DTIC Budget: Committee Report

Meeting report

Opening Remarks                           
The Chairperson opened the meeting and invited the Committee Secretary to present the concluding remarks in the draft report on the Department of Trade, Industry and Competition’s 2022/23 Strategic Plan and APP as the report had been circulated and Members had had time to go through the report.

Presentation of the first draft report on the DTIC’s 2022/23 Strategic Plan and APP
The Committee Secretary informed the Chairperson that only the ANC had contributed to the concluding remarks. The other parties had not made any submissions. He read out the 14 concluding remarks:

Draft Concluding Remarks:
1. The Committee welcomes the government’s three-pronged approach to addressing the challenges facing the country. The focus on industrialisation, transformation and building a capable, ethical and developmental state was key to unlocking the potential of the SA economy. However, the Committee recognises that greater cooperation between all spheres of government is essential to achieve its desired outcome.

2. The success of the government’s Reimagined Industrial Strategy was central to achieving the government’s objectives of reducing unemployment, poverty and inequality. The Committee welcomed the focus on a central master plan in the development of globally competitive industries. The process of developing the plans also highlighted the challenges in regard to transformation and provides an opportunity to overcome those challenges within specific industries.

3.The Committee welcomed the support of government for the new creative and innovative industries, especially in the hemp and cannabis sectors, and encouraged the dtic to work in collaboration with relevant sister departments to ensure that the regulatory framework enables broad participation across the entire value chain.

4. The Committee recognises that investment, both by government and the private sector, as well as the development of a regulatory environment that would attract investment is critical to addressing SA’s challenges. Therefore, it encourages government to work towards realising the recent investment pledges and continually assesses them to ensure that the impact thereof translates into job creation.

5. The development of SEZs and IPs are key components of government’s approach to developing local, regional and rural economies. The Committee welcomed the gains made in certain Special Economic Zones (SEZs), such as the Tshwane Automotive SEZ, among others.

It was agreed that the point on concern about the poor service by some provinces would be moved to the Oversight Report.

6. The Committee supports the government’s initiatives, such as the Black Industrialists Programme which seeks to structurally transform the economy through increased black participation in the mainstream economy. It highlighted that the dtic and its entities should ensure that there is adequate ongoing non-financial support to ensure that Black Industrialists remain sustainable.

7. The Committee welcomes the review of the Economic Partnership Agreement with the European Union and supports the maintenance of the current tariff lines, but would welcome greater benefits for the Southern African region.

8.The Committee noted that the dtic had identified a weak export promotion alignment with its industrialisation efforts as a major concern. It therefore urged the dtic to ramp up its promotion initiatives in line with its industrialisation drive. The Committee also noted that the export of SA goods and services was vital to ensure a healthy trade balance and the overall growth of the economy.

9. A decrease in the Industrial Financing Programme was a major concern to the Committee as this programme provides economic support to various sectors of the economy. In the Committee’s view, this budget cut may compromise the dtic’s ability to leverage investments to stimulate economic growth. Given the fiscal constraints, the Committee encouraged the dtic to find innovative ways to continue to provide the necessary support to stimulate economic activity.
 
10. The Committee welcomed that trading under the Africa Continental Free Trade Area Agreement (AfCFTA) had commenced with its concomitant benefits to both SA and countries on the African continent. This presents significant growth opportunities for the African market, provides for 90% of tariff lines over time, and encourages industrial development through diversification. According to the Committee, this would enhance Africa’s competitiveness both regionally and globally.

11. The Committee recognises the importance of scrap metal as a resource in the manufacturing process for steel products that play an essential part in construction or downstream manufacturing. Given the rise in infrastructure being sold as scrap metal, the Committee urged the dtic to utilise all measures at its disposal, including engaging National Treasury and law enforcement agencies, to ensure that the illegal export of scrap metal is significantly reduced. In addition, it is of the view that scrap metal export regulations should be efficiently enforced to ensure sufficient availability of scrap metal to the local industry at an affordable price.
 
12. The Committee remains concerned about the increasing levels of economic concentration and its implications for the participation of small and medium enterprises in the long run and acts as an impediment to structural transformation of the economy. It encourages the dtic to work with other departments to ensure that the recommendations of the Competition Commission’s Report on ‘Measuring concentration and participation in the South African economy: levels and trends’ are implemented.

13. The Committee recognises that over-regulation and unnecessary bureaucracy adds an administrative burden on business, thus impeding investment and economic growth. Therefore, it welcomes the Department’s commitment to ease the regulatory burden by simplifying processes that would promote investment across all departments and government agencies. While the Committee acknowledges the dtic’s commitment to reduce red tape across all its programmes, it is concerned that specific practices and/or measures have not yet been identified that should be addressed in this regard.

14. The Committee was concerned that most of the dtic’s output indicators and targets were in the form of reports or action minutes being produced and not targeting specific outcomes such as the amount of support aimed at specific incentives, value of disbursement or jobs created. This lack of quantification created a challenge in respect of effectively holding the dtic accountable and measuring its impact.

The Secretary stated that there were no formal recommendations and therefore the only recommendation would be that the House adopt the Budget Vote.

The Chairperson noted that there were no inputs or comments on the conclusions or the recommendation. The way forward was that the final report would be put to the Committee at the meeting on 13 May 2022.

The Secretary stated that he would incorporate the concluding remarks proposed by the ANC into the report and provide a copy to Members to take to their respective caucuses. Any additional comments, conclusions or recommendations would be considered for incorporation in the report.

Closing Remarks
The Committee Secretary informed Members that the following meeting would be on Friday, 6 May 2022, when the Committee would receive input from the dtic and the Senior Parliamentary Legal Advisor, Adv van der Merwe, on the remitted Bills. The report had already been sent to Members.

The Chairperson concluded the meeting.

The meeting was adjourned.