Minister on WTO engagements & outcomes of the Black Industrialists and Exporters Conference

Meeting report

Opening Remarks

The Chairperson informed Members that she had received a communication from the Minister requesting the postponement of the engagement on trade and trade-related matters and had agreed to that request. The matter of trade and trade-related matters would be scheduled for the first term of 2023. Furthermore, she had received a request from the Free State MEC for Economic, Small Business Development, Tourism, and Environmental Affairs for a postponement of the engagement originally scheduled for the following day, Wednesday, 16 November 2023 due to prior commitments of the MEC. The matter had been moved to the following week on Tuesday, 22 November.

The purpose of today’s meeting was to receive a status report on South Africa's current engagements and outcomes concerning the World Trade Organisation (WTO) trade negotiations from the Minister.

Presentation on the World Trade Organisation Talks

Minister Ebrahim Patel indicated that he would use the PowerPoint presentation as the basis for his briefing. He was going to deal with two quite significant relationships that complemented regional or other trade institutions, such as the Southern African Customs Union as well as SADC and the African Continental Free Trade Area (AfCFTA). SA had trade agreements with other parts of the world, for example, with the European Union, with four countries in Latin America, and had preferential access to some markets such as the United States. His focus was on a substantial element of SA’s overall trade engagement as a member of the World Trade Organisation (WTO). He would be reporting on the 12th Ministerial Conference (MC12) of the WTO.

SA has been a member of the WTO, since its establishment in 1994. However, WTO rules exhibit a range of imbalances and inequities that prejudice the trade and development interests of developing countries, particularly concerning agricultural and industrial and limits technology transfer. A particular challenge was the non-functioning dispute settlement mechanism (DSM).

South Africa’s strategic objective at MC12 was to work with a broad alliance of countries to achieve concrete outcomes in certain areas: a waiver of certain WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions, regulations to address illegal fishing and over-fishing; addressing the inequities on e-Commerce taxation; and an agreement on the terms of reference of WTO reform. MC12 adopted key decisions on the following:

-The TRIPS Agreement waiver

- Fisheries Subsidies

-World Food Programme Food Purchases

-Exemption from Export Prohibitions or Restrictions

-Work Programme on Electronic Commerce.

Much more would need to be done to achieve both greater fairness and equity in global trade and to place development at the centre of trade talks, but in the week of discussions in Geneva, developing countries were able to put forward a number of their concerns and have them incorporated in global decision-making.

(See Presentation)

Discussion

Mr M Cuthbert (DA) found the presentation very interesting and encouraged the Minister to give regular updates. It was disappointing that the dispute mechanism had not been resolved by the WTO. Some of the Members of the Committee had the opportunity to visit the WTO Ambassador in Geneva and to hear from her what she thought the pertinent issues were. But he found it very interesting to hear directly from the Minister and see what SA’s positioning was on all of the global issues facing the country. What was most disappointing from a WTO perspective, was the continued impasse that surrounded the dispute resolution mechanism. He thought the change in the US government would have brought about a restoration of normalised trade relations, as well as the proper functioning of the dispute resolution mechanism. That had been rather disappointing and he would like to have seen a change of tactics.

Mr Cuthbert said that the second issue was exactly what he was told when he visited Columbia and that was that SA had a constrained policy space, obviously related to industrialisation policy, and the Minister had repeated that. Other Asian Tiger countries such as South Korea, Taiwan, and so forth, obviously made use of those rules, as had industrialised economies. That was often cited as a bone of contention at the WTO, typically from the South African position. What provisions prevented the Minister from being able to industrialise in the same way that the Asian Tigers had?

Mr Cuthbert noted that a few months previously, an extraordinary step was taken by other governments to launch a dispute against Spain in the European Union (EU). Could the Minister give a status update on that particular matter as due to the dispute resolution mechanism being unresolved at present, he assumed that it would not be processed very quickly? Had any concessions been gained through the initial talks with the WTO, as well as the EU itself? It was a very important matter as some old-fashioned sanitary standards were put in place to discriminate against African goods and often on scientifically spurious grounds. It would be interesting to find out what the Minister's view was on that.

