Department of Economic Development and Tourism and entities 2020/21 Annual Reports

Meeting report

The Committee considered the Annual Reports of the Western Cape Department of Economic Development and Tourism and its entities. The Chairperson outlined the process to be followed. Members would introduce themselves. The Western Cape Minister of Finance and Economic Opportunities would then make introductory comments, followed by presentations by the Department and its entities. Parts A, B, and D of the Annual Report were before the Committee. Parts C, and E would be considered by the Standing Committee on Public Accounts (SCOPA) later that afternoon.

Mr A Van der Westhuizen (DA), Ms N Makamba-Botya (EFF), Ms M Maseko (DA), Mr G Brinkhuis (Al-Jamah), introduced themselves as Members of the Committee. Ms A Bans (ANC) stood in for Ms N Nkondlo (ANC).

The Minister, Mr David Maynier, said that the public entities of the Department included the Western Cape Investment and Trade Promotion Agency (Wesgro ), the Saldanha Bay Industrial Development Zone (SBIDZ), and the Atlantis Special Economic Zone (ASEZ).

He emphasised the negative economic consequences of the COVID-19 pandemic during the year under review. The Annual Report detailed the Department’s response to the difficulties caused by the pandemic. The Department was able to respond positively to the COVID-19 lockdown restrictions by opening up the E-commerce sector, opening the airport in George and by providing funding to struggling businesses via the COVID-19 Business Relief Fund. The Relief Fund provided R39 million to 249 beneficiaries and supported an estimated 2 000 jobs. The Department assisted businesses to access funding, especially those that struggled to access funding through the Unemployment Insurance Fund’s Covid-19 Temporary Employer/Employee Relief Scheme (TERS). By doing this, it supported an estimated 180 firms and 8 500 employees with an estimated pay-out of R43 million. The Department also assisted businesses with workplace safety measures.

The Minister added that the Department’s achievements were not limited to COVID-19 responses. Its public entities brought in an estimated R4.7 billion worth of investment. The Red Tape Reduction Unit and Ease of Doing business Unit worked hard towards decongesting and keeping the Port of Cape Town open. There were an estimated 4,000 beneficiaries of the Department's various skills development programmes. Municipalities procured electricity from independent power producers. 

He complimented the Department and the public entities on their performance during the year under review.

Mr Solly Fourie, Head of Department, introduced the Chief Financial Officer (CFO), Ms M Abrahams; the Budget Manager, Mr R LeBreton; the Deputy Director-General (DDG): Economic Coordination and Stakeholder Engagement, Ms Jo-Ann Johnston; DDG: Economic Operations, Mr R Toefy and additional members of his team. He then introduced Dr Pierre Voges, the acting CEO of the Atlantis SEZ; Ms Kaashifah Beukes, the CEO of the Saldanha Bay IDZ, and Ms Wrenelle Stander, the CEO of Wesgro.

Mr Fourie said the challenges the Department faced during the year under review were unprecedented and prompted the Department to alter procedures. The Department was forced to respond to concerns about the decline in demand in the tourism and hospitality sector. The closure of takeaway services prevented individuals from earning a livelihood. Another concern was the banning of alcohol sales. He said that despite the challenges the Department faced, their performance was commendable and he noted that the Department had received a clean audit opinion. 

Part A, Economic Development and Tourism Annual Report

The Chairperson congratulated the Department for producing a clean audit and opened the discussion on Part A from page 1 to 36 of the Annual Report.

Discussion

Ms M Maseko (DA) congratulated the Department on producing a clean audit report and said it had gone beyond the call of duty to sustain the Western Cape economy. She referred to page 13 and asked the Department to detail the breakdown of the investments which led to the creation of the 1 830 jobs. Were the jobs created of a permanent or casual nature and what systems were implemented to ensure the sustainability of permanent jobs within the industrial base? She asked for the SMME Booster Fund criteria and for the Department to describe the challenges faced by organisations that were not selected. She asked how organisations receiving funds from the SMME Booster Fund were monitored.

Ms N Makamba-Botya (EFF) asked about the industries in which the 1 830 jobs referred to on page 13 of the Annual Report were created.  On the Municipal Energy Resilience Initiative, she asked how households had been enabled to generate, procure, and sell their own power. On the Community Economic Recovery Project outlined on page 14, she asked what the selection criteria were for funding spaza shops, and how many spaza shops there were in total in the province. How many spaza shops did not receive funding? On the Western Cape recovery plan outlined on page 31, she asked how the Department contributed to safety within the province.  Referring to page 32, she noted that 12 positions were still vacant and asked what the impact was on service delivery in the province. She said the Department purported to recruit suitable candidates from the whole country, yet the majority of recruits were white people.  She then asked how the Department had addressed red tape issues. 

