Business Process Outsourcing and Work Placement Programmes; Saldanha Bay IDZ, Atlantis SEZ & Wesgro Programmes

Meeting report

The Chairperson welcomed the Committee and delegation to the meeting. The rules of engagement were explained, followed by introductions and apologies tabled.

Mr Rashid Toefy, Deputy Director-General: Economic Operations, Western Cape Department of Economic Development and Tourism (DEDAT), introduced the delegation from the Department.

DEDAT BPO and Workplace Placement Programmes Presentation

Mr Nezaam Joseph, Chief Director: Skills Development and Innovation, DEDAT, presented the rationale for experiential learning programmes. The Western Cape’s labour force was 3 018 000. Provincial unemployment was 680 000 individuals but NEETS were 1 748 000.

• 58% of the provincial workforce is not economically active
• 43% of youth up to the age of 24 is unemployed, nearly double the provincial unemployment rate
• 53% of the provincial population over 20 years of age does not have a matric pass
• High levels of unemployment exert pressure on the fiscus, presents social costs such as social cohesion, crime, substance abuse, poor health choices and a net economic loss. 
• Many unemployed youth do not have the experience or skills that are likely to lead to employment.

Description of the experiential learning programmes:

• BPO and Work & Skills programmes are two of the Department’s experiential learning programmes
• The Department provides monthly stipends of up to 12 months of R3 000 per month per beneficiary
• Companies are expected to provide a top-up funding over and above the Department’s stipend and provide further employment after the experiential learning period 
• Experiential learning programmes incentivise companies to: 
  • provide experiential learning opportunities to unemployed beneficiaries
  • provide on the job experience 
  • from 2021-22, provide accredited or vendor specific training to beneficiaries
  • provide further employment to beneficiaries that have completed the experiential learning programme

ficiaries that have completed the experiential learning programme

Rational for BPO support:

• Each BPO job contributes more than R300 000 to the domestic economy
• New foreign inflows that are further multiplied in the domestic economy
• During the pandemic year the BPO sector added more than 6 000 net jobs servicing offshore destination
• A growth of approximately 20% 
• It is not dependent on the domestic economy
• The Western Cape is home to more than 60% of all offshore BPO jobs in South Africa
• Our youth and domestic skills are ideally suited for offshore jobs
  • Accent neutrality
  • Phone etiquette and natural conversation style
  • Strong back-office capability such as IT, paralegal, finance and accounting
  • Time zone affinity to source European markets

Criteria for participation:
The Department’s company selection tool evaluates companies based on the following criteria:
- Value of company contribution to the beneficiary
-The nature of the training, vis-à-vis structured but non accredited training, vendor (such as Microsoft) accredited training or SETA accredited training
-Cost per job
-Company commitment to further employment (70%+ is expected)
-The above criteria is weighted - a threshold is set for company eligibility 
-The beneficiary must reside in the Western Cape
-The beneficiary must be younger than 35, but exceptions can be made
-The beneficiary must be unemployed
-The beneficiary must not have worked for the host company before

Programme budget and targets:
-The programme APP target was 1 500 beneficiaries supported
-Using voted funds, the Department crowded in a further R105 564 039 in support of experiential learning programmes 
-4 153 beneficiaries were supported.

2021/22 Budget: BPO: R31.44m; Work & Skills: R6.07m

Programme highlights:
-During the pandemic year 1 700 unemployed youth were employed in the BPO sector through the BPO initiative of which 1 166 were offered full time employment 
-One BPO had a cohort of more than 500 beneficiaries of which more than 90% were offered fulltime employment 

See presentation attached for further details

Saldanha Bay Licencing Company on its skills training and education programmes Presentation

Ms Kaashifah Beukes, Chief Executive Officer: Saldanha Bay IDZ Licensing Company (Pty) Ltd (SBIDZC), outlined the SEZ’s strategic and business framework and how it fits into the vision for skills training and education.

Impact of Development Programmes:
-Over 2 450 beneficiaries over last four years
-West-Net developed with DEDAT & CPF
-O&G readiness assessment on 35 local companies
-Over R200m value created to local construction (35%)
-Over 1 500 visits to the SBIDZ SME Co-Lab

Model:
-facilitate the development and broadening of local skills within the Saldanha Bay Municipality (SBM)
-facilitate the competence levels of local businesses, enterprises and contractors.
-Key focus is on the three sub-programmes: skills development, enterprise/supplier development and contractor development.
-Our strategic response to the local socio-economic challenges is through the development programmes model.

Skills development and investor human capital demand were seen in the following artisanal fields:
-mechanical and electrical construction
-shipbuilding and repairs
-oil processing, recycling and storage
-heating, ventilation and air conditioning and refrigeration

Members were taken through the SBIDZ SME co-lab centre and contractor development.

Priorities for the future:
Phase 1:
-Spent more than R55 million on Supplier Development (SD), Enterprise Development (ED) & CD combined
-Established a flourishing shared office space for local SMEs at SBIDZ SME Co-Lab Centre

Phase 2
-Focus on investor workforce and supply chain demands.
-Focus on the SBIDZ and investor infrastructure demands.