Broadly looking at the other issues that had been raised by the Minister, specifically regarding fisheries, he thought that was a landmark agreement and welcomed the work that had been done. It could not be that industries were subsidised by governments expected to play in the same pool as others. Subsidies distorted trade, particularly if they gave an unfair competitive advantage to other economies. SA was quite vocal in trying to expand free trade and limit barriers and it was important to identify with things, such as the belief that fishing as well as agricultural subsidies distorted trade, and did not allow for fair trade amongst countries, particularly considering the inherent advantage that more developed economies had because they had industrialised much earlier on. He reiterated that the presentation was very interesting.

Mr C Malematja (ANC) said that SA would forever be disadvantaged by the attitude that business was business. He was especially concerned about the fishing industry. If the country wanted to balance and regulate the business sector in the water, one had to take account of the people who had been denied the opportunity to be part and parcel of that sector based on the manner of granting licenses. Those who were in the industry were told only a limited number of licences were allowed to businesses to avoid overproduction of the fishing industry. And yet, Parliament’s mission was to bring as many as possible industrialists into the economy to balance the past. How did government implement that policy when the danger was that those who had been there a long time were monopolising the entire sector and were benefiting more than the newcomers who were supposed to be assisted to get into the sector?

Mr W Thring (ACDP) said that he had visited Germany around 2008/ 2009, together with a group called the Democracy Development Programme, accompanied by colleagues from the ANC and the DA, many of whom did not understand, at the time, the effect of over-subsidisation or subsidisation by developed countries, and how that skewed the playing field. He had raised it in Germany when they had visited the German Parliament, and the representative from Germany had acknowledged that it was an unfair practice by developed nations, as compared to developing nations and, and poorer countries. He was interested to hear how far those negotiations to scrap that kind of practice had advanced.

He added that developed nations had strength in negotiations because they were, to a large extent, the referees and players at the same time when the rules regarding the WTO had been established. How far were the negotiations in terms of levelling that particular playing field where developed nations, even just one nation, had veto powers, and could veto a very good recommendation about levelling the playing fields?

Starting with the MC 12, Mr S Mbuyane (ANC) raised the issue of food security and the agricultural declaration. The Minister alluded to the fact that the MC 12 was a success because the ministers were able to agree in terms of food security and agriculture and decisions were taken about domestic food production, and the process of safeguards in that some people would buy the surplus production. Did that mean the TRIPS agreement and the waiver that a country could not export more than 50% of its production to other countries, had been amended? He cited the example of the United States and China. How would that situation be levelled?

He asked what role trade and investment should play in achieving sustainable development. What was the difference between the administrative part of WTO and the Conference sessions? Could the negotiations subcommittees negotiate and come to an arrangement before they took the matter into a WTO session? Lastly, he asked about the Marrakesh Agreement in terms of the micro and multilateral issues relating to the Global New Deal. The current narrative was that if countries wanted to deliver a trade agenda for a sustainable future, they had to move from supply chain to value chain which meant mobility in terms of food and agriculture, and also governance and infrastructure that would radically change the disruptions of food and supply chain. Could the Minister comment on those two issues?

Mr Cuthbert had further questions. He had previously engaged with the Department of Trade, Industry and Competition (dtic) on why there had been not much movement, particularly in electronic goods and services. One of the reasons was a lack of local capacity. There had not been much focus on electronic goods and services in the way the master plans were structured, and the industries that had been identified, to allow SA to develop that kind of capability. In light of the ongoing negotiations as well as the timelines that had been set for the moratorium to come to an end, would it not be prudent for the government to focus on those kinds of industries to make sure that SA had the necessary capacity to compete on that front? In addition, SA could benefit from the revenue collected by instituting certain tariffs on those items, which were currently tariff-free. He had seen that President Xi Jinping and President Biden had met on the sidelines of the meeting and had agreed to a lowering of the temperature between China and the US. What was the Minister’s personal view on how that would bode for future negotiations at the WTO? That was one of the serious conflicts that had led to the suspension of the dispute resolution mechanism. How would the Minister use the situation to try and advance SA’s own trade goals and objectives?

