DTIC initiative to reduce red-tape & update on the roll-out of provincial One-Stop Shops

Meeting report

Opening Remarks
The Chairperson noted that the Department of Trade, Industry, and Competition (dtic) had included in its 2022/23 Annual Performance Plan, the need to improve the ease of doing business and to identify and reduce unnecessary red tape across its branches. The dtic has also been rolling out provincial InvestSA one-stop shops to assist investors in navigating the regulatory requirements and resolve blockages during this process by providing access to all key government departments and entities under one roof. The Committee had initially visited the Western Cape one-stop shop in 2019 and engaged with the concept on the day. However, at the time, several provincial one-stop shops were in the process of being rolled out. So the Committee will, in this meeting, be receiving a briefing on the progress that has been made since 2019, in rolling out the one-stop shops, as well as the renewal and reforms that have been identified to improve the ease of doing business.

The Chairperson invited the Department to brief the Committee.

Presentation by the Department of Trade, Industry and Competition
The delegation from the Department of Trade, Industry and Competition was led by Ms Sarah Choane, Deputy Director-General (DDG): Corporate Management Services. The other senior officials on the platform introduced themselves:
Yunus Hoosen, Acting DDG: Invest South Africa
Malebo Mabitje-Thompson, DDG: Industrial Finance
Steven Hanival, Chief Economist
Evelyn Masotja, DDG: Consumer and Corporate Regulation
Nikki Kruger, Chief Director: Negotiations

Ms Choane informed the Committee that the presentation would also include how the dtic offered support to alleviate the energy crisis and the regulatory reforms made to improve capacity. Mr Hoosen was responsible for one-stop shops in the Department and would present that topic.

Roll-out of One-stop Shop – Yunus Hoosen
The One-stop Shop (OSS) was the focal point of contact in government for all investors to coordinate and facilitate the relevant government departments involved in the regulatory process, registration, permits and licensing. The OSS significantly shortened and simplified the administrative procedures and guidelines for issuing business approvals, permits, and licenses, thereby removing bottlenecks faced by investors in establishing and running businesses. The OSS offered specialist advisory services in the areas of
- Economic environment
- Regulatory environment
- Legal environment and compliance
- Industrial development and financial support
- Investment guide.

The OSS was a  partnership between the dtic and provincial government in implementing the InvestSA One-stop Shops. Mr Hoosen presented statistics showing the impact of the three OSSs currently operating in Gauteng, the Western Cape and KwaZulu-Natal. In 2022/23, OSSs would be opened in the Eastern Cape, Northern Cape and Limpopo.

To assist with the alleviation of problems emanating from the lack of a consistent power supply, the President announced in July 2022 that the One-Stop-Shop (OSS)  would be providing an accessible entry point for Independent Power Producers (IPPs) and embedded generators aimed at streamlining the regulatory process. This would enable the fast-tracking of projects and reduce regulatory red tape. It would also enable other features like tracking uptake and monitoring project progress. This work would form part of the Legal and Regulatory Workstream of the National Energy Command Council and the Energy Natjoints. This work would form part of the Legal and Regulatory Workstream of the National Energy Command Council and the Energy Natjoints.

The Department gave examples of how it had assisted with the ease of doing business. Regulatory changes would incorporate the revision of the Export Marketing and Investment Assistance (EMIA) Scheme regulations and the creation of an online platform to streamline the Know Your Client (KYC) due diligence exercise by the Export Credit Insurance Corporation of South Africa (ECIC). The dtic looked at expanding exports, focusing on Black industrialists and women and youth-owned businesses.

(See presentation)

Discussion
Mr W Thring (ACDP) believed that the concept of fast turn-around times through one-stop shops, ease of doing business, and growing the economy in SA was very important. He began by requesting that when the Department showed bar graphs, or any graphs for that matter, in presentations, the axis should be labelled in the presentation, particularly the vertical axis, as one had to try to figure out whether it was seconds, hours, days, years, and only during the presentation, Members are informed of the unit, e.g. it was the number of days, etc. If it were labelled on the graph, it made it easier for the reader to understand what was being portrayed on the graph and prepare for the meeting.