Members were then taken through the SBIDZ’s Saldanha Bay schools’ development programme and innovation campus project and partnerships.

See presentation attached for further details

Atlantis Special Economic Zone Presentation

Mr Pierre Voges, Chief Executive Officer: Atlantis Special Economic Zone (ASEZ), took the Committee through the strategic objectives of the ASEZ. Members were also taken through the “green lab” concept. Skills in demand were: management, supervisory, interpersonal, technical, specialised and foundational.

The presentation identified the partners in skills development and ASEZ as a “living lab”. Mention was also made of community integration and development.

Current Skills Development Initiatives 2021 – 2022
-Water treatment & Waste management (20 beneficiaries)
-Early Childhood Development (20 beneficiaries)
-Collaborating with City-funded program supporting green economy skills development (90 beneficiaries)
-Construction SMME Supplier Development (13 beneficiaries)
-Basic welding, boiler making and mechanical fitting (54 beneficiaries)
-SARETEC BTS and BTT training (12 beneficiaries)
-Business Administration (10 beneficiaries)
-Project Management (15 beneficiaries)
-Business Communication (10 beneficiaries)

See presentation attached for further details

WESGRO

Mr Tim Harris, Chief Executive Officer: WESGRO, began by looking at the performance overview of Wesgro for 2020/21. The presentation then outlined the virtual networking sessions, export advancement and promotion activities and outcomes, virtual/hybrid missions and export declarations and jobs. 

See presentation attached for further details

Discussion

Mr A Van der Westhuizen (DA), making reference to the slide on the National Skills Fund, sought a breakdown of the cost per learner, along with an indication of the cost efficiency of the training.  On page nine of the Saldanha Bay IDZ presentation, mention had been made regarding the challenge that contractors struggled with calculating the correct prices, which often led to court cases and second contractors being brought in. He wanted to know whether it was a general pricing issue or whether it had to do with the competitive nature of the environment. Lastly, in relation to CATHSETA, he emphasised that six months was far too long to fix things which in his opinion was quite easy to fix.

The Chairperson, in reference to the BPO Academy which had been launched in November 2020, wanted to find out as to when applications would open and close, the process of applying and the overall recruitment process. Explanation was sought as to the strategies being used to attract the youth to study at the academy.

The Saldanha Bay IDZ was congratulated on the number of beneficiaries in its various training programmes. DEDAT was congratulated on its respective skills programmes. The viability of a school’s road show along the West Coast and other school districts was inquired about. The Atlantis SEZ was congratulated on some of its programmes, including the IkamvaYouth education programme. It was asked as to whether it was not possible to leverage some of the SETAs and some of the budget for the Coding and ICT Skills Development Initiatives.

An explanation was sought with regards to the strategy which would be used to bring the CATHSETA backlog from six months down to three months. The waiting time period was far too long given the fact that the Western Cape had the most tourist guides in the country.

Ms N Nkondlo (ANC) wanted to know if the participating BPO projects were more metro or non-metro biased. Is it able to reach the non-metro and if so, by what percentage? An explanation was sought as to why the Work Skills Budget was reduced and what the subsequent impact was of the reduction. Information on the salary ranges within the BPO sector was sought. The work done by both the Saldanha Bay IDZ, and the Atlantis SEZ was impressive, especially on the developmental initiatives. However, she wanted to know if the two entities were engaging with FET colleges in harmonising the skills development which was being done by them.

Ms M Maseko (DA) stated that in the last administration, one of the challenges found was drug abuse. She asked about the extent of the collaboration between the entities and the Department of Basic Education.

Response

Mr Joseph (DEDAT) responded by confirming that the Department had a target of 1 500 beneficiaries. It managed to support 4100. Some of those could be explained by the cost of the job being reduced, however it was also a result of the funding which the Department leveraged. The gap between the 1 500 and 4 100 was the net effect of the digital funds which it leveraged. With a budget of R50 million, 4 100 opportunities were created which translated to R12 039. However, with the crowed funds, the cost per job translated to R36 000 which was exceptionally low. BPOs were more metro-located, however, they were expanding to peripheral areas, with them having recently facilitated investment in the Garden Route. Challenges included the requirement for funding, with secondary requirements particularly revolving around who could host individuals as companies were often limited by legislation and regulation, where one tradesperson could only have a certain number of candidates. Whilst the Department provides the criteria, they have insisted that firms do the recruitment themselves.

Ms Bianca Mpahlaza-Schiff, Acting Chief Director: Economic Planning Infrastructure and Coordination, DEDAT, responded that the Department would love nothing more than to fund all the programmes, however, due to the unfortunate budget constraints and requirements DEDAT could not make any further funding available. It would, however, continue to work with its partners to try and find suitable funding and possibly later on in the year, manage to raise the required funding from somewhere else.