Minister Patel responded to Mr Cuthbert on the constrained policy space. Essentially, even before the development of the Asian Tiger model, there were three periods of industrialisation in Europe. During the period when those rapid industrialisation programmes took off, there were no trade talks and there were no disciplines imposed on national governments by anyone outside the national government itself. Parliaments had a high degree of policy autonomy and policy space and countries were able to develop using a range of tools; some of these would be the use of strategic subsidies and technical support. The US had both a formidable technological base to the economy, in part through quite targeted spending by the military through the military budget, enabling ground-breaking breakthroughs that were then applied to industrial products.

In the more recent, and specifically WTO era, significant disciplines have been put on the support that can be rendered by governments, for the local industries in the traditional sectors, clothing and textile sectors, steel, and so on, to transform those industries into more competitive technology-led industries. Those same disciplines do not apply to many parts of the spending by governments. The second example is the strategic use of tariffs where a country that seeks simply to put up its tariffs to the highest level across all products is likely to find that it gets a temporary benefit, but with a real danger that its economy becomes uncompetitive because local players can rely on the protection and are unchallenged. They do not have the need to innovate to find better processes, and technologies, improve skills, attain higher productivity and so on. Historically, in both the Asian Tigers and in the earlier phase of development, developed countries were able to use targeted and carefully calibrated tariffs to support their industries. In fact, there has been a return to some of that by developed countries in several disciplines that limits the ability of states to use the instruments of public power to try to improve the competitiveness of the industry.

He added that global supply chains are a critical part of a global economy in which SA is interdependent. If South Africa sought to cut itself off from the world and not trade, there would be no place left for SA to sell its gold and platinum, and other mineral riches. In that sense, trade makes a lot of sense. The challenge is that if a country limits itself to trading only in minerals and agricultural products, the return is very limited. So, countries all look to move up the value chain. They do not only want to be in someone's supply chain, producing widgets, they want to get to the point of having the highest return for the entrepreneurs, the best wages for workers, and the best opportunity for governments to secure a share of that through taxation that can then be used to build either social systems, welfare systems, or economic support systems.

That is what trade talks are about: how to get to a point where countries across the world with divergent interests involve a common set of rules. That led to the WTO which said that instead of power being the only basis for decision-making, there would be an agreed set of rules with a dispute settlement system for instances where any one country believes another country has not worked within the rules. On the other hand, some developing countries, and South Africa was a classic example, because of its stage of transition at the time, were locked into commitments, which gave less flexibility in some areas than even developed countries have in respect of the support that countries like SA can give either in service markets or in goods markets. That is what that is about. The Asian Tigers benefited enormously from very strong preferential access, and unilateral access to markets, South Africa and Sub-Saharan Africa have benefitted from African Growth and Opportunity Act (AGOA), and SA was seeking to secure more of that gain in the future.

Turning to the question on the dispute settlement mechanism, Mr Cuthbert is right that this is an area that is quite fundamental to the operation of the global trading system. If one has rules, one needs to have an adjudicative process to determine how to deal with breaches of those rules. The WTO process is quite a complex one. Before the collapse of the dispute settlement mechanism, when one country provides support to industries, another country can challenge that. Building a green industrial economy by putting in place some support mechanisms for the production of components for the green industry, would lead to a complaint. In that complaint, there are two levels. The first level is a panel that seeks to get to a finding on the facts and encourage the parties to implement a finding; the more difficult one is where there is a binding decision that is taken by the appellate body of the dispute settlement system which is binding not only on that country but over time, it is developed into a jurisprudence on trade.

The United States has taken the view that the jurisprudence that is developing was never agreed to by WTO members and that sovereign countries are now trapped in a body of international law that they have not signed up for. That was the one argument that the United States has. The South African side has raised the issue that if you do not have a binding dispute settlement system, then powerful countries can impose their will to innovate. A good example would be the measures taken by the United States against South African steel and aluminium exports, where there is no coherent ground on trade law for excluding South African products and the United States has relied on essentially a national security provision to limit the export of steel and aluminium by South Africa. SA wants a fit-for-purpose dispute settlement mechanism because developing countries have not been completely happy with the old system. It is cumbersome, extremely expensive, and requires enormous resources. So, a wide reform of the dispute settlement mechanism is necessary. South Africa has, both bilaterally with the United States and in the wider discussion, emphasised the importance of resolving the impasse on the appellate body of the WTO.

