Red Tape Reduction Task Team in the Presidency

Meeting report

Presentation by Red Tape Reduction task team

Mr Sipho Nkosi, Head: Red Tape Reduction (RTR) task team, said the RTR programme had been established in the Private Office of the President, and its objective in the short to medium term was to make tangible progress in reducing excessively complex rules, regulations, procedures and processes that inhibit economic growth and job creation in key areas of the economy, working with relevant
role-players across government, the private sector, and community-based organisations.

As the RTR team was situated in the Private Office of the President, the Presidency played a central oversight and coordination role, with direct implementation taking place through government departments and agencies, including the Department of Trade, Industry and Competition (DTIC) and the Department of Small Business Development (DSBD). Cooperation and collaboration were essential requirements for progress. At that stage, there was no permanent structure for the RTR initiative, as it was constituted of a combination of Presidency staff and part-time seconded personnel, but as the programme evolved, that staffing model could be reconsidered. There was a need to add administrative capacity to the RTR team to assist with arranging meetings, taking minutes, and associated logistical arrangements.

The activity report showed the following:

The RTR team had identified a long list of almost 100 potential red tape issues.
This was subsequently reduced to a shortlist of 12 focus areas following engagement with the DTIC, DSBD and selected stakeholders.
Based on the experience with Operation Vulindlela (OV), it was agreed to proceed with an initial focus on three areas, with a view to making material progress by the end of 2022.
These three areas were considered of high importance for their respective sectors, but were also potentially capable of showing improvement in the coming months. Timetables and milestones needed to be agreed on to measure progress.

The three initial prioritised interventions were:

Tourism travel permits

This was a long-standing issue for an important industry, impacting established and emerging operators alike. There has been progress recently following engagement between the Department of Transport (DoT) and the industry, with the support of the Minister of Transport. The DoT had made progress in reducing the licencing backlog, but the existing process remained cumbersome, with additional requirements not contained in the regulations. The Minister of Transport remained engaged with that process.

Mining and prospecting rights licensing system

The growth of the mining industry in SA had been hindered by the lack of a modern system to administer mining and prospecting licences, with the procurement process for licences being delayed, in part, due to differences between the State Information Technology Agency (SITA) and Department of Mineral Resources and Energy (DMRE). A meeting would be held with the DMRE in the first instance to discuss how the RTR process could be of assistance.

Work permits and visa administration

The inability to process work permits quickly negatively impacted international firms’ ability to operate in South Africa and attract critical skills. A report into this issue had been prepared by Operation Vulindlela, under the leadership of former Department of Home Affairs (DHA) Director-General, Mr Mavuso Msimang. The report had been shared with Minister Aaron Motsoaledi, and a detailed briefing had been scheduled to plan a way forward. The RTR programme would support the implementation of the recommendations, which would be based on engagements with the DHA regarding the programme of work.

Other areas of interest that had recently arisen included informal trading permits and licences, and early childhood development (ECD) regulations. These were under consideration. Letters were being prepared to the Premiers of each province to engage and encourage the establishment of red tape-reduction units in their provinces. This was a process towards the creation of dedicated capacity in each province that would form part of the overall architecture to tackle RTR more systemically in the country. Addressing the selected impediments depended on the cooperation of the relevant administrative authorities at national, provincial and local government levels.

Stakeholder engagement

Meetings were held with Business Unity South Africa (BUSA) regarding focus areas and priorities. It had been explained that the RTR programme generally focused on economic blockages, including those affecting small, medium and micro enterprises (SMMEs) and larger businesses. A second consultative reference group meeting was scheduled for 17 November, including representatives from the DTIC, DSBD, and business organisations such as BUSA and the Black Business Council (BBC).

(Please refer to the Presentation for Appendix 1 which illustrates the structure of the task team and the relevant functions, and Appendix 2 which outlines the top 13 priorities of the task team.)

