Black Industrialists programme: briefing with Ministry; Remitted Bills (deliberations postponed)

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Trade, Industry and Competition

01 September 2020
Chairperson: Mr D Nkosi (ANC)
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Meeting Summary

Black Industrialists Scheme (BIS)

The Portfolio Committee on Trade and Industry met on a virtual platform for a briefing by the Minister of Trade and Industry on the Black Industrialist Programme. The Deputy Ministers were also in attendance.

The Minister provided a snapshot of work being done within the Department and its entities to show the kind of economic activities that were promoted and encouraged through the Broad-Based Black Economic Empowerment programmes. While the policy purposes of empowerment were constitutionally sound, there had been a number of challenges in giving effect to policies. Fronting practices were used in a number of cases, where companies misrepresented the position of the true shareholders and beneficiaries. The transformation agenda had to include equitable provincial spread so that development was a reality across the country.

A number of black industrialists continued to face challenges in breaking into markets or managing sustainable enterprises. Some of the difficulties included limited access to support and facilities from commercial banks, based on a lack of business track records or collateral; concentrated markets where incumbents effectively limited entry of new players; limited market experience in some sectors; weak governance arrangements in company boards. The impact of Covid-19 on businesses was the most recent challenge. A greater focus on transformation policies was needed. To address market access challenges, amendments would be made to the Competition Act to enable the authorities to investigate concentrated markets. Stronger support networks and access to business coaching as well as technical partnerships for black industrialists were all necessary. The new auto industry transformation fund would include strong partnerships between large auto assemblers and black component suppliers.

Members asked if there was a tracking system to monitor students coming through the system to ensure that there was no bottle neck where students found themselves qualified but unable to find employment. What was being done about fraud and corruption through fronting? How did one prevent patronaging where tenders were given to those who had no experience in the industry, so the tenderpreneurs then passed on the work to a skilled company? Of the 900 businesses supported by Department of Trade, Industry and Competition, what was the success rate? Had the programme produced young industrialists and women industrialists? How did one measure the sustainability of the interventions and the companies? How were they monitored? Could that be reported on?

Members also asked some more broad-ranging questions.  Bearing in mind that 30 black farmers had been murdered in recent weeks, what safety measures were available to the black farmers?  Why was the Chairperson of the National Lottery Fund, Prof Alfred Nevhutanda, listed as a director of the United Industrial Cable company and was it not a conflict of interest as he was the chairperson of a public entity? How was it morally justifiable that Sanlam had done a B-BBEE deal by selling 25% of the investment holding company to one individual who was already a billionaire?  What was happening about economic planning in the district spaces where there were poverty nodes, such as on the Cape Flats?

The Committee was to have discussed the two remitted Bills, the Copyright Amendment Bill and the Performers’ Protection Amendment Act, but a request was accepted from the ANC Members to defer the deliberations on the Bills until the following quarter as the Members were having discussions with the Portfolio Committee on Arts and Culture.

Meeting report

Opening Remarks
The Chairperson requested the Secretary to take a roll call to ensure that the meeting was quorate.

The Committee Secretary announced that all Members were present.

The Chairperson welcomed the Members and turned his attention to the agenda.

Ms J Hermans (ANC) stated that the ANC requested that the remitted Bills, the second item on the agenda (Deliberations on and consideration of the Copyright Amendment Bill and the Performers’ Protection Amendment Act) be moved to the first item on the programme in the following quarter. The ANC team had not completed its work in preparation for addressing that agenda item and was in discussion with the Portfolio Committee on Sports, Arts and Culture as the Bills impacted on that Committee’s work.

The Chairperson asked Members for their comments on the proposed postponement of the item.

Mr S Mbuyane (ANC) noted that the agenda item stated “deliberation and consideration” which was confusing but he seconded the proposal by the whip, Ms Hermans. Was the Committee deliberating on the item or considering the item?

The Chairperson agreed to withdraw the item on the remitted Bills and would ensure that it was properly formulated when returned to the agenda.

Mr D Macpherson (ANC) said that he had no problem with the request of Ms Hermans but he felt that, when dealing with such fundamental items, all Members should be on the same page. Ms Hermans had his phone number and email address and those of other Members, and so he requested that she contact him and other Members before presenting such a proposal. He requested that things be dealt with in that way in the future.