On the matter of Spain, SA had very extensive discussions with the European Union, even meeting with the Vice President of the European Union, who also holds the Portfolio of Trade Commissioner. SA met with the Spanish government during the recent state visit and is engaged in discussions. A team of dtic officials went to Brussels recently to engage with their counterparts. The Minister was hopeful that the matter, particularly the false codling moth, could be resolved. That was the latest sanitary and phytosanitary issue that the European Union had used to block South African exports of citrus products. Before that, it was citrus black spot. For more than 100 years, South Africa has exported citrus fruit to European countries, even predating the European Union, and the fears that Europe now raises that citrus black spot can jump from oranges exported to Europe onto the orange trees and affect their production had never been scientifically shown. There is no evidence of any of the fears that Europe has raised. It is because South African farmers have become more successful globally, including in the European market, in selling citrus products, that suddenly these plant diseases have been discovered. The allegations are being used to limit SA's entry into the European market. SA will seek to first have a solution through dialogue and discussion, but failing that, will take the matter to the highest level.

The Minister said that there are several ways in which SA can address the issue of a dysfunctional appellate body in the WTO. When taking up the citrus matter, SA has the facility to have an agreed arbitration with a panel of arbitrators chosen between the parties. However, hopes are that in the discussions that are underway at the moment, an agreement can be reached. Spain is the world's biggest exporter of citrus fruits and Africa is the world's second-biggest exporter. The Spanish government has acknowledged that they understand the depth of concern that South Africa has, and the matter has been elevated to President Ramaphosa with his counterpart, Prime Minister Sánchez. President Ramaphosa has also raised the matter with the President of the European Union. He was a bit constrained on some of the specific points that South Africa is rising but the issue is true that SA has seen, particularly in Europe, a greater use of sanitary (SP) and phytosanitary (SPS) measures to limit its products, including game meat, the export of horses, access for other livestock and access for other agricultural products. Some trading blocs are using SP and SPS measures as disguise protection for their markets and it is going to be a challenge to crack in the WTO. There are legitimate SPS measures that countries are entitled to use, but we have seen greater use of them than necessary.

Minister Patel responded to the question on the fisheries agreement. It was a landmark agreement in many respects and particularly important to South Africa because Members would know that SA’s coastline is very long and fishing has been so often contrary to the rules, that the agreement is an opportunity to have a rules-based system. South Africa was nominated by a large group of fishing nations, the ACP (African, Caribbean and Pacific) nations, to coordinate the input of ACP countries in the WTO talks. India was very concerned about artisanal and subsistence fishing. SA had very positive conversations with the European Union and the United States, engaging in a lot of detail. Those engagements contributed to laying the basis for the agreement reached at the WTO.

Regarding e-commerce, the Minister agreed that it was important for South Africa. There are two objectives: to ensure access to the revenue collection and to develop an e-commerce capability. SA was quite a significant e-commerce player, both in the domestic economy, and on the African continent, but compared to the enormous capacity of the United States and China, SA was a relatively small player. He also agreed that there was no master plan specifically on e-commerce but there was a master plan around Global Business Services, which is a form of services mediated through digital platforms. Tens of thousands of South Africans are employed as call agents for countries around the world. Part of the discussions at the WTO is about getting the necessary space to build e-commerce and to strengthen SA's e-commerce infrastructure. So, the Global Business Services is one leg, the WTO is another leg and the third leg is the work of the Competition Commission, which is doing a market inquiry, looking at a number of online platforms, including e-commerce platforms. The work should be completed by the end of February and that will give enormous insight into measures that can be taken to introduce more competition and more capability in this market. It does raise quite significant and deep competition issues which the Competition Commission is looking at but is an area of growth in the sector and provides opportunities for small businesses to thrive in that ecosystem.

