The Portfolio Committee met to receive a briefing on the Annual Performance Plans of the Department of Trade and Industry and the Department of Economic Development. The Minister of Trade and Industry delivered the majority of the presentation to the Committee with the Director-General of Trade and Industry and the Acting Director-General of Economic Development providing additional details of the Annual Performance Plans. The Deputy Minister accompanied the team.
The Minister pointed out that there were two separate Budget Votes within the scope of the Portfolio Committee – the Budget Votes of Trade and Industry and Economic Development - and therefore there were two Annual Performance Plans. The two entities were being merged into a single Department but until that process was complete, there would be two Budget Votes. It was anticipated that it would remain two Budget Votes until the end of that financial year but that was the prerogative of Parliament and National Treasury.
The Annual Performance Plans were based on work done almost exclusively during the Fifth Administration but once the Department had completed its Medium Term Strategic Framework based on the programme of the Sixth Administration, the Performance Plans might well be adjusted.
The Minister stated that the intentions of his ministry had been captured in the State of the Nation Address with the vision of a reimagined industrial strategy, which was growing the economy, growing it more fairly and more inclusively, and growing the economy with decent jobs. Urgency and focus would be a key hallmark. The work would be evidence-based and the Departments would replicate successes and scale them up. The Minister wanted to see partnerships with the private sector as the bulk of industrial activities in South Africa were driven by the private sector and so a smart industrial policy was about increasing private investment. But, it was also about a partnership with workers as workers were essential to making the transition towards a dynamic economy and a higher producing economy. He explained that the South African unemployment problem was complex because the growth of the labour force outstripped the growth of the population. In 1996, 36 out of every 100 people were in a job whereas in 2018, 43 out of every hundred people were in a job. Since 2010, there had been a 4,1 million increase in the labour force with 2.5 million more in employment but with 1.6 million more in unemployment.
The Director-General for Trade and Industry informed the Committee that his Department had three broad objectives: manufacturing, transformation and the state as a regulator. Key interventions included, firstly, transformation of the economy, secondly, building mutually beneficial regional and global relations, and thirdly, to create a fair regulatory environment. Planned interventions included supporting Black Industrialists and small business. The Department would focus on the quality of products and on opening markets for Black Industrialists. The Department would be developing practical measures to support collaboration by reducing the cost of logistics, including regulatory delays and fees as well as transport and communications infrastructure. Special Economic Zones and Industrialised Parks remained a key focus for intervention. The Department would be supporting implementation of the B-BBEE Amendment Act and the Code of Good Practice for B-BBEE. The Department had a budget of R10.1 billion for 2019/20.
The Acting Director-General for Economic Development said that his Department would coordinate job drivers and implementation of the New Growth Path economic strategy by producing analytical and public policy advocacy reports, promoting job drivers and supporting provinces. Other interventions included monitoring and supporting implementation of the Green Economy Accord, supporting youth and black women with access to employment and business opportunities through policy initiatives, funding initiatives, unblocking projects and promoting access to employment or entrepreneurship. The budget for 2019/20 was R1.1 billion, of which R918 million, or 80% of the budget, was transferred to entities.
Members were concerned about the budget for Trade and Development. Why was there a decrease in the budget for Programme 8: Investments, which was amongst the most critical in the mandate of the Department? Was the budget of R61.7 million allocated for the B-BEEE Commission sufficient for what had to be done to enforce the policy of B-BBEE, especially as the intention was to increase participation in the economy? The National Credit Regulator (NCR) had requested an increase in its budget. Had that happened?
Members noted that the South African Gini co-efficient was the one of the highest in the world which indicated that South Africa was one of the most unequal societies in the world. How could B-BBEE include those who had been excluded over the past 25 years under a democratic government? What had been the success rate of the Black Industrialists? Were their businesses still in existence? How easy it was to register a business and to continue to do business in South Africa? Noting the decline in the very big industries in the Eastern Cape and KwaZulu-Natal, such as agriculture and mines, were there any plans to revive those economies and to support young businesses?
Members asked about the process of sorting out the challenges with South African Bureau of Standards and the National Regulator for Compulsory Specifications. What progress had been made?
A Member noted that It was common knowledge that state capture, poor governance and corruption, as well as the lack of cohesion across government, had impeded the efforts of the Department of Trade and Industry to reindustrialize the economy. What was the capacity of the Department to perform proper oversight during the Sixth Parliament? What measures had the Department taken to step up oversight? Was the 33.6% decrease in agriculture in 2018 a result of property rights concerns?
Members wanted to know what Bills were coming to the Committee in the Sixth Parliament. When was the Committee going to see a Sugar Amendment Bill, and a new National Credit Amendment Bill? The Committee had waited ten years for the Gambling Amendment Bill. When would that be ready? When would the Committee see the Liquor Amendment Bill?
The Chairperson welcomed everyone to the meeting. He noted that it was the first meeting where the Committee was meeting with the Minister of Trade and Industry, Minister Ebrahim Patel, and the Deputy Minister, Nomalungelo Gina, as well as the Department of Trade and Industry, and the Acting Director-General (DG) of the Department of Economic Development.
The adoption of the agenda was proposed by Mr S Mbuyane (ANC) and seconded by Ms R Moatshe (ANC).
Presentation by the Minister and DGs of Trade and Industry/ Economic Development
Introductory remarks by Minister Patel
Minister Patel tendered apologies for Deputy Minister, Fikile Majola, who was in Niger attending a meeting of Trade Ministers to look at the African Continental Free Trade Agreement (AfCFTA) in preparation for an extraordinary summit that would be held on Sunday 7 July 2019. He sent his apologies and best wishes for the meeting.
The Minister agreed that it was the first meeting of the Committee with the Executive, stating that he hoped it would be a long and productive engagement. It was the job of the Committee to hold the Executive to account on behalf of the people of South Africa so they needed to recognise and accept that the role was not only a constitutional role but it was essential for them if they were to achieve their own governance programme. The Executive had to be able to go to Parliament and account for how the money that had been voted from the public purse was spent.
He was accompanied by Deputy Minister Nomalungelo Gina whom some of the returning Members of Parliament would know from her parliamentary days. He also had the two DGs of the Departments, Mr Lionel October and Dr Monde Tom and the Deputy Directors-General (DDGs) of the Departments. He hoped that there would be an opportunity during the deliberations to introduce the DDGs to the Committee Members and to inform the Members of their roles.
The Minister suggested that, in the interests of time, he could skip the introduction and dive straight into the Annual Performance Plans (APPs). The detailed introduction could follow at a later meeting.
The Chairperson indicated that he appreciated that approach.
The Minister stated that that meeting was the commencement of a very important relationship where the Executive tabled an Annual Performance Plan and the Executive, through the Department, would be coming back to Parliament on a regular basis on matters relating to the APP. The document had been distributed to Members and he had a PowerPoint presentation that highlighted some of the key aspects. It did not replace the document but might facilitate a conversation.
Introduction to the APP by the Minister
The Minister explained that he would make a few introductory remarks and sketch the context of the APPs. Each of DGs would take the Committee through the relevant APP.
The Minister informed Members that the APPs had been prepared by the Departments and approved by the Executive and that was the yardstick by which the Departments were to be measured. From time to time, they would report back to the Committee on where there had been achievements and where there were problems and how the problems were being addressed. 2019 was a slightly unusual year in that it was a transition year between two Administrations. That was relevant to the discussion of the APP.
The Minister pointed out that there were two Budget Votes within the scope of that Portfolio Committee – the budget votes of the dti and the EDD. The two entities were being merged into a single Department but until that process was complete, it remained two Budget Votes. It was anticipated that it would remain two Budget Votes until the end of that financial year but that was the prerogative of Parliament, and National Treasury would be leading the Executive’s thinking on the matter. The plan at the moment was that the Budget Votes would continue until the end of the financial year.
He was tabling the 2019/20 APP. It was based on work done almost exclusively in the Fifth Administration. The work had started late the previous year, leading to the Budget tabled by the Minister of Finance in February 2019, further technical work and refinements were done by the Department and then presented to the incoming Executive. The programme of the current, Sixth, Administration would be based on its mandate from the people of South Africa as interpreted through the State of the Nation Address (SONA) – both the founding one made by the Present in June 2019 and those made in January each year in the coming years The programme would also be based on the Medium Term Strategic Framework (MTSF) which was a document that captured the mandate and spoke the language of governance and government. The MTSF had, in principle, been adopted and the detail was being worked out.
His ministry had tabled the two APPS in Parliament and as the MTSF was completed, the Departments would adjust their strategic programmes and might adjust the current APPs. If they were adjusted, he would be obliged to table the changes in Parliament. There would be a major review of the APP before the start of the next financial year. The APP would then capture the new strategy and show some big changes. Within the current APPs, the work would be re-oriented towards the new electoral mandate and the new SONA priorities. That would happen immediately.
Vision of the reimagined industrial strategy
What dti wanted to do had been captured in SONA. President Ramaphosa had, in setting out the vision for the next five years, placed enormous importance on the industrial strategy as a means of reigniting growth and ensuring that the country achieved its broader targets set out in the National Development Plan (NDP), as well as the other government programmes. A lot of work would be focussed on integration within the new merged Department to support the reimagined industrial strategy, which was growing the economy, growing it more fairly and more inclusively, and growing the economy with decent jobs. Those were key elements. Growing the economy more inclusively would relate to opportunities for young people, for women and for Black South Africans and the rurally excluded so that more South Africans got to work. Urgency and focus would be a key hallmark of what government hoped to achieve and would be evident in Cabinet and all departments. It would change the way everyone worked. The electorate had indicated that it wanted all parties to move with a sense of enormous urgency.
The Minister stated that dti and EDD would build on experience. The Departments had succeeded in some things and failed in others but they had provided valuable lessons. The work would be evidence-based and the Departments would replicate successes and scale them up. They wanted partnership with the private sector as the bulk of industrial activities in South Africa were driven by the private sector and so a smart industrial policy was about increasing private investment. But, it was also about a partnership with workers as workers were essential to making the transition towards a dynamic economy and a higher producing economy, both in the contribution of workers in the process and in ensuring that the results of growth were fairly and equitably distributed. The intention was to build a deep commitment by everyone in the economy towards the same goals. There would, of course, be discussions between partners about how much went into return to capital, how much went to wages, and how much went to taxes. That was the nature of the economy, but if there could be more and more a common objective to inclusively expand the economy, then the country could achieve its national goals.
Government wanted to develop a capable State. There were parts of the State that were strong and well-run, but it was recognised that parts of the State were not strong nor well-run. There were sections that were slow and sections where significant skills had been lost over the last number of years. It was the job of government to fix problems that had been identified.
The Minister explained that he had set out some of the broad approaches to give an indication of how government wanted to work.
To achieve faster, inclusive economic growth, the Minister stated that dti would constantly be looking, as at a dashboard, to see what was happening in the global economy and what was happening in the domestic economy. It was necessary to look at the global economy because the SA economy was a globally integrated economy. A third of the country’s Gross Domestic Product (GDP) was derived from exports and so what happened elsewhere in the world economy, directly affected the SA economy. The Minister explained that in the domestic economy, dti would look at growth, sector performance and exports as those were good indicators that the Department was hitting the mark.
The Minister referred Members to Slide 6 which showed that global growth had declined since 2018 and was likely to remain lacklustre for the next few years. That was the current projection by global economists. A slowdown was forecast in the United States (USA) and the European Union (EU). Growth in emerging and developing economies was dominated by China and India. There were headwinds to global growth, especially in terms of a possible trade war between China and USA. A trade war would result in lower demand and higher trade barriers for SA goods.
Slide 7 showed that 2009 was at the end of the sharpest decline in the SA economy in the democratic period. The first decline was in Quarter 1 2014 and the most recent was in Quarter 1 2019. The Minister explained that when two quarters were in decline, that was seen as a recession. A recession could be short or long. The following slide showed periods of growth and recession in South Africa since 1968. The two longest periods of growth since 1968 had been in the democratic era.
Slide 10 showed the different sectors that had contributed to GDP and the share of manufacturing in the GDP. Agriculture had the steepest decline but business services had grown significantly in 2018/19. The Minister explained that 2017 data had been used to show provincial growth because provincial data lagged behind national data by a year and a bit. In that period, Limpopo had had the highest growth. He stated that the next slide showed the manufacturing sector’s share of the GDP. Manufacturing had declined since 1990 and the main contributor was the coming into being of the new tariffs set by the World Trade Organisation (WTO) following the Uruguay Round talks. The second decline began with China’s entry into the manufacturing sector. The tension between China and the USA was as a result of manufacturing. Sub-Saharan Africa’s challenge was how to industrialise and SA’s challenge was how to re-industrialise and to claw back its share of the economy.
The trade scenario
The Minister referred to Slide 11 which showed that from 2017 to early 2018, manufacturing had improved its share. SA did more trade with the world than the average country (slide 12) because of the raw material exports. For past two years, SA had had a positive trade balance. The top export market was China, then Germany, USA, etc. There was some relation with the list of countries from which SA bought goods. The composition of trade was the problem because SA sold raw materials and imported complex, manufactured goods. That information determined the industrial strategy. The composition of trade had to change in order to create more jobs. The Minister noted that SA was a significant supplier of manufactured goods on the continent of Africa in the same way that German goods dominated the European market and Brazilian goods dominated the South American markets, and similarly Japan and China dominated Asia.
The employment scenario
The Minister stated that the employment situation was quite complex. SA had a labour force of 22.5 million people, i.e. in a job or actively looking for a job. 16.1 million people were unemployed and actively looking for work but that was the narrow definition. The real number of people without work had to include those who had become discouraged from looking for work. Since 2010, there had been a 4,1 million increase in the labour force with 2.5 million more in employment but with 1.6 million more in unemployment.
The Minister noted that people often blamed fast population growth for the growing unemployment but employment had grown faster than the increase in population. The problem lay in that SA was a young nation and so the labour force had grown faster than the population of the country. The workforce had grown by 134%. In a patriarchal society, women were not looking for work but were outside of the economy. In a democratic society, women became equal job seekers, thus growing the labour force. Those who were involved in the subsistence market were counted as neither employed nor unemployed but if they moved to a city to find work, they joined the number of unemployed. The Minister informed the Committee that in 1996, 36 out of every 100 people were in a job whereas in 2018, 43 out of every hundred people were in a job. That explained the different nature of the SA labour force.
The Minister explained that the background about employment and unemployment was important because it informed the strategy of dti. Not only was it necessary to push up the GDP growth, it was essential to increase the number of opportunities for employment.
Slide 18 showed that the Private Sector accounted for 77% of jobs in the country with the remaining jobs in government and the utilities, such as Eskom. 1.8 million people were employed in manufacturing. That was calculated by StatsSA following a quarterly labour force survey. The biggest sector was food and beverage. Food, metal and clothing accounted for more than half of those employed in manufacturing. Manufacturing jobs in the formal and informal sectors were estimated to have declined by 24 000 jobs over the last five years but, according to the StatsSA employment survey showed that in the formal sector, there had been a growth of 59 000 jobs in the past five years.
The Minister told the Committee that investment was very important because investments were the seeds that had to be planted in order to harvest growth. From 2016 to 2019, the economy had grown faster that the rate of investment. The country was consuming more than it was investing. The private sector contribution to total investment had grown to 69%. Overseas investment was part of the investment drive but the biggest focus was on domestic investment because the dividends remained in the country. However, the savings rate in the country was too low and the country had to rely on foreign investment, i.e. borrow other people’s savings.
The Minister explained that his intention in providing a detailed context on behalf of Deputy Minister Gina, the two DGs and himself was to sketch the context in which the two Departments wanted to deploy the resources of the state to try and turn the story around. The Departments could not do it alone. They needed the support of workers and businesses but the state would do its parts to lift the rate of job growth, GDP growth and economic inclusion. It was a dashboard for them showing where they were and, over the next five years, Members would be able to measure the impact that the Departments had on the dashboard: were
Presentation of the Department of Trade and Industry Annual Performance Plan
Mr Lionel October presented the APP for dti. He indicated that it was a high level summary. Dti had three broad objectives: manufacturing, transformation and the state as a regulator. Manufacturing was at the heart of the transformation and growth plan. Key interventions included, firstly, transformation of the economy, secondly, building mutually beneficial regional & global relations, and thirdly, to create a fair regulatory environment.
The DG provided details of the dti’s planned interventions which included supporting Black Industrialists and small business. Dti would focus on the quality of products and on opening markets. Dti would be developing practical measures to support collaboration by reducing the cost of logistics, including regulatory delays and fees as well as transport and communications infrastructure. Special Economic Zones and Industrialised parks remained a key focus for intervention. Dti would be supporting implementation of the B-BBEE Amendment Act and Code of Good Practice for B-BBEE.
A priority for the Department was the processing of the Companies Amendment Bill and conducting Impact Assessments. Dti was looking to maintain a clean audit.
The total budget for 2019/20 was R10.1 billion and the main allocation was for industrial development and administration.
Presentation of the Department of Economic Development Annual Performance Plan
The DG of EDD, Dr Monde Tom, presented the APP of the Department of Economic Development.
Key interventions included ensuring good governance in the Department, which included plans to achieve an unqualified audit opinion. The Department would coordinate jobs drivers and implementation of the New Growth Path (NGP) economic strategy by producing analytical and public policy advocacy reports, promoting job drivers and supporting provinces.
Other interventions included monitoring and supporting implementation of the Green Economy Accord, supporting youth and black women with access to employment and business opportunities through policy initiatives, funding initiatives, unblocking projects and promoting access to employment or entrepreneurship
EDD would coordinate infrastructure development by compiling reports on the 18 Strategic Integrated Projects (SIPS) and coordinate actions to drive the implementation of SIP 5, which was the Saldanha-Northern Cape Development Corridor. EDD planned to unblock and fast track and facilitate investment and infrastructure projects as well promote economic transformation through support for township enterprises.
The budget for 2019/20 was R1.1 billion, of which R918 million, or 80% of the budget, was transferred to entities.
Conclusion of the presentation
Minister Patel indicated that, in the past, the two APPs would have been implemented completely separately but the DGs had put together an approach, under the guidance of the two Deputy Ministers and himself, where they would begin the integration of the two APPs as quickly as possible so that they could build on synergies between the plans.
The Chairperson asked Members to begin with clarity questions or comments.
Ms P Mantashe (ANC) appreciated the presentation. She also expressed her appreciation for the fact that the President had kept his promise to reduce the number of departments which she could see in practice in the two Departments that were in front of the Committee that day.
Ms Mantashe considered Programme 8: Investments amongst the most critical in the mandate of the dti in terms of priorities outlined in the SONA of 20 June 2019, that is increasing and facilitating investment into the SA economy. However, she noted a decrease in allocation for that Programme. She requested an explanation for the decrease. In November 2018, the then Minister had announced the extension of the Automotive Production and Development Programme (APDP). How would that effect the allocation in Programme 6: Incentive Development and Administration.
One of Ms Mantashe’s favourite policies of the current government was the B-BEEE policy, although some people hated it with a passion. Was the budget of R61.7 million allocated for the B-BEEE Commission sufficient for what had to be done, especially as some people were trying to avoid implementation of the B-BBEE policy. The Committee was talking of increasing participation in the economy and the B-BEEE Commission would have to enforce compliance by new participants in the economy. She also reminded the DG that the National Credit Regulator (NCR) had requested an increase in its budget. Had it been done?
Mr W Thring (ACDP) thanked the Minister for an excellent presentation and suggested that all departments should look at the presentation as it gave a very clear and concise picture of the economy, both globally and locally. He noted that dti had obtained a clean audit, but certain entities had not. However, the number of entities with clean audits had grown from four entities in 2014/15 to seven entities. That was commendable. However, the audit seemed to have excluded two entities: the South African Bureau of Standards (SABS) and the National Regulator for Compulsory Specifications (NCRS) and he had read about the SABS Board being disbanded. What was the process of sorting out the challenges with those two entities? What progress had been made? If those two entities had been included, the Auditor-General would not have been so flowery with his words.
Mr Thring observed that the South African Gini co-efficient was the one of the highest in the world and indicated that SA was one of the most unequal societies in the world, overtaking Brazil. The ACDP recognised the inequalities that had existed and that they needed to be addressed. However, his challenge with B-BBEE was that it had not been broad but fairly narrow and large percentages of the population had been excluded from the economy. How could B-BBEE include those who had been excluded over the past 25 years under a democratic government? If the Gini co-efficient was to be reduced, there had to be an introspection with regards to the operation and implementation of B-BBEE.
Mr Thring asked Mr October about the one hundred or so Black Industrialists who had been assisted over the past few years. What had been the success rate of those Black Industrialists? Were their businesses still in existence? Sometimes there was no follow-through of the necessary assistance and so people were set up for failure. Mr October had noted that Regulations had to be improved and it had to be made easier to do business and start businesses, particularly if the country wanted foreign investment. The President had spoken, in SONA, of a one-stop shop and how easy it had become in that a business could be registered in a matter of 24 hours. Mr Thring asked how easy it was to register a business and to continue to do business because many businesses complained about over-regulation and stated that they would rather move to capital intensive rather than labour intensive businesses.
Mr M Cuthbert (DA) honed in on the Minister’s analysis. He suggested that in some regards, the analysis was slightly out of date because there had been a reduction in Quarter 1 of 2019. There had been a contraction of 3.2% in the economy. It was the worst in ten years and, therefore, to try and manipulate the statistics in a particular way to make the picture look positive was not the most honest or forthright thing to do.
Mr Cuthbert referred to page 17 of the APP document which showed a 33.6% decrease in agriculture in 2018. Surely that was a result of property rights concerns? Although not within the mandate of the Department, such things affected the work of the Department. Agriculture, fisheries and forestry, the mining industry and even the golden egg, the automotive industry, were down. SA was ranked 82 out of 190 countries for the ease of doing business. Surely that was something that required focus going forward so that SA could roll out the red carpet for countries to come and invest in business in SA. Countries which had embraced market-led reforms, such as Mauritius and Rwanda found themselves at number 20 and 29 respectively.
Mr Cuthbert had noticed mention of Mao Zedong, Karl Marx and the ‘One Belt One Road’ initiative (now known as the Belt and Road Initiative (BRI) ), particularly in the SONA responses. It was concerning because he had noticed that other African countries that had sold their sovereignty to China now found themselves with hefty loans that they were not able to afford, which left them to the might and will of the Chinese government.
Mr Cuthbert referred to page 35 of the dti APP and asked DG October to provide the Committee with the roles and functions of people who had been suspended within the dti. He also had some questions about the
Budget. He wanted to understand the overall decrease in incentives themselves and also in relation to the service investment incentives that had decreased. It appeared that, since 2016, incentives had been appropriated less and less money and he requested an explanation.
Mr Cuthbert noted that the EDD played largely a coordinating role but he did not believe that KPIs could be reflected in reports. The KPIs should be measured against jobs created and money invested. KPIs could not be measured against reports and that had probably been the problem in the EDD for past 10 years.
Mr D Macpherson (DA) congratulated the Minister and Deputy Minister on their appointments. He was pleased to see a colleague from KwaZulu in the Department as Deputy Minister, and he wished Deputy Minister Gina well.
Mr Macpherson welcomed the announcement that the APPs would undergo a major review. Over the past five years, dti had attempted to plug the leaks in the economy without dealing with the structural issue, which was the weakness of the dam wall which had been eroded by politics and by factional and ideological arguments. Hopefully a review of the APP could start to stabilize that dam wall of the economy. He looked forward to seeing the re-imagined strategy which Mr October had kindly presented at the ANC National Executive Committee (NEC). Hopefully, the Committee would get to see it now that the ANC had seen it.
Mr Macpherson stated that he supported the Minister’s evidence-based approach to the economy. Far too often, meaningless words were thrown around and blame was appropriated to groups of people and even the private sector which he had said he wished to see as a partner in development. That was a great way to see the private sector as far too often the private sector was seen as the enemy instead of the solution. He knew that his colleagues on his right saw themselves as being pro-poor, but one could not be pro-poor without being pro-business because business and the private sector were the ones investing in the economy. One of the most fascinating slides that the Minister had produced that day was the slide on investment per sector which showed that only the private sector was investing in the economy.
Mr Macpherson gave the Minister his word that when the Minister’s own colleagues tried to undermine him in the quest to support the private sector, the DA would support him to push the agendas forward. He agreed that there was a need for a capable state. He wanted to see a Minister who would go to Cabinet and fight for industry, for the job creators and the sectors that could create employment and that invested in the economy. Far too often Ministers had sat around the Cabinet table and talked about he knew not what but not about growing the economy and creating jobs. The country needed a champion in Government who was prepared to build that capable state and to ensure that State-Owned Enterprises (SOEs) were not a stumbling block but aided economic growth.
Mr Macpherson agreed that manufacturing had decreased but it did not have to be that way and dti could turn that sector around. The country could re-industrialise, but the ministry and Department had to start asking the tough questions about how to get Government out of the way, to stop Government holding back businesses, and how to eliminate the administrative costs that Government roped around the neck of businesses. He believed that there was a difference between the rate of employment versus the rate of unemployment. Unemployment had increased over the past ten years. That was a fact that one could not get away from and that had to a guiding star in chipping away at unemployment. Manufacturing was a key driver to decreasing unemployment. Why were programmes, such as why the Manufacturing Competitiveness Enhancement Programme (MCEP), which was one of the most successful programmes, coming to an end? He had given dti much public praise for the programme. The Committee wanted to see the programme going forward but there was no forward planning.
Mr Macpherson asked what should the Committee be measuring dti against. His answer would be jobs. It was the only KPI that he was interested in: what was the number of jobs created every year? Every division in dti had to focus on creating jobs, including entities such as SABS and NRCS, offering incentive programmes, etc. If entities could not do that, they had to be removed or people had to remove themselves.
Mr Macpherson asked the DG which Bills were coming to the Committee during the Sixth Administration. He was not going to wait until the fourth year before the Committee began dealing with serious Bills. When was the Committee going to see a Sugar Amendment Bill, and a new National Credit Amendment Bill? The Committee had waited ten years for the Gambling Amendment Bill. When would the Committee see the Liquor Amendment Bill? The DG wanted to table only one Bill but there were some very pressing Bills that needed to come before the Committee.
Finally, Mr Macpherson told the Minister that everything would be undermined unless he was pro-active in some of the crises that would unfold if there was no planning. The sugar industry was facing a crisis and Parliament had resolved that the former Minister would deal with it, but he had gone to sail his boat in Langebaan. That was just not good enough. The Committee needed the current Minister to pick that up. There were some urgent interventions that needed to be made. He wanted to know what those interventions would be.
The Minister stated that he would respond to the questions regarding policy, but he would first give the DGs the opportunity to respond to detailed questions about funding, programmes and such matters as they were the Accounting Officers. He would also ask Deputy Minister Gina if she would like to make some comments on the points raised.
Response by DG: dti
On the question of the budget, the DG told Ms Mantashe that he could see that she had gone into the budget in some detail. He explained that the InvestSA budget looked like it had declined, but there was, in fact, a slight increase. R53.8 million had been budgeted in 2018/19 but during the Budget Adjustment, an additional R30 million had been granted to InvestSA for rolling out offices in certain provinces. The budget of R58 million for 2019/20 was an increase. The budget for B-BBEE was R67.1 million but it was not a listed entity and DTI provided backroom and administrative support, so those costs were not allocated. He believed that the amount was adequate until B-BBEE became an independent entity.
When the new Credit Amendment Act had been passed in Parliament, the dti had made arrangements to assist the NCR, especially with the additional staff it would need. However, the Act had not yet been promulgated and dti would make an additional allocation if there was pressure on the budget. In general, Ms Mantashe was correct that the budget was constrained, and the Department had to work smarter with the budget, allocate it more efficiently and keep the spread right. In the film industry, dti had reduced the maximum available per project so that the funds could be spread over more projects.
The DG responded to Mr Thring’s concerns about the audits for SABS and NRCS. There had been progress by the NRCS, and the audit just required a technical adjustment for the NRCS revenue to be properly reflected and for their IT system to be put in place. SABS was a real problem and because of the mismanagement, it had been put under Administration and three senior dti members of staff had been appointed to manage the process. They were in phase two and would be acting until October and then the Minister would make a decision about re-constituting the board. There was progress even though SABS had received a disclaimer but dti would put a plan in place to get things right. Dti had experience in turning around organisations as it had done in the case of CIPRO/CIPC which had been turned around and was doing well.
The DG responded to Messrs Thring and Cuthbert’s questions on the Black Industrialist Program. The business world was tough but so far all were still in business and growing. The entry criteria to get into the programme was tough. Selection demanded viable business plans, inspections were carried out and dti did lots of due diligence. Dti also had a forum for the Black Industrialists to monitor progress, to deal with difficulties and to offer support and that was why dti was moving to interventions to ensure that the businesses could grow. So far, the businesses were holding their own.
The ease of doing business was actually a big focus area for the DG and dti which was why the dti had created the one-stop shop and InvestSA in 2014/15. The President indicated in his speech that SA wanted to move from a position in the 80’s to the top 50 countries where it was easy to do business. Dti had an active programme with the World Bank to improve the ease of business. Companies could be registered in a matter of minutes, but the big issue was that the system was not fully integrated with the SA Revenue Service (SARS), the Unemployment Insurance Fund (UIF), and the Department of Labour, etc. That was a top priority and dti was working on it. They wanted a seamless process between all organisations.
The DG explained that dti had reported to Parliament that three persons had been suspended because dti had adopted a policy of zero tolerance for fraud and corruption and dti suspended people the same day that management heard about misrepresentation. That was how fraud and corruption in the Department had been kept close to zero. His officials were checking on one of the names because there was a case pending in court. He would forward the names to the Committee.
Response by DG: EDD
Dr Tom noted Mr Cuthbert agreed that the Department was intended to coordinate efforts create decent jobs, but he questioned why six KPIs were reports about SIPPS. SIPPS was engaged in huge investments in country. The reports gave specific detail on the type and nature of jobs created by the private sector and social partners. The reports on Youth also gave details of the creation of jobs for youth. That was why reports were KPIs. They actually reported on exactly what Mr Cuthbert wanted to see.
Response by the Deputy Minister
Deputy Minister Gina noted that the main question was about how government was planning to build a capable state. She welcomed the support for the intention to review the APPs very soon. The intention was to see what the two Departments could come up with. Mr Thring had asked how they would ensure that they included those who had been excluded from economic activities in the country. The Departments had to ask how more investors would be attracted to the country and how they could assist businesses to grow the economy. Very soon she, the Minister and the team would be coming back to have open discussions with the Committee to get even more ideas about they could grow the economy.
The Deputy Minister told the Chairperson that on the whole the Committee Members had added to the vision through their engagements and had contributed to ways in which the economy could be assisted to grow.
Response by the Minister
The Minister thanked the DGs and the Deputy Minister. The issues raised by Ms Mantashe had been covered by the responses, but he appreciated the comments made by Ms Mantashe about reduction in the number of departments. It was an indication of the new way in which government intended to work.
The Minister appreciated the warm sentiments from Mr Thring. He had raised several policy issues. The Gini co-efficient showed the broader inequality but dealing with that inequality was a key objective for what the Department intended to do in the next few years. Creating more jobs was one way of dealing with inequality in society, as was ensuring reasonable standards for working people and fostering entrepreneurship for South Africans who wanted to start small businesses and to build small business enterprises. He was looking for practical ways to assist people to overcome the inequality. There was a role for civil society to offer social protection such as grants but the long term strategy had to be based on job creation. That had to be the fundamental pillar on which everything else rested and so over the next period the Departments would focus more on that. From time to time, in policy announcements, he would highlight the attention that was being given to resolve the issue of inequality as show in the Gini co-efficient.
On the issue of B-BBEE, the Minister noted that Mr Thring made the point B-BBEE had not been broad enough or not broad at all. As he engaged with South Africans in townships, factories and villages, there was a recognition that government had to re-think how it implemented it broad-based policies. Some of them had worked well but there was also recognition that in a number of cases, B-BBEE had not given large numbers of South Africans the empowerment that they needed. There were a few things that Government was doing. The first phase of BEE had been one where, principally, the focus was on getting 5% to 15% of shares in a company sold, on a concessional basis, to black SAs. There had been some value in it, but it had had two major defects: it was not sufficiently broad-based and, secondly, it had not fostered a sense of entrepreneurship. Basically, those black SAs were passive shareholders waiting for the dividend to flow.
The second phase was the introduction of a broad-based vehicle which tried to include more women, more black South Africans, more young people and so on. There had been some successes. He believed that at one of the sessions with the Committee, the Department should share some of its challenges but also some of its successes as part of building a democracy was ensuring everyone in the country celebrated successes. In the third phase, the focus had been on black industrialists. Instead of focusing on a shareholding in an existing company, government was trying to inspire black SA’s to build, buy and grow their own businesses. It was different from the general BEE scheme. A black South African had to build, own and drive his or her own enterprise and that had begun to get some traction over the years. DG October had said that so far all of the Black Industrialists who had been given incentives were still in business, but the nature of business and the market economy meant that some would fail. However, the intention was that the majority should succeed and grow those businesses from medium-sized businesses to large businesses but so that there was always space to bring in more small or medium-sized businesses.
Government was ready for a fourth area in the transformation of B-BBEE and it was one where the approach was looking much more towards the empowerment of workers within a company as they were the co-wealth creators. Some work had been done on it in the past, but now the Competition Amendment Act of 2019, which would come into effect in 2019, had a provision that essentially encouraged worker ownership or share participation in mergers or acquisitions. That was important because when workers became shareholders, they were more committed to growing the business that they had an intrinsic stake in. The idea was to bed down the changes and once the policy was right, implementation had to be improved to make it work. Then the results would be evidence.
The Minister responded to Mr Thring’s comments about regulation and the ease of doing business. It was important not only to be able to start and register a business but the need for a conducive environment in which to grow businesses was important and the Department was focusing on that. It was not merely about being able to buy and register a shell but about making sure that businesses could thrive. The Department would make sure that it was possible for businesses to grow and to be big players in the market, especially as the African Continental Free Trade Agreement meant that SA had to capture the African market, or the other African countries take the space and there would be a significant growth in imports would to SA. Those were all points well made.
He noted that Mr Cuthbert had said that the 3.2% decline in the First Quarter in 2019 was not included in the presentation, but it was included on page seven of the document. Obviously when one quarter drops, the annual growth rate declines and if the drop continues, the annual growth would be in negative territory. However, the presentation had not focused on a single quarter because it was the start of a new Administration and he had wanted to give a longer view of things. When it came to Quarterly Reports, the presentations would focus on what had happened in that quarter as well as what had happened in the previous 12 months because those were useful indicators.
The Minister stated that, as Dr Tom had rightly pointed out, the reports indicated the number of jobs and so on, but he wanted to add that the creation of jobs was often a result of doing other things right. The reports dealt with the things that were within Government’s control. There were things that Government could do but there were also things required by the private sector and things required by labour. The reports would indicate those impediments and enable Government to remove the impediments to faster job growth.
The Minister thanked Mr Macpherson for his appreciative comments and welcomed the support for evidence-based policy because it was an area where they could build great consensus within the Committee. He also welcomed the support for the role of manufacturing as a key driver for the increase of jobs. The role of manufacturing was often underplayed and misunderstood and in the embrace of new economies and new sectors, which was important, the significant role of manufacturing was not always recognised. Manufacturing did not only create jobs in those particular factories, but manufacturing played a role in spawning technology, pulling in financial, legal and other services and had a multiplier effect; it pulled in raw materials from mines, farms and the ocean and thus created jobs upstream and downstream. The role of manufacturing could not be underplayed, and he believed that all parties in Parliament would be in agreement on that issue.
Mr Macpherson had noted the important role of dti. The Minister said that he would address structural versus short term responses, but he had to say that he had been given an enormous advantage in being able to build on the work of Minister Rob Davies who had put an enormous amount of effort and passion into the portfolio and had achieved significant successes in certain areas. Secondly, the Minister had to say that he had a great team that he could rely on and that could be deployed in pursuit of the new vision of reimagined industrial strategy. The President had not used the word ‘policy’ because the focus was going to be on action. That was the message that all parliamentarians had received from the electorate. The electorate had demanded that all parties got on with the issues and got things done.
The Minister recognised that both the short term and the structural issues had to be resolved. He knew that there was not going to be common agreement on the structural features of the SA economy. One of the structural features of the SA economy was very high levels of concentration and ownership. On the one hand, one needed large companies which had economies of scale and could bring down prices. Large companies could afford Research and Development budgets that allowed innovation and creation and had large budgets so they could, aggressively, go into the export market. Those were the positives. On the other hand a concentrated market did not encourage new companies, small companies and new products, resulting in very little incentive to be dynamic and competitive and to keep prices low. Therefore, the role of competition in opening up markets was critical. A lot of the focus would be on competition policy that would open the markets. That would change the structural nature of the economy. There were many other examples of ways in which the structure of the economy could be changed.
The Minister recognised that there was a mismatch between skills preferred and skills needed. There were issues around infrastructure that had to be addressed. The low savings rate was another issue. Not all issues fell directly within the purview of the dti and EDD mandates, but the Departments could contribute to resolving those issues.
The Minister acknowledged that Mr Macpherson was correct about the emphasis on partnerships as Government did not operate in any of the sectors. For example, Government did not build cars or stitch suits, although he hoped all Members of Parliament would wear locally made suits. He noted that Mr Macpherson was wearing a locally-made suit but that there was a stunning silence from Mr Cuthbert. The Minister wore a suit made by local workers in Salt River and it was a great quality suit. Not only did they create jobs by buying locally made suits, but the work of SA workers was great.
Government had to work closely with the private sector and help them to be the generators of jobs and growth in the economy. It did not mean that the State had no role. International experience showed that it was not a matter of the State getting out of the way, but the State had to be in the right areas to not cause a blockage, while offering support. In the wrong areas, the State could be a brake to growth.
President Ramaphosa had spoken of the entrepreneurial state and he had referred to a work based on the US economy. It showed than many of the technologies at the heart of American growth such as GPS, the internet, and touch screen technology were all a result of risks taken by the state and work undertaken by the American government. American businesses had leveraged off those developments, commercialised the technologies and created jobs. The Minister said that that emphasised that an absent state did not promote growth. The state was not there to manufacture, but to create the appropriate environment and make it possible for things to happen. It was important to find the right balance. Reimagining the industrial strategy mean that Government would not be making suits or cars, but to help those who did make the suits and cars by creating the appropriate environment.
The Minister concurred with Mr Macpherson about the fight for industry and the job creators. They were all part of what drove the growth engines and so Government would be building partnerships with the two key social partners and supporting and facilitating partnerships between business and labour. Business and Labour were the two most important players. The rate of unemployment was a great concern as it was extraordinarily high. The presentation was not intended to show that SA was doing well but to show the significant challenge faced by SA in the realm of unemployment. There were far greater challenges than in most other countries. The challenge was not only the inherited back-log, but as more subsistent farmers move into the commercial economy, the increase the unemployment figures was way beyond population growth. The country needed extraordinary interventions, including interventions by the business community, by Labour, by Government and by all together trying to facilitate the absorption of, particularly young, people in employment.
The final area addressed by the Minister was the notion that the only KPI for the dti and its agencies should be jobs. Jobs should be the principle driver of the work. It was not the only measure, but it should be the principle one. The Minister wanted SABS to report on how its standards helped create jobs, but it should also set appropriate standards to ensure safety, etc. Every entity would be asked to look at creating jobs. If Government resolved the jobs issue, it would fight poverty and the unequal economy.
The Minister added that the easiest thing to do was to announce a series of Bills, but he wanted to ensure that only appropriate Bills should be introduced. When he had the right list of Bills, that information would be introduced immediately to Parliament, even if the intention was not to introduce a Bill right away. He wanted to allow the Committee to create its roadmap. He agreed that legislative changes should take place as early as possible without being a rush job to get the Bill on the table, but nor should it be a rush job to get the Bills off the table.
There was probably more detail, but the Minister promised that would come in the fullness of time.
The Chairperson asked that the team introduced themselves so that he could hear everyone’s voice and then the Minister could tell the Committee what the team members did. It was important, and strategic, at the first meeting, for the Committee to know who was there and what role they would be playing.
Mr Macpherson said that there were some unanswered questions, for example on the sugar crisis.
Mr Cuthbert stated he had asked about the decrease in the incentives budgets. He believed that he had been misunderstood in respect of the KPIs. What he was also suggesting was that in order to make the KPIs more outcomes-based, the KPI should be linked directly to jobs.
Ms Mantashe heard what Mr Macpherson was asking the Minister to respond to. She was also interested in the matter that he was raising but she humbly requested that the Committee should not ambush the Minister at the first meeting with the Minister.
The Chairperson informed the Minister that the Committee had agreed to go with the introduction of the team members and then the Minister could respond to the issues raised, but he could decide how to deal with the sugar matter.
The officials from DTI and EDD introduced themselves and conveyed their job titles.
Response by the Minister
The Minister responded to Mr Macpherson. He had referred to the matter very briefly in the SONA debate to indicate that he was looking at the matter. For new Members, he explained that over a number of years, SA’s sugar industry had faced enormous pressure with imports of sugar from Brazil and many other countries coming into SA. The country had a sugar tariff in place, so in about 2017, the sugar industry had approached the government and said that they were bleeding. He, Minister Patel, and Minister Davies had held a meeting with growers, millers and users such as beverage manufacturers and resellers of sugar. Subsequently, they had asked the International Trade Administration Commission of South Africa (ITAC) to look at the sugar tariff. ITAC had considered the matter and had recommended an increase in tariffs, lower than the industry had requested but higher than the end users had requested. However, when the tariff was being adjusted, there had been a gap in imposing import tariffs and sugar had flooded into the SA market.
The sugar industry still had enormous challenges which could lead to job losses and potential closures. Government understood the challenge of farmers. Some were small-scale farmers eking out a living and others were large-scale farmers who had invested significantly over the years. Government had to maintain and grow the agricultural sector. On the other hand, huge quantities of sugar became an input into the agro-processing industry. Sugar did not only go to supermarkets but a lot of food companies producing processed foods used sugar and when the price of sugar went up, the price of the processed goods went up. The beverage industry had stated that with the increase in sugar prices, it had become impossible to sell their products. The beverage industry had subsequently moved to sugar-free and lower sugar products. It appeared that there was a fall-off in the demand for sugar. The Department was looking at all those aspects in order to present a more sustainable strategy. The Minister just needed more time to determine the best strategy. So he understood the concern around sugar farmers, but he needed to have a solid plan before he could say anything. The dti was looking at domestic demand for sugar, and whether there were alternative products that could utilize sugar. All those aspects had to be carefully considered.
The Minister stated that he had forgotten to mention an important point about incentives. He could see that he had a united team on the side of the Committee that supported the need for an increase in the Budget for dti. That support was appreciated. It was music to his ears. He was not looking for budgets to pay staff and support, but budgets that would go into rebuilding industry and supporting small business, medium-sized businesses and large businesses that could export overseas. The support of the Committee, vocally and in the public arena, was very important.
He admitted that the Minister of Finance had a very difficult balancing job and he had to ensure that resources went to social support and into growing business without going into unsustainable debt. He had to balance the books. However, Minister Patel was arguing that supporting investment spending to grow the economy and spending less on consumer spending was the smart choice because, over time, the economy would grow and there would be a bigger fiscal take. When the budget was constrained, one could not cut oneself into growth; one had to shift into growth by more investment spending. State investment spending was principally in infrastructure, which was a fundamental role of the state in promoting growth and counter-cyclical economic policies. The other driver was industrial support. Together they were the key drivers of growth. He hoped that all the party leaders shared the views of the Committee Members and if they all raised the matter in Parliament, they would be heard.
The Minister stated that the point made about KPIs by Mr Cuthbert bore some thought. There were challenges, one of which was that KPIs had become something that was audited and tick-boxed. The Department and the Auditor-General wanted to comply with the language of KPIs.
Some years previously, EDD had reached an agreement with Coco Cola in a merger matter that made available R800 million to small scale businesses, farming and enterprises and which supported jobs, brought the African headquarters of Coco Cola to SA. Coco Cola had agreed that no blue collar jobs would be lost, indefinitely, and that the Appletizer brand would continue to be produced in South Africa and exported globally, etc. When EDD had put that agreement in its report, the Auditor-General had said that it was not technically in the KPIs.
If the Auditor-General was obliged to audit the letter of a KPI, then the KPI had to match what the Auditor-General was going to audit. They had also taken into account the fact that context could have a negative impact. If the economy went bust, or there was downtime in energy, the Department could not meet its KPIs but if the economy grew more robustly, then the Department had an easier job to meet its KPIs. It was not the best way to measure performance and did not encourage an entrepreneurial state that could get things done and looked at the impact rather than simple pro forma compliance. However, that was the system that the Department was operating in and it had to operate in the way the law required while the issue was being reviewed. DG October had been a champion within government in trying to find new ways of measuring and doing things. In the meantime, he had to be sure that the KPIs were auditable or there would be non-compliance The point was to be held accountable only for those things which were under the control of the Department.
The Minister assured the Committee that he would take the suggestions into account and give the matter some more thought.
The Chairperson informed the Minister that the Committee still had to get its house in order. The legacy reports, dti reports, etc. had to be examined. The sugar matter was captured in the legacy report and the Committee would have to work out a programme and a plan to deal with that process. But they had to plan in good time and agree on what to prioritise and not pick up what seemed urgent but might not be. The Committee already had a full plate dealing with issues in the legacy reports. The Committee would be meeting the following week to consider the draft budget vote report and would be engaging with the dti to address the issues of the entities and incentives. On 11 July 2019, the debate on Vote 34 and 25: Trade and Industry & Economic Development would take place in the National Assembly.
The Chairperson noted that the Committee had a lot to do but that day’s meeting had given Members a sense of what the Committee had to do. He asked the Minister that the lines of communication be kept open so that Members could receive information in good time and were able to read up beforehand so that Members did not waste a lot of time on clarity-seeking questions. The Committee had to decide what it was going to do and how it would plan so that parliamentary deadlines were met.
The Chairperson called on Mr F Mulder (FF+) who had raised his hand.
Mr Mulder told the Minister that the FF+ congratulated the team and wished the team all the best for the new term of Parliament. He had to ask a question about the previous day that had an effect on that day and an impact on the following day. It was common knowledge that state capture, poor governance and corruption, as well as the lack of cohesion across government, had impeded the efforts of the dti to reindustrialize the economy. What was the capacity of the dti to perform proper oversight during the Sixth Parliament? It might be a make or break term for the government. He had not seen anything in the documents regarding the stepping-up of oversight. That situation had impacted very negatively, so what measures had the Department taken to step up oversight?
Ms Y Yako (EFF) welcomed the Minister and his team. She asked whether there were any plans to develop young and emerging businesses in the rural economy, especially in the Eastern Cape and Limpopo in the light of the decline in the very big industries in those provinces, such as agriculture and mines that had gone under? Were there any plans to revive those economies and to support young businesses?
Mr Mbuyane asked about the status of the automotive industry. He asked for an update from the report in November 2019. What progress had there been with the automotive industry? He welcomed the budget for B- BBEE so that the Commissioner could at least do some monitoring and out some measures in place where there was non-compliance. Some SOEs and departments were not compliant with B-BBEE Act. What was the strategy to deal with non-compliance in government and the private sector?
Mr Macpherson asked the Chairperson if the draft Committee budget report could be emailed by Monday so that Members could start going through it and submitting comments. He also asked whether the Committee would continue the process of submitting comments via email.
The Chairperson confirmed that the process would remain the same.
Response by the Minister
The Minister thanked Mr Mulder for his kind comments. Mr Mulder raised an important point around state capture on economic performance. About two years previously, EDD had investigated the effect of corruption on infrastructure. Because the Department did not have the exact data, it had done some modelling on an overpayment of 10% on infrastructure bills as a result of state capture and had calculated that the impact was a loss of R27 billion per year with the loss of some 76 000 jobs that would be otherwise created. So there was a relationship and it was a negative relationship.
The Minister stated that the matter was being dealt with through a range of interventions, including the Zondo and other Commissions and the actions that would follow from there. Some things were directly under control of departments. The EDD and Industrial Development Corporation (IDC) were making a lot more information available as transparency helped. IDC currently published the names of all the people who had received IDC loans on its websites. That was not the norm as bank-client information was normally confidential. However, something had to be done and things had to be done differently so that the corruption could be dealt with.
The other part was effective oversight of entities. The Minister said that DG October had made a good point when he said that starting some ten years ago, the Department had started to clean up public entities that had audit problems and sometimes disclaimers. Dti had started working, institution by institution, to clean them up and that had contributed to fewer entities with that problem. The goal had to be zero. All entities had to get a clean audit. It was a constant oversight because there were slippages, but people had to see action and consequences for wrong-doing. That process would dry up the wrong-doing. Only then was there a change in the mindset. There would be a report to Parliament on the oversight of entities and the Members could give input as to whether the Department was thorough enough. Members should give input and suggestions because it was the job of the Executive and the Department to hear the voices of Parliament. One could never win the fight; one could only say that one was winning the fight as it was ongoing. Vigilance had to be eternal and constant. The Committee could evaluate the plans and indicate if the Department was doing enough or could do more.
The Minister noted that Ms Yako had put a focus on rural areas and young people. The Department was doing something in the area. Both DGs would elaborate on those matters in future but he would just give headlines. One of the areas of focus was industrial parks and special economic zones which tackled the whole spatial transformation of the economy. Dti would be working with other departments and that programme was intended to address that challenge that Ms Yako had rightly raised. He remembered when there were thriving industries in rural areas. While some had completely disappeared, there was a programme in dti to help with basic infrastructure, such as water and electricity and a fence around the building, etc., in 15 industrial parks to enable smaller and medium-sized businesses to relocate there. The concept of digital hubs was in the final stages of planning, and not just for urban areas.
The Minister had visited a new school in a rural area in the Eastern Cape and he had seen the eyes of a young child pressing the pad of an iPad. He was able to imagine bringing digital technology to young people. The hubs would provide an opportunity for young people to be exposed to IT. The programme was not just to assist the rural poor but also to assist overall growth. Dti hoped it to do more but the budget was limited, and the Department was looking for ways to access more funding. Dti would be working with the Departments of Small Business Development and Communications on that project.
Regarding the auto sector that Mr Mbuyane had asked about, the Minister stated that the Department was working on the modalities of implementing the second phase of the auto sector plan which focused on local manufacturing of components. In 1996, SA had had a large but inefficient motor industry because it had enjoyed many protections and cars were expensive. Many people could not afford cars. As soon as SA opened the economy, as required by the WTO, it became evident that the motor industry would be decimated. In the first phase, an agreement was reached in 1995 to consolidate the motor industry and the industry agreed to make fewer models and use economies of scale. The next phase was to bring in more component manufacturers, so the rules had been tweaked and there would now be two jobs in making components for every one job in the actual motor industry. The third phase was to include more black SAs in making components as entrepreneurs and business owners. Dti was currently looking at significantly increasing the level of local components. Currently localisation stood at 39% and dti was seeking to increase that to about 60% over a number of years. The industry was in agreement with the plan.
Furthermore, the Minister noted that dti was looking at automotive industries bringing innovations in terms of hybrid or electrical cars because they had to make vehicles that people wanted.On B-BBEE, the Minister knew there was a Commission and he would be briefed on that matter in due course. Dti did look at government departments. He was aware that the buying power of the state could create a broad base.
The Chairperson noted that there were no wrong questions. Mr Thring was to ask last question.
Mr Thring said he had read that there had been colloquia, one of which had been on beneficiation. Beneficiation was key to growing the economy, but he had not heard much about beneficiation in any of the presentations. What was the Department’s role in ensuring that beneficiation was fast-tracked?
The Chairperson stated that he would like to adjourn the meeting at that point, but he would first take the Minister’s comment.
The Minister promised that beneficiation would be presented to the Committee from time to time. It was a central part of the strategy and the Departments were already doing quite a bit in the area of beneficiation. For example, dti was promoting the manufacture of batteries and the use of local scrap metal in steel foundries and steel mini-mills. The past support of platinum in catalytic technologies and the smelting of manganese were a few examples of beneficiation. Aside from those initiatives, there was agro-processing which was the beneficiation of agricultural products and furniture-making was also a beneficiation. The Department would continue to looking at beneficiation. There were serious technical challenges but underpinning the APP and the presentation was government’s efforts at beneficiation.
The Chair asked about the colloquium.
The Minister noted that each colloquium that the Department held from time to time was a round table where people such as inventors, investors or academics were brought together to share expertise. The word actually meant a gathering of academics to discuss a concept. That was the intention of gathering people: to discuss concepts. The Minister was not sure which specific colloquium Mr Thring was referring to, but a couple had been held and he would report on the outcomes of those colloquia in future.
The Chairperson thanked the Minister, Deputy Minister and members of the Departments.
The Committee Secretary informed the Committee that the budgetary process was to send a draft by the coming Monday evening and the comments needed to be emailed to the Secretary who would capture them in the draft so that, when the Committee met, the comments would have been incorporated. After the deliberations on Tuesday, a clean document would be prepared for the conclusion of the process on Wednesday.
The Secretary informed the Committee that there had been slight changes to the Committee Programme. The mini-plenaries related to the cluster of trade and industry had been included.
He added that in the previous Parliament, there had been a move towards doing away with paper but that had not been finalised. He hoped that all Members had received iPads and laptops as the digitalisation would be dealt with Wednesday. On 24 July 2019, Members would get a report on dti and EDD budgets as well as the legacy report.
The Chairperson declared the meeting adjourned.
The meeting was adjourned.
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.