Ms A Bans (ANC) asked why 12 vacancies were listed on page 33 and why there was a high turnover in the Department. She asked whether these vacancies indicated a paralysis in key intervention areas such as the green economy, red tape reduction, oil and gas manufacturing, and maritime skills programmes and projects.

Mr A Van der Westhuizen (DA) referred to the table on page 15 and asked the Department for an explanation of the financial transactions in assets and liabilities for which it did not budget. He said he believed that COVID-19 was being blamed for some of the Department’s service delivery failures or service delivery problems, which included the shared call line being non-operational. He asked the Department to explain the contrast between the overall vacancy rate of 4.7 percent reported by the Department and the 33 percent vacancy rate in senior positions. He asked if the table on page 15 of the Annual report was a template and what the unused lines indicated.

The Chairperson asked whether the Western Cape recovery plan on page 13 of the Annual report referred to previous budgets that were tabled in Parliament in the year prior to the one under review. She added that the Department had assisted with tertiary education and asked if it was still facilitating the Fintech degree. On the Department’s five-year strategy listed on page 17, she asked how its primary priorities aligned with the policy mandates of the Department outlined on page 27.

Responses  

Mr Fourie said that the 1 830 jobs that were created were related almost exclusively to the attraction of the investments. The Wesgro report would detail how those jobs were created. The jobs were related to long-term investments which he hoped would be sustainable. They were not contract jobs.

The Committee was told that the criteria for the SMME Booster Fund were published in tenders for larger intermediary organisations to support small and medium enterprises. The categories of support were Enterprise and Supplier Development (ESD); Business Development Support programmes; Infrastructure programmes;  and  SMEs that were in distress. To qualify for funding, businesses must be recognised as legal entities. They must be executing existing programmes. They must have a particular track record in terms of the businesses and SMEs that they were supporting. They must be solvent.

Members were told that the Department had worked with municipalities to support households to generate their own electricity with PV panels. Households across the province were able to generate their own electricity and then sell electricity to their respective municipalities. 

Mr Fourie said the Department’s primary focus was on jobs. Through job creation, youths would be diverted from involvement in criminal activities. He added that “nothing stops a bullet like a job.”

Mr Rashid Toefy, DDG: Economic Operations, said the Department played a crucial role as the economic partner in the policing of the Western Cape. The Department was responsible for ensuring truck drivers entering ports had the correct permits. The Department informed the police on workplace non-compliance. The Tourism Safety Police Force in combination with the Metro Police of the City of Cape Town policed areas where there had been attacks to ensure the safety of domestic and international tourists. 

Mr Fourie said that the organisational structure on page 32 and 33 of the Annual Report was not the funded structure. Not all of the positions on the organogram could be filled. The Department did not have a budget for them as the Western Cape Government had implemented an upper limit on compensation of employees. He said the staffing allocation was aimed at ensuring that the Department had sufficient staff to deliver services and priority projects. In the 2019/2020 financial year there was a staff turnover rate of 21.7 percent. This decreased to a rate of 16 percent in 2021. He added that the staff vacancies were in the more junior positions and were related to people that had left the Department and moved to other areas or found new opportunities within other areas of the Western Cape Government.

He said the Department made use of contract employees to a great degree, and when the contracts ended a flexible staffing arrangement was implemented. He added that the vacancy rate of 4.7 percent relative to the funded structure for the year under review compared favourably to the 5.1 percent vacancy rate recorded during the 2019/2020 financial year. He said the reassignment and adjustment of staff was the result of the Department’s budget which had caused certain areas to be deprioritised. He assured the Committee that there were no gaps in service delivery. The Director of Business Regulation post had been filled, the Red Tape position which was vacant from January 2021 to March 2021 had been filled. It had been difficult for the Department to fill the positions that were not considered priorities because of the upper limit on compensation of employees.

Ms Mymoena Abrahams, CFO, said that the table on page 15 of the Annual report was a template and any lines that were unused were for comparative purposes across all the Departments. She said the Department was not a revenue generating one. The only revenue which could be generated was the tour guide registration revenue, which was estimated to be R351 000. The revenue which was collected but not budgeted for was received from donors such as the merSETA funding agency for the skills and development programme.

Mr Toefy said that staff did convert the shared call line onto their cell phones and the usual call lines were operated by call centres. The Department had made the Red Tape Reduction line the COVID focal line for people who faced challenges with TERS. The consumer protection line was operated by a call centre to deal with any outside calls relating to noncompliance in the workplace.

He said page 34 of the Wesgro Annual Report detailed every investment related to the 1 800 jobs that were created. He added that 9.5 percent of those jobs were in retail, 15 percent were in tourism, 28 percent were tech and Business process outsourcing and four percent were in the Pure Green economy. Forty-two percent of those jobs were in manufacturing, and an estimated two percent were related to services.