It was famously said that developed countries kicked away the ladder of development, the very means that they used to build their capacity so that developing countries are unable to use it to follow in their work.

Minister Patel said the local fishery industry challenges had been resolved by granting licenses to avoid the monopolisation of the sector, but that was domestic policy and does not go directly to the trade talks at the WTO. Minister Barbara Creasy is very aware of the challenge and is seeking to find ways in which the licensing system and the quota system enable smaller players to come in while ensuring that SA's coastline is not over-fished.

The question of subsidies by developed nations and the levelling of the playing fields is ironic in agriculture as there is not a level playing field with the enormous subsidies given to agriculture in developed nations. Allowing developing nations to develop and export agricultural products is one of the few ways in which many developing countries can improve the quality of life of, and employment for, their own citizens. With that avenue being closed off, more and more people are getting into little ships and crossing the Mediterranean to find a livelihood in Europe. So, Europe will continue to have enormous migration challenges as long as Africa remains in a state of under-development and African farmers do not have access to the markets. When you block African products, unavoidably you are going to find Africans, in desperation, seeking to enter those countries. A new deal is necessary to re-balance the ability of developing countries to build strong economies that are able to meet the needs of their people.

The matters of food security, as rightly pointed out, came up in MC 12. SA is particularly keen to support the World Food Programme to ensure that, wherever possible, SA is able to buy food stocks. SA was able to secure some critical protection for those measures in the WTO in terms of a waiver. Historically, the flexibilities in the TRIPS Agreement were available to countries that wanted to use it, subject to a number of rules, but countries could not use it unless they exported the majority of the particular product. For a very big economy, which was not such a big constraint but South Africa could never use that avenue because if one produces only for the South African market, the product will be expensive and unaffordable. SA spent a lot of time putting the argument to the European Union, the United States, the UK, Switzerland, Japan, and other countries that were originally concerned about the waiver proposal. And in the final document, there is no such constraint, as long as countries export to other developing countries that are eligible under the system. That was quite an important breakthrough.

Trade and Investment are big drivers of development. A government is not able to create jobs and improve the lives of citizens by running public works programs. Fundamentally, it is about the ability to increase a country's industrialisation footprint and produce more. While he has emphasised localisation with more going back into the domestic market, South Africa also has to export more. When a country scaled up exports, the markets are bigger, prices come down, and innovation, as well as resources for innovation, increased. The discipline of exporting means that one is forced to constantly become more competitive. It was a combination of all these measures that were highlighted in the World Trade Organisation talks.

Coming to Mr Cuthbert's question on President Xi Jinping and President Biden seeking to temper the heat that has been generated over geopolitical tensions, it is good for global trade and development because things like the war in Ukraine, where the parties are engaged in battle and also the potential threats of physical conflict, as in the South China Seas area, disrupt global supply chains. South African automakers, for example, were forced to close their operations for several days because there was a shortage of semiconductors, i.e., the chips that go into the making of the electronic systems for cars. What South Africa seeks to do is to position South Africa and the African continent as an important source for the production of goods in a world where risk is being factored into decision-makers’ calculations and consequently to expand procurement to South Africa and to the African continent. SA is seeking to position the African continent as a critical means for businesses, be they in China or in the United States.

He added that the lowering of global tensions will also encourage more investment because investors often press the pause button in periods of heightened tension. In the President's investment conference in April 2023, in the context of lower global tensions, SA is likely to have a stronger appetite from global investors to invest in South Africa. If tensions are lowered, it provides an opportunity for South Africa to sell more of its products in markets elsewhere in the world, that are more constrained in times of global tension. So, on the investment side of trade, South Africa and the African continent could benefit as a procurement destination in a world where there are lower levels of global tensions.

Minister Patel informed Members that SA's work in the WTO is very important and largely successful. All South Africans can be very proud because it is the collective work of South Africa, Inc. South Africa provided enormous leadership, especially at times when it looked like the trade talks would stall and deadlock. South Africa's negotiators played a key role in reaching out to many different parts of the world and helping to bring parties together into what was ultimately a meaningful set of agreements.

