Departmental Budget

Meeting report

TRADE INDUSTRY PORTFOLIO COMMITTEE
29 February 2000
DEPARTMENT OF TRADE AND INDUSTRY: BRIEFING
 

Annual Budget Presentation

SUMMARY
The Director General of the Department of Trade and Industry, Dr Alistair Ruiters, presented the R 2.2 billion Budget for 2000/20001. He outlined a focused strategy to tackle the previous year's unclear and unmeasured budget that had left a R6 million rollover. In his attempt to curb the unsettled atmosphere, he encouraged an open-door policy. He suggested quarterly progress reviews and committee visits to Pretoria. In addition, he asked the committee to think of DTI as a multi-national corporation to beat DTI's previous lack-lustre image. Working with this theme, he focused on peripheral plans such as a 24-hour hotline to improve working standards in the Department.

He outlined a multi-pronged thematic approach that encompasses six major areas. Three of these will especially be focussed on: SMMEs, black empowerment, and investment. He stressed building foreign capacity for South African exports, calling local businesses the "foot soldiers for the broader market economy. " Investment in South Africa will not grow without small businesses. He closed with the uplifting phrase, "let's move from ball and chain to aeroplane" suggesting that last-year's rollover can be put where it counts in a multi-year strategy.

MINUTES
The Director General acknowledged that the previous budget was not focused, was not easy to understand, that outputs were not clearly indicated and that the impact could not be measured. He asked members to continually challenge him in keeping this budget legible, focused and measured.

He stated that "a budget is a tool to achieve a vision" and he expressed the desire that the members of the committee would use the budget wisely to share a collective vision. He said that he would "not play numbers games."

Dr Ruiters said "a budget is not an event, it is a process." In this regard, he wanted to see a hands-on approach by the committee including regular interactions with relevant senior managers on specific programs and on-site visits to the department and its programs. He would ensure that corrective measures were to be put in place at quarterly budget progress reviews.

Dr Ruiters identified his fundamental task and strategy as that of growing the economy. In this regard, he stressed the importance of also measuring the impact of the budget.

Dr Ruiters outlined six critical areas from which they have chosen to focus on three: promoting SMMEs, empowerment and investment. He said that through investment, the other two will be promoted. With this in mind, he suggested that the committee think as an investor would think and assist possible investors in every way possible. He said that we want to show that we can process applications faster than other countries, making South Africa a very attractive investment destination.

Questions and comments arising from the presentation:
Mr P J Gomomo (ANC) commended the Director General and his team for the comprehensive, well-researched report. He commented however that if one wants [economic] growth in this country, there has to be a focus on the growth of Small, Micro and Medium Enterprises (SMMEs), the focus of which was lacking in the presentation.

Ms F Mohamed (ANC) pointed out that she is not clear as to whom institutions such as CSIR, are accountable. She asked that the Director General (DG) convince her that these institutions are indeed accountable.

Ms C September (ANC) registered her agreement with the DG's comment that the Department of Trade and Industry (DTI) has marketed itself very well internationally but is not doing well within South Africa. That, she said, is indicated by the glaring omission of the entire local content programme in the budget. The MP further substantiated her argument by saying that current unemployment in the country is above 30% and nothing in the DG's presentation suggests that the DTI is gearing itself towards addressing that problem, which is more domestic than international.

Mr M K Gigaba (ANC) asked several questions:
- what DTI is doing for Domestic Industry as this, according to him, was not covered in the DG's presentation.
- does the DTI have a programme to respond more quickly to investment opportunities. If so, is the DTI developing the requisite human resources to do that?
- does the DTI have a strategy that has its focus on the local business sectors (local economic development).
- what is in the budget that is specifically directed to addressing the problems that impact upon the youth of this country?

Dr R Davies (Chairperson and ANC MP) noted that although the budget, on the overall, looks good, it does not have measurable outputs. The budget should explain more the "nitty gritties", for example, how much money is to be spent on taxi recapitalisation. He spoke of lowering the tone of the budget into specificity.