Mr Fourie referred to pages 13, 17 and 27 of the report and said the Department aligned itself to the Provincial Five-Year Strategic Plan that was set in 2019 before the COVID-19 pandemic. The Departmental Five-Year Strategic Plan related to the promotion of infrastructure and growing exports and investments; addressing the skills gap; and accelerating ease of doing business and resource resilience. However, the COVID-19 pandemic forced the Department to compile the Western Cape Recovery Plan to address the challenges caused by the pandemic. The Western Cape Recovery Plan related to the provincial approach to address the economic challenges without cancelling the Provincial Five-Year Plan. The Western Cape Recovery Plan was an addendum to the Five-Year Strategic Plan. The three key pillars were jobs, wellness and safety.

Jobs were a primary focus in the Western Cape Recovery Plan. The Department had implemented an immediate jobs intervention from August 2020 to March 2021 which meant pivoting the Department to bring about immediate job opportunities within the economy. The Western Cape Recovery Plan was supported by the Department’s Immediate Jobs Plan. He added that during the year under review the Department had not deviated from areas such as ease of doing business, energy resilience, investment and export growth, and supporting skills development. He said the Department has introduced the term of primary priorities to ensure it was capable of delivering services which had the most impact with the amount of money available in the shrinking fiscal environment.

Members were told that the Department had been working with the universities in developing new programmes such as fintech accreditations. The uptake for the programme had not been as vigorous as anticipated.

The Minister said the Department had played an important role in ensuring safety. During the recent incidents of taxi violence it set up a platform for business to pinpoint areas of concern for the Department to respond to.

Further discussion

Ms Makamba-Botya asked, on the issue of the Municipal Energy Resilience Initiative, how exactly the Department was enabling households to sell their own power. She asked whether the high staff turnover rate was a result of staff being shuffled to make sure service delivery was not impacted negatively. She asked whether an overload in staff responsibilities had caused staff members to become fatigued, causing a decrease in productivity. She added that she did not believe the Department prioritized the wellbeing of staff and asked if the Department conducted interviews with staff upon their departure to determine why they were leaving.

The Chairperson added to Ms Makamba-Botya’s question about the Municipal Energy Resilience Initiative and asked for details about the process for households to begin to generate their own electricity.

She asked why the positions of Director, Connected Business, and Director, Connected Citizens, were not considered critical priorities. Part B on page 44 of the report noted that the World Economic Forum estimated that 60 percent of adults lacked basic digital knowledge and skills. She added that the COVID-19 pandemic had prompted a rapid expansion of e-commerce, online education, digital health, and remote work within the Western Cape. She raised concern about the limited internet availability for the people of the Western Cape. She noted that the lockdown restrictions prevented individuals from accessing the internet at libraries, schools and other spaces which normally provided internet access. She asked how the Department would be able to increase internet accessibility if they did not consider the digital economy vacancies as critical. She asked for further details on the impact and implementation of the fintech degrees and the Cape Business Processing (BPO) Academy.

Responses

The Department said the Municipal Energy Resilience Initiative was operational. It had numerous systems and regulations which impacted a household’s decision to install PV panels. The Department's accredited service providers in the Western Cape installed viable PV panels on the roofs of the households. Households were then expected to pay for this because it was an expensive process. The Department was engaging with insurance companies to support the households involved in the initiative. The Department was working with the City of Cape Town to consider whether households could pay for the PV panels through rates and taxes.

With the onset of load shedding, the regulations and by-Laws preventing households from generating their own electricity had been changed. The Department supported households by ensuring that an enabling framework was in place to make it possible for households to install the PV panels and afford the installation cost. The Department could provide a document detailing each of the steps a household followed to produce their own energy.

Mr Fourie said that Part D of the Annual Report addressed the high staff turnover rate. A large portion of the vacancies were related to officials in finance that were in high demand. He said the Department did conduct staff exit interviews when staff were willing to participate. There was not an element of staff being overloaded and fatigued within the Department. On the vacancies for Digital Directors outlined on pages 32 and 33, he said the organogram structure was determined in 2011 at a time when the Department was responsible for the Broadband Project of the Western Cape Government. However, several years ago the Broadband Project was taken over by the Department of the Premier. Some staff were retained to facilitate the legacy projects of the Broadband Project. The Department did not require the full staffing because it did not have the responsibility of providing digital capabilities for the province.

Mr Fourie said the Department’s primary aim of creating opportunities for growth and jobs had influenced their efforts to equip young people with skills in the BPO and the technology sectors. He added that Page 116 of the Annual report indicated that 4 153 beneficiaries were supported through the Department’s skills intervention, the majority of which were placed in the BPO sector. He said the Department's role in the digital space was not the development or the roll out of digital projects and programmes but to support young people with digital skills. He noted that it was important for young people to have an experiential learning experience through internships or through a learnership. An estimated 70 percent of the young people who participated in internships or learnerships were employed by the firms where they were placed.

