National Gambling Board; Small Enterprise Development Agency: Strategic Plans and Budgets

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Trade and Industry

07 March 2006
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Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE

8 March 2006

NATIONAL GAMBLING BOARD; SMALL ENTERPRISE DEVELOPMENT AGENCY: STRATEGIC PLANS AND BUDGETS

Chairperson:

Documents handed out
 

Mr B A Martins (ANC

Small Enterprise Development Agency presentation
National Gambling Board presentation

SUMMARY

The National Gambling Board outlined its strategic objectives and budget up until 2009. Members discussed the virtues of a free market versus a regulated approach to gambling in South Africa. They asked for clarity on expenditure, especially the employment of "professionals" and the necessity for provincial gambling councils.


 

Members questioned them about services such as the Enterprise Information Centres as well as the financial implications for using SEDA services. They commended SEDA for its co-operation with industry in joint training initiatives and for developing relationships with financial services organizations.

MINUTES
 

Adv Thibedi Majake (CEO: National Gambling Board) assisted by other members of the NGB delegation presented. The Board's responsibilities as stipulated in the National Gambling Act were explained. They outlined how they planned to achieve their ten strategic objectives and what their key products and services were. Note was made of their involvement in developing internet gambling and in drafting national internet gambling legislation. A summary of the Board's budget for the next three years was presented with indications of where there would be cost component changes. Finally the risks that they faced in achieving their objectives were identified.

Discussion

Mr Bapela (ANC) commented that the presentation was hard for Members to follow given the small size of the font. This hindered the Committee in its oversight role.

Ms Thebi Moja, NGB Deputy Chair, apologized about the small font and said that it would have been better if there were one slide per page rather than two.
 

Dr E Nkem-Abonta (ANC) asked for the Board to highlight the challenges that it faced. He asked what mechanisms were in place for dealing with these. He believed the presentation failed to show sufficient detail on the budget. It lacked comparisons with expenditure of previous years.

Ms Moja replied that at the

Dr Nkem-Abonta requested that the Board convince the Committee that the taxpayer was getting value for money. Why was there a National Gambling Board as well as provincial gambling councils? He asked if the NGB felt this was necessary.

Mr Themsa Marasha, NGB COO, said that it was an Act of Parliament which had created the provincial gambling councils and National Gambling Board, and which had stipulated the role of each. He did not feel it was a duplication of roles and functions.

Dr Nkem-Abonta said that he did not think regulation of the location of gambling machines was necessary. He advocated a free market. Anyone who wanted to gamble should be free to do so.

Mr Marasha said that the current gambling regulations were informed by the findings of the Wiehahn Commission. Gambling had been legal in the former homelands but in the then white South Africa, there had been no gambling whatsoever. The Wiehahn report had recommended legalising and regulating it. This had been an informed decision. Many people felt there was currently a lack of gambling restrictions. The maximum number of casinos permitted in the current Act was forty. In Australia, there were over 200 000 gambling machines and in that country there was a serious gambling problem. He reminded the Committee that prior to gambling being legalized South Africa had had 200 000 illegal gambling machines. Gambling needed to be regulated to prevent a free-for-all.

Mr L Labuschagne (Democratic Alliances) expressed his concern that the CEO had left the meeting. He said that when presenting to a parliamentary committee "one would expect the senior people, with the responsibilities and the salaries to be present."

In answer to this, the Chairperson reminded the Committee that they had the power to summon witnesses to answer specific questions.

Mr Marasha said that he was to blame as he should have started the discussion by giving Mr Majake’s apologies. The CEO had always attended the Portfolio Committee meetings, but matters beyond his control had come up.

Mr Labuschagne was concerned by what was absent from the presentation. There were dramatic unexplained increases in the budget. He referred to the percentage of professional employees and asked why the NGB had employed all these professionals.

Mr Marasha explained that the budget increases were related to the National Gambling Act of 2004 which replaced the 1996 Gambling Act. This greatly increased the functions and duties of the NGB. This had been reflected in the budget increases.

Ms Moja explained that professional services included research costs and legal fees. She said legal fees were an expense beyond their control. If they were taken to court, they had to be able to defend themselves.

Mr Marasha explained that NGB was not employing professionals - this was a question of semantics. There were certain matters for which they did not have the expertise and invariably they needed to contract those people with specialist knowledge. Most things however were done in-house.

Mr Labuschagne asked what percentage of performance-related bonuses had been refused by NGB. How much were these bonuses?

Mr Marasha said that since he joined the NGB in 1991, they had never received any bonuses. This bonus system had just been introduced. He said it would be contradictory to human nature to refuse a bonus.

Mr Labuschagne asked what would have happened if the NGB, in its monitoring role, detected a breach of the regulations. What enforcement powers were there? He asked that the presenters explain to the committee what the responsible Gambling Program was.

Ms B Ntuli (ANC) said she thought that the legislation needed to be revisited. There was clearly some repetition of functions and structures between the National Gambling Board and the provinces

Mr Marasha said that the NGB did not mean to duplicate the work of the provincial gambling boards. If they did it was unfortunate and unintended. A provincial competence was a constitutional matter. It was the business of the political office bearers to decide whether the Constitution needed to be changed or not.

Ms Ntuli asked presenters to explain the NGB's strategic objective of having an information register of national licences. She raised concern about spending time and finance conducting research which may have been conducted by other departments previously.

Mr Marasha replied that the system of national licences provided for operators with outlets in several locations nationally to purchase one national licence. Previously operators would have to apply to each province for a licence, which would have to be approved by each province, and then a licence fee had to be paid for in each province. This was inevitably simpler. The NGB was responsible for these licences.

Mr J J Maake (ANC) asked what the figure of 25 gambling machines, quoted in the presentation, had meant. There were obviously more machines than this number nationally.

