Hansard: NA: Debate on Vote 25: Economic Development (NA Chamber)

House: National Assembly

Date of Meeting: 12 May 2015


No summary available.




TUESDAY, 12 MAY 2015




TUESDAY, 12 MAY 2015





Members of the Extended Public Committee met in the National Assembly Chamber at 14:02.


House Chairperson, Mr C T Frolick, took the Chair and requested members to observe a moment of silence for prayer or meditation.








The MINISTER OF ECONOMIC DEVELOPMENT: Hon House Chairperson, hon members, Cabinet colleagues, agency heads and invited guests, in the past 12 months Deputy Minister Masuku and I visited factories, construction sites, energy plants, communities and investment conferences across the country. We spoke to working and unemployed South Africans, local leaders, managers and investors to see the impact of our policies and to identify what we need to do more. It has been an invaluable pulse-take of development and of urgent challenges that we can be proud of.


The scale of the challenges we face is clear: Many young people full of energy but without jobs; broken infrastructure that has not been maintained; and investors who faced problems getting their businesses to run properly. However, we also saw much to celebrate -quiet but solid efforts at local level to transform lives; South Africans who are making us proud. I want to share those experiences today - stories of jobs, innovation and social infrastructure.


There is Andries Motseke, a worker whose towel-making factory has expanded and now employs 81 more people than a year ago; Rachmat Thomas, a black woman who co-owns a shoe factory that has doubled its employment in the past six years and now employs 300 people; BongiweGumede, a lab technician from a packaging plant in KwaZulu-Natal,which expanded by 17% using an Industrial Development Corporation loan; Jiff Van Zyl, an entrepreneur experimenting with new technologies that make it more difficult to steal cables from our electricity network; Solomon Masango, a black maize and soya farmer, who benefited from the agreement government reached with Afgri; Avril Johnson, a worker whose bed-linen factory is expanding jobs and bringing in new machines with a loan and competitiveness enhancement grant from government; 56-year-old Victoria Gumede, who now uses the new clinic that is a 10-minute walk from her home in KwaMahleka, her life transformed and her body healed from the medical ailment that kept her in bed;15-year-old Joyce Mokoenaof Freedom Park, attending a new school built through the infrastructure programme; Francois Kapp, an engineer who works for the Square Kilometre Array, the site located at Carnarvon, where South Africa is building the most advanced radio telescope system in the world.


I met community members and foreign investors in Pofadder in the Northern Cape to launch a R6 billion solar plant that will produce enough electricity for at least 80 000 households or 400 000 South Africans. It is one of the 39 completed renewable energy plants. These stories of South Africans working are confirmed by the statistics collected nationally.


During my Budget Vote speech in July last year, I noted that there were 15,1 million employed people in South Africa. Today that figure is 15,3 million, a quarter of a million additional jobs over the nine-month period. Most of this growth has been in construction, the public sector and trade.However, the rate of growth of investment and of job creation remains well below what is required and we are confronted with weaknesses in global growth and domestic factors such as energy constraints and industrial relations conflict. The economy grew by 1,5% and gross domestic product is now more than R3,8 trillion. Public investment in the economy grew to R280 billion but private investment remains weak.


The Budget I amtabling today will strengthen efforts to focus on jobs, investment and industrialisation, using the combined capacity of theDepartment of Economic Development and of its agencies and working closely with the Economics cluster of government. I want to highlight a few examples of what we have done and what we have planned to do in the six areas identified in the last Budget Vote, namely infrastructure, industrialisation, investment, innovation, inclusion and integration.


Over the past five years, the Industrial Development Corporation, the IDC, has dramatically increased its level of industrial funding to R61 billion. Last year, the IDC approved R1,6 billion for black industrialists, including a company owned by Mr PasekaLesolang. The company makes an innovative valve to reduce water leaks. There are also a foundry in Benoni with major black ownership; a new packaging paper mill that is to be built and will have 51% black ownership; a gas pipeline owned by black South Africans; a manufacturer of compressed briquettes owned by Ms Lorraine Masipa; and a large black-owned and managed shoefactory.


We must scale up this effort to support industrialisation, investment and inclusion.A commitment to real broad-based empowerment must underlie our efforts to create a more equitable society and to ensure that the benefits of transformation accrue to millions of South Africans. We need more worker and producer co-operatives to harness the entrepreneurial energy of the nation and address the high levels of inequality and economic exclusion.