The Minister said that in a recent investor meeting, the investment decision rested on questions about the supply of digital skills, competition for digital skills, and the relative price of digital skills in Cape Town and the Western Cape. He said the development of digital skills was vital. The Department could set more ambitious targets, and the R16 million allocated for the development of digital skills was minimal.

The Chairperson said that the allocation of R16 million for the development of digital skills was a drop in the ocean which she would highlight to the Minister of Finance at the Annual Report session. She then opened the floor for Ministers to ask questions on Part B of the Annual Report.

Part B, Economic Development and Tourism Annual Report

Discussion

Mr Van der Westhuizen said the Department's response that the shared call number was operational did not align with page 60 of the Annual Report which indicates that the call line was not available due to COVID-19. He congratulated the Department for addressing challenges which businesses had experienced in the Western Cape. He said complaints had been made to him about serious delays at the Deeds Office and about seating not being provided in outside waiting areas. He asked if the Department would be able to provide some form of shelter and seating.

On The Cannabis Master Plan outlined on page 89 of the electronic copy of the Annual Report he asked whether a study had been conducted on the social risks and the potential impact of cannabis. He asked why Technical Vocational Education and Training (TVET) colleges did not offer digital skills training such as phone repairs and audio-visual installations

Ms Makamba-Botya referred to the mention on page 45 of kiosks on Long Street which enabled 10 microenterprises to access new market opportunities in the Central Business District (CBD). She asked if the Department had plans to increase this number. She also asked if small businesses were required to ask for assistance, and how they were able to access the opportunities for assistance. On page 70 of the Annual report under the title, Improved Ease of Doing Business, she asked how small businesses had benefited from the Red Tape Reduction Initiative.

Ms Bans asked what the purpose of the Red Tape Reduction Initiative was if the Department identified some issues related to finance as being outside the Department’s control. On page 72 of the Annual report under sub programme 1.2 of the Financial Management outputs, she asked if it would be better for the Department to shift their targets every year. She added that communication and knowledge management was not being reported on. On page 82 of the Annual report under sub programme, 2.4 Red Tape Reduction, she asked why the targets set by the Department had been lowered each year

 

Ms Maseko referred to the Ease of Doing Business Interventions on page 82 and asked the Department to elaborate on why the planned target was the number of interventions rather than the number of enterprises supported. She also asked the Department how the Ease of Doing Business Interventions were measured and monitored.

 

The Chairperson referred to paragraph three on page 39 which spoke to the Western Cape positioning itself as a Digital Green Tech and Financial Hub which could support BPO, manufacturing and development and asked why agri-processing was not mentioned. She noted that the Committee had requested feedback from Transnet about inefficiencies at the port. Transnet had told the Committee that they were unable to respond due to the same inefficiencies at the port which the Committee had requested to be updated on. She asked for details in relation to port inefficiencies to be provided because Transnet was yet to furnish the Committee with the details on the matter. She then asked for the outcome of the Cape Town Cruise Initiative.

 

On page 78 of the Annual report under sub programme 2.1, Enterprise Development, she asked how the Department created the targets they set for the number of businesses to be assisted. She highlighted that in sub programme 2.2 on page 80 of the Annual report the outcome was Improved Ease of Doing Business, but the output indicator was Business Intervention Supported. She asked how the Department established the output indicators and outcomes because they did not reflect each other. On the Digital Economy, she asked how the Department's work integrated with the work of the Department of the Premier and the Department of Education to advance the digital economy and how funds were allocated among the different departments.

 

Responses

 

Responding to Mr Van der Westhuizen, Mr Fourie noted that the Deeds Office in the Western Cape reported to the National Department of Land Reform and the National Commissioner. He said the issue of delays in the Deeds Office stemmed from the Public Service regulations which stipulated that government employees through the various levels of lockdown were required to adhere to the social distancing regulations. This caused a backlog to build up because only a third of the employees were working.

 

Mr Toefy told Mr Van der Westhuizen that the Cannabis Master Plan fell under the national Department of Trade, Industry and Competition (DTIC). The Western Cape Department served on a provincial subcommittee. 

 

The Committee was also told that no socio-economic or social impact assessments had been conducted by the DTIC in relation to Cannabis Master Plan. The focus of the plan was the industrialisation and cultivation of cannabis and hemp. With regard to medicinal applications, the South African Health Products Regulatory Authority (SAHPRA) granted permits for medicinal purposes. The Cannabis Master Plan was expected to generate R28 billion per year for the country and create between 10 000 and 25 000 job opportunities.