A committee member asked if the DTI is doing something in linking the department with the provinces.

Ms F Hajaij (ANC) remarked that the DTI has many offices worldwide,
especially in Europe. For example, in Switzerland alone the department has two offices. She asked if the department really needed these two offices, especially in the light of the fact that there is none in the Middle East.

Ms Hajaij also registered her concern about the accountability of the institutions, like CSIR, which are supposedly under DTI's influence and the measures to monitor them.

Ms Sirhabe (ANC) was concerned about the lack of local content in the budget and said it looked as if the DTI does not have enough information about the differing capacities and strengths of various provinces. She made an example of the "Malaysian Tigers", who emphasized local content before they went global, an emphasis that is lacking in South African's case as it is doing the opposite of that.

Mr L Zita (ANC) commented that the budget is too general with no specific information. To substantiate that, Mr Zita said that there is no clear sense of what the department's targets are. For example, there is nothing that says so much percentage will have been achieved at a particular time in terms of DTI's plan for Black Economic Empowerment. He asked if the DTI has put together a workgroup for achieving its goals.

Ms R Shope (ANC) commended the budget as representing a very beautiful picture of people keen to do work, but she wondered whether the advancement that seems on top of DTI's agenda will be able to be accessed by rural people, given their condition.

Mr Lockey (ANC) asked whether the DTI has put together a workgroup to develop the focus of the DTI.

Mr F Beukman asked if there is a plan for a joint task group between DTI and other departments such as Home Affairs, especially with regards to work permits.

Collective response to these questions by Dr Ruiters:
· This budget marks a shift in the focus of DTI, which can easily be seen if one compares it to the previous budget. This shift amounts to changing the mindset of thousands of people, including the staff. It was, therefore, not an easy task.

· The DTI is trying its level best to take South African products and sell them in foreign markets where the DTI has offices. Overseas offices are instrumental in making sure that SA penetrates overseas markets in order to build local business. Thus this indicates that DTI and its overseas offices do not focus on overseas markets, at the expense of local business.

· Of all investments between 1996 to 1998, R200 billion (30%) came from foreign sources, and 70% from local sources, which therefore should address the fears that DTI is not taking the local (domestic) investment and economy seriously.

· Between April 1998 and January 1999, 400 firms went overseas (especially to USA and France) to sell themselves, and 343 of them were businesses owned by women from disadvantaged backgrounds. Eighty percent of the costs for that trip was paid by DTI. In addition, Dr. Ruiters reported that 1100 small businesses were also supported in going overseas to sell their products. The intention for all this is for "us" to understand the overseas market because the South African market is not big enough to accommodate all our needs.

· He admitted that the DTI has not planned sufficiently, as it would have wanted to, and that the incentive schemes are unfocussed. As a result of this, he pointed that DTI is currently reviewing all its incentive schemes, and after that process is over, they will need to be reprioritized. The DTI will then be in a better position to issue clear directives.

· In response to the concern raised by Ms Hajaij about the number of overseas offices in Switzerland, Dr Ruiters said that the two offices in Switzerland serve SA in different ways and are thus acceptable as one office deals with commercial matters and the other deals with multilateral issues.

· Regarding Ms Sirhabe's comment that it looked as if the DTI does not have enough information about the differing capacities and strengths of various provinces, Dr Ruiters reported that the issue of provinces is under serious scrutiny by his department in conjunction with the Department of Finance. The amount of money that is to be spent by provinces from the 2.2 billion DTI budget is to be established soon.

· Attention to rural areas is clear in that projects dealing with agricultural processing, craft participation and tourism are on top of DTI's agenda. The Lebombo project - one of the projects in rural areas - is indicative of DTI 's concern about rural areas.

Dr Ruiters, in summing up his responses, pointed that DTI is not responsible for job creation, however it is trying to provide an environment that is job-creation friendly, and that is not the job of DTI alone.