Mr Thring said he had visited Rwanda, particularly the Great Lakes region, about ten years ago. When he was there, Rwanda had already initiated one-stop shops and the economy was seeing an uptick because of those one-stop shops and the ease of doing business in Rwanda. In one day, a person could get a business registered in Rwanda and that was about eight to ten years ago. So why had it taken South Africa, which was, at the time, the largest economy on the continent, so long to introduce one-stop shops? Most recently, South Africa was number two behind Nigeria. He did not know whether SA had slipped further or overtaken Nigeria, but SA had been the largest economy on the continent, and yet, a country like Rwanda, a tiny country, with about five to six million people, was able to introduce one-stop shops. Why was it taking SA so long to catch up?

He noted that SA was supposed to have had one-stop shops going a few years ago – he could not remember the exact date. At least from 2019 or so, the idea had been mooted by the President and now, in 2022, they were only in the three major provinces: KwaZulu-Natal, Western Cape and Gauteng. And while he appreciated that within the next six months or so, there would be another three, it was still going at a slow pace. South Africa was facing economic challenges: a high debt to GDP, high unemployment, and so on; if there were to be turnarounds, such as low growth in terms of GDP growth, and if Members wanted to see a turnaround in South Africa, the Department had to be able to expedite the processes. In his view, it was still too slow.

Mr Thring turned to the question of progress in terms of energy. Sufficient energy was needed for businesses that were applying as obviously businesses relied on a steady stream of energy, and if SA did not have that, it was going to be losing business to other countries. He had read that Rwanda had overtaken South Africa as a more favoured African investment destination. So South Africa was losing ground to smaller economies, purely because of either moving too slowly or policy uncertainty. How did the country inform and assure investors of policy certainty in South Africa?

Ms N Motaung (ANC) agreed with Mr Thring on the slow progress in setting up one-stop shops. What challenges had InvestSA encountered in setting up one-stop shops in other provinces? And how was the entity resolving the challenges? What regulatory and legislative reform had InvestSA identified to improve the work of the one-stop shops to ease the doing of business? What was the relationship between the red tape office in the Presidency and InvestSA?

Mr D Macpherson (DA) stressed that the matter had been spoken about for the last eight years. It was sexy to say “reducing red tape”, or to use the words “ease of doing business.” The truth was that none of the talks, none of the players, none of the money, and none of the effort had resulted in any material or meaningful difference; so much so that the President was forced to take responsibility for red tape reduction away from the dtic because the officials either simply refused or were just incapable of cutting red tape. And in 2019, the President made a song and dance in the State of the Nation Address to advance SA’s position in the “Ease of Doing Business Report” from the World Bank. And then in 2018 and 2019, South Africa was number 82 worldwide. The World Bank had discontinued the “Ease of Doing Business Report” the previous year, but at that time, SA had regressed to number 84. So, all of the discussion, the pomp, the ceremony, and the chest-beating had simply resulted in a regression. And that was the truth as to why the President had got sick and tired of the Department's unwillingness to remove red tape. The dtic and the Minister saw it as their job to put more red tape in front of people's businesses, control more of the economy, and control more sectors. And that was why the President had to act in the manner in which he did. The fact that there were only three one-stop shops was exactly symptomatic of what the Committee had seen over the past eight years, and more specifically, the past three years.

Mr Macpherson pointed out that, in the City Press the previous week, or the week before that, the Chairperson of the French Foreign Trade Advisors had lamented that France had more than R50 billion in investments in South Africa and yet the investors had been waiting for seven months to get visas for French nationals that work in those businesses. The Committee could talk about one-stop shops, about the ease of doing business, but if SA could not even grant visas to people who had R50 billion invested in South Africa, what chance did any small business have of cutting it or making it? And what exactly did the one-stop shop and red tape reduction unit in the dtic do if it could not even get the Department of Home Affairs to issue a visa to people who have R50 billion invested in the country? He was not buying the presentation that had been put before the Committee. It was just smoke and mirrors. He did not know what the Department did because there was very little, if anything, to show for it. Maybe the Committee needed to consider whether there was any value in the Department if the Presidency had taken it over because even the President knew that the Department did not achieve anything.

He stated that the country had to either be pro-business, pro-jobs, pro-investment or pro-red tape, pro-control, or pro-interference. Those were the only two jobs and, from the amount of time that he had been on the Committee, and from what he saw and what he read, he just did not believe that there was any seriousness. And he thought that the Department used red tape as a barrier to investment deliberately, in an attempt to frustrate people into the belief that, well, if they cannot get visas, they will have to employ someone locally or if they could not bring something in, they would have to manufacture it locally. That was what red tape was used for: as a non-tariff barrier for investment. And that was why the President had to intervene. The Committee had to call out the Department and those officials who were unwilling and unable to get the job done because that was certainly what it looked like.