Discussion

The Chairperson expressed her appreciation for the presentation and the outlining of the clear priorities that Members would be able to engage on. The task team had made good progress, and the establishment of the initiative by the President was appreciated. It would be beneficial for the structure of the team to be formalised for the sake of accountability, as small businesses were disadvantaged when they were not being properly assisted.

Another issue of red tape related to the process of procurements, payments and how compliance issues were being adhered to. The Committee had learnt in a previous meeting that invoices worth billions of rands were not paid on time, so in discussing red tape issues, all angles and their contributory factors needed to be considered, and measures needed to be put in place to alleviate them. It was the responsibility of the parliamentary committees, as the organs of state that did oversight from Parliament, to come up with legislation to best deal with such issues. She handed over to the Members to engage further.

Mr H Kruger (DA) said that he had done a lot of research since 2014 about red tape reform, as there was not much in the academic field about it. Sometimes politicians use [the term] red tape without thinking about its consequences, but it plays an unbelievable role in every person’s life worldwide and influences multiple areas. However, there needed to be a clear definition of “red tape”, particularly “bureaucratic red tape,” as that was where the state was involved. The starting point should be to assess regulations in all sectors, using an assessment tool to identify any unnecessary red tape. Following the assessment, the red tape needed to be assessed in rand values to determine the cost involved. Solutions needed to be come up with to alleviate the red tape, while maintaining the outcomes of the regulations. Had such an assessment tool been considered?

Mr J De Villiers (DA) asked what the biggest issues to tackle were in order to improve employment, and reduce inequality and poverty. He compiled a list of areas he perceived to be significant in the country. The first issue was the lack of access to reliable energy and the energy crisis. Had there been any engagements with Eskom, Public Works, or the Government at large, to include small businesses as part of the solution to the energy crisis, as they were some of the best innovators and hard workers? Any small business with a roof over its head had the ability or opportunity to install solar panels on its roof, potentially contributing to being part of the solution. There were many other ways to incentivise people in the technology sector to be part of the solution, but private power generation was exclusive and not generally accessible to small businesses.

Secondly, the red tape hindering drivers from getting e-hailing permits for offering transport services through apps like Uber, affected both drivers and passengers alike. Due to the failing transport systems in the country, e-hailing services helped citizens of all income brackets to travel reliably and created opportunities for drivers to provide for their families. Therefore, it would be in the best interest of the drivers, passengers and the government to ensure that obtaining an e-hailing permit is not difficult.

Labour legislation did not encourage employment amongst small business owners, as it was very protective of employees in the hiring and firing process. Due to the difficulty of hiring and firing employees, difficulty in performance management, and entrepreneurs fearing the risk of involvement with the Commission for Conciliation, Mediation and Arbitration (CCMA), they tended to err on the side of employing as few people as possible. This was not due to the cost of hiring, but how incredibly overprotective legislation was of employees. The easier it was for employers to hire and fire employees at will, the more efficient businesses were, stimulating productivity and economic growth.

The current Property Practitioners Act, and the way it was managed, made it difficult for people to become property agents due to the red tape relating to exams that needed to be written, processes to adhere to and internships to complete, which resulted in over-regulation of the industry. The high establishment costs associated with the industry -- for example, having one's business audited daily, discouraged estate agencies from being formed in lower income areas because of their low turnover.

People importing and exporting goods through the harbours had to go through many hoops to get their goods moving, negatively impacting small businesses, especially those in the fruit industry, due to the time-sensitivity involved with imports and exports.

Government officials had to be held accountable to pay invoices within 30 days. The delay in payments was debilitating to small businesses, and destroyed their livelihoods if they did not have cash flows. The lack of payment was a matter of ill discipline exercised by the officials, as the money had been allocated to departments for the services rendered by the businesses.

Lastly, if the Committee received many inquiries from small businesses in the future, how could the queries be directed to the offices of the task team? Was there a contact number or website to get in contact with them?

