Value & impact of direct selling: Direct Selling Association of SA briefing; NCASA on role in resuscitating and formalisation of cooperatives movement

Small Business Development

01 September 2021
Chairperson: Ms V Siwela (ANC)
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Meeting Summary

The Committee met virtually to be briefed by the Direct Selling Association of South Africa on the role of the association had in the direct selling sector, and by the National Cooperatives Association of South Africa and its role on the resuscitating and formalisation of cooperatives movement. A key concern that the meeting sought to address was the concerning unemployment rate that South Africa is facing, with an estimated 7.2 million citizens believed to be unemployed.

The Direct Selling Association of South Africa outlined the detailed effect of unemployment rate of 32.6% and the detrimental effect that the COVID-19 pandemic has had on job security. The Association’s primary focus is to represent the business interests of over 850 000 direct sellers in South Africa.

The Chairperson of the Direct Selling Association stated that there is a need for recognition, support and to develop the business sector in order to allow the industry to flourish extensively. The Association also emphasised that it is a self-regulation body, and that it prides itself in considering ordinary consumers. It is not a pyramid scheme, and it supports the rights of member companies. It is concerned with creating job opportunities in order to mitigate the glaring effects that unemployment has on the youth population.

Members expressed some doubts as to how has the Direct Selling Association added to the contribution of job security and economic development during the COVID-19 pandemic. A Member was worried about the lack of regard that the Association had for making a timely submission before the Committee, as the suggestions that could have been formulated would improve the quality of the presentation and made for improved engagement with the entity. Timeous submission also demonstrates that the Association respects the Committee in its functions.

The Association responded by stating that, as an Association, it prides itself in adhering the Consumer Protection Act, and that it regulates deceptive and unfair trading policies in order to protect the interests of the public.

The National Cooperatives Association of South Africa defined its role on the resuscitating and formalisation of cooperatives movement. The Association began its briefing by outlining that it aims to combat poverty and the dire unemployment rate in South Africa. It proposed solutions to the unemployment rate by looking at the possibility of relocating cooperatives from the ministerial committee to the ministry of Cooperative Governance and Traditional Affairs, in order to align the proximity of local government that is in-line with community development. In addition, it was proposed that there is a need for sustainable cooperatives in the ministerial committees in order to reduce the employment rate.

The Cooperatives Association noted that the purpose of its presentation was to provide a mechanism to interrogate whether there has been sufficient support received from the state regarding service delivery. The Association highlighted that, despite there being existing policies and administrative reforms, this has not led to the abjection of poverty and the decline of the unemployment rate within communities. The Association outlined its primary objectives, which are to promote a conducive environment for the promotion and growth of co-operatives, to develop policies, institutions and services for the promotion of the co-operative movement and to strengthen relations with the international co-operative movement.

In addition, the Association said that it intends on strengthening relations with all governmental departments that are committed to supporting the co-operative movement. It stated that there needs to be a structure in order for there to be improved community development, and this will lead to an improvement of projects. There was also an emphasis on the establishment of new co-operative sectors in consumer, mining and insurance. There is an on-going discussion with the Department of Education in order to build community colleges (CETs) and community constituency to sit on SETA boards in order to lead to the promotion of youth development.

Members expressed their gratitude on the formalisation of the Cooperatives Association presentation, as it was comprehensive and addressed the considerations in the policies and how this initiative needs to be supported in the ministry.

Meeting report

The Chairperson opened the virtual meeting. She noted the apologies, including that from Minister Stella Ndabeni-Abrahams and Deputy Minister Sidumo Dlamini, who had to commit to unexpected ministerial commitments. The meeting began with the Chairperson paying respects to the late Member of Parliament, Mr K Maphatsoe (ANC), who had recently passed away. The Chairperson asked for a moment of silence in order for the Committee to pay its respects.

The Chairperson then said that September is Heritage Month in South Africa, and placed emphasis on the need of one to embrace their heritage during the course of the month.

The Chairperson commenced the meeting by outlining the objective of the meeting, including that it proposed to address the value and impact of the direct selling by the Direct Selling Association (DSA) of South Africa and the National Cooperatives Association of South Africa (NCASA), as well as the role these associations play in fighting unemployment, particularly during the COVID-19 pandemic.

Briefing by the Direct Selling Association of South Africa

The DSA Secretariat, Mr Imitaz Ebrahim, outlined the objectives of the presentation. He stated that the DSA represents 26 direct selling companies that distribute goods and services directly to consumers, in a face-to-face manner, generally away from a fixed retail location.

The DSA said that it is expanding and intends on surpassing its direct sellers in 2022. There is a code of ethics between direct sellers and consumers, and there is an emphasis on the protection of the industry and the adherence to the Consumer Protection Act.