China, Spain and India are all examples of countries with strong and effective co-operatives. We must also nurture individual black industrialists who run and own their businesses in the productive sectors of the economy; who create decent work opportunities and bring innovation, entrepreneurship and strong partnerships with their workforce.


I am therefore pleased to announce that the R100 billion committed for industrial development over the next five years by the IDC will include R23 billion set aside to support and facilitate the growth of black industrialists in the productive sectors and R4,5 billion each for women and youth-empowered businesses.


The IDC will give a discount of 150 basis points on its pricing to black industrialists who own and control their operations, with additional discounted pricing for meeting job, localisation and regional development targets. We will do this in partnership, among others, with Minister Davies and the Department of Trade and Industry.


To complement this, the state is looking at various set-asides in infrastructure and other products to support black industrialists and to address the requirements for markets. To generate viable projects to productively absorb these levels of funding, I have directed the IDC to develop internal capacity to identify market opportunities and potential co-investment technology and funding partners. In the next six months we will convene roundtables with private investors in different provinces to identify new opportunities. We are working with local companies to weather various global headwinds, particularly in the steel industry, which has been affected by the sharp slowdown in global demand.


In addition, the Competition Commission has completed its investigation into collusion by the biggest steelmaker. We are looking at ways to enable a more competitive steel price for downstream users so that we stimulate local demand for steel. I have appointed an independent panel of steelindustry experts to advise on options and modalities.


We welcome the job stability in the clothing and textile industry for the past three years as a result of a number of government and industry initiatives. The government will step up efforts to strengthen the industry. The partnership with the DTI has been invaluable. I invite Members of Parliament to see examples of this and other industries in the Old Assembly area after the Budget Vote.


Our efforts regarding economic integration with the rest of the continent are yielding successes. During last year, we exported goods worth R300 billion to the rest of Africa - an increase of R36 billion. Aside from the damage that xenophobic attacks do to our humanity, we cannot unscramble ourselves from Africa, our continent, without serious economic damage.

Our total manufacturing, mining and agricultural exports to the rest of Africa sustain 244 000 direct jobs in South Africa. Of these, 169 000 are manufacturing jobs. Africa is now more important for growth in manufacturing exports than Europe, the United States or China. The gas that powers our largest industrial company, the SA Synthetic Oil Liquid, Sasol, comes from Mozambique. Every second glass of water consumed in Gauteng every day comes from Lesotho. The biggest export market for South African plastic products is Zimbabwe, for televisions it is Zambia and for clothing it is Mozambique.


On Africa Day, 25 May, the department,with the University of Johannesburg and the IDC, will convene a symposium of investors, workers, intellectuals and public officials to look at the economic impact of our relationship with the rest of the continent. We will take this as a roadshow to different provinces, to engage our people in a deeper discussion about being African, and to communicate one simple truth: our prosperity is intimately tied with our economic relations with the rest of the continent.


To promote inclusive growth and industrialisation, our trade policies have supported domestic manufacturers. Over the past year, 14 products received stronger trade protection or rebates, from paper and batteries to barbed wire and chicken. Yet if we simply rely on tariffs without improved investment and productivity, we will not become competitive. I will, therefore, within six weeks, issue a trade directive to the International Trade Administration, Itac, to ensure that trade tariff changes at the request of industry are accompanied by reciprocal commitments by manufacturers to invest more, create more jobs, improve their products and improve productivity.


The Small Enterprise Finance Agency, Sefa, maintained an important milestone last year - approvingfunding projects worth R1 billion for the second year in succession. The operational responsibility of Sefa is now being transferred to Minister Zulu. We are working closely with her to integrate small business as a focus in all our economic programmes.


The growth of the small business sector, particularly small retail, is a critical economic entry point for black South Africans. I wish to advise that the Competition Commission will launch a market inquiry into parts of the retail sector, involving large supermarket chains, grocery stores and small retail outlets like spaza shops. It will cover the structure of the industry, including retail outlets in townships; the tenancy arrangements in shopping malls, which seem to squeeze smaller players out, and the impact of the growth of large retail chains on competition, jobs and small business development.The Competition Commission will announce the terms of the market inquiry within the next four weeks.


The health care inquiry, chaired by former Chief Justice SandileNgcobo, has done considerable work and will commence public hearings into the cost of medical care this year. The Competition Commission has uncovered evidence of a cartel in the furniture removal industry, targeted at the SA National Defence Force, and is also investigating price-fixing in the auto component sector. The message is clear: We will act against practices that undermine the economy’s dynamism, the entry of small businesses and the youth into industries and South Africa’s ability to create jobs and drive industrialisation.