Prince Z Burns-Ncamashe (ANC) welcomed the report as it sought to coordinate and integrate all systems that would make it easy to do business in SA. It was an important transformation imperative. That was in line with the notion of the district development model, the syndication of resources, and the syndication of services, so that at the end of the day, any investor, any entrepreneur did not have to go around wasting time and wasting resources, looking out for services.  It was a very good model, which everyone should support because it made it easy for all the role players, citizens, and investors, and was going to change the face of investment opportunities within South Africa. Of course, there would always be prophets of doom against every effort carried out by the government.

He asked how the valuable information found expression with local people and communities, especially in the rural hinterland where primary production was largely happening, especially in the agricultural sector. He wanted to encourage one-stop shops in rural areas, where there were ward councillors, traditional councils, and so on. That information had to find itself there. Community development workers should have that information at their fingertips so that citizens can access it. MPs, councillors, traditional leaders, and all public office bearers had to make sure that they took it upon themselves to preach the gospel so that his people had access to information, which would empower them so that the notion of an inclusive economy became a reality. If one wants to do business in the region or continent, the one-stop shops must facilitate that kind of export business opportunity. He believed that the Department was doing the right thing but must accelerate its pace to ensure that more and more citizens had access to that valuable information.

Mr S Mbuyane (ANC) asked when the one-stop shops would be available in the rural provinces. Rural provinces had the right to have the same services as Gauteng had. There were six rural provinces in South Africa, and nothing was happening in terms of a one-stop shop. All services were made available to Gauteng. It seemed as if the dtic was only servicing the metro and the metro districts in terms of the one-stop shop. What progress had they made in developing one-stop shops in all provinces? The rural provinces need the same services if the rural masses were to form part of the value chain in terms of the economy. Nothing had changed since the last presentation. There was nothing new. The Committee was just told the Department was establishing them, but it did not. All programmes, like the industries programme, were situated in Gauteng; there was nothing in the rural provinces, so the people were not benefitting from the Department. Were rural provinces or the rural masses on their own?

Dr M Tshwaku (EFF) noted the Department’s point about jobs in the pipeline. Had those jobs been realised? Or what was happening there? Why was a report used as a key performance indicator? Should a key performance not be something tangible? Something tangible to drive jobs? Who would drive the report – internal capacity or consultants and, if so, how much money was it costing? Why not create internal capacity and save money if consultants were being used? There were four reports on pledged investments; of the investments that had been pledged, how many jobs or projects had been realized? Could the Department name the 24 investor issues?

He asked why the Department had made the presentation. Why did dtic want to tell the Committee about something it was still busy doing? It would not be a problem if dtic had come and said it had completed the implementation of the so-called one-stop shops and had presented the result. The Department had come to the Committee to tell Members about its failures. It had failed to open the so-called one-stop shops. What did dtic seek to achieve by coming to the Committee and telling Members about the one-stop shops?

Dr Tshwaku asked about InvestSA. Since the establishment of one-stop shops, how much had foreign direct investment increased? How much had been brought in by the establishment of the centres? Could the dtic put it into monetary terms? Was there a benefit in monetary terms - not of people coming to the centres and asking questions? He did not see that as a real success. What was the success in monetary terms? How many billions or millions? Had the dtic managed to double the investment that it had been given? So what is the return on investment? Was the Department investing properly in that thing? Did the country get value for money from establishing a red tape one-stop shop? Had the dtic done that calculation? If not, when was it going to do it because the citizens needed to get value for money? He asked if the OSSs were cutting red tape. Can it be seen? Had the dtic done any trend analysis? Were the trends available?

He asked what tax incentives and land incentives the OSSs were advising on. Had consideration been given to leasing the land and not letting investors buy land in SA? And when the Department said it was giving tax incentives, did that mean taxes were being cut? He also asked about the starting of a new business. The Department said that it came up with the one-stop-shop concept for starting up new businesses, but the system of online registration, combining that with online applications to SARS, UIF, and all that had been in practice since 2012 or even 2011. Why was the dtic taking credit for it? The dtic said that because of the one-stop shop, it had managed to put those services online and pull them together. So how could it be possible to claim that InvestSA managed to do that?

He added that a Member only had so many questions to ask when the person fully prepared for the meeting.

