% to R478bn in 2017. SA mostly traded with its Southern African Development Community (SADC) and Southern African Customs Union (SACU) partner countries. 22 out of 26 countries had signed the AFCFTA. Some of the countries that had not signed were Ethiopia, Sudan and Eritrea. SA exported value added products to Africa. These included mineral fuels, machinery and vehicles etc. Benefits of the AFCFTA included achieving larger economies of scale, a bigger market and improved prospects for the African continent to attract investment. It would also provide legal certainty and predictability of markets. On the flip side there were also potential threats to SA. There was a possibility of transhipment whereby third party imports could gain access through neighbouring countries. There could additionally be an influx of substandard goods.

Discussion

Mr M Khawula (IFP, KwaZulu-Natal) noted that the issues were clear and that the Committee should vote on the Agreement. The DTI was asked why Ethiopia had not signed the Agreement. What was the reason? There was no instability in Ethiopia and its economy was doing well. Ethiopia had even overtaken SA in terms of economic growth.

Ms Mlumbi-Peter stated that it was a sovereign decision by Ethiopia to sign the Agreement or not. Ethiopia did fully participate in the AFCFTA. At the right time Ethiopia would sign.

Mr Mhlanga noted that perhaps the Minister of Trade and Industry needed to answer questions around the Agreement. In the United Nations (UN) there was much being said about institutional reforms. What was the United Nations Economic Commission for Africa (UNECA) doing to reform Africa per se. How was Africa being empowered in terms of development? 2015 World Trade Organisation (WTO) figures showed that intra-Africa trade sat at 18%. What could be done to increase intra-Africa trade? For 2017 SA’s contribution to intra-Africa trade amounted to R478.8bn. He asked whether it included deals that SA had with the United Arab Emirates (UAE). The DTI was asked whether SA exported processed or unprocessed gold. He was concerned that not much was happening in SA’s steel manufacturing industry. He asked the DTI to provide an update on what was happening. What underpinned the decision to go with Free Trade Agreement?

Ms Mlumbi-Peter explained that the UNECA did provide technical advice and input on regional integration processes. There was regulatory advice as well. The UNECA did consider a developmental perspective. Member states did however look at the appropriateness of the advice that had been given. She said that intra-Africa trade was only 18% because African states produced similar products. Most of which was minerals and agricultural products. There was a need to diversify SA’s productive structures. From 2009-2015 the figure had doubled so efforts were being made. The R478bn was merchandise trade with the rest of Africa. Through the AFCFTA the amount could be increased further. There were preferential arrangements with the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). It should however go beyond this. No the figure did not include trade with the UAE. She confirmed that raw minerals were exported but that 68% of exported products were value added products. There were beneficiated products. She conceded that SA had lost productive capacity on steel. Worldwide there was an over production of steel. The DTI had implemented measures to protect the South African steel sector.  On why the FTA was chosen to negotiate with, the FTA allowed a country to set its own tariffs. There was a developmental approach to tariffs. SA had only joined one customs union ie the SACU.

Mr Rayi pointed out that the number of countries that had ratified thus far was seven. South Africa would be the eighth. Had Nigeria signed the Agreement? He asked what the point of having regional structures like SADC and the SACU was when there was the AFCFTA. He assumed that there would be institutional arrangements for implementation. The DTI was asked what the financial implications of the institutional arrangements were. On value added products he said that there was always talk about beneficiation but it was not done. Why was beneficiation not taking place? The DTI was asked how the trade imbalances with BRICS Bloc countries were to be dealt with.

Ms Mlumbi-Peter confirmed that seven countries had ratified the AFCFTA. It took time for ratification and in some instances years. 49 members of the African Union had signed the AFCFTA. There was progress. Intra-Africa trade had to increase. There was value in having a bigger regional market. On whether Nigeria had signed the Agreement she explained that some countries did not have the national platforms for consultations like SA had ie National Economic Development Labour Council (NEDLAC). In the Nigerian instance there had been a lack of consultation. The Nigerian government had to go through the entire country to explain what the AFCFTA was. The point of having regional structures was that there was value in belonging to the SACU and the SADC. They however should not undermine the AFCFTA. A country could sign as many Free Trade Agreements as it wished. On institutional arrangements there would be a technical secretariat. It would not be political. The size and budget would still be decided. On trade imbalances she said that SA had a growing trade surplus. A linear integration model could not only be followed. The focus was to look at the development of a regional value chain. SA needed to refine its own strategy. The DTI had formed a unit within itself called Trade Invest Africa.  SA in addition had to consider where it was in the value chain.

The Chairperson read out the Committee Report which essentially stated that the Committee recommends that the House in terms of section 231(2) of the constitution approves the said Agreement.

The Committee agreed to what was contained in the Committee Report.

Briefing and ratification of the Agreement amending Annex 1(Co-operation on Investment) of the SADC Protocol on Finance and Investment (FIP)

Ms Mlumbi-Peter said that the intention of the briefing was to request the Committee to consider the amendment for ratification. The purpose of the FIP was to ensure harmonisation of investment policies amongst SADC member states in line with the region’s economic integration efforts. Challenges with Bilateral Investment Treaties (BITs) including investor to state disputes, reducing policy space and regulatory autonomy necessitated the SADC to review the Protocol. Investors were targeting SA‘s transformation laws. SA was therefore modernising and reforming its investment policy in the region. The amendments to the Protocol were to amongst others to Articles 1(1), 1(2), 2(3), 5, and 6(1). There were eleven SADC countries that were signatories to the FIP, ten had signed the amendment. SA had signed in August 2016. The amendment came into force on 24 August 2017.

Discussion

Mr Khawula asked what the implication to Article 25 would be if SA’s constitution was amended.

Mr B Nthebe (ANC, North West) referring to Article 5 which spoke about compensation for expropriation to be “fair and adequate” asked whether the use of the word, “adequate” was wise. What was considered to be adequate? He felt it to be very subjective as to what was considered adequate. It could open up matters to litigation. He felt that the word, “adequate” as used in Article 5 should not be used in the future. The use of “fair” was good enough.

Ms Mlumbi-Peter on Article 5 explained that the assessment of “fair and adequate” would take into considering amongst others the purpose of the expropriation and also whether it was in public interest. There would be a whole range of factors to consider.

The Chairperson read out the Committee Report which essentially stated that the Committee recommends that the House in terms of section 231(2) of the constitution approves the said Agreement.

The Committee agreed to what was contained in the Committee Report.

The Chairperson pointed out that SA was manufacturing locomotives. He noted that Mr October had said that SA was not. The Agreements that had been ratified should find its way to provinces. He stated that at the last planning committee of the World Trade Organisation (WTO) he had seen where SA was positioned on the WTO and also how much African countries depended on the advocacy work that SA was doing.

The meeting was adjourned.

Share this page: