Western Cape Appropriation Bill: Vote 12 Department of Economic Development & Tourism

Meeting report

The Chairperson said the meeting had been convened to deliberate on Vote 12 of the Economic Development Tourism in the Schedule of the Western Cape Appropriation Bill of 2020. She was cognisant of the fact that the delegation from Saldanha had travelled a long way to be present for the meeting, so questions posed for Saldanha would be done first, followed by WESGRO and then the Department.

Mr David Maynier, Provincial Minister of Finance, said the Premier had called an urgent Cabinet meeting to deal with the Coronavirus pandemic, which was a matter of significant public importance which had major implications for both his portfolios of Provincial Treasury and Economic Development. He therefore requested that he be excused from the meeting in order to attend the meeting, as the circumstances were of high importance.

Mr D Mitchell (DA) supported the releasing of the Minister, as there were special circumstances. The Minister would be available to respond to questions, and therefore he fully supported the release.

Ms N Nkondlo (ANC) said that it was not ideal, as Members had to endure great pressure to hold all the meetings in budget week. Scheduling should be done to ensure that there were no conflicts in future between the committees and the Executive. She had specific questions for the Minister, and would therefore forward them to him directly.

The Chairperson acknowledged that there were special circumstances at play. The Executive had not planned on having the meeting that day, but due to international media news coverage about the Coronavirus and how it was affecting Africa, South Africa and the Western Cape in general, it had been found to be appropriate to hold the meeting in order to discuss, prepare and respond to the situation. While matters things needed to be attended to at this meeting, there were other obligations in the provinces that also needed to be dealt with, and she was not sure how the Minister of Health would receive the funding she required if the relevant Ministers were not present. She said that any questions posed to the Minister could be forwarded to him.

Mr Maynier commented that he agreed with Ms Nkondlo that it was not ideal. He had has been in the Opposition for 10 years in the National Assembly, and he had committed to appear regularly before the Committee and to respect the Province. However, due to exceptional circumstances, he needed to be present at the Premier’s Cabinet meeting. Any questions forwarded to him would be replied to timeously.

The Chairperson released the Minister, and he left the meeting.

Mr Solly Fourie, Head of Department: Western Cape Department of Economic Development and Tourism, said the Coronavirus issue was a very important one – not only in terms of health, but also from an economic and financial perspective as well. There would definitely be job losses if the economy took a further knock, so it was an issue that needed to be addressed rapidly.

Vote 12: Appropriation Bill

Coming back to the Vote 12 of the Appropriation Bill, he explained that for the 2020/2021 financial year, the Department had been focusing on expanding the economy and growing it through the challenging times. The economy was made up of four large components:

• The first component was domestic consumption, which was the ability of people to spend money and buy goods and services for their households, but also for firms
• The second component was investment, which was the ability of people to invest in the economy, whether that was for infrastructure or capital investment
• The third component was government spending, and the national Minister of Finance had stated that spending by the government had been constrained both nationally and in the provinces
• The last component was the exports and imports combination, where the Department had specifically targeted the growing of exports from the Western Cape as a major thrust to ensure economic growth

Discussion

Mr A van der Westhuizen (DA) said that the Coronavirus did not just affect South Africa and the Western Cape, but the world, and with that the global economy. He asked whether the predictions in the budget of economic growth would still be attainable, taking into account the impact on the economy of the Coronavirus. He contended that it was more than likely that the Western Cape would be hit harder by the Coronavirus than other provinces, as tourism made up a massive part of the economy in comparison to other provinces – especially since South Africa’s borders had been closed to certain countries. He wanted to know what the effect of such changes would have on direct foreign investment, along with general economic growth, on the Western Cape.

He said he was also the Chairperson of the Standing Committee on Agriculture, and wanted to know what funds were being offered as support to agriculture because of the national disaster that had been declared. He explained that imports and exports would become limited, so more demand would be placed on local agriculture, and there needed to be a framework in place to access funds and protect the current farming operations.

Ms Nkondlo sought clarity on the current budget allocation to the skills development programme. She wanted to know exactly what the money was being used for. She did not understand why R164 000 had been shifted to regional skills coordination. Was she right in assuming that the regional skills coordination work was done in collaboration with the municipalities? Where was the money linked to the skills development programme?

Given the fact that budgets seldom had enough funding for development and transformation programmes, she found it unusual that the current budget did. She was interested to see where the conversation would lead regarding the Coronavirus’s impact on small and medium sized companies – she gave an example of a company that had lost almost 50% of its income. What would the response of the provincial government be in order to help companies survive the pandemic? How would projects like the Halaal Value Chain Cluster development programme survive?

She referred to the impact of red tape on small and medium enterprises in both the province and the municipalities, and said there had been progress with the draft economic procurement policy implementation plan, which proposed development in the townships. She wanted to know when the plan would be completed, and whether or not input had been received from the townships.

The Chairperson said that R1 million had been assigned to Laingsburg as a small business enterprise development fund. This was phenomenal, given that Laingsburg was the smallest municipality in South Africa. She kept telling the people of Laingsburg that because it was the smallest municipality, it should be the best run municipality in South Africa – which it once was. She wanted to know exactly what the money assigned to Laingsburg would be used for.

Lastly, she wanted to know how the Coronavirus would specifically affect imports and exports that were currently taking place within the African continent.

Department’s response

Mr Fourie responded that the Department and agencies acknowledged upfront that when they had started with the budget planning and strategy, there had been very vague notice taken of the events in China. Therefore, a lot of the implications of what could happen had not been considered. The budget was according to how the economy stood at the end of November 2019. Moving targets were being developed to monitor the situation, such as when South Africa had its first confirmed case of the Coronavirus, and when the Western Cape had its first confirmed case. The next phase would be to monitor the situation as it swept across communities.

There had been a significant decline in the number of people travelling to South Africa and, by extension, to the Western Cape. Cancellations had been experienced by various places, such as the Cape Town International Convention Centre (CTICC) and the Winston Hotel. There had been a number of cancellations for conferences, and they had seen declines in forward bookings of people who would be coming into the country, so the tourism industry would be hit hard.

Emergency and disaster management procedures had come into effect this week, leading to the establishment of seven clusters that would be looking at how specific areas were being or would be affected. This would be under the authority of the Director-General, who was also not available to attend the meeting due to the Cabinet meeting that had been called. At this current stage, he believed that tourism and tourism-related industries would be very badly hit. Work needed to be done to assess the damage that would befall small and medium enterprises that had cash flow problems.

Wesgro comments

Mr Tim Harris, Chief Executive Officer: Wesgro, said that analysis of the Coronavirus’s impact had shown that although it was very early days, the effect could already be felt. Data retrieved showed the impact on markets that had been heavily affected. China, for instance, had experienced a 77% decline.

Mr Cornelis van der Waal, Chief Research Officer: Wesgro, said that Mr Fourie had summarised the situation very well. Things were changing very rapidly, and yesterday had even seen the United States of America (USA) implement a travel ban on Europe, along with various other strategies and plans. Obviously, with all the travel bans and complications in the very short period, people would rather avoid travelling altogether, and the medium-term impact over the next month would see a rapid decline in bookings. As more certainty came into the market, the situation was expected to normalise again, but whether that would be in three months, six months or a year, could not be answered. Bookings had currently declined by 15%, and would continue to drop.

Mr Fourie said that the weekend would bring a turning point, when questions would be answered. Business confidence was what was needed to attract investment and to make sure that South Africa had growth. He commented that there had not been any major loss of investment into the region because of any particular factor, but there had been a global decline.

Mr Nezaam Joseph, Director: Economic Research and Development, responded on the issue of the national skills fund, and said that training would begin within the next three to four weeks.

Mr Fourie said that as far as agriculture was concerned, it was something that needed to be looked into. He believed that agricultural growth meant growing the economy, and the Western Cape contributed just over 3% of the regional gross domestic product (RGDP). He expected that it could be higher, given the fact that they were going on an aggressive marketing and promotion campaign to seek bigger shares of the market for agriculture and agri-processing products. His department would be working very closely with the Department of Agriculture to ensure that the numbers increased.

Mr Joseph responded to a question raised that was related to the Red Seal artisan qualifications, and said that it was a three-year process which consisted of 18 months of experiential learning.