Ms Hermans offered her humblest apologies for not contacting other Committee Members. It had been an oversight to not seek consensus.

The Chairperson agreed with the need for Members to communicate. He noted that there was a second substantive item on the agenda – a briefing on the Black Industrialist Programme. He welcomed the Minister of Trade, Industry and Competition, Ebrahim Patel, the Director-General, Lionel October, and other officials.

Presentation by Minister of Trade, Industry and Competition
Minister Patel greeted the Chairperson and Members of the Committee as well as the two Deputy Ministers: Deputy Minister Nomalungelo Gina and Deputy Minister Fikile Majola.

The Minister stated that he had a PowerPoint presentation that would indicate some of the issues relating to the Black Industrialist programme and highlight some of the successes and challenges. He indicated that he would take a leave of absence just after 11:00 as he would be attending the National Command Council meeting on Covid-19. He also informed the Committee that he had been joined by the senior executives of the Industrial Development Corporation (IDC) and the Industrial Development Corporation (NEF) who could expand on the case studies if the Committee should request such expansion.

The Minister proceeded to brief the Committee.

The presentation provided a snapshot of work being done within the Department and its entities to show the kind of economic activities that were promoted and encouraged through the Broad-Based Black Economic Empowerment programmes.

The Minister explained that while the policy purposes of empowerment were constitutionally sound, there had been a number of challenges in giving effect to policies. Fronting practices were used in a number of cases, where companies misrepresented the position of the true shareholders and beneficiaries, to falsely claim that they were black South Africans. In some cases, black-owned firms ‘lent’ their names as the contractors in tender documents, with the work actually done by another company. In other cases, individual persons would be put on a shareholder register without their knowledge, which represented outright fraud. The dtic had strengthened the regulations to tighten controls and make fronting a criminal offence and the Department and agencies had put in place measures to address fronting.

There were a number of challenges. Importantly, the transformation agenda had to include an equitable provincial spread so that development was a reality across the country. While the presentation focused mainly on one aspect of the transformation policies, namely the black industrialists, there were a number of other aspects of the development objectives that were not covered, such as worker empowerment.

A number of black industrialists continued to face challenges in breaking into markets or managing sustainable enterprises. Some of the difficulties included limited access to support and facilities from commercial banks, based on lack of business track records or collateral; concentrated markets where incumbents effectively limited entry of new players; limited market experience in some sectors; weak governance arrangements in company boards. The impact of Covid-19 on businesses was the most recent challenge.

The Minister concluded that a greater focus on transformation policies was needed. The Department had to determine what mechanisms worked and what did not, and to make necessary changes. To address market access challenges, amendments would be made to the Competition Act to enable the authorities to investigate concentrated markets. Stronger support networks and access to business coaching and as well as technical partnerships for black industrialists were all necessary. The new auto industry transformation fund would include strong partnerships between large auto assemblers and black component suppliers.

The Chairperson thanked the Minister and called for comments and questions.

Discussion
Mr W Thring (ACDP) noted the Minister had mentioned that thousands, if not hundreds of thousands, of students were being given opportunities to study for bursaries. Was there a tracking system to monitor students coming through the system to ensure that there was no bottle neck where students found themselves qualified but unable to find employment?

He asked how one prevented patronaging where tenders were given to those who had no experience in the industry and the tenderpreneurs then passed on the work to a skilled company or, if they attempted the work themselves, they made a hash of things. Of the 900 businesses supported by dtic, what was the success rate? In May, the Committee had been informed told that 60% of the companies receiving funding were under stress due to Covid-19. So, with regards to the 900 businesses that were supported, what was the success rate? With regard to the black farmers who were being supported, what type of training and safety programmes were available to those farmers? Recently, 30 black farmers in KwaZulu-Natal had been murdered by cattle smugglers. The murder of farmers was across the board. What safety measures were available to the black farmers?