Presentation on Black Industrialists and Black Exporters Conference

Minister Patel said that Members of the Committee would be very familiar with the core mandate of the dtic and the background of economic empowerment policies. It was about redressing the history of exclusion and the legacy of the past. It was laying the foundation for deeper growth through greater economic inclusion and that was about improving the pool of enterprising talent that the economy could draw on to develop and grow. But it was also recognizing the high inequalities, which was a challenge that many countries faced as it was associated with the impact of globalisation. Against that background, the dtic held the Black Industrialist and Black Exporter Conference on 20 July 2022.

President Ramaphosa gave the keynote address at the inaugural Black industrialist and Exporters Conference. The Conference provided a platform to reflect on progress made in advancing redress and transforming a skewed racialised economy and discuss further initiatives to strengthen economic transformation in support of greater diversity in ownership in the economy; to highlight Black Industrialist capabilities and their contribution to the South African economy.

The next steps for the Black Industrialist Programme would be to:

- Measure better, i.e., more research on the impact of B-BBEE

- Communicate better the stories of black industrialists to inspire young people

- Implement better: improve the speed, secure more development and jobs

- Scale up: shift resources from lower-impact to higher-impact measures.

Useful lessons had been learnt at the Conference which would inform the Black Industrialist Programme and the information base being developed by the dtic. It was proposed that the Conference be held annually or every 18 months.

The Minister concluded by showing a video of the event and interviews with some of the participants. With the type of support seen in the video, the Black Industrialists Programme had impacted a wide range of sectors and industries across a range of youth and women-run businesses, including established entities. He invited more entrepreneurs to step up as industrialists and take advantage of the schemes within the Black Industrialists Programme, as that would surely help grow the South African economy.

(See Presentation)

Discussion

Dr M Tshwaku (EFF) asked why Committee Members were not invited to dtic events.

He told the Minister that he did not have to upgrade jobs; just give people the money. The Minister spent R1 billion to create 1 000 or 2 000 jobs, and a million people were unemployed, so, if that figure were divided by R1 billion, the Minister could give each person about R3 million. Government needed to look into that. The Minister should look at the unemployment rate in South Africa and at the mandate of dtic and see what impact dtic had in terms of creating jobs and ensuring that people were employed. He thought the industrialists had a problem with the markets. With the chickens, for example, would there be a market to sell those chickens?

The real problem was that so many black people did not own the mines. Black people did not own the means of production, so how was the Department going to ensure the market availability of the people being funded was as stable as possible? The lady selling pickled vegetables might be innovative and her market was booming but she was competing with Famous Brands and the only thing that they would do would be to get into her market and, secondly, they would just ensure that the price for good ingredients became so unreasonably high that she would not be able to make a profit.

How was the risk cushioned because many Black people did not own the means of production which was fundamental for industrialisation? What was the Minister’s view because Dr Tshwaku did not see any players in the mining industry? Had the dtic supported any black industrialists to mine minerals, the real stuff like uranium, gold, diamonds, and platinum? When they mined platinum, they would be able to create jobs because platinum can be beneficiated to produce a catalytic converter for a car and that could be exported. What was happening in that sector? It was very, very quiet.

He pointed out that in agriculture, although there were small-scale crop farmers here and there, he was not hearing about aggressive funding or industrialisation. Small-scale farming could create a massive number of jobs. If a small-scale farmer employed ten people, 1000 small-scale farmers could provide employment for 10,000 people. That was massive employment. Things needed to be done, but what was the Department doing about those things?

He asked if the Chairperson had told the Minister that the Committee had received a presentation on industrial policy from several professors from different schools of thought. He did not know if the Minister had been appraised of the outcomes, but maybe the Minister should ask the Committee for a report so that he could look into it and send it to his Department for consideration. There were countries in similar situations, like the Vietnamese who were industrialising and who were at the forefront of industrialisation. Unfortunately, South Africa was moving in a different direction; SA was running backwards. The Minister should get the study groups in his Department to look into the issues. Was he moving in the right direction? It looked as if he was running in a different direction.