Mr Patrick Lakabane, Executive: Development Programmes, Saldanha Bay Industrial Development Zone (IDZ), said the organization was not funded directly by the province for the skills development enterprise. However, since 2013 they could leverage funding from the Skills Education Training Authority (SETA) and from partnerships with a few private sector role players within the skills development environment. Should the funding from the province stop, they would not have any funding, so they needed those other funding models in order to become properly funded. Their quarterly report gave details to their coordinating body-- how they trained people, who they trained, what type of interventions they implemented with enterprise development, and also the skills development.

Ms Danielle Manuel, Executive: Stakeholder Management, said they were conducting a social facilitation process around informing communities about the opportunities available for the disabled, and worked very closely with the municipality. Funding was not necessarily from the province, but they made do with what they had.

Ms Jo-Ann Johnston, DDG: Economic Coordination and Stakeholder Engagement, said that not a lot of money would be spent on the mechanisms they used. The research had been conducted, and would continue. They had managed during the last three to four years to leverage money to fund feasibility studies. Research and feasibility studies provided a really powerful calculus on several fronts so one could reduce uncertainty for businesses because they had the information at hand, as opposed to trying to decide in a vacuum of evidence. It demonstrated the government’s commitment to being effective as their facilitated research demonstrated that they were committed to a project that provided businesses with confidence. It reduced costs and time for businesses, as studies were aggregated.

Regarding the drought, they had worked closely with the Department of Agriculture on a number of projects and were focusing on processing sector projects. They also assisted with the implementation of findings and statistics.

The Chairperson said that on 9 March, there had been a dip in the oil price. Sasol had lost approximately 40% in value so far. Some people had compared the situation to the economic crisis of 2008. She wanted to know what the impact had been on the Johannesburg Stock Exchange (JSE).

Lastly, the annual training plan refers to a person in charge who was described as the chief director responsible for water. However, she did not recall there being a chief director for water, and she wanted to know if that was a new position or if it had been renamed, and who the chief director was.

Mr Fourie said that the oil price drop on 9 March had been a result of the fight between Russia and Saudi Arabia on whether Russia would cut back or not, which had led to Saudi Arabia not being able to get a reduction in their production through. As far as oil prices on the global market were concerned, South Africa needed to be thankful that they did not go higher, as an increase coupled with the Rand’s drop in value would have led not only to petrol prices increasing, but inflation and everything else increasing as well.

When the budget was drafted, not a lot of consideration had been given to the current global situation. However, their role was to seek to build confidence amongst South African businesses, and to expand them in order to draw investment to the country. He stressed that they would help companies to grow and expand wherever they could.

He said that Ms Helen Davis was the Chief Director: Green Economy, which had two sub-directorates under it – energy and water security. She was currently on leave, and a new director would be employed to deal with those two sub-directorates.

Mr Fourie referred to the Consumer Protector’s Office, and said that one would notice from the annual performance plan (APP) that the targets for interventions had substantially increased, even though the budget had decreased. They had decided they would be doing more with less.

Mr Phenias Ncube, Acting Director: Office of the Consumer Protector, said the outcome indicator was reflected in the APP. They did not commission surveys anymore. The last survey had been done in 2014, and had cost a lot of money as it had to be done by an independent entity. In 2019/20 the outcome indicators reflected would be measured in terms of the savings that accrued to consumers as a result of the intervention of the Consumer Protector. If someone had a problem with their cellphone contract or with a car they bought from a dealership, for example, the Consumer Protector’s Office would step in to cancel those contracts.  

Ms M Abrahams, Chief Financial Officer (CFO): Economic Development and Tourism Department, said the partnership with the City of Cape Town had to do with the deployment of tourism safety officers, which was the Department’s contribution to the safety plan.

The Chairperson said she was happy learn about the allocation to Laingsburg. The Laingsburg Municipality would be naming its square after Tannie Poppie, as she had contributed significantly to bringing tourism to the town. Before Tannie Poppie, Laingsburg had been considered only as the “flood town.”

The Chairperson thanked the Department and all entities that attended the meeting and thanked everyone for their contributions to the Vote.

The meeting was adjourned.