 

Other officials of the Department responded to Members’ questions. They were told that in addition to developing skills programmes and ensuring immediate job creation for the unemployed youth, the Department was focusing on changing the curriculum of TVET colleges and changes at the basic levels of education in response to the increased demand in the digital marketplace. Colleges and universities were more responsive in tailoring their curriculum to the increased demands of the digital sphere. However, it was more challenging to change the curriculum at the basic levels of education. When companies made skills demands they were expected to provide experiential learning for individuals while the Department provided training to those individuals. This model was very successful, and an estimated 70 percent of the individuals involved in this model were retained. The Tech industry was unresponsive to the Department’s provision of individuals capable of being trained to work within the Tech industry. The Department had a R30 million fund within the financial year in question dedicated to the BPO and Tech sector, but the BPO sector had grown significantly more than the Tech sector and recruited more individuals than the Tech sector.

 

Members were told that there were currently only 10 available spaces for microenterprises on Long Street. For microenterprises to be supported by the Department they must have been operational for a period of 24 months, hold a valid tax clearance certificate, and the Business owner must have a South African ID. The Department partnered with the Small Enterprise Development Agency and The National Youth Development Agency to identify microenterprises which would be eligible to receive support from the Department.

 

Members were referred to the satisfaction rate of 54 percent detailed on page 52 of the Annual report. They were told that all the inquiries that came to the Department were integrated in a single call centre, which was why the satisfaction rate seemed high.

 

The Department explained that the number of output indicators had been reduced to six because the new indicators had subsumed the previous ones. The Department had expanded the indicators to be more specific in terms of the interventions. The Department had assisted small businesses by generating FAQs that answered questions associated with small businesses, sole proprietors, and the informal sector. The Department had helped SMEs and employees to access TERS and unemployment benefits. The Heritage Western Cape Interventions had allowed small building businesses to build in the Paarl area. The Department had helped 250 early childhood development centres (ECDs) become compliant.

 

The Committee was told that financial management was an area which was transversal across all the provincial Departments. Two years ago, the Department of the Premier developed transversal indicators for financial management across the 13 Departments for comparative reasons and to identify what financial management performance should be expected within each Department. Due to this process the Department only reported on the set indicators which the Department of the Premier had designed. The Department did however have internal indicators for service delivery.

 

Mr Fourie said that page 13 of the Annual Report outlined the tourism, retail, and the informal economies as the sectors which were most vulnerable to job losses during the COVID-19 pandemic. They required a massive consumer demand which was disrupted by the national lockdowns.

 

The Department was committed to agri-processing as a part of boosting investments and exports. The Port Efficiency Project was important for the exports of deciduous fruit expected in February and March 2022. On the feedback the Chairperson revived from Transnet, he said ad hoc changes were being made at the ports. However, systemic changes were yet to be implemented. Trucks were being used to intensify the Department’s attempts to create a supportive road to rail system. The Department was attempting to expand services into the port to 24 hours a day and seven days a week. Ageing infrastructure and backlogs were the challenges which the Department faced. 

 

Mr Toefy responded to the Chairperson’s question on the Cape Town Cruise Initiative. He confirmed 

29 Cruise vessels had been secured for the cruising season. The Department had been instrumental in lobbying for the lifting of restrictions at both the provincial and national levels. On agri-processing, he said the Department focused on assisting exports by the beverage, food and natural products industries. Once the Department had assisted the businesses to prepare their products for export, Wesgro took those products into the market. The Department recorded the number of businesses supported rather than jobs created because a range of jobs was created among the small businesses and it was more practical for the Department to record the number of small businesses created.

 

Members were told that the Department reviewed the impacts of the interventions with small businesses after six to twelve months to ensure the investments into these businesses were sustainable.

 

Mr Fourie said that the Department's interventions had multiplier effects within the economy. He stressed that the provision of broadband and connectivity within the Western Cape lay within the ambit of the Department of the Premie. The Department had previously been involved in the Broadband Project. However, for the financial year under review the Department's focus in the digital space was to provide individuals with the requisite IT skills. He said the Java programme allowed individuals leaving grade 12 to become qualified Java programmers.

 

The Minister said that the Department had a renewed focus on trade barriers to exports and an early success was an increased export of oysters. He said the Wesgro Annual report indicated that the majority of the 67 companies that were cited were worth an estimated R4.6 billion and were related to the agri-processing sector. On the shared call issue, he said the Department would consider the question raised by Mr Van der Westhuizen and provide a comprehensive response. He said management of the ports had been disrupted by the Port Manager’s promotion to the Port of Durban. He added that The Port of Cape Town was committed to issuing a Request for Information (RFI) about providing a multi-purpose terminal and improving operations.

 

The Chairperson said that the Committee had resolved to call the World Bank because the World Bank was the stakeholder who wrote the RFI. She added that The World Bank listed the Cape Town Port low in terms of world ranking.

The Minister said that the Department was committed to improving port efficiencies in response because the port was a vital aspect of the Western Cape economy.