Mr Thring asked if there were any negotiations with traditional leaders, particularly those in the Ingonyama Trust, to unblock land for mining and industrialisation to actually strengthen localisation. He appreciated the progress made in beneficiation, although he thought that it was miniscule as compared to that which could be done. Did the Minister have any figures on the percentage of raw materials exported compared to that which was beneficiated? What was the plan to spread equitable opportunities across all provinces, particularly where those provinces had a high unemployment rate?

Mr M Cuthbert (DA) stated that the Minister had responded to his Parliamentary Questions, PQ 1707, in which the Minister had informed him that the United Industrial Cable Company had received roughly R64 million. However, as a result of a tender not received from Eskom, and they had not had any follow-up, according to the Minister’s words, the business was still trading, but only marginally. The company was pursuing a new partner. That had happened under the auspices of the Black Industrial Programme (BIP). According to the United Industrial Cable Company, the Chairperson of the National Lottery Fund, Prof Alfred Nevhutanda, listed himself as a director. A search for him on the Companies and Intellectual Property Commission, found that he was not listed as a director.  Why was he listed as director of the company and was it not a conflict of interest if he is the Chairperson of a public entity which dispersed R1.6 billion and was a recipient of the BIP because he would receive a fee for sitting on the board of United Cables. Could the Minister clarify the situation and, if the situation pertained, what was the Minister going to do about the conflict of interest?

Mr Macpherson said that the Minister’s presentation was interesting because it spoke to a number of theoretical ideas that were not borne out in reality. He intended going back in history. The idea of Black Economic Empowerment (BEE), which had later morphed into Broad-Based Black Economic Empowerment (B-BBEE), had come into being under the idea it would include more Black SAs in the economy and create, redress and lead to an end to inequality. The facts were that the very opposite had happened. It had not addressed inequality, had not led to growth and had, in fact, increased inequality because B-BBEE had been used as a patronage scheme to enrich people close to or in the governing party, the ANC, and as a fig leaf for those in the governing party to gain tenders. It had been seen time and time again.

He said that the Minister would be aware of the two years of work that he had done to uncover the fictitious B-BBEE certificates used by the Guptas to gain billions of Rand of contracts from Eskom, which had been awarded under the guise of B-BBEE. The country had seen it happen more recently in the personal protective equipment (PPE) scandal that his party was engulfed in. Those PPE tenders were distributed on the basis of B-BBEE connections.

Mr Macpherson thought that it was important to discuss the basis on which the BIP had been built and the ideological and philosophical foundations of that programme, which were nefarious to begin with. The Minister had stated that B-BBEE was not confined to ownership but that was not so in the latest case of a transaction between Patrice Motsepe and Sanlam. Sanlam proudly proclaimed that it had done a B-BBEE deal by selling 25% of the investment holding company to one individual who was a billionaire. Sanlam had achieved B-BBEE status in terms of the law by selling a portion of the business to one man who had been enriched billions of times. How was that morally justifiable? How did that equate to any of the things that the Minister had spoken about, such as redress, growth and addressing inequality?

Mr Macpherson turned his attention to the conduct of the Industrial Development Corporation (IDC) and how it had participated in a form of capture. The IDC had distributed loans, and the Minister would know about it because he had asked the Minister many questions about it, under the guise of participating in B-BBEE transactions, to people that were politically connected and belonged to the ANC that had never been paid back who had never paid back the hundreds of millions of Rand in loans.  The IDC had never taken action to try and recoup those loans dating back to 2009. The IDC could not be used as a slush fund for connected cadres to use money for B-BBEE transactions and never pay back the money.

Mr Macpherson stated that the Minister had said that R32 billion had been paid to 900 industrialists to sustain or create 50 000 jobs. It was important to separate creation from sustaining of jobs as the figure of 50 000 was misleading. The programme provided funding for people to buy or buy into existing businesses; it was not about the creation of new businesses. So, what value had been obtained in job creation and new businesses creation with the R32 billion?

Mr Mbuyane welcomed the presentation. He appreciated the BIP as it had changed tender types from pre-1994 to the present time. The Minister had to try to up the budget. Were the two entities, National Empowerment Fund (NEF) and IDC, assisting rural businesses? He asked about the number of young black industrialists, women, provinces and rural areas assisted? Had the programme produced any young industrialists and women industrialists?

