DTIC 2021/22 Annual Performance Plan, with Minister & Deputy Minister

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Trade, Industry and Competition

04 May 2021
Chairperson: Mr D Nkosi (ANC)
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Meeting Summary

 Annual Performance Plans

The Portfolio Committee on Trade and Industry met on a virtual platform for a briefing by the Minister and the Department of Trade, Industry and Competition on the Department’s Strategic and Annual Performance Plans for 2021/22.

The Minister Patel informed the Committee that on 30 April 2021, Director-General October had finished his last day in the Department after a career spanning 20 years. He had served two terms as Director-General, i.e. ten years, and had been a strong and capable leader of the team. Mr October joined the Department as a Chief Director of Industrial Policy in 2001, serving as the Deputy Director-General responsible for Enterprise and Economic Development. He was first appointed to the position of Director-General on May 1, 2011. At end of his term of office, Mr October had graciously accepted a position as the Head of the new Special Economic Zones Unit to be established at the Industrial Development Corporation from 1 May 2021. Lionel October would also act as an adviser on industrial policy and related matters to the Ministry. The Deputy Director-General for Industrial Finance would act as Director-General for the next three months.

The Minister informed the Committee that the Annual Performance Plan was not about many new objectives, but about new ways of implementation, with the focus on integration, to enhance the development impact of the work. Key priorities of building local capacity and a green economy, greater mineral beneficiation, implementing the African Continental Free Trade Area agreement and so on would receive attention but the way in which the Department worked would shift radically. The Department had developed Joint Key Performance Indicators which required integrated planning, implementation and reporting across multiple branches of the Department as well as its entities. The intention was also to create a flexible and quick-response capacity should policies or programmes require support or financing. Non-financial capacities would complement the financial allocations to industry. The CFO noted that the Department’s budget for 2021/22, amounted to R9 736 575, although the original budget of 2020/21 had been set at R11 billion.

Members asked what was being done to improve SA’s ranking for ease of doing business. How was over-zealous regulation going to be addressed before it caused more damage as had the onerous and over-zealous Covid lockdown restrictions, particularly after the Ministerial Advisory Council (MAC) documents sent to government were simply ignored? What was the Department going to hang its hat on in the Annual Plan and what was the Minister going to live by, and die by, in terms of his reputation and his commitment to the projects? How could the Deputy Minister meet with the Progressive Business Forum, a wing of the ANC set up to extract business from the government? When would government include a third bullet as a standard in all presentations which would relate to poor governance, state capture and corruption, which was still ongoing, and had crippled the SA economy to such an extent that it should be red flagged?

One Member suggested that the Committee would like to oversee how companies were chosen for the Black Industrialist Incentive Programme and the demographics of the Programme in terms of scope and gender balance. How was it possible that SA had a trade agreement with the US and the European Union but not with China? Would the Minister not say that SA was taking an approach of neo-imperialism in its trade relations? What radical plan did the Minister have to address illegal imports?

Was it possible to build a capable state integrating three spheres of government into one? Would the sugar industry be covered in the Department’s plans? Was the symbiotic relationship between small businesses and industrial enterprises being used to consolidate economic power? Would the Minister take action following the laying of charges against a Member of the Committee by a candidate on the shortlist for the position of Chairperson of the National Lottery Board?

Meeting report

Opening remarks
The Chairperson welcomed Members and everyone on the platform.

The Secretary confirmed the attendance of Members.

The Chairperson noted that the Agenda indicated that the Committee would be receiving a briefing on the Strategic and Annual Performance Plans for 2021/22 of the Department of Trade, Industry and Competition.

The Chairperson remarked that it was the first time that DG October would not be present in meeting.

Presentation by the Minister and the Department of Trade, Industry and Competition of
Management of the Department of Trade, Industry and Competition
Minister Ebrahim Patel informed the Committee that on 30 April 2021, DG Lionel October finished his last day at dtic after a career of 20 years. He served two terms as DG, i.e. ten years, and had been a strong and capable leader of the team. Mr October joined the Department as a Chief Director of Industrial Policy in 2001, served as the Deputy Director-General responsible for Enterprise and Economic Development. He was appointed dtic Director-General on May 1, 2011, and had served two terms of office. He had spearheaded key industrial and enterprise development policies, such as the National Industrial Policy Framework and Action Plan, the re-imagined Industrial Strategy and the development and implementation of broad-based black economic empowerment legislation, and the development and growth of the SEZs, besides others.

Mr October had served government with distinction over the past 20 years and had developed deep experience and insight into a range of policy matters, including industrial policy. He had also been responsible for highly-effective implementation strategies in the range of areas that he led in government. He had driven, in the past two years, the revised Strategic Economic Zones (SEZ) strategy adopted by Cabinet in 2019. He had rejuvenated the SEZs and driven Black Empowerment. His contribution to the state had been very significant.

At end of his second term, Mr October had graciously accepted a position as the head of the new Special Economic Zones (SEZs) unit to be established at the Industrial Development Corporation from 1 May 2021. A loyal and dedicated public servant who has served government with distinction, Lionel October would also act as an adviser on industrial policy and related matters to the Ministry. It was a big shift for the team but the Minister had felt that it was important to have someone with the necessary experience and insight to carry out those functions.