Further discussion

The Chairperson said that in certain programmes, it would be possible to forecast the outcome of jobs. She asked how the Department monitored the numbers of jobs they created against the target of 35,000 jobs the Department had set in the Five Year Plan. She commented that the Department did not detail how the whole Western Cape Government had responded to the increased demand within the digital market and raised the concern that different Departments might be duplicating programmes.

Ms Maseko asked if the annual performance plans (APP) or the Strategic Plan would outline the number of jobs that had been created. She asked whether the Department was achieving the targets which they set for themselves in relation to interventions.

Ms Makamba-Botya asked what processes the SMEs had followed for the Department to support their expansion to Long Street and whether the Department would support SMEs at the township level. She noted that in some instances Businesses were benefiting from TERS but not supporting their staff. She asked for a list of all the businesses the Department had helped receive TERS funding and how the Department ensured that businesses remained compliant in supporting their staff.

Mr Van der Westhuizen asked what the Department’s role was in lobbying the National Government to assist with investments in the Western Cape that would support job creation and economic growth, such as the construction and further development of dams within the province.

Responses

Mr Fourie said he and the CFO had requested that the Department review the indicators that were used in the Annual Report for the year under review because it was important for the Department to measure how many jobs were created.

The Committee was told that the Department had partnered with the National Youth Development Agency (NYDA) and The Small Enterprise Development Agency (SEDA) to support the SMEs on Long Street. The Department looked at the SMEs that it could potentially support via the NYDA and SEDA. These organisations would assist the Department with determining which SMEs met the criteria for support. Before an SME was supported by the Department, they were expected to give a presentation to the Department.

The Chairperson asked how SMEs applied for support and whether information about receiving support from the Department was easily accessible on the Internet. She was told that applications were done through the Department.

Mr Fourie invited Members of the Committee to email him should they require further details on the application process. 

The Committee heard that the Department had engaged with municipalities to try and replicate the Long Street SMEs initiative. However, there was a need for trading spaces to be created. The Department had introduced a category within the SME Booster Fund that dealt specifically with the issue of trading space.

Mr Fourie said that the national Department of Agriculture, Land Reform and Rural Development and the national Department of Water and Sanitation played a direct role in the construction and further development of dams in the Western Cape. The Department has conducted work in relation to the buildings at small harbours. However, the national Department of Agriculture, Forestry and Fisheries had control over activities related to small harbours and this had hindered the Department’s work.

The Minister said that one of the few dividends of the COVID-19 pandemic was that in order to respond effectively to the pandemic, the Department had built very strong partnerships with the national government departments. The Department had lobbied for investment in the Port of Cape Town and in relation to the rail environment, to which the Department expected to allocate more resources. He added that the development of dams, such as the Clanwilliam Dam, fell within the scope of the Department of Agriculture, Land Reform and Rural Development.

He said that if Businesses disappeared after receiving funding from TERS, a complaint was either directed to the Department of Labour or lodged with the Department to ensure the complaint was followed up. On small harbours, he said progress has been insufficient and that it was a matter which the Committee should pay particular attention to because of the potential economic opportunities in the small harbours.

Further discussion

Mr Van der Westhuizen congratulated the Department on the vacancy rate of 4.7 percent which he said indicated the dedication and hard work of the department. On page 164 of the electronic copy of the Annual Report, he asked for further explanation on what was meant by a cumulative number of employees.

Ms Makamba-Botya referred to table 3.14 of the report and asked why lower skilled workers did not get overtime and medical assistance benefits. In relation to table 3.4 on page 169, she asked why employee contracts were not renewed after their expiry. She said that she found it shocking that the Department had not appointed any individuals with disabilities in senior and managerial roles. She added that page 172 reflected a low number of Africans in top managerial roles. She asked for a race related demographic breakdown of the top management and senior management roles. She said that table 3.10.3 indicated that employees in the category of highly skilled had taken a high number of leave days. She asked how this affected service delivery. On the utilisation of consultants listed on pages 191 to 194, she asked how many of these companies had more than 50 percent black ownership. 

The Chairperson stressed that the COVID-19 pandemic had increased staff workload and asked whether the Department had given due consideration to the wellbeing of its staff. She warned the Department that if staff were not given the opportunity to take leave, they might experience burnout which would negatively impact their wellbeing and service delivery.

Responses

Ms Cheryl Julies, Director: Strategic and Operational Support, said that table 3.11 related to each person that has been remunerated during the reporting period. 

Mr Fourie said medical insurance was a choice. Contracts were not extended when the Department did not have the budget available to renew or extend contracts.

Ms Julies said that the recruitment selection process for those appointed to senior and managerial roles was an inclusive and open process.

Mr Fourie said that the Department ensured that the short list of candidates for senior and managerial roles reflected employment equity requirements. Table 3.10.3 indicated that individuals in the category of highly skilled had taken a high number of leave days because a larger number of individuals fell within this category. On the number of Black owned consultants used by the Department, he said the pages 191 to 194 outlined the B-BBEE levels. He added that the COVID-19 pandemic did create difficulties which did increase the pressure on staff. However, they did have opportunities to work from home.