The Chairperson reminded Dr Tshwaku that the Committee had already visited a one-stop shop and therefore, the briefing intended to provide a follow-up on implementation. The work that InvestSA was supposed to be doing was very important to make sure that investment into the country was encouraged because it created jobs.

She asked the dtic about the relationship between InvestSA and the red tape reduction unit in the Presidency. Could the dtic summarize the biggest challenges it was facing, especially in the roll-out, as Members were very concerned about the slow pace of the roll-out of one-stop shops? What were the biggest challenges that the team could share with the Committee?

She handed over to the team to answer the questions raised by Members.

Ms Choane noted the point about not naming the vertical axis and promised to improve the quality of presentations. Some questions about jobs and reports as key performance indicators did not come from the presentation, but they might relate to another report. Her team could not respond to those questions. She requested that the dtic be permitted to respond to some of the questions raised in writing.

Mr Hoosen explained that quite a few questions were interrelated and, as Ms Choane had said, a few questions were asked that were not part of the presentation so those could be dealt with separately.

The cross-cutting issues that Members asked about related to the challenges in the rollout of the one-stop shop. The one-stop shop was an investor centre and the dtic worked with provinces to roll out into districts where the local government and province would provide advisory capacity. But essentially, the ones that the dtic was setting up were purely for domestic and foreign investors. There were challenges in a few areas. One was a capacity issue nationally because the one-stop shop was not only about dtic investments, it was about bringing the rest of government together, different government departments. So there was a capacity issue nationally and a bigger capacity issue at a provincial and local level.

Secondly, he pointed to the autonomy between national, provincial, and local which could be a problematic issue in terms of regulatory policy.

And thirdly, the biggest challenge in provinces was the capacity when dealing with an economic development agency, or any other agency, which was a very high turnover. Within three months of going in, the CEO would leave and there was a vacancy until six months later, somebody came in, and in no time, that person left, so the major challenge was the governance framework. And it became very problematic when the governance framework and reporting structures were too weak to implement and roll out the one-stop shop.

Mr Hoosen had worked very closely on the ease of doing business and indicated it was quite a difficult task to get some African trade going but the dtic had got it going. It was rather unfortunate that the World Bank had ceased publication of the country list for “ease of business” because of abnormalities in the World Bank itself. The indicators that dtic had worked on, starting a business, from paying taxes, registering a property, etc., would have seen South Africa making a significant dent in those rankings of World Bank report, particularly in starting of the business, because the dtic had significantly reduced the number of steps required. The dtic had brought the various systems together, SARS, CIPC, and the banks to a single step. Had the report been released, colleagues from the World Bank suggested that SA could have been in the top 10 on that particular ranking. So it was rather unfortunate that that report had been discontinued.

Concerning the relationship the dtic had with the red tape unit in the Presidency, Mr Hoosen explained that there was a very close working relationship, and the dtic worked specifically on the operational level while the unit facilitated issues on a strategic level. The dtic continued to do the work it had always done for investors and businesses on any issue, i.e. unblocking obstacles to starting a business and reducing red tape in government.

He stated that the dtic had assisted in resolving the visa issue, even though the issuing of visas was not a dtic mandate, but a mandate of the Department of Home Affairs. The visa matter had been like a sore thumb. The dtic played a facilitating role for government. The dtic also worked with the Department of Labour to facilitate labour-related issues. The dtic had established the technical task team and advocated it together with the Presidency. As of the previous day, the Home Affairs process of centralised visa processes at headquarters, as practiced for the past eight months, had gone back to the original decentralised process where visas are no longer processed only at Home Affairs headquarters. That was the result of advocacy work that dtic had done, together with other government entities The Presidency had persuaded Home Affairs to take a look and change its mind, and hopefully, things would be better. At the same time, the dtic CEO had engaged with various ambassadors, such as the German and the Japanese Ambassadors. He had played a facilitating role in linking with ambassadors to obtain information regarding business people worldwide who required visas. The previous day, Mr Hoosen had personally written to the SA Ambassador in Japan to say that the backlog of Japanese visas had to be cleared out as a matter of urgency. By the end of the current week, all the Japanese visas would be cleared out. That was the kind of input made by dtic and the facilitating role it played even though the mandate of that particular visa issue was solely and squarely in the Department of Home Affairs. Mr Hoosen stressed that the dtic certainly did what it could to ramp up matters because the country needed a very comprehensive ease of doing business programme.