In terms of the application process for support, what was the process to be followed from the first stage to deadlines, selection, etc.? Where did the committees to approve support sit? Some people had been applying for four years but nothing had been forthcoming. The education and awareness programme was another issue that could be improved. There were nine provinces and each had different economic activities. It would be proper for the two entities and the Department to identify where the funds were needed. One could see that only Johannesburg had been transformed because funds had been repeatedly allocated to Johannesburg. Could the budget not be allocated per province? For example, three projects should be supported in each province.

Mr Mbuyane asked for information on the working relationship between the IDC, NEF and commercial banks. How could rare industrial infrastructures, such as those that had supplied gases during Covid-19, be supported? He stated that fronting was corruption. What was being done about fraud and corruption through fronting?

Mr F Mulder (FF+) said that the FF+ was of the opinion that any race-based policies were unacceptable and unfair. When he went through the presentation, it seemed to tell a good story of people with happy faces and companies that had been assisted but to the exclusion of others. He compared it to B-BBEE and the privileged approach which was extraordinary. Privilege came with a premium and the SA economy could no longer afford premiums. Most of those businesses would not be sustainable in the future because the SA economy had declined, not only because of Covid-19 but also because of the policies in the past and state capture, etc. How did one measure the sustainability of the interventions and the companies? How were they monitored? Could that be reported on?

Ms Hermans said that there was still a whole Grand Canyon to be crossed to create equality in the country. All that had been done was to cross the Fish River Canyon. She wanted the Minister to continue his good work as it was ANC policy. The ANC manifesto spoke to inclusion. She asked for the reasons why firms had failed. People thought that when firms failed, the programme had failed, although that was not the case.

She appreciated the fact that Mr Mbuyane had raised the issue of women and youth. Because women and youth was a focus of the Sixth Parliament. She asked the Minister to disaggregate the figures and give figures around women and youth when he again addressed the Committee.

Ms Hermans asked about the number of jobs. As Mr Macpherson had pointed out there were existing jobs as opposed to job creation. Surely a number of new jobs would have been created.

Ms P Mantashe (ANC) said that the Department had a good track record of balancing the participation of everyone in the country. She applauded the work of the IDC and NEF in assisting people to stand on their feet. She asked the Minister if it were possible for the IDC and NEF to merge as they could pool their resources to assist black people in need to run their businesses.

She said that the B-BBEE monetary policy was a good policy but comrades should look at it afresh because it had been diluted by those who had made their people fronters in their companies. She applauded the work of the Department. The Minister also needed to give funding to carry on with the Industrial Parks development. What if the auto sector went away? What would happen to the Eastern Cape? Bridgestone was intending to fly out of the country. What could the Minister do to see that the business was retained? The country needed some businesses, especially after the pandemic.

Mr F Jacobs (ANC) said that, coming from the Portfolio Committee on Small Business Development, he applauded the Minister’s work. B-BBEE was crucial for everyone and he suggested that the Minister should not mind the detractors. On the Cape Flats he saw white empowerment and so national government should see how it could support the businesses in the area because clearly the provincial government was not going to do anything to address the economic imbalances. Shared and inclusive growth should be the mantra of all. The ANC had a painful past of economic exclusion and had made mistakes around corruption but it needed to continue addressing that.

Mr Jacobs said that the Portfolio Committee on Small Business Development had noted that government could not do it alone. Government had made the R200 billion relief package available for small businesses through banks but banks were making it difficult for small businesses to access loans. There had to be an improved public-private partnership.  What new mechanisms could government bring to see that poor people who had issues around food security could get assistance to go into business?

Lastly, he asked about economic planning in the district spaces where there were poverty nodes, such as on the Cape Flats. There had to be some economic planning to maximise the programme.

Ms T Msane (EFF) said that for the analysis to make sense, it had to be compared to the status quo of the different sectors in which black industrialists were being funded. For example, could the Minister compare those funded by the Department to the number of the big boys in the sector?

She asked how many government entities were procuring from the sponsored industrialists, such as linen for prisoners and food for hospitals and what was the quantum in Rand value? How many funded black industrialists were women, youth and people living with disabilities, especially in the piping industry and agriculture? How many sponsored BIack Industrialists owned the properties or farms? How many Black Industrialists in poultry or other feed had been sponsored by the Department?