Ms B Mathulelwa (EFF) said that the report from the Presidency was without direction, and included no permanent solution to the red tape encountered by small businesses. The report from the previous day’s meeting was better in providing solutions for small businesses. The Presidency had been warned about creating an unnecessary separate structure to deal with issues of red tape, as respective Ministers and their teams had to take charge of resolving the matters in their respective departments. It had been anticipated that the formation of the task team was meant to speed up the process of resolving red tape, but the report was filled with hopes and not actual solutions, which was disappointing and made the creation of the special unit futile.

Mr H April (ANC) appreciated the report as it gave a better understanding of the role of the task team. The huge task they had was to help with the ease of doing business and to help the economy do better as a result. How far did the powers of the task team stretch in commanding or instructing various departments regarding red tape? Where had they identified red tape, and had they encountered any red tape that prohibited them in certain areas? The uptake of the funds made available by the Department had been low -- why was that? Due to unnecessary red tape and lack of compliance, it was easier for small businesses to obtain funding from private banks than from their own government. What was being done about that?

Mr F Jacobs (ANC) said that red tape reduction should not just benefit the rich, but the poor too. They should see things through the lens of unlocking bureaucracy for the poor, unblocking service delivery, and ensuring that government is responsible and caring. The current policies and existing red tape were restrictive for small businesses. For example, there were more than 40 000 unregistered ECD centres in the Cape, because the City of Cape Town charged them almost R50 000 to formalise their backyards into formal ECD centres. The children were also not receiving the daily R17 per child from national government because they did not fulfil the necessary requirements. This showed how national, provincial, and local government had failed the people. There were good policies in place, but the children were not benefiting from the opportunities because the different levels of government were not communicating with each other. He requested that Mr Nkosi and his team urgently meet with the South African Early Childhood Congress, which was an organisation of early childhood practitioners, and the South African Local Government Association (SALGA), to simplify the legislation for ECD facilities so that children could receive the money made available to them.

Likewise, municipal permits for informal traders were expensive to acquire, so the process needed to be simplified to make trading easier. It would be beneficial to bring together the government, businesses, the Department of Employment and Labour, and communities to work towards problem-solving collectively. Ultimately, there was a need to make it easier for previously disadvantaged people and poor people to be part of the ownership of the economy.

He reiterated that officials needed to be held accountable by the Presidency for the R4.5 billion made available to small businesses, which had not been spent. Referring to the point about "fire and hire" raised by Mr De Villiers, Mr Jacobs said that the struggle for freedom and dignity had been a struggle for a living wage. While they wanted their people to be productive and be skilled, they did not want to be sweatshops like other third world countries. They needed regulations that protected their jobs and an entrepreneurial spirit that valued their people, thus the sentiments of having a flexible labour system were not shared.

The Department of Trade and Industry (DTI) has looked at the ease of doing business for ten years, and the National Planning Committee has identified areas of blockage, so the Presidency should not reinvent the wheel but focus on implementation. The Committee needed more detail on the substantive issues mentioned in the report.

In conclusion, he said that the task team had the Committee’s total commitment and support, and they should continue their good work.

Response

Mr Nkosi said that the questions and comments by the Members were helpful, and gave the task team insight into what the leaders were thinking about and guidance on how to approach certain issues. The team currently did not have sufficient resources to fulfil the work they were tasked with, but they were engaging with various stakeholders to get resources to deal with some of the issues raised. The team had worked on defining red tape, and further detail required would be provided to the Members. There was a long list of issues that the team would be focusing on as resources became more available, including the use of the assessment tool, the payment of invoices, and labour legislation.

He acknowledged and agreed with Ms Mathulelwa’s point about creating unnecessary structures. The team would be available to serve until Members felt it was no longer necessary.

Responding to Mr April, he said that the team did not have powers currently, but they were in negotiations to see what they could do with their limited powers. They were in engagement with Ministers and Directors-General, and would await the outcomes of those engagements.

Access to finance had always been a big issue for African youth and those wanting to start small businesses, which needed to be addressed as a country. They were doing research to this effect, though not much work had been done on small business and red tape. The unblocking to the poor mentioned by Mr Jacobs was important. They needed to focus on ensuring that those who could not work could, and for poor people to find sustenance and make a living in the country by relooking legislation and practices, which should not only be for the haves, but also for the have-nots. Conversations had been started with the provinces, and they would also be engaging with SALGA.

