Strategic Plan and Budget: briefing

Meeting report

TRADE AND INDUSTRY AD HOC COMMITTEE; ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE: JOINT MEETING
26 May 2004
TRADE AND INDUSTRY DEPARTMENT STRATEGIC PLAN AND BUDGET: BRIEFING

Acting Chairperson

Presentation by Department of Trade and Industry (DTI)
Department of Trade and Industry Budget Vote

SUMMARY
The Department briefed the committee on their strategic plan and budget and reported back on the measurable outputs of the previous cycle. Discussion topics were varied and included the following:
- the micro-economic reform strategy that was mentioned in the presentation.

- what the DTI is doing to foster entrepreneurship such as the Apex Fund..
- changing perceptions of South Africa and its risk profile.

- alignment of the provincial departments of economic affairs and the DTI
- assisting municipalities to decentralise the economy

MINUTES
Dr Alistair Ruiters (Director-General), Ms Wendy Dobson (Chief Director: Executive Management), Mr Govender (Deputy Director-General) and Mr Naidoo (Chief Finance Officer) represented the department.

The presentation outlined the 2003/4 achievements and the key outputs for the seven DTI programmes (International Trade and Economic Development, Enterprise and Industrial Development , Consumer and Corporate Regulation, The Enterprise Organisation, Trade and Investment South Africa, Marketing, Administration). It described the Department's strategic objectives for 2004 to 2007 and its flagship projects for 2004/5. It showed how this strategy was supported by the budget and described the budget allocations for each programme. Ineal terms it means that the budget is being spent in the following way:
Staff costs = 9.9% = R281m
Procurement of goods and services = 12.5% = R357m
Transfers to agencies = 38.5% = R1,09bn
Grants to enterprises = 31.6% = R900m
Equipment = 0.5% = R13,6m

DiscussionMr Rasmeni (ANC) congratulated the DTI on their presentation. He enquired about complaints that it takes very long for the national lottery proceeds to be distributed.

Ms Ntuli (ANC) commented on economic opportunities for black businesses. She stated that the nature of black business, especially in townships, is survivalist. What exactly will the department do to make these survivalist businesses into real businesses?

Dr Nkem-Abonta (DA) enquired about the micro-economic reform strategy that was mentioned in the presentation. He added that the items he saw in the presentation did not belong to classical microeconomics. Could this be explained in more detail?

Prof Turok (ANC) asked about the DTI's resource facility at 120 Plein Street. He suggested that the DTI make available a programme for Members of Parliament to help in educating everyone. He also asked if the DTI could give them some sort of assessment on the unique data that Business Map releases on black business, participation in the economy etc. He added that the IBSA (India, Brazil, South Africa Trilateral Commission) developments are very important and asked to be kept up to date.

Ms Ntwanambi (ANC) asked for more information on the Proudly South Africa campaign in the townships. She also wanted to know more about the DTI's partnership with tertiary institutions.

Dr Davies congratulated the DTI on their presentation but asked that in future, the report should look at all the outputs, not just highlight the successful outputs.

Ms Cheng (DA) asked about foreign exchange controls. She said it should be the decision of the South African people whether they want Rands or Dollars.

Mr Stephens (UDM) asked for more information on the consumer credit law reform process.

Mr Watson (DA) complained about all the acronyms in the briefing document and asked for a glossary of all the terms.

Mr Durr (ACDP) asked what the DTI is doing to foster entrepreneurship. He also expressed his concern about consumer exploitation.

Dr Davies commented that it would have been preferable for the committee to visit the DTI in its new premises before Parliament started. This was however not possible and it is less than ideal. He added that he would let the Director General respond to the questions as he sees fit.

Dr Ruiters responded that it is always a difficult exercise to cover all the DTI's doings, considering the size of the DTI. He explained how the DTI's role is growing and how they have to play a central role in Nepad and other trade talks. As an example he mentioned that South Africa is now the number one trading partner of Morocco, replacing France who was the number one for many years. In the DRC it had knocked off Belgium as the number one partner. The Director General asked members for their indulgence. He explained that every question that they asked raise issues that come out of policy debates. It would be very difficult to answer all the questions in detail and therefore he wanted to talk about themes that have emerged from the questions.

Focusing on Africa and trade negotiations is very important to the DTI. Issues around competing with the much bigger Chinese and Brazilian economies is high priority. Important talks are going on with for instance Mercusor (Southern Common Market), the US, and the European Union. The Director General asked that they come back to the Committee sometime and only speak about trade.

Another theme is small business development and black empowerment. He stated that you could not speak about those two concepts together seeing that there are black businessmen and women whose businesses are far from being small. He mentioned that some of them own the second and third largest gold companies in the world. The interest of big business in South Africa is aligned, whether black or white. There are still issues to deal with in terms of how to transform the corporate world. Interventions in the second economy are distinctly different from the first. The Apex Fund [to provide micro-credit to people at the grassroots level] is one of the interventions they will be making in the second economy.

Dr Ruiters explained that most of the investment coming into the country comes in the form of mergers and acquisitions. Most of the investment is domestic. Every country targets foreign investment. One is looking for technical, technological and managerial acumen and the new markets they bring with them. Some people assume that the DTI places too much emphasis on foreign direct investment at the expense of domestic investors. Foreign and local investment is largely driven by perception and that is converted into risk. An enormous amount of effort is going into changing perceptions of South Africa and its risk profile. You can see the results in our improved ratings from the rating agencies.

In reply to the question on the Plein Street facility he said that they are considering moving the resources from Cape Town to their new premises and opening a facility for schoolchildren in Pretoria.

Mr Rasmeni enquired about the current position of the process of reviewing legislation.

Dr Nkem-Abonta asked about the budget. The staff and personnel costs are just under 10%. Is that not very low?

Mr Sinclair (NNP) said that while the macroeconomic picture is looking good he was concerned about the challenge of addressing poverty levels, especially in his province (Northern Cape).

Mr Van Rooyen (ANC) enquired about the role of the provincial departments of economic affairs and their relationship with the DTI. Is there any alignment?

Ms Mabe (ANC) asked how the DTI is assisting municipalities to ensure that one decentralises the economy?

Dr Ruiters replied that they are currently producing their annual report, which in some ways is a duplicate of the report they have to submit to the Committee. This will include all output indicators and the financial statements in one document.

On the legislative review he replied that they are targeting six pieces of new legislation in this administration. Apart from that there will be many amendments - which reflects the nature of economic legislation.

Dr Ruiters said that there are about 6000 people working across all their agencies. That is a more realistic number of personnel. In this budget only the staff of the DTI itself is covered. He added that he is focused on getting more out of his staff.

On the role of the provinces he explained that there is a monthly meeting with the provincial heads of economic affairs departments. Certain issues have proved to be difficult such as gambling for instance. Other areas where they have worked well are small business development, consumer protection and critical infrastructure development. Once a year all the department heads present their plans for the next year to all the others, there it gets tweaked and alignment is secured.

Dr Davies thanked the Director General for his efforts. He stressed that in the future the committee will have to have a presentation and discussions on the annual report and not just circulate the document. More attention has to be given to intergovernmental processes and the different agencies. He said they were looking forward to their next meeting and adjourned the meeting.