Mr Hoosen explained that, for the one-stop shops to work, there had to be investors coming into the country. So firstly, policy levers had to work, and then one also had to have an effective back office. For example, if the dtic digitised the starting of doing business with CIPC on the portal, if the automation process works with CIPC, but the back office did not work, the system doesn't. So there had to be capacity, continuous improvement, and service delivery as part of product improvements. Improvements did not happen in one day; continuous, ongoing work was needed. So, some of the challenges that the dtic faced included the rollout code input, and particularly the issues of capacity, the governance framework, and in the last few years, Covid. But certainly, the dtic was very keen to put the three one-stop shops in operation by early January 2023, in the Northern Cape, in East London, as well as the third one in Limpopo and then very quickly do the other three in starting with the Free State, then Mpumalanga, and the last one in the North West Province. So, our one-stop shops, work for investors and are linked to the districts. In the future, the Department was looking to open up satellite offices in municipal offices, particularly in district municipalities.

Ms Choane reiterated that some of the questions did not relate to the presentation, so the team could not respond to them.

The Chairperson requested the Secretary to follow up and request responses in writing where questions had not been addressed.

Committee business
Training: Terms of Reference for workshop on Industrial policy
The Chairperson explained that a half-day training was scheduled for Tuesday 20 September 2022, from 9:00 to 13:00.  As part of capacity building, the Committee had agreed to have a workshop on industrial policy-related matters. Training would focus on the following factors: driving industrial development, productivity, competitiveness, and national industrial policy within the context of regional and continental development and integration instruments of industrial policies, such as the use of input tariffs and other trade measures, as well as the promotion of localisation. And then lastly, the role of the value chains and beneficiation in economic development.

She was submitting the terms of reference, or the scope, to afford Members an opportunity to give input and for Members to submit names of experts that could be procured to lead the workshop. Names were to be submitted to Manco (The Committee’s Management Committee) for consideration. Given the short time frame, because it had been brought forward on the programme, the names of experts that Manco should consider for facilitating a workshop had to be submitted by 7 September 2022.

Dr Tshwaku asked that the Committee include persons who could give a perspective from the right, centre and left.

The Chairperson asked Members to nominate experts from different perspectives.

Mr Macpherson supported Dr Tshwaku’s proposal that the workshop takes place in person.

The Chairperson agreed to take that proposal to Mancom.

Other business
Dr Tshwaku asked for a meeting without the Department so that Members could discuss matters. He asked where questions were recorded and where the Committee recorded responses from the Department. At a previous meeting, it had been decided to implement a resolution tracker. Had that been done? He asked whether each meeting could start with a review of the previous business.

Many actions had been determined since he joined the Committee, such as things to be done or replies from departments and other kinds of stuff like that. Where did the Committee record all those things? He had now asked questions related to investors, but not directly into the presentation, or whatever, so how were those responses to be tracked? The Committee had to have a resolution tracker to know where it was going, and when Members requested things from the Department. The Committee needed to know where it stood. Normally, in a meeting, one had what was called “matters arising” and a meeting started with what Members had agreed on in the previous meeting, and they checked whether those actions had been performed.

The Chairperson said that the support staff could develop a resolution tracker and indicate which divisions of dtic had briefed the Committee recently and which had not.

Dr Tshwaku repeated his request for the report back at each meeting, based on the resolution tracker. He also asked if there was a possibility that the workshop could be held physically. When he had read the notice, it seemed to be on a virtual platform. Was there a possibility that maybe the  Committee could meet physically?

Mr Macpherson supported the proposal by Dr Tshwaku to have the workshop in person. He felt that when the Committee met in person and had presentations in person, it was way more fulfilling than doing so online. He would rather delay it somewhat if that meant being able to meet in person.

The Chairperson agreed to consider the inputs of the two Members.

Mr Macpherson raised the matter of a study tour. A study tour had been mooted but nothing had taken place and as the Committee moved into a pre-election year, study tours tended to be put aside. He also pointed out that he liked to manage his diary well in advance.

The Chairperson stated that she would consult with the support staff and report back on the matter of a study tour at the next meeting.

Closing Remarks
The Committee Secretary informed Members that the following meeting would be on Wednesday, 07 September 2022: a briefing by the IDC, NEF and Dtic on its funding application and adjudication processes, as well as on its aftercare services.
 
The meeting was adjourned.