Mr Anthony Costa, Investment Lead: Office of the Presidency, said that some of the specific issues raised by the Members had been considered. The issue of e-hailing permits had not been considered specifically, but the team would do preliminary work on it. This area was somewhat complicated by the fact that it was largely regulated at a municipal level and there was relatively little provincial and national coherence or alignment, so the ability to have an impact was limited by operating in each municipality. The other issues raised by Members that had not been identified by the task team but would be considered going forward, were the restrictions for estate agencies and challenges surrounding cooperatives.

There had been a great demand for engaging with and sending queries to the task team, as many stakeholders had contacted them. However, part of the challenge was that with its current structure, the team was not able to attend to individual queries of citizens, consumers, or small business owners. There was no capacity or mandate to do so -- the team looked more into the systemic issues. They needed first to understand their engagement structure, and would work with the DSBD on that and communicate back to the Committee.

Regarding the comments around funding and the low uptake, they would engage with the Department and National Treasury.

The task team was aware of the question of the ease of doing business, and they had worked closely with the DTIC on that. The ease of doing business was being reshaped in terms of a separate piece of work around improving the business environment. They had a dedicated member from that team who was working on the task team to ensure alignment. They met with the National Planning Commission (NPC), which was doing work on trading in the townships and developing businesses in the informal economy. They were looking forward to releasing that report sometime in the upcoming months, and would further engage the NPC, thereby providing more clarity in that regard.

Ms Lawule Shumane, graduate researcher, said that one of the key things the task team had done to ensure that they were stretching themselves as far as possible was to work collaboratively across government. Operation Vulindlela (OV), which aimed to unlock some structural impediments to the economy, was going well. Points had been raised related to the work done with the OV. The issue of the ports was specifically a key reform area for the OV, where there were several intervention areas that they were engaging with the DoT, the Department of Public Enterprises (DPE) and Transnet to operationalise the NPA, improve the coordination across departments to ensure an improvement in operational efficiencies within the ports, and coordinating and implementing the decongesting of the ports in Durban and Cape Town. Updates on these were being provided through OV and fed into the RTR team so that everyone was working in the same direction and that there was no duplication of efforts.

It had been noted and recognised that small business owners and every stakeholder in South Africa were key players in resolving the electricity crisis. The President noted this in his speech on 24 July, stating that there was a need to expand the use of rooftop solar panels. Colleagues within the National Energy Crisis Committee (NECOM), which was the structure put in place to ensure that they were delivering on the action plan, had been working tirelessly with municipalities and Eskom to determine what type of structures were needed to roll out rooftop solar power systems. Inputs were coming in from various departments in the technical NECOM structures, which highlighted some of the solutions that businesses in the manufacturing industry and elsewhere were bringing to the table so that they could action them.

The ECD issue was quite crucial to the task team, not only because it impacted the lives of young South Africans, but also because it created livelihood strategies for many women across the country who were seeking to operate businesses. The R17 subsidy was not only changing the life of a young child, but it was also ensuring that a business could be viable, given the many socioeconomic challenges that were faced within the communities. The task team had met with colleagues from the DSBD who were working to remove red tape, highlighting issues and the need for a business processing engineer to simplify what was required. The mandate was to ensure that the most vulnerable could get the assistance envisioned by the state, so the team was involved with encouraging where efforts were being made, and keeping an eye on the progress delivered.

Mr Nkosi thanked the Chairperson and the Committee for the points raised in the meeting, which would also be mentioned and fleshed out in a meeting held the following day.

The Chairperson thanked the task team for the work they were doing, and the focus areas mentioned. The Committee would digest the presentation individually and communicate any further recommendations. She would be pleased if the team had a means of contact for all stakeholders, as receiving recommendations would enrich their plans.

Committee minutes

The Committee considered and adopted the minutes of 9 November.

The meeting was adjourned.