Ms Julies said the Employee Health and Wellness section on page 183 outlined how the Department had supported staff to deal with the increased pressures which COVID-19 had caused.

Ms Maseko asked if employees were provided with the option for medical insurance and if subsidies were provided for employee medical care.

Ms Julies said that medical assistance formed part of the staff service benefits which staff must apply for. She added that nationally there was medical insurance which staff could apply for.

Saldanha Bay Industrial Development Zone Annual Report 2020/21

Mr Thembisile Salman, Chairperson of the Board of the Saldanha Bay Industrial Development Zone (SBIDZ), noted that the SBIDZ was able to produce a clean audit for the year under review.

Discussion

Ms Maseko asked what plans the SBIDZ had in place to promote innovation in the forthcoming year.

Ms Bans referred to the Saldanha Bay Municipal Economic Recovery Plan on page 25 of the Annual report and asked what level of attention was afforded to SMMEs. On page 48 of the report, she asked whether it was accurate to conclude that of the list of 21 significant investors, the majority of beneficiaries were white owned companies. She was concerned that on page 275 of the Annual report under Equity Targets the top management positions were shown to be held by three white males.

Mr Van der Westhuizen said that Saldanha Bay would require significant investment by the Port Authority to reach the targeted maintenances of vessels and asked what work was required to ensure the targets related to maintenance of vessels were met.

The Chairperson asked for further detail to be provided about the increased importance of  offshore wind as a renewable energy alternative.

Responses

The Committee was informed that the SBIDZ had completed a pre-feasibility study for a project to bring new dedicated port infrastructure to the Port of Saldanha. The SBIDZ had a mandate to establish the Zone, and an infrastructure mandate in relation to unlocking investment. The freeport designation had the potential to unlock other markets within South Africa. A memorandum of understanding (MOU) had been signed with the Chemical Sector Education and Training Authority to establish a Smart Skills Centre.

Mr Patrick Lakabane, Senior Management Executive: Development Programmes, said MOUs had been signed with the Transport Sector Education and Training Authority in relation to further funding in the maritime sector and creating more opportunities for the youth. He said that during the year under review no COVID-19 incidents had occurred on the construction sites.

Ms Adinda Preller, Senior Management Executive: Transaction and Investor Support, said that of the list of 21 top investors, five were assisted to apply for the Black Industrialists Scheme (BIS) incentive offered by the Department of Trade, Industry and Competition (DTIC), which was a mechanism for black industrialists to access funding. The majority of investors were majority black owned, or had a majority black shareholding. She added that the B-BBEE profile of the investors could be shared with the Committee upon request.

Ms Preller said that page 75 of the Annual Report showed that four females of different races occupied top managerial positions. Therefore, it would be inaccurate to conclude that the SBIDZ was dominated by white males.

The Committee was told that the limited capacity of the port was an issue and that attention had to be directed towards port infrastructure to reach the targeted maintenance of vessels. The SBIDZ had worked with the Department of the Premier to include the Port Infrastructure Project in the President's Infrastructure Programme. National and international development finance institutions had been approached.

The Committee also heard that studies had shown that South Africa's coastline had a potential for offshore wind energy, and this needed to be further explored.

Further discussion

The Chairperson asked if there were ways of increasing the digitisation of the port in order to increase efficiency. She asked for an update on the Transnet and Eskom liquefied natural gas (LNG) pipeline and infrastructure.

Ms Benedicta Durcan, Senior Management Executive: Ease of Doing Business, said that for digitisation of the port to be possible, systems interface processes had to be mapped out. This was done in 2017. She added that the ultimate goal was that ports would digitally interface with the government departments’ systems.

Ms Preller said that the LNG project was being led by the Department of Mineral Resources and Energy (DMRE) under the Independent Power Producer (IPP) Programme. She said bid window six would be published in February 2022 and would emphasise gas and power.

The Chairperson said that, while it was pleasing to hear of importation plans, there had been numerous delays in building the necessary infrastructure required in relation to LNG. She asked how long it would take for all the relevant stakeholders to be coordinated in a manner that would ensure the ultimate goal of digitisation was achieved.

Ms Durcan was unable to give the Chairperson an accurate estimate of when the ultimate goal of digitisation would be achieved.

Mr Van der Westhuizen said it was interesting that 40 percent of the annual salary budget was allocated to the top managerial positions.

Ms Preller said experts, specialists and operational people are included in that 40%.

Atlantis Special Economic Zone Annual Report 2020/21

Discussion

Ms Maseko asked Dr Pierre Voges, acting CEO of the Atlantis Special Economic Zone (ASEZ) whether the entity had accepted the social responsibility of providing skills development for the youth within the Western Cape province.