Ms Leigh Gunkel-Keuler noted the dire effects of unemployment on the business sector industry, adding that there is a need to achieve great economic goals. It was also stated that there is a need for clarification on what opportunities can be taken in order to support 850 000 small business programmes and whether there is efficacy. The Department of Small Business Development has mitigated the funding opportunities for small businesses that will improve the business sector and South Africa’s economy.

Discussion

Mr G Hendricks (Al Jama-ah) said that while he understood the purpose of the meeting, the presentation was not submitted to the Members timeously, and that did not allow for deliberations and meaningful engagement from the Committee. He further emphasised that the briefing before the Committee is a presidential project and is of importance to community development. Departments need to engage with the small business developments.

Mr H April (ANC) expressed his dissatisfaction with the lack of timeous submission of the presentation, as it did not allow for deliberations. He added that there needs to be regard for the institution that is Parliament, and the important role that it plays. In addition, he asked questions pertaining to the self-regulation of the DSA. He asked for clarification on how the DSA deals with member companies that engage in unfair labour practices, and how the COVID-19 pandemic has has contributed to the membership of the DSA direct sellers.

Mr April asked if there were any members that were directly affected by the recent looting and the survival rate of the DSA direct-seller members.

Members asked about the role that Parliament can play to assist the association.

The Committee Chairperson expressed that the Members asked paramount questions that needed further deliberation and granted the DSA an opportunity to respond to questions.

Responses

The DSA Chairperson noted that there is a need for recognition, support and for government to develop the business sector in order to allow the industry to flourish.

The Chairperson of DSA, Mr Rajesh Parshotam, reiterated that the DSA is driven by co-creation. In self-regulation, DSA adheres to significant codes of conduct and various policies and legislation that govern the association, namely the Consumer Protection Act. The Association retracts membership depending on the nature of the transgression.

Mr Parshotam said that the COVID-19 pandemic has had a greater impact on economic development than the recent looting. Moreover, the role that Parliament can play is co-creation in order to improve employment opportunities.

The Committee Chairperson stated that there is a need for further deliberation on the presentation and emphasised that the questions need to be succinct in order to allow time for the additional presentation to be heard.

The Chairperson introduced the presentation briefing by the National Cooperatives Association of South Africa and its role in the resuscitating and formalisation of cooperatives movement.

Briefing by the National Cooperatives Association of South Africa

The Chairperson of the National Cooperatives Association of South Africa (NCASA), Mr Zacharia Matsela, began the meeting by outlining that NCASA aims to combat poverty and the dire unemployment rate in South Africa. NCASA proposed solutions to the unemployment rate by looking at the possibility of relocating cooperatives to the Ministry of Cooperative Governance and Traditional Affairs in order to align the proximity of local government that is in line with community development. In addition, it was proposed by the chairperson of the NCASA that there is a need for sustainable cooperatives in the ministerial committees in order to reduce the employment rate.

The NCASA said that its presentation intends to provide a mechanism to interrogate whether there has been sufficient support received from the state so far regarding service delivery. The NCASA indicated that, despite there being framework policies and administrative reforms, there is a disjuncture with limiting the effects of unemployment within communities. The NCASA outlined its primary objectives, which are to promote a conducive environment for the promotion and growth of co-operatives; to develop policies, institutions and services for the promotion of the co-operative movement; to strengthen relations with the international co-operative movement. In addition, the chairperson of NCASA said that the association intends on strengthening relations with all governmental departments that are committed to supporting the co-operative movement.

NCASA stated that there needs to be a structure in order for there to be improving community development, and this will lead to an improvement of projects. Also, there was an emphasis on the establishment of new co-operative sectors in Consumer, Mining and Insurance. In addition, there is a discussion between the Department of Education in order to build community colleges and community constituency to sit on SETA boards – in order to lead to the promotion of youth development.

Discussion

Members expressed their gratitude on the way that the presentation was conducted, as it was succinct and grappled with the core issues that the meeting sought to address.

Mr H Kruger (DA) expressed his support for the coherence of the presentation, and commented that it captured the relevant important details that the Committee needed clarity on. Members further noted that the President needs to play a bigger role in the introduction of small co-operatives into the business framework. There is a need to strategise a mechanism for how govenrment can adequately address the plight of small business development.

The Members pointed out that every business in the sector lacks characteristic needs, and there is a need to improve small business development.

The Chairperson concluded the meeting by noting the presentation was well-prepared and that it was cohesive and addressed the plight of unemployment. She noted the on-going work that still needs to be done in this sector.

The Chairperson thanked the Members and all the guest delegates for attending the meeting.

The meeting was adjourned.

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