Ms Msane asked how many Black Industrialists were participating in the Programme for Infrastructure Development in Africa.

The Minister began by responding to Mr Thring. The Department enabled bursaries. He was not talking about government bursaries but those set up by others. For example, the National Union of Mineworkers had, many years ago, set up an investment company that provided bursaries for the children of mineworkers. They generated resources through the empowerment programmes that they participated in. The Kagiso Trust was a community based organisation run by Rev Frank Chicane that provided bursaries. He appreciated Mr Thring’s suggestion that the Department needed to encourage them to track the employment impact. He knew of at least one large empowerment company that tracked their bursary holders but the Department needed to do more work to get detailed information in order to aggregate the data.

He noted that Mr Thring had raised an issue that had come up elsewhere and that was the patronage arrangement where tenders were used to reward friends and family of the person awarding the tender. A patronage arrangement was a criminal offence. It was wrong and misuse of public funds. However the BIP was not a tender programme but a programme to support companies. However, Mr Thring had drawn attention to fighting corruption and patronage.

The Minister responded to the question of the success rate of the 900 firms. The Department was tracking the success rate. He knew companies were under enormous stress following Covid-19 and the impact was greater on black companies because black businesses did not have the capital from generational wealth and had not been in business very long, so they were not well prepared to deal with the once in a century crisis that the economy was facing.

In addressing the issue of the black farmers who were supported by the programme, Mr Thring raised the issue of crime in rural areas and the murder of farmers, not only black farmers, and that had to be condemned. However, it was not only about the economic impact but also about law enforcement and, fortunately, officers were taking steps to deal with crime against all South Africans. When it came to training farmers, the Department favoured a competition-related programme that had a training aspect. For example, when AFGRI was bought by new owners, they had to set aside R90 million to support more than 300 small-scale black farmers. Similarly, Pioneer Food was required to invest in agro-processing technology and other skills. He would check with his colleagues about the negotiations with traditional leaders but Mr Thring would see in the case studies that some of the farmers were farming on traditional lands. There was an opportunity to do more in that space.

The Minister believed that beneficiation was showing some green shoots but there was a need for examples of beneficiation in order to utilise the industrial resources. He recognised that he needed to put together a document that would show examples of beneficiation.

The Minister stated that he was not aware of the directorship raised by Mr Cuthbert but he promised that he would look into the case. He was sure that Mr Cuthbert would be able to provide him with the information relating to the issue.

The Minister told Mr Macpherson that he and the ruling party did not support the philosophical basis of the DA policies. The DA had an opportunity to stand for election and put out its philosophical position but it did not get the necessary support to become the governing party. The DA manifesto had been rejected by the majority of South Africans. The ANC manifesto of transformation was the central pillar of what the government would be implementing. Notwithstanding the efforts put into empowerment, there was still enormous inequality in SA and he agreed with the challenges of inequality.

Government recognised the need to widen the ownership basis and he had pointed out in the presentation the work that was being done in four transactions in the competition space that had given workers in large companies a share of the equity and ownership of those companies and which addressed the matter of inequality. Given Mr Macpherson’s concerns about inequality, he hoped Mr Macpherson would support the government in the firm actions that it would be taking against inequality and the actions being taken at present to address issues of economic concentration.

As far as patronage schemes were concerned that enriched people linked to the governing part, the Minister stated that in every instance where it had happened by virtue of a person being a member of a party was wrong. At the same time, there were large numbers of black South Africans across the country who had been a member of the ANC and who had become business people at the end of the struggle. Because of the wide support of the ruling party, there would be many ANC supporters who received contracts in their own right. The question was whether people had been given preferential treatment.

The Minister encouraged Mr Macpherson to write to Sanlam about the transaction as it was not government that made such decisions but the Sanlam board and he looked forward to being copied in on Macpherson’s letter.