Mr Van der Westhuizen asked why ASEZ considered outsourcing the care of financial transactions to Wesgro  as a major constraint.

Dr Voges said that ASEZ had conducted a gap analysis to determine which skills were in high demand to ensure that skills development programmes equipped the youth with the necessary skills. 

Members were also told that the training programme for the 2021 financial year was informed by the gap analysis. A considerable amount was invested in technical training and 60 percent of the trainees were female. The technical training was based on renewable energy and other practical skills which beneficiaries could use in existing businesses.

Ms Maseko asked whether the individuals involved in the training programmes were solely from the Western Cape Province. She asked whether housing was provided for individuals involved in the training programme if they were not from the Western Cape Province. She was informed that those recruited were primarily from the Western Cape. However, it did occur that individuals from other provinces moved into the Western Cape to seek out economic opportunities such as the training programmes.

Dr Voges said that the presence of ASEZ was initially of concern to the local community as they distrusted the development of another entity within their locality. However, he assured the Committee that ASEZ had been able to form a healthy relationship with the community.

He said that Wesgro was used as an incubator for ASEZ before ASEZ was established as a state-owned enterprise which began operating as a company on 1 April 2020. In terms of Section 25 of the SEZ Act, ASEZ was required to be a provincial enterprise. The Act was being amended to make it a non-requirement. In terms of the Public Finance Management Act, ASEZ was required to be a Provincial Business Enterprise in order to open a bank account. Wesgro was then used as an accounting conduit. This relationship became difficult as Wesgro had their own urgent priorities. He added that ASEZ submitted a listing application in August 2020 which received a negative response due to a negative revenue stream.  He added that ASEZ purchased 93 acres of land from the City of Cape Town for R56 million for an asset to be reflected on the balance sheet and for proof that ASEZ was funded outside of the Financial Revenue fund.

Mr Van der Westhuizen asked whether ASEZ was the legal owner of the 93 acres purchased from the City of Cape Town and therefore entitled to its income.

Dr Voges said the sale agreement with the City of Cape Town had been signed with the amendments suggested by the National Treasury to make ASEZ a provincial business enterprise. He added that the Share Subscription Agreement and a Shareholders Agreement have been signed with the City of Cape Town. At this moment ASEZ could not transfer the land onto its balance sheet. If they were to do this, they would be expected to pay VAT.

The Minister said that he was in regular contact with the Atlantis (SEZ) to ensure they were registered as a Provincial Business Enterprise.

Wesgro Annual Report

Discussion

Mr Van der Westhuizen said it was heartwarming that Wesgro did not use the COVID-19 pandemic as an excuse to underperform. He asked whether there had been any changes which resulted from the tension experienced in 2020 which contributed to the resignation of the former CEO.

The Chairperson reminded Mr Van der Westhuizen that a formal written official report detailed three independent opinions relating to his question.

Prof Brian Figaji, Chairperson of Wesgro, said that tension experienced in 2020 had allowed Wesgro  to delineate the way in which relationships were defined and stronger relationships had been forged.

Ms Maseko commented that there needed to be greater representation of women within Wesgro .

The Chairperson congratulated Wesgro on the R4.4 billion which they had invested to create 1 830 jobs. She added that the Department had partnered with Airbnb for remote working in order to get the prices reduced to promote people extending their stay. She said a Cape Town by-law did not allow homeowners to rent out Airbnb accommodation for longer than 30 days.  She asked whether the City was willing to alter the 30-day limit in an attempt to attract more international visitors.

Mr Van der Westhuizen asked whether the investment outlined on page 34 of the Annual Report was a new investment. He asked whether Wesgro has investigated the contributions that South African businesses which relocate to the Western Cape made towards the recovery of the Western Cape economy. He asked whether there was an expected growth in overseas companies using the Western Cape as a filming location.

The Committee was told that the Western Cape had a world class film studio which is operating at 95 percent capacity. However, the incentives set by the DTIC had left a bad taste in some of the filmmakers’ mouths. The Western Cape had a thriving animation post production sector earning a lot of awards.

Ms Wrenelle Stander, CEO of Wesgro, said Wesgro was not collecting data on the “semigration” patterns of South African businesses into the Western Cape.

Prof Figaji said Wesgro was entirely supportive of diversity in the board and aimed to ensure that the full diversity of the country was reflected in the board.

The Chairperson congratulated Wesgro for the Convention bids listed on page 50 of the Annual Report.
Gambling Board request

The Chairperson said the Committee had received a request from the Western Cape Gambling and Racing Board to comment on the licensing and rollout of Limited Pay-out Machines. She asked that members of the Committee refrain from commenting on the matter as the Committee had oversight on such matters.

Ms Maseko said that the Committee would refrain from responding to the request made by the Western Cape Gambling and Racing Board.

The meeting was adjourned.