This year marks the 15th anniversary of the competition authorities, who have made remarkable progress in transforming the economy. I am pleased to announce that in November South Africa will host a major conference of competition authorities from the Bricscountries, where representatives from Brazil,China, India, RussiaandSouth Africa will share experiences to ensure that competition policies remain relevant to the realities of developing countries.


Infrastructure development has boosted the economy and is one of the key reasons that we avoided another recession. The Presidential Infrastructure Co-ordinating Commissionprojects under construction - with dust, bricks, cement and workers on site - is worth roughly R1 trillion – R1 trillion, right now - that is being constructed. It employs about 220 000 workers, building dams, roads, power stations, schools, rail lines, university facilities, hospitals, clinics, fuel pipelines and fibre-optic systems.


Since the enactment of the Infrastructure Development Act last year, we have made solid progress with facilitating regulatory approvals. Working closely with Ministers Mokonyane and Molewa, 16 water-use licenses and four environmental authorisations for infrastructure were approved.


Over the past year, a number of schools, clinics, renewable energy plants and other infrastructure facilities have been completed and local skills have been generated. For example, more than half a million solar water heaters have been installed. More details of these and many other achievements will be made available in various Budget Votes over the next few weeks.


The government is now focusing on the big build programmes of Medupi, Kusile and Ingula power stations, where delays are severely constraining the electricity grid. Other key areas of infrastructure focus will be broadband build, transport, water and sanitation, and health facilities.


The IDC has invested R3,7 billion in infrastructure in 10 African countries to strengthen regional growth. These range from cement making in Ethiopia and Namibia, gas and hydro energy in Mozambique, power generation in Ghana, Zimbabwe and Nigeria, a ferry and road in Uganda, a port and airport in Senegal, a biofuels plant in Sierra Leone and a water treatment plant in Sudan. We are investing in regional integration to make Africa a growing continent.


The infrastructure programme has boosted South African manufacturing. From importing public transport vehicles previously, we have now supplied orders to Brazil, China and elsewhere in the world. We now have factories that have built more than 670 buses locally and have assembled more than 32 000 taxis locally - here in South Africa - creating jobs and stimulating investment.


I am pleased to say that two weeks ago, Toyota produced the first taxi that uses almost double the levels of locallymanufactured components and materials than before - a big stepup for government’s programme. I am working closely with my colleagues Ministers Nkwinti and Nxesi to strengthen capacity in the state regarding infrastructure and we have directed the IDC to play a stronger role in developing the infrastructure pipeline and technical capacity in the state.


I am pleased to note that in January this year, the African Union Heads of State Summit designated South Africa as the champion to develop the manufacturing of train engines, coaches and wagons for the whole continent. We will build on this very welcome decision to deepen our industrialisation efforts.


In December last year, the PICC Council resolved that the state must crack down on the theft of cable and metal from our infrastructure programme, which causes serious economic and social disruption. Trains have been unable to operate, water was cut and electricityblackouts ensued. Working closely with the Minister of Justice, amendments to various pieces of legislation have been drafted and he will table them in Parliament shortly. These pieces of legislation will expand on the power of the state to act against cable and metal theft. We cannot and will not accept the effective sabotage of our infrastructure systems for the profit of syndicates.


To support innovation, the PICC will identify areas in infrastructure where we can draw on South African inventiveness. This year, the department will partner with Wits University and the University of Johannesburg to bring their talent pool into the work of the state. The most critical partnership that we need to get right is the one between business, labour and government so that we can turn the recent conflict-driven industrial relations into greater co-operation and the creation and sharing of wealth. The Deputy President has initiated a dialogue with social partners to identify the basis for stronger workplace partnerships. Social tension as a result of high inequality will undermine the democratic gains of the past 21 years if we do not address it with urgency. We must do so.


The successes that government points to in infrastructure, in industrialisation and in all the areas that matter to our people are the result of a collaborative effort. I therefore wish to thank Deputy Minister Masuku, with whom it has been a pleasure to work, and my Cabinet colleagues Minister Davies, Minister Nxesi, Minister Hanekom, Minister Nzimande and all the others. Together we constituted the Economics cluster that made this possible. I also want to thank the portfolio committee members, the Industrial Development Corporation, whose chief executive officer is here today, the competition authorities, Itacand Department of Economic Development, as well as the social partners in trade unions and business associations for their work over the past year.

I now table the Budget Votefor the Department of Economic Development for consideration by this august House. Thank you.