The Minister was currently focused on saying to development finance institutions that they needed to support current jobs as well as ensuring the creation of new jobs.  Without capital injection, plants closed. The bulk of IDC money had gone for purposes that he believed Mr Macpherson would be quite delighted with. The programme for new start-ups was at 35% while 47% went to the expansion of existing firms that bought new machines and increased jobs, while ownership changes accounted for only 10% of the total. Enormous work was going into expanding the economy. There was an enormous quantity of support trying to find ways of expanding the economy. Several Members had requested deeper, better and more detailed levels of aggregate information and he knew the officials were listening to those requests. The IDC was looking at getting a dashboard of information with new categories.

Mr Mbuyane had raised a question regarding challenges around gender and provincial spread and he would get aggregate information. He assured him that development had to reach all parts of SA. The point about not only supporting industrial areas was well made. The challenge that the IDC and NEF faced was that they did not get funding from Parliament and had to make a profit from their funding venture and so IDC said that it could only fund profit-making projects that had the ability to sustain themselves. He added that the IDC had recently expanded its risk appetite. The funding institutions were looking for new people to fund.

Ms Hermans asked for the reasons for firms failing. When black people come into business the failure rate would be high. Previously only 8% of the population had the advantage of experience and the Committee had to work together to challenge that situation and provide the necessary opportunities.

Mr Mbuyane had suggested that a percentage allocation per province but the IDC was obliged by law and policy to look at all applications. However, the idea was good and perhaps the Department could give the IDC some of the dtic grant funding to support business plans in provinces with historically lower growth and development and without significant industry. He agreed that the Special Economic Zones and Industrial Parks might be one way of supporting depressed growth areas.

The Minister commented on the relationship between the NEF and IDC and commercial banks. A lot of the needs of clients that go to the IDC could not be fully met by the commercial banks. Very often the IDC backing gave banks the comfort to support resources. Sometimes the IDC provided a guarantee to a company and it could go to a commercial bank for the loan while the IDC stood surety should the loan go wrong. The IDC often did not have cash as its own balance sheet was stretched and so it used its asset base to borrow money with its own balance sheet as the guarantee and the money was on-lent. SA needed to learn from Germany, Brazil and China where development banks were given regular resources by the state to do its development work.
The Minister was not au fait with gas supplies in hospitals but he was sure that Mr Mbuyane could provide more information. He emphasised that fronting was a criminal offence and he hoped that the levels of fronting had been reduced following the work done by the dtic but they needed to be reported by Members and the public.

The Minister noted Mr Mulder’s views. If he looked at the history of white Afrikaners, he found the comments about affirmative action quite ironic when he thought of the employment policies in the railways and mining sector in the 1930s that had reserved jobs for white Afrikaners only. A government had a special duty and responsibility to look at those who were excluded and faced with poverty. He hoped that he would be able to persuade Mr Mulder to support him in doing that. The importance of monitoring impact was correct. He agreed with Mr Mulder. The dtic, IDC and NEF monitored companies that were paying off loans but that monitoring should be extended further. The IDC now had a programme that brought additional resources in the form of skilled personnel to render support to failing companies so that they became profitable, dynamic companies.

He agreed that corruption and state capture was wrong and undermined the transformation effort. It did not benefit black entrepreneurs, or women and youth but stole the money meant to support them. Corruption and state capture had looted the state resources and gone into the pockets of only a few. They had not expanded industry and that issue had to be resolved.

The Minister told Ms Hermans that he liked the metaphor of the Grand Canyon and the Fish River Canyon.
He wanted Mr Mulder to celebrate the nice and beautiful stories where a black person had opened a little business, was producing but struggling and wanted to expand with the help of government. He hoped Mr Mulder would celebrate the successes of black SAs and white SAs. The Minister supported white businesses, especially where they needed to send goods overseas. But the topic that day was about programmes to support black based businesses. The successes in a wide range of industries had to be celebrated but where there were high levels of unemployment and people were excluded from the economy and there was abusive dominance, government had to give them support.

Ms Hermans had asked about the reasons for business failure. He did have a slide in the concluding sector that gave the reasons for failure but he would give some examples. He referred to a company that had recently lost its export order which had immediately placed that company under enormous stress as it had geared up to fill an order. He did not know why the company had lost the business but the viability of the company was impacted. In other examples, a company expands and buys new equipment but the cost of servicing the debt becomes too much for the company to remain profitable, or a company with a business plan included use of, for example, a water supply and the supply was stopped for some reason, perhaps a municipality failing to deliver, and the company then failed. Sometimes a business took out too much profit as dividend and failed because of a lack of capital. More recently, Covid-19 had affected businesses. For example, online shopping businesses were strong whereas a business with a physical shop would have been in difficulties. Money was being spent on food and not on other goods such as clothing. Businesses failed for many reasons as running a business was always a challenge. One could not guarantee success but one could support enterprise and energy.