Dr Tshwaku did not understand the slide on jobs and ownership. How many jobs were created from 2020/2021? He wanted to track the money. The dtic should not claim easy victories over an extended period of time.

Mr Malematja said that he had been part of the conference. Those conferences showed what was happening throughout the country and throughout the Department. They showed how things were done practically, how people were happy and how people had been helped. He had witnessed how people were positive that they could improve the economy of South Africa. He had witnessed how people were tired of looking for jobs and, instead, they were creating jobs and there were no complaints. People were not politicised. At that conference, they managed to share skills, to interact with other people and the presenters themselves. They were still talking post-conference and there were media statements. It was good to have such events where people could display their skills and show how they assessed the economy positively, even after the pandemic. Even after the July unrest, everything was so positive. The Minister and his team must be applauded. The people who participated displayed what they had done to contribute to the high number of jobs created.

He said that the economy needed everyone to work together to ensure that if they talked of Black industrialists, they were positive and gave them positive support. The other aspect which the participants appreciated was the manner in which the funding was done, but he had picked up, and which he believed was being responded to, the lack of one-stop shops to assist people to comply because many people realised that they did not comply with requirements. The one-stop shop was important and he proposed that the Department also involved other departments in the one-stop shops. For example, why was the means of transport not exempted from load shedding? Often the products did not reach the market on time because of load shedding and people were being penalised.

People working in offices and relying on scholars who were not on the ground were not always correct. On the ground, people were creating jobs. Government had to unleash more funds for them; unleash land and give it to them; give them more support and ensure that they achieved their objectives.

Minister Patel understood that Dr Tshwaku was keen to be invited to the conference. He took that to be a compliment on how well the conference was run. He would bring that to the attention of the team in future. On the question of jobs, ownership, individual Black industrialists, and the specific questions on their work, he reminded Dr Tshwaku that he provided detailed reports, including case studies and budget analyses, to the Committee on a quarterly basis. Those reports were also provided to Cabinet. The presentation that day was an opportunity to showcase what had taken place at the Black Industrialists’ Conference and so the intention was different from the quarterly reports

On the question of the ways in which the state supports job creation, Minister explained that the state could do one of three things, or all three. Firstly, it could provide direct job opportunities through things like the social employment programme that he had highlighted in the quarterly report or the EPWP as managed in other parts of government. Secondly, government could provide support to small businesses and start-ups and people in the informal sector where typically the capital required was relatively modest and which also helped to create opportunities in townships in rural areas. That could help to absorb people who otherwise might struggle to make ends meet. Lastly, the state could try to build a modern economic base working in partnership with the private sector, but that required quite significant capital.

Regarding the money “spent” on job creation, it was, in most cases, loans provided by the Industrial Development Corporation, etc. The money was not simply given; the loans were paid back which enabled further loans. He added that the auto sector was a very capital-intensive sector in which black South Africans were component manufacturers. It was not about low value-add products in the economy. Black and White South Africans were building a modern sophisticated economy and the dtic’s programmes were complementing and supporting the efforts.

On the points that Dr Tshwaku raised, Minister Patel considered them largely philosophical. Representing the ruling party, he had a different set of starting points. For example, he did not believe that in a modern economy, only gold and platinum and the other minerals, were the real stuff. In a modern economy, value was added through human skill and ingenuity, and sometimes natural endowments, such as minerals, and climatic conditions well-disposed to agricultural production. The modern economy added value through innovation and technology using human skills and ingenuity. That was the economy that he sought, increasingly, to build and to strengthen. The mining sector had an important role in the SA economy as it provided an enormous resource space, and the dtic was doing a lot more by promoting beneficiation. He had highlighted some of those examples in the quarterly reports. As to the question of whether the dtic group provided support to Black miners, he pointed to the IDC Annual Reports and various reports that the IDC had made available publicly, many of which were on the IDC’s website.