Mr Marasha apologised for causing confusion. He had meant there were currently 25 000 gambling machines in the country.

Mr Maake asked if the research conducted by the Board, had come up with a solution for dealing with the negative social impact of gambling.

Mr Marasha explained that research was being carried out into education, training and counseling in order to rehabilitate people with addiction problems. That was the focus of NGB’s research

Mr M Moss (ANC) noted that almost 60% of the budget was spent on what sounded like head office expenditure. Compliance which was the more important and more expensive part of the responsibilities of the organization, took only 18%. His instinct was that more should have been spent on compliance.

Ms Moja emphasized that it was the office of the CEO and not the CEO alone that had 60% of the budget. There were a number of elements that were contained within the budget for the office of the CEO. He said that in future reports, the Board would explain the budget in detail rather than lumping elements together like this. Members could then make an informed decision

Mr Labuschagne apologised for not making it clear when he had meant by "refused bonuses". He would not expect anyone to refuse a bonus. He had instead been referring to the number of bonuses that had been withheld by management. If you had a system where there were ten employees and they all received a performance bonus each yea, that was not a performance bonus. He had a problem with performance bonuses. Salaries were paid to employees to work one hundred percent, so employees should only receive a bonus for having worked over and above that.

Mr Labuschagne was concerned with the budget summary in the presentation. The Committee was supposed to conduct oversight on these budget divisions but this type of information did not enable this. He compared the presentation to a testimonial.

Ms Moja commented that perhaps the information in the presentation was not clear enough. In the future they would put everything in, rather than trying to decide what to put in or leave out.

The Chair thanked the presenters, and noted that there were many more questions to be asked but due to time limitations, it was necessary to move on.

Small Enterprise Development Agency (SEDA)

Ms A Damane, CEO: SEDA, explained that they had previously provided a detailed progress report at the 28 November 2005 meeting. She noted that SEDA had been formally founded only four months earlier and the restructuring needed to create the new organisation (amalgamating Ntsika Enterprise Promotion Agency, National Manufacturing Advice Centre and Community Public Private Partnership) had been a huge challenge (see document for full details). In its short existence SEDA had moved their head office twice and was now part of the DTI offices.
 

SEDA had faced the challenge of becoming an organization capable of operating nationally provincially and locally. She talked the Committee through the 2005-6 highlights which included a roll-out of six provincial offices.

She outlined the current status of programmes and products. They had inherited programmes but had reviewed and re-packaged them. There had previously been a manufacturing support program, but now the emphasis would shift towards very small manufacturing although she assured the Committee that this and all other inherited programs would continue.

SEDA had started to develop joint training programs with organisations such as BUSA, CHAMSA, NAFCOC, and ACHIB. She also stressed the importance at the current stage of attracting and retaining talented staff.

The plans for the next financial year were highlighted which included establishing a presence in the three remaining provinces.
 

In looking at small scale industries, SEDA had been working closely with the Departments of Agriculture and Tourism. Arts and crafts would be a particular focus especially in view of South Africa being the host nation for the 2010 Football World Cup.

She explained that SEDA would continue to encourage formalisation of business. Although they did not have a mandate to provide financial support, she believed access to finance remained a challenge. To tackle this problem they had developed links with financial institutions as a way of dealing with this challenge. Research constituted an important part of small business development.

She believed they had made significant progress in establishing SEDA as a credible organization although the roll-out and implementation had taken longer than they had predicted.

Discussion

Mr K Bapela (ANC) asked why only six provincial offices had been opened. Why had the others not yet become involved. He also asked if there had been any loss of jobs during integration.

Ms Damane replied that SEDA would soon have all regional offices installed, now that they had got a critical mass of six provinces. There had been no loss of jobs. This had been specifically stipulated in the amendment of the Act. There had however been two instances where employees did not accept the new positions they had been offered. The Act had not provided that they would automatically maintain their same position.

Mr Bapela requested what the Enterprise Information Centres (EIC) were and how they would work. He commented that the co-operation with industry was commendable. However he warned against leaving out the labour movement.

Ms Damane explained that the Information Centres were access points for gaining basic information about SEDA's programs. The branches were a specific service to aid the entrepreneur.

Mr Nkem-Abonte (ANC) asked if there were examples of similar agencies in other countries that had been successful.

Ms Damane explained that similar organizations had been very successful in India and Brazil. He said that SEDA had a lot more to learn about sustainability. In terms of funding, the Indian project differed from South Africa's in that it was funded as part of a levy ring fenced for small business.

Mr Nkem-Abonte asked if people had to pay for SEDA services.

Ms Damane explained that people only made contributions at the stage when there was direct intervention in the operation of the company.

Mr Labuschagne noted that it was commendable that SEDA had developed a relationship with financial organizations. There was no point in giving advice if people still could not access the necessary capital.

Mr Labuschagne asked if the branches were actually up and running. Could he walk in and access information?

Ms Damane explained that although the branches were fairly new, they were each already seeing a minimum of 40 people although they had not even been marketed yet.

Mr Labuschagne asked if anyone could access the information and resources SEDA provided or was it dependent on ethnicity.
 

The response was that all small businesses could benefit from SETA's services - whoever you were. SETA concentrated 80% of resources on small to micro business and 20% on small to medium.

The Chair explained that although there was much more to ask, they had to draw the meeting to a close due to time constraints.

Meeting adjourned

The Small Enterprise Development Agency presented an update of the highlights for the past year which included a SEDA presence in six provinces. Amongst their plans for the next financial year was to roll-out to the remaining three provinces. The programmes that they had inherited would not be scrapped but had been remodelled. The challenges they faced were outlined.
28 October 2005 meeting, they had presented their annual report to the Committee which had contained in-depth information. They had been cautious of repeating it.

 

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