He agreed with Ms Mantashe about the merger of IDC and NEF as that would reduce overheads and the dtic could keep the mandates of both institutions in such a merger. Some of that work had been put on ice while the Economic Development Department and the Department of Trade and Industry were being merged. The next phase was looking at which entities that had belonged to the two separate Departments needed to be merged. The NEF had fallen under the Department of Economic Development and the IDC had fallen under dtic. Now that the Departments had merged, it would be easier to merge the entities.

The Minister informed Mr Jacobs that the district development model would take time to get right as there were so many different departments and agencies that would require coordination across departments at national level and then there would have to be coordination across local and provincial spheres of government to unlock economic opportunities in a district. The district development model needed to be retooled following Covid-19. Just a few weeks before the State of Disaster was declared, the President had a meeting with mayors and provincial leaders to discuss the model. The work of national government would have to be retooled for district level. Even within a department, the district development model would help because there were so many entities in a department. For example, there were 17 entities and 10 branches within dtic.

Ms Msane had raised the link between procurement and black industrialists. The Minister agreed that it was important and hence he had raised the matter in some of his slides towards the end of the presentation. It was happening. Some companies in the BIP or other empowerment programmes were able to bid competitively for tenders and that addressed the demand side of the product.  The dtic addressed the supply side so tenders did not fall within its mandate, but dtic could designate that certain products bought by the state had to be locally bought and that gave advantage to local players. More had to be done.

Concerning the ownership of farms, the Minister knew that in a number of cases the land was owned by the black farmers but he would follow up as that be interesting information. Regarding the Continental Infrastructure Programme, one black industrialist was participating and was involved in the supply of infrastructure but it would be a good focus to see how women, youth and black South Africans, and all South Africans, could be involved in a project such as that one. The project offered good export opportunities and was a good opportunity to tool up for the introduction of the African Continental Free Trade Area (AfCFTA).

The Minister noted that he needed more aggregated and detailed information and he would follow up on that. He could not deal with individual cases in that meeting but he would deal with individual cases at a different time. He hoped that as he worked with the Committee, he could build consensus across all parties so that the value of the work was appreciated and the Committee could help dtic to up its game.

The Chairperson stated that the government was focusing on making sure that the majority of South Africans participated in the economy. Black Africans and women were the largest numbers but they did not dominate in the economy. The Committee should encourage their involvement in the economy.

He thanked the Minister for the discussions. As per the earlier discussions, the meeting would close at the conclusion of the Minister’s input.

He invited the Minister to make his closing remarks.

Closing remarks by the Minister
The Minister stated that he appreciated the feedback and he wanted to end with a quote by President Mandela, the founding father of SA’s democracy which would be a good conclusion to the discussion:
 
A democratic constitution must address the issues of poverty, inequality, deprivation and want in accordance with internationally recognised standards of the indivisibility of human rights. A vote without food, shelter and health care would be to create the appearance of equality while actual inequality is entrenched. We do not want freedom without bread, no do we want bread without freedom. While providing the rights associated with democracy, our constitution should also create the basis for an expanding floor of entitlements so as to accord every citizen that measure of dignity intrinsic to being human. This implies a strong affirmative action component designed to reverse the discriminatory practises of apartheid and sexism. Affirmative action is not a threat to either standards or to individuals. "It is an internationally recognised method of redressing past wrongs. To reject this mechanism is to accept an unjust status quo and to ensure that the fruits of war, colonialism, racism, sexism and oppression continue to be nurtured in our society.

The Minister noted that they were powerful words and he hoped the Committee could work with him and the Department to give effect to the words.

Closing remarks

The Secretary reminded the Committee that the next meeting was with the National Lottery Commission at 9:00 on the following day.

The Chairperson thanked the Members for their participation.


The meeting was adjourned.

 

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