The Minister stated that he would be delighted to see the many examples of what had been discussed at the Committee workshop and he was delighted that Dr Tshwaku had found the workshop stimulating and interesting. He was familiar with the work of all the panellists that were there, especially those on the President's Economic Advisory Council. One of the presenters worked for an agency that the dtic drew on from time to time, although she had never served as one of his advisors. He told Dr Tshwaku that the government had done some careful thinking over the years and had drawn on many schools of thought, but at the end of the day, his job was to make sure that the government partnered with the private sector. He had highlighted the work done with Black industrialists, but there were also several instances where government had gone into partnership with white South Africans and with foreign investors in its economic support programme.

Despite the heavy headwinds that many of the entrepreneurs in the economy faced, there were also many success stories and it was great to tell those success stories, not because there were no problems or because he was in denial about the challenges, such as the energy challenges, but societies were inspired by successes. That helped to move societies forward and that was what the day’s presentation highlighted. He had highlighted only a sprinkling of cases because the universe of Black South African contributions to the economy was much wider than the few examples he was able to cite. There had been a nice symmetry between the trade discussion, earlier in the morning, which dealt with the issues of opening markets, and the Black industrialists’ programme that he had just covered, which looked at how to utilise opportunities in those markets.

Dr Tshwaku believed in science and not just in imagining things. He asked if the Minister thought he was making a dent in the bloodbath. He wanted the answer; he did not want to be referred to reports and websites.

What he had asked was whether, with the jobs that the Minister had created, he was making a dent in the unemployment bloodbath. Was the Minister getting value for money? He (Dr Tshwaku) was on the ground, not in some portal. He looked at the theory, but he also looked at the practicality of things. The sprinkling of jobs being presented, like 100 to 1000, was too few. He had wanted the Minister to say that in the period in question, so many jobs had been created. However, he would get it from those references that the Minister had spoken about. He was asking the question again so that the Minister could respond. It should be easy to check the number of jobs created with all the money that the Committee had given the Department.

He added that when he asked about the scholars, he did not ask if the Minister knew the scholars. Everyone knew the scholars because they read their publications. He was saying that the Committee had taken the initiative and invited scholars to address Members and now he was suggesting that the Committee give the Minister a report so that he could look at the deliberations, at the sciences and the trends there. The Committee wanted his views on the report. He was talking about the content, not the individuals and whether the Minister knew them. There were different schools of thought from those of the ANC or DA and other bigger parties. The Minister should look at the deliberations and at the work the Committee had done because some very good data was presented by all the scholars. It would assist the Minister to know more about how to create jobs.

The Chairperson thanked the Minister for the briefing. She suggested that Dr Tshwaku’s concerns about jobs could be addressed in the next quarterly report briefing by the Minister.

Minister Patel agreed that the information that Dr Tshwaku was asking for was provided to the Portfolio Committee in the quarterly report. Dr Tshwaku had asked the same question during the presentation of the Quarter One and Quarter Two report and he had replied to that question in considerable detail. He could not add more to the answers he had given to the questions at the time.

The Minister explained that he had, in his responses, made the point about knowing the work of the scholars and why he was so familiar with the work of those scholars. It was not that he had not taken into account the views of scholars across many different disciplines and different schools of thought, but, at the end of the day, public policy was about choices the government made and the choices made included the Black Industrialists Programme. There were a number of successes, but there were also several challenges. However, society had to be able to celebrate those successes and he was sure that Dr Tshwaku and the other Members of the Committee, joined him in celebrating the successes of people who had built significant businesses, and operated in very, very challenging markets.

The Chairperson thanked the Minister and his team for the two presentations.

Closing Remarks

The Chairperson stated that the next agenda item was the formal consideration of the Budget Review and Recommendations Report (BRRR) but, in light of the time, she had taken a decision to move that item to the following morning.

The Committee Secretary stated that the Committee would receive a briefing from NMISA (National Metrology Institute of South Africa) and SANAS (South African National Accreditation System) on the Annual Report and the First Quarter Non-Financial and Financial Performance for the current financial year of each entity. As indicated, the meeting would start with the consideration of the BRRR. He had forwarded the draft BRR report to Members, which included the submission from the EFF, for their consideration.

The meeting was adjourned.