The Department was commencing processes to appoint a new DG. The Minister had appointed a transition team to manage the work over the transition. He had appointed three people to the team that had a strong gender profile: Malebo Mabitje-Thompson DDG: Industrial Financing, Shabeer Khan CFO, and Lerato Mataboge DDG: Export Development, Promotion and Outward Investments.

Ms Mabitje-Thompson would be the Acting DG during the transition. She had started in the dtic on 1 May 2006. She had been a DDG for seven years, having been appointed DDG for Industrial Financing in 2014 and was responsible for the single biggest expense item – the Incentive Programme.

The Minister concluded his introduction on the leadership team, stating that it was the significant change in the dtic.

The Minister indicated that he would introduce the presentation and Ms Mabitje-Thompson would present details while Mr Khan would present the budget and comment on the financial aspects of the Plan.

Introductory remarks by the Minister
The Minister indicated that the dtic APP sought to advance an industrialisation agenda based on building dynamic firms and economic inclusion. The overall approach was to build local capacity, i.e. the policy of localisation, for both local and global markets. Opportunities identified covered both the traditional sectors, i.e. consumer goods, infrastructure components and transport equipment, with new opportunities, including the green economy and greater mineral beneficiation.  Implementation of the AfCFTA and further positive positing of SA industries in other international markets is key. Execution of the strategy required partnership with the private sector, using a combination of supply- and demand-side measures.

The Minister explained that a major shift in the approach of the Department was a new concept of ‘Joint-KPIs’, namely indicators of performance designed to increase the level of coordination and alignment of efforts between different programmes of the department. Seven Joint-KPIs had been introduced: integrated support to drive industrialisation, an AfCFTA export plan, investment facilitation and growth, the new district development model and spatial equity, promotion of transformation, the green economy, and strengthening and building a capable state.  The implementation would no longer be assigned to one Programme of dtic but would be cross-cutting across all Programmes.

Programme details of dtic
Ms Mabitje-Thompson, Acting DG, dtic, presented details of the ten Programmes of the dtic. She presented the purpose, the outcomes, the outputs, the output indicators for 2021/ 22 and the annual target for each of the ten Programmes.

The Acting DG noted that there had been budget cuts and therefore, the Department had to use more than funds to attain its objectives and that was why partnerships and tools that would enable the Department to attain its goals would be vital.

Budget for dtic in 2021/22
Mr Shabeer Khan, CFO, dtic, noted that the dtic budget for 2021/22 amounted to R9 736 575, and would increase to R9 979 809 in 2022/23 and to R10 099 712 in 2023/24. The original budget of 2020/21 was
R11 billion. The most important issue in the current financial year would be the need to find creative ways to complete all programmes with a constrained budget.

An additional R369.4 million had been allocated to the Competition Commission over the medium term to                                                                                                                                                                                                                                                                                                                                                                                                             improve capacity to investigate cartels and conduct market inquiries, and for litigation. In line with the intention of government to cut down on the state employee compensation bill, National Treasury had taken tight control of the employee compensation budget and departments had very little room to move in that area.

The Minister concluded the presentation by stating that he hoped that the APP spelt out in more detail the plans for the Department.

Mr D Macpherson (DA) joked that he was offering his services as the DG of dtic, if anyone was interested. He recalled that the President had promised to improve SA’s ranking for ease of doing business but the country had been ranked at number 82 for a number of years. Should the APP not include a plan to increase the country’s ranking on that scoreboard if the President had committed to it in the State of the Nation Address?

He noted that the Minister had spoken eloquently about regulation and the impact of it, good and bad. That was a good change from the previous belief that regulation was good and the more, the better. The Minister had given a commitment to monitor regulations and understand how they contributed to economic growth and inclusion and he supported that, but was the Minister going to monitor the consequences of eager or over-regulation or nothing was ever going to happen. Unless one understood the consequences of that eager or over-regulation, nothing would be done to fix it. How was that going to be addressed?

It had come to light that the Covid restrictions had been onerous and over-zealous by the government, particularly after documents sent to government by the Ministerial Advisory Council (MAC) were simply ignored. The ban on alcohol, cigarette sales, etc. had the consequence of nearly collapsing an entire industry around bottling, manufacturing, transport, etc. That was the opposite to the views of the Department which was attempting to restrict over-zealous regulation. What was the Minister’s role, as a Cabinet Member and a member of MAC, in fighting the over-regulation and over-reach?

In the presentation by the Acting DG, the country seemed to celebrate doing the basics right, which was good and well, but one should be celebrating the big wins. Nothing should be important should be good governance, but it should just be taken as given. It should be taken as given that no one was going to steal, but that was not the case. What was the Department going to hang its hat on in the APP and what was the Minister going to live by, and die by, in terms of his reputation and his commitment to the projects?

Mr F Mulder (FF+) stated that opposition parties always asked difficult questions. He had many questions but he would focus on slide 6 of the presentation: Building economic inclusion. There were two bullets, one about people and one about infrastructure. When would government include a third bullet as a standard in all presentations which would relate to poor governance, state capture and corruption, which was still ongoing, and had crippled the SA economy to such an extent that it should be red flagged? It was real and an existing threat to economic growth.

His second question related to the implementation of policy and plans on growth and development via the District Development model. Considering Eskom’s inability to provide power, the state of the roads, water infrastructure, ineffectual local government, etc., how realistic was it to expect growth in such circumstances? He believed local government should play a large role in the growth of the economy. He commented that the plan for economic growth should be realistic and in line with reality and not a textbook plan. Considering the state of local government and the state of the state-owned enterprises, how realistic was it to expect the performance plan and economic growth to succeed?

Mr M Cuthbert (DA) addressed the matter, in his view, of double-speak by the Minister who spoke of protectionism at home but promoted free markets across the continent. It seemed to him that SA was wanting to take a mercantilist approach: SA closed its market but wanted to extract economic benefit from the rest of Africa. Considering the rhetoric used by the Minister and the governing party, would he not say that SA was taking an approach of neo-imperialism? How did he reconcile that when setting the economic policies as well as the guiding philosophy of his approach to economics at large?
Secondly, he asked about a meeting that the Deputy Minister, Fikile Majola, had had with the Progressive Business Forum. As far as he understood, the Progressive Business Forum was a wing of the ANC and a forum that was set up to extract business from the government. Did the Minister think that it was proper that such a meeting was held between the business wing of a political party and an official government department? Did that not create a conflict of interest? If the DA wished to facilitate a similar meeting, he and the Minister both knew that would not happen.

Thirdly, Mr Cuthbert asked about SA’s dealing with China. The DA had provided a solution in the form of a Free Trade Agreement which allowed SA legal recourse in the case of illegal dumping, particularly in the textile industry and the like. The instrument had not been pursued far enough. There had been an agreement in principle that Ambassador Carim would discuss the matter at length with the Portfolio Committee but that had not happened. It was something worth pursuing. How was it possible that SA had a trade agreement with the US and the European Union but not with China?

Mr Cuthbert agreed that he harped on about the National Lotteries Commission but he had a severe problem with the administration of NLC. Most recently, one of the applicants for the position of Chairperson had tried to take him to court for defamation. It was quite abhorrent that a government entity that had ducked and dived and ignored Parliament in the matter of releasing information on grants was now taking a Member of Parliament to court for attending to his oversight duties. It was totally uncalled for and he hoped that the Minister would protect Parliament. He suggested that a copy of the Powers and Privileges Act should be sent to each of the NLC members in an easily legible format for pasting on their walls.

Ms Y Yako (EFF) believed that the Committee had seen the presentation before. She had some concerns about a matter close to her heart, the Black Industrialists Programme. Her concerns were about young people who had solid plans and an ambition to become a young black industrialist but had no political connections to the ANC or to the dtic or selection committees and hence no chance of getting a loan or star-up incentive. She would like the Committee to oversee how companies were chosen for the Black Industrialist Incentive Programme and the demographics in terms of scope and gender balance.

Addressing illegal imports, she asked if there was a policy that would create a radical plan that would shift and shape the way that imports had been coming into the country under the tariff system and how such a plan could impact on economic growth.

Mr S Mbuyane (ANC) welcomed the presentation and the Department. Was it possible to build a capable state? It would mean integrating three spheres of government into one like the District Model that he applauded because it integrated the three levels of state.

Mr Mbuyane liked the joint programmes and targets because now all entities under the dtic would be talking to a common Programme. It would also assist all departments because they should all work together.

He thought that the AfCFTA would assist the country and people would be able to go out of the country and do business. Those from outside of the country were welcome to come into SA to do business but they had to understand and respect the policies of localisation and industrialisation.

Mr Mbuyane stated that rural enterprise should be included in the District Development Plan. What would each and every province be doing and how could the Department assist them? Would the sugar industry be covered? He had heard talk of a Master Plan but the industry had to be integrated into the plans for economic growth.  It was important to applaud the Department on joint KPIs. It would possible to check where the Industrialisation funds were going. He also was hoping for further details on beneficiation.

Ms J Herman (ANC) joined the Minister in wishing Lionel October well in his future work. She wished the Acting DG well over the next three months. She complimented the Minister on his press conference on 1 May 2021 on worker ownership, which was a step in the right direction and should be implemented across the entire economy.

She said that harmonising the role of dtic was important and, for her, a specific role in AfCFTA was vital and she hoped that the Minister would elaborate on that point.

Mr Z Burns-Ncamashe (ANC) appreciated the presentation by the Minister and the Acting DG and the CFO.

He encouraged the Department to create opportunities for SA’s Black industrialisation. Localisation should be sacrosanct as it was part of developing a society by developing a programme for creating deliberate opportunities for  African people which was very important because a different programme had given impetus to a specific group of people for a very long time. Opening up opportunities for African people would mean that African people could operate at various levels in the value chain. Those opportunities had been enjoyed by only a few in the country. It was important to ensure that participation was not only quantitatively but also qualitatively, measured.

He stated that it was important that there was a symbiotic relationship between small businesses and industrial enterprises so that small businesses could be positioned to plug into the regional and continental opportunities offered by the AfCFTA. Africa had its own resources and was not only fit for charity. To what extent was the dtic thinking of consolidating economic power?

Minister Patel appreciated the presentation by the Acting DG and the CFO. Mr Mulder had said that the opposition parties had to be expected to ask difficult questions but he appreciated that because it helped the Executive to think through where they might be getting it wrong, so he did appreciate both kinds of feedback.

Minister Patel noted that Mr Macpherson had jestingly offered to be the Accounting Officer for dtic but he suggested that Mr Macpherson should be careful what he wished for as he might get it, and the burdens associated with that office.

Regarding the intention to improve the ease of business, his Department intended to do two things. Firstly, the dtic intended to do better against itself and, secondly, to become a more attractive place to do business in comparison to others against whom the country competed. The ranking of ease of business did attract the attention of some investors but those with a long record of doing business in SA knew how to do so in SA. When looking at the ease of doing business on the index of “Ease of doing business”, one would see that it encompassed many different parts and the dtic had only one part of that process. The responsibility of dtic was the starting up of a business, and that was one of the indicators. The dtic had ensured that people could easily register companies, particularly younger people and small businesses. That was an area of focus.

The Minister explained that in the past year or so, SA had made reforms in four areas of doing business, i.e. starting a business, registering a company, paying taxes and getting permits for construction. In each of those aspects, different departments were involved. The dtic was only responsible for registering a business and it had developed a portal for immediate registration and had added some value-added services, even though they fell outside of the dtic, e.g. PAYE and UIF. SARS had improved value-added tax and had improved audit processes which made it easier to pay taxes and reduced audit times. Registering property was more transparent. The dealing with construction was easier and did not require permits from four different entities. Other departments were encouraged to consider the impact of their work on the ease of doing business and dtic would assist. The ease of business was a multi-year programme and entities were encouraged to consider ease of business.

The Department would do impact work based largely on feedback from businesses. The Minister explained that he wanted to build the process on a solid foundation because it was easy to make promises without knowing whether the machinery was in place to deliver the promises. As the programme rolled out, he wanted to re-think government and to create a more responsive and agile policy. There were detrimental effects of over-regulation and those would come out of the reviews that had been instituted. The reviews would get every department to understand the relationship between regulation and outcome. Regulation should be sharp and not impose any cost beyond the public purpose it intended.

Mr Macpherson had shared his opinion on the MAC reports but Minister Patel assured him that government had, in some instances, implemented the recommendations exactly as given but, in other instances, government had to take into account other factors and following consultations with provinces, other government sectors, the private sector and had to balance all of that input. Sometimes it went further than what MAC had thought was necessary, for example in the case of alcohol, and in other cases, the recommendations were lower than Mac’s recommendation. The Minister of Health, Minister Mkhize, had clarified the matter very well.

There was an important and careful balance between lives and livelihoods. In India, one had seen heart-rendering pictures of hospitals flooded and lives lost because the pandemic had not been contained. The impact of alcohol on behaviour had been considered and the clinical experience of medical staff in the trauma units had indicated the impact of alcohol on people’s lives. They were not easy decisions to make and there had to be careful balances. The dtic’s role was not to be a shop steward for one particular interest. Critical was saving lives and preventing deep economic damage.

The Minister noted that Mr Macpherson had suggested that good governance should be a given and not a cause for celebration. In general it was true; one should aim for something higher, but there were times when one valued something because the absence of the basics was so very problematic. When the Minister had been asked about his policy objective, he had said that where implementation was weak, implementation was the policy and all efforts had to be put into implementation. Unless SA had good governance, the government would not be able to achieve what it wanted to achieve.

Acting DG Mabijte-Thompson had focussed on that point, and she was absolutely right. If the foundations were loose, there was no point in spending time talking about the top structure. The foundation had to be rebuilt.

He told Mr Macpherson that he had not focussed on the big ideas: that meeting was about the Annual Performance Plan so that had been laid out and then in the Budget speech he would lift out the key priority areas. He wanted Mr Macpherson to have something to look forward to in the Budget speech. He asked Mr Macpherson to bear with him on that point.

Mr Mulder had raised the point that government had to recognise that it was not only the structural problems and the legacy of the past, but also about poor governance, state capture and corruption. Leadership played a leading role in dealing with ethics. The Minister reminded Mr Mulder that those issues were addressed on page 47 of the dtic Annual Report. It was not for him to recognise the structural damage that Apartheid had caused and the problems that many small businesses faced as a result but he could recognise the impact of structure on economic growth.

In 2017, Minister Patel had called on the then Department of Economic Development to do some research into corruption in the infrastructure sector and to present a report to Cabinet and that report  had showed that a 10% over-payment on infrastructure projects as a result of corruption, would result in a R27 billion loss in GDP per year. That amount multiplied over years as prices rose. The jobs lost were also calculated. The research had looked into the Gupta affairs. One had to recognise the corrosive and damaging practices of corruption, but one had also to recognise the corrosive and damaging practices of Apartheid on the lives of many, many South Africans and the structural challenges faced. But he recognised that one reached consensus by having a common desire for good in the country. The constitutional development of the country was unusual in that it did not only talk about first generation rights, but also talked about the other issues, i.e. rights of a more social character.

The Minister believed that Mr Mulder was right to raise the challenges around Eskom and local government capacity. The dtic worked with industrial capacity and in the process, it worked with municipalities and Eskom and public entities to get their capacity right. The dtic had often stepped in and supported other entities or a
municipality that needed assistance, especially where there were tensions between Eskom and a municipality. That was what the District Development Model sought to do.

Mr Mulder pointed, rightly, to capacity challenges and budgetary constraints and he had asked if the APP goals were realistic. One could not wish for a different toolkit but one had to learn to use, effectively and purposefully, what one had in one’s hand and that was what the APP would seek to do. The DDGs and some Chief Directors understood that the output had to be raised. He asked for Mr Mulder’s support in doing that. In his meeting with the Department and Deputy Ministers, he noted that some line Programmes had considered reducing their programmes of activities but those reductions had been lifted. The dtic would have to work very hard to achieve those outcomes, but he had confidence that the Department could achieve substantially what it was setting out to do, barring any crises. He noted that the original preparation for the APP for 2020/21 had not considered the implication of Covid. He welcomed Mr Mulder’s support, criticism and his feedback.

Mr Cuthbert had raised the comparison between protectionism and free markets. It was a complex area of public policy around the world. If it was true that all free markets worked, no country would need to have a trade policy and every country would bring tariffs down to zero, but no country did that. Every country had a trade policy. He listed many countries that had a trade policy. A trade policy assisted development in a country but if one went overboard with the tariffs, the country would go backwards, unable to get competition. One had to strike a careful balance between sufficient protectionism to support local industry and sufficient free trade to bring in fresh ideas and fresh products.

In his experience, that was not what big business always wanted. Many businesses would offer to make investments saying that they could put in a big plant but would need a supportive trade policy; other business wanted to bring in goods required in their manufacturing processes at a lower tariff. There were different ways to do things and the world was not a binary world where a country supports either a heavy protectionism or takes a free market approach. Most countries, as did SA, took a balanced approach. SA’s trade regime was interesting. Despite appearances, at 25% of the GDP, SA imported more than all of the other major economies, proportionally, and for that reason, SA had a greater challenge to claw back many of those imported goods. The 25% import ratio was too high and that needed to be brought down. There would always be products that SA would always want to import, e.g. oil and raw materials, products where SA did not have the intellectual property, etc. A good example was that local masks were initially produced at a much higher price than imported masks but when supply lines were disrupted, the SA companies had increased capacity and could now produce competitively priced masks because they were now manufacturing in sufficient quantities to be competitive. Using the tools of development lay at the heart of SA’s economic development.

As a Minister, he engaged with many countries and could say that even though some countries talked of free trade, every country balanced free trade and protectionism. He had a dossier on many engagements where SA had tried to engage in free trade with countries around the world. It would be naïve to believe that every country did not use trade tariffs. Every country in the AfCFTA was looking to facilitate free trade but also to industrialise while marketing competitively. Every country was striving to produce more jobs. If one wanted complete free trade, there would be no need for a free trade agreement and a country would simply have zero rating import and export duties.

Mr Cuthbert had raised the issue of China and a free trade agreement. The Minister assured Mr Cuthbert that he had looked at that and it was not in SA’s interest. One had to consider a number of factors. There had to be a complementary structure in the two markets; one had to look at the cost structure in the market. In the European Union, there was a high degree of complementarity on some products and a high level of competition on other products. In the case of China, SA would have to open up to a country that enormously outweighed SA.  China far outweighed SA in terms of the scale of production. Its ability to marshal resources and its ability to make competitive products would simply destroy SA’s industrial sector. It was not a theoretical position. There had been a massive reduction in tariffs in SA in the mid-1990’s and SA had lost manufacturing capacity in an inverse ratio to the goods that had entered the country.

The Minister added that SA was discussing opportunities with China for value-added manufacturing. To simply export mineral products to other countries was not the solution for SA. Many African countries have a profile of simply exporting minerals and agriculture and as a result those countries were poor because they did not have the benefits that came with industry. SA was seeking to extend trade, but it had to be trade with more SA value-added goods.

The Minister recalled that Mr Cuthbert had raised the matter of the attendance of the Deputy Minister at the Progressive Business Forum. He commented that Deputy minister Majola was not the only person who had attended that Forum. He had spoken at some of those meetings in the past as had his colleagues. When a group of business people were assembled, it provided government with an opportunity for government to communicate its policies. Mr Cuthbert had then posed a rhetorical question, which he, himself, had answered. Asking what the response would be if the DA invited government to meet and have a discussion with a similar group, Mr Cuthbert believed government would decline such an invitation. However, he wished to inform Mr Cuthbert that if the DA had such a Forum, government might well take up the invitation.

Government was keen to inform the public about its policies and programmes and speaking to a group of people, such as business people, university audiences or groups of consultants, was one way of doing that. A decision whether to attend a meeting would be made on the basis of the size of the audience, whether speakers were available, etc., as there were only so many hours in a day.

The Minister noted that Mr Cuthbert was upset about someone linked to the NLC who wanted to take him to court. Unfortunately, he did not have the details of the matter.

Mr Cuthbert informed the Minister that it was one of the candidates for the position of NLC Chairperson, Dr Muthuhandini Madzivhandila,that had laid charges against him.

The Minister said that if it was the NLC, the organisation had to be taken to account, but if it were an individual, there was nothing that he could do about it. He was bantering slightly, but he himself had been taken to court many times by the NLC board itself and beneficiaries. One could not be swayed by such actions; one had to do what was right to promote good governance and parliamentarians carried out important public responsibilities and challenged government and its entities. The Minister did not have the details of the matter but was sure that he would be favoured with those details. However, for him, part of building a capable state was dealing with corruption, which cost the poor, not the wealthy, and those resources needed to be made available to the poor and those living in rural areas. The job of parliamentarians and the Executive was to ensure state money was correctly spent and he was conscious of the fact that the NLC operated with public money. He did not have the details, but everyone had to be unwavering in their opposition to corruption.

The Minister thanked Ms Yako for acknowledging the golden thread through the years in the dtic policy and programme. The Department presented a policy and a strategy and said that was what it would be doing and then reported regularly to Parliament and how much of the plan had been achieved or whether new and better ways of doing something had been determined. Where circumstances, such as the Covid pandemic, warranted a change, that was brought to Parliament and the Department reverted to previous plans as soon as feasible.

In response to Ms Yako’s question on the Black Industrialist Incentive Scheme, the Minister stated that he had presented a series of slides on over a hundred people who had been supported by dtic through the Black Industrialist Programme. He had also included in the package, the impact made by those people on the GDP, the creation of jobs, etc. Many, many people worked very hard to keep their businesses going, so it would be unfortunate, and wrong, for people to believe that one had to be politically connected or know someone in the Department. Many people had put their life’s savings into their businesses and every SA should celebrate the achievements of those people – government and the opposition parties - because it was good for the country.

In respect of how people and businesses were chosen, the Minister assured Ms Yako that he did not select the ones that he liked. A system was in place and in that system, criteria had been put in place and made known publicly. Applications were made and the applicants had to go through a process which was more formal in some instances, e.g. where a loan was required from the Industrial Development Corporation; that was quite a formal process. In other contexts, the process was different but, in all cases, it was about the basic business being sound and potentially profitable, based on a proper business plan. The Department was in the business of economic development, not social grants. Businesses had to be viable or potentially viable. The Department got a lot right but some wrong. The risks were not raised so high that no one qualified, nor were the requirements so low that the Department would accept businesses that would surely fail. An industrial development scheme had to put its money into businesses that would grow and develop the industrial sector and the country.

The Reports on the Incentive Programme provided information on gender and scope. He would ask the PLO to make the Black Industrialist Report available to Members of the Committee. Praise was welcomed but constructive feedback was even more welcome.

Addressing the radical plan for imports and exports as raised by Ms Yako, the Minister highlighted his earlier response to Mr Cuthbert. The dysfunctionality was that SA imported too great a percentage of the GDP. That was important for SA as well as for the rest of Africa. Africa imported from places outside of Africa. He was hoping that more of the R6 trillion that Africa spent on purchasing goods from other continents would be spent in purchasing from goods from African countries which would provide an opportunity for countries across Africa to get more of that market. When one did that, one helped Africa to meet its human development goals. Those goals set could not be achieved through international Aid. Funds were needed for schooling, for health, etc., and that money would only become available when the African countries grew their economies by ensuring industrial development and the production of goods that could produce taxes. It was a fundamental necessity to get industrial development in SA and on the continent of Africa. The prize was R6 trillion of products that were being bought outside of Africa. The continent could buy some goods from outside of Africa, but not goods worth R6 trillion. The main opportunity was in the R1.1 trillion non-oil products imported into Africa.

Minister Patel recognised that Mr Mbuyane had spoken of the capable state, and the coordination and collaboration between the three spheres of government. It was in instances where the three spheres were both independent and inter-dependent that was particularly important. It was in the District Development Model that the government was going to tackle one of its biggest challenges. It had not been tackled in the period since 1994, and that was the better alignment and integration of districts. Instead of separating issues and allowing each municipality to tackle them on their own, that would be better integrated to produce a better outcome.

One way of doing that was through the new model of the Special Economic Zones (SEZs). In the old system, dtic would receive an application for an SEZ, look at the business case and if it ticked all the boxes, dtic would agree and publish the necessary government notices. The second function was that of a post box. The dtic would get money from National Treasury, it would be apportioned in the budget and the funds would be sent on to the SEZs which reported to the provinces. The dtic played no further role unless additional funds were required and the dtic would then approach National Treasury. That system did not work.

In the new system, the dtic had taken on a much larger role in managing the SEZs. Each of the three spheres of government had to come to the party. For example, the Tshwane Economic Zone had been coordinated by dtic which had gone to the Tshwane municipality and explained what role the municipality had to play. The Department had then gone to other departments to see what they could bring. The new model required one third of the inputs from each sphere of government. The Tshwane Economic Zone was moving much faster than any of the other SEZs. The Minister gave the example of Ford Motor Company’s investment of R16 billion in its own factory which sat just outside the Tshwane SEZ as that allowed the suppliers to be located in the SEZ. Mr Mbuyane’s point was important.

The Minister thanked Mr Mbuyane for recognising the joint KPIs as he believed that the joint KPIs would be critical in enabling the Department to raise the level of instruments in the APP and would give the Department the greatest ability to achieve the integrated approach.