Ms Beukes (Saldanha IDZ) responded that a challenge which was identified was that local SMMEs lacked the capacity to negotiate discounts on material pricing with suppliers. Labour charges were competitive as a result of Labour Bargaining Council Regulations. Funding was received by the Chemical Industries Education & Training Authority (CHIETA) SETA and the Local Government SETA (LGSETA). There were no challenges with learners receiving their certificates from the SETAs once they had completed their training.

Regarding the road shows to schools, due to the current Covid-19 pandemic, it would not currently be a viable option. She agreed with the principle of it, however, practically the entity has not yet been able to go to schools which it has targeted. Regarding drug abuse and drug tests, initially anyone found to be positive was not allowed into any of the programmes. Further investigations found that it prevented those seeking a second chance in life from being able to participate meaningfully in their development programs. The entity then decided to stop drug tests. It signed an MOU with the Department of Social Development which was assisting it where drug problems were detected.

Mr Voges (Atlantis SEZ) responded that one needed to be brutally honest and state that the fiscal in the province was under youth strain. Exponential growth in funding coming from the provincial fiscus for training and skills development would be unlikely. The funding would have to be found elsewhere because training people and getting them jobs was something which was not up for negotiations.

After discussing it with the five investors in the industry, he stated that every lease agreement they signed with an investor needed to include a small stipulation that a small percentage of the turnover needed to go into a corporate social investment fund to be used for training. 

Mr Yaw Peprah, Chief Business Officer, WESGRO, responded that WESGRO had no real preferences in terms of which Municipalities it worked with. It chose to use the district approach which had been adopted by National as well. Municipalities were worked with individually based on their specific needs.

With Covid, WESGRO was able to set up regular meetings with municipalities where plans were shared and were able to deliver those at a fraction of the costs. It was able to meet with some of the smaller companies who would otherwise not have been able to attend, and it funded those themselves because it could reprioritise some of its budget to cater for that. He said that WESGRO needed to be in a situation where it could give Municipalities a better understanding of what investment promotion meant and did.  It held a couple of webinars with some of the Municipalities, but the Enterprise Resource Planning (ERP) was held with all the Municipalities.

Ms Ilse van Schalkwyk, Chief Director: Economic Sector Support, DEDAT, responded that the Department has engaged with the National Tourism Registrar regarding the backlog. It was setting up a process to receive a monthly update regarding how far the Department was in capturing the backlog. Once a Western Cape liaison has been appointed it would make engagements much easier. The backlogs were holding up the process of getting people registered as details could not be verified on the CATHSETA database, which was a major concern.

Mr Van der Westhuizen asked how the quality of training could be improved. He wanted to know, to what extent could support be offered to training institutions for them to develop good training material, invest in good equipment and to know that there would be a pipeline for the foreseeable future so that it could appoint and recruit good trainers.

The Chairperson stated that mention had been made regarding the R14 million budget cut. The Department was encouraged to seek external sources of funding and methods to leverage the funding needed to accommodate the R14 million cut. A feasibility analysis was asked for with regards to having an online roadshow. It was requested that the CATHSETA delays be escalated to the National Minister and Department immediately and that monthly reports on the matter be submitted to the Committee.

Mr Toefy responded that it would be escalated to the National Minister.

Ms Beukes responded that the aim of the high school program was to improve the outcome of mathematics. The first phase was to target mathematics teaching by improving the usage of digital tools in the teaching and deliverance of the curriculum. Hence, the reason for the partnership with the Western Cape Education Department being so important. Online courses have been provided for the teachers.

Just the previous week, the entity had the Junior Mayor from the municipality speak at the youth event, who stressed the importance and need for full broadband internet at schools. Work was being done to identify the feasibility of providing full broadband internet across schools. She emphasised that the online roadshow and its feasibility would definitely be looked at and reported back to the Committee.

Mr Joseph responded that the R14 million cut represented a 70% cut in the budget for that initiative.

He explained that the Department used every bit of its funds. It set a target for every one of its funds in order to leverage more funds. Due to the environment being constrained, it was difficult for anyone to run credible programs. SETAs typically contacted the Department and would state the money they have and ask for a response to the bid. The Department would have to also contribute its own money in order to leverage other money. Due to the pandemic, there was a decline in economic activity which subsequently led to less money being available. Most of the funds came from the private sector, which was also suffering from budget constraints. He alerted the Committee to the fact that the measure quality of the training institutions were exceptional and of the highest quality.

Committee Resolutions

Mr Van der Westhuizen proposed that the Committee express its appreciation for the work and funding which was channelled to skills training in the Western Cape by the Department as well as the entities. Secondly, that the entities be encouraged to try and leverage more funding from those sources of funds which are actually there for them utilize.

The Chairperson proposed that the matter of the CATHSETA six-month backlog be urgently notified in writing to the National Minister and Department in order for it to be addressed. A monthly report is to be sent to the Committee in order for it to get an update on the backlog until the matter has been completed addressed. An online training and learning strategy must be engaged with the Department of Basic Education for the students and not only the teachers. DEDAT would need to come up with an online strategy in order to continue with its programs remotely.

Consideration and Adoption of Committee Minutes
The Committee considered and adopted its minutes for 12 and 26 May 2021.

The meeting was adjourned.