Mr Mbuyane had asked how the dtic would enable more businesses to take part in the AfCFTA, which was also a theme spoken to by Mr Burns-Ncamashe. It was important. Some of the general work to assist companies would be enabled by the AfCFTA plan. Lerato Mataboge, DDG for Export Development, Promotion and Outward Investments, was leading the Department’s work on export development. She could rely much more strongly on the Black Industrial Programme and the unblocking ability of InvestSA. She could reach out to DDG Thandi Phele who was responsible for the different sector programmes and the section that dealt with transformation. She could rely more heavily on all of those resources.

The Minister agreed that the sugar industry could play a role and so getting more players in at the low level of sugar production was critical. So, dtic was getting more small-scale farmers into the sugar industry. Coco Cola had agreed to procure 30% of its sugar from small-scale farmers. There a process to get to that point, but Coco Cola was already working on that.

Industrial financing was another of Mr Mbuyane’s points. The new system would enable the Department to spread out its support and it particularly wanted to direct support to women, poorer provinces and to give opportunities to young people. It was not a social grant programme and there was always competition. Once an incentive plan had been announced, the money had to be put into viable businesses that could produce jobs and benefits to the economy.

Minister Patel thanked Ms Hermans for her positive comments on his May Day briefing. He hoped that it showed that transformation and benefits could benefit broad numbers of people. He had asked the two Deputy Ministers to meet the provinces and then work out an export plan for the various municipalities so that they too could benefit from the AfCFTA. For example, in an area where fruit juice was produced, the municipalities needed to work out where such fruit juice could be sold. That meant municipalities should not add costs, such as an electricity surcharge, on those industries as that would mean their products could not be sold competitively in other African countries.

The Minister told be Mr Burns-Ncamashe that the value chain was critical. Firstly, raw material did not attract a premium price but goods to which value had been added through beneficiation earned more money and jobs would have been created: industrial engineers, designers, bankers, etc. would have benefited along the way, and greater value would have been added. Black South Africans could not remain at the lowest end of the value chain and so it was important to get more value chains going.

He recognised that Mr Burns-Ncamashe had seen the value of small and micro enterprises working with macro programmes. He talked about the merger of Walmart with Game, Deon and Builders Warehouse and although the Competition Commission had agreed to the merger, government had wanted to protect small businesses in SA and therefore insisted that not all the products on those shelves could be imported. Government had taken Walmart and the Competition Commission to the Competition Appeal Court. Walmart was then required to pay R240 million into a programme to support small and local business players. At the last count, more than 30 SMEs and SMMEs had produced R1.7 billion worth of output for Massmart. One of the firms that had been brought into the programme made cool boxes. When government was attempting to get small products for its C-Packs during Covid-19, certain parts could not be obtained and the Department had sat down with the cooler pack manufacturer and determined that the company could make the unobtainable parts for the C-packs. That demonstrated the symbiotic relationship between big and small businesses and macro policy programmes. Some of those firms exported items to Walmart stores internationally. There should be many more examples. 

The Minister explained to Mr Burns-Ncamashe that beneficiation was not easy to do as one needed a secure and inexpensive electricity supply, although beneficiation was about supporting SA business and localisation.

The Minister thanked Members for their warm comments on Lionel October and promised to convey their good wishes.

Mr Macpherson agreed with the Minister that corruption should be stamped out. He was glad that the Minister was firm about the NLC.  However, he could not understand how the Minister allowed board members to fight him and push him around using public money when the solution was easy. It could be finalised by the Minister dissolving the board. The NLC board had lost all willingness and ability to run that entity. They were more pre-occupied in fighting the Minister than performing their duties. Could the Minister agree that when people looked to their position to silence members of Parliament for pointing out abrogations of disclosure, such behaviour was not tolerable, especially for someone who might want to lead an organisation like that?

Secondly, Mr Macpherson asked if the Minister had received any pressure from Luthuli House (ANC Headquarters) as to who he should appoint as Chairperson of the NLC? In an article published by Independent Media Online, a group that claimed to be the Independent Beneficiaries Forum, which was part of the United Civil Society Action group, had  appealed to the ANC to ask Minister Patel to provide information on who and which organisation nominated Dr Pityana for the position of the chairperson of the NLC and had requested that his name be removed. Had the Minister received any pressure from Luthuli House?

The Chairperson said that the Committee had completed the NLC process and had sent its report to the Minister. So he was not sure that the matter could be taken any further in the meeting. It appeared that Mr Macpherson had good contacts at Luthuli House.

Mr Burns-Ncamashe stated that his sense was that the issue raised by Mr Macpherson was not part of the agenda that day. There was a sense of obsession about the ANC processes which was quite unfortunate because, especially in that case, the Portfolio Committee had dealt with the case with the highest level of integrity which would mean all of the Members should confine themselves to the applicable legislative process. It would not be fair if that same person said that he said he heard on social media that Mr Macpherson only had a matriculation, noting what that implied about his academic or intellectual capability. As much as Committee Members were Members of Parliament, they had to remember that they were dealing with South Africans who had constitutional rights to human dignity, so when issues were raised one had to be sensitive to those issues.

Mr Burns-Ncamashe said that his parting shot was that while he and others were Committee Members, they were not ashamed to be ANC members or to execute the policies of the ANC because it was on the basis of those policies that the ANC had formulated its manifesto and on the basis of that manifesto, it had been elected to govern SA.

Mr Macpherson interjected saying that it was a defence brigade and asked why the Minister was afraid to answer his question.

The Chairperson warned Mr Macpherson not to go there as a Member of the Committee. When several other Members began interjecting, the Chairperson declared that he was not a street fighter and would not to see things get out of hand as it was a waste of energy and time. He called on Ms Hermans to speak.

Ms Hermans stated that the Minister had responded to the Committee and had explained the process that he would be following. He had, therefore, answered the question.

Mr Macpherson interjected that the Minister had not answered the question about whether or not Luthuli House had instructed him.

Several Members interjected.

The Chairperson suggested that Mr Macpherson should apply to join the ANC and his application would be considered. He called on the Minister to make his closing remarks.

The Minister noted the charged atmosphere and light heartedly suggested that Mr Macpherson should share his deep insights and connection in Luthuli House with him so that he could use those shortcuts when he did want the view of Luthuli House.

He added, on a serious note, that he was of the view that he had answered the question, but he had not given the answer in a way that it would make a big media sound bite. That was not the purpose of the discussion. In his long experience in Cabinet, he had never been instructed by Luthuli House as to whom he had to appoint. As a Minister, he took an oath of office to the Constitution, and had to adhere to that oath by apply the relevant Act.

The Minister stated that every board of every public entity had to be accountable for the spending of the money and be committed to good governance. Regarding the dissolving of the board, he had to look at all the facts before him and then he had to be advised by the legal advisors as to what was possible. In the exercise of public policy, he had to work within the law, as advised by the legal advisors. He would obtain the details relating to Mr Cuthbert’s case and then assess that matter.

Regarding the NLC Chairperson, the Minister’s responsibility was to ensure that the best person for the job was appointed. That had to be a person that had come through a formal process of advertisement after which Parliament had to make recommendations. Initially, he had followed the process of the previous Minister, but he had deferred to the correct process.  He was waiting for those nominations to be approved by the National Assembly. The Minister then had to make a decision regarding the Chairperson in terms of the Minister’s fiduciary duties. The President had clarified that fact. When the Minster received the three names, following ratification by Parliament, he would apply his mind, having the benefit of Parliament’s process.

The Minister trusted that his response settled the matter.

The Chairperson said that the issue was not the topic on the agenda and it was an issue that had been engaged with and had been concluded so it could not be discussed at the current time. The Minister had been courteous in responding but the matter was not on the agenda. The Committee could not engage on such matters as being taken to court until the matter appeared on the Committee Agenda.

Mr Macpherson said that the Minister had not responded whether Luthuli House had engaged with him or put any pressure on him in respect of his decision, as quoted by the Civil Society Group.

The Chairperson stated that the Minister could comment but it was not on the agenda.

Mr Burns-Ncamashe said that his sense was that the issue raised by Mr Macpherson was not part of the day’s discussion. There was an obsession with the ANC’s processes. He believed that the Committee had dealt with the process to the highest degree of integrity.

He added that the Members had a sense of an unfettered right to raise questions. The issues raised by Mr Macpherson were about a person who held a PhD. Mr Macpherson would not think it fair if that person said that he had heard that Mr Macpherson was only a matriculant as education determined one’s integrity. As parliamentarians, Members had to be aware that people had to be treated with dignity. It might be a Committee Meeting but he was not ashamed to …

Mr Macpherson interjected

Ms Hermans said that the Minister had responded fully to the question.

Response by the Minister
The Minister joked that given his deep insights and contacts in Luthuli House, Mr Macpherson should share those contacts so he knew who to ask when he needed direction from Luthuli House.

Minister Patel believed that he had answered the question. In his long term as Minister, he had never been instructed by Luthuli House to appoint a certain person. He had undertaken an oath of office when appointed to Cabinet and he had to respect the Lotteries Act. There was no other way of appointing the Chairperson. The Lotteries Act determined that he had to take into account the recommendations of Parliament and then he had to apply his mind. He understood that in parliamentary Committees there was a little bit of jostling and Members wanted to extract a sound bite, but it was also a serious question and so he had answered explicitly.

The Minister had hoped that the APP would not be overshadowed by the issue of the NLC as the APP was a credit to the staff at dtic and the two Deputy Ministers, and himself, who had put in so much hard work, including working with the entities, to develop the plans to attain the goals of building local capacity and a green economy, greater mineral beneficiation, implementing the AfCFTA and so on.

It was a difficult time as the issues of Covid were not yet behind the wall as the pictures taken in India showed. The Department had brought its ambitious APP in all humility but he and the team would give it their best and he hoped to bring indications of success with strong support from all Members of the Committee, across political parties.

He thanked the Committee and he appreciated all the comments and contributions of the Committee. He had answered as fully as he could because he really wanted all Members to understand exactly what he and the team were doing and why they were doing it.

The Chairperson thanked the Minister for his engagement, as well as the Department for its input.

Closing remarks
The Chairperson noted that the Committee had completed its work for the day. On the following day, the Committee would address Unremitted Bills.

The meeting was adjourned.


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