Ms E M COLEMAN: Hon Chairperson, Minister, Deputy Minister, my colleagues in the portfolio committee, Ministers and Deputy Ministers present, Members of Parliament and our stakeholders present here, I want to dedicate this speech to Mme Ruth Mompati.


Sixty years ago this year, in Kliptown, the people of South Africa, through the Freedom Charter, committed to, among other things, a nation where the wealth of our country shall be shared among all; a nation where we are able to trade and where we choose to manufacture and to enter all trades, crafts and professions.


From 2 February to 6 February this year, the committee spent a week right in Kliptown, at the Soweto Hotel and Conference Centre, which is located at the Walter Sisulu Square of dedication. This is where South Africans congregated on 26 June 1955 to plot a new path for our nation and country. The week-long experience in the Soweto Hotel did three things. Firstly, there was the significance of the symbolism of the portfolio committee using the same precinct to develop its long-term strategic plan; the same place where,60 years ago, the people of South Africa committed to the future South Africa they would like to see.


Secondly, the venue and the surroundingsboth reflected the achievements of the current government, particularly in relation to its support of art and the confidence shown in the previously disadvantaged in the form of this being the first black female-owned hotel. This was on the one hand. On the other hand, the environment reflects that more work still needs to be done.


Thirdly, it further confirmed the centrality of the Department of Economic Developmentin the co-ordination of economic development as it relates to the different needs and interventions that are required in the economy. Those are small and medium enterprises. If we were to take the scenario of the Soweto Hotel, there are those who trade outside the hotel; the medium and large enterprises such as the hotel itself; and the co-ordination in local development and infrastructure development that exists between the local community and national departments such as Tourism and Arts and Culture.


South Africa’s economy is strongly linked to what happens globally and all around us in the rest of Africa. Therefore, when growth slows down globally, particularly in our traditional trading partners such as France, China, etc, we are not immune to the effects. Global economic growth is weaker than what we would like. Growth is forecast at about 3,5% for 2015, rising to 3,7% in 2016, according to the National Treasury’s global outlook. According to the International Monetary FundWorld Economic Outlook, growth in the US is picking up and is focused at about 3,5% for 2015, rising to 3,3% in 2016. In Europe, where most of our exports are destined, there is growth but it is very slow - at 2,7% for 2015 and 2,4% for 2016. Brazil, Russia, India and China - our partners in Brics - are classified as developing economies. With the exception of India, where growth will be higher than in the last two years of 2013 and 2014, the gross domestic productof Brazil, Russia and China is slowing down. As a matter of fact, Russia is expected to have negative growth this year.


Whatever the degree of slowdown in China, whether from 7% in 2014 to the expected 6,8% in 2015 and 6,3% in 2016, it hits us as South Africa hard because China is the largest consumer of our raw materials, especially iron ore.


On the rest of the continent, in sub-Saharan Africa growth is being stifled by low commodity prices. However, the growth outlook for the next two years - 2015 is at 4,9% and 5,2% for 2016 - remains above the global average.


What does this mean for South Africa? The slow international growth, especially among South Africa’s trading partners, will directly affect South Africa. The slowing demand for commodities in China in particular will have a negative effect on Africa and South Africa’s exports.


Growth in Africa and the appetite for manufactured goods and services provide an opportunity for South Africa to counterbalance the slowing demand in our traditional trading partners. Africa is growing and it offers an expanded export market for South Africa’s manufactured goods and services.


What are the economic prospects in South Africa? We know that more positive GDP growth in South Africa faces risks. We face two risks: one is external and the other internal. The external one is what we continue to talk about and has more to do with slowing demand in China. The second is internal, of course, and has more to do with the electricity constraints facing the country. This is also hitting our manufacturing and mining sectorshard. Combined, these risks will have the effect of slowing down growth and the economy will not be able to diversify product markets to include other emerging countries.


Also a problem is that growth in employment will also slow down. This is not only in the public sector but - worrying for the National Treasury - private sector job creationalso continues to be very weak. This will negatively impact on household consumption.


What is government’s response? First, yes, we have a war room on electricity, which will begin to help us see things in a brighter way. Secondly, it is focusing on infrastructure. There is large public sector infrastructure investment in electricity and transport, while infrastructure investment in energy occupies the greatest attention due to the electricity outages.


Overall, public sector infrastructure expenditure at all spheres of government and across all sectors - that is, social infrastructure and economic infrastructure - have consistently been above R200 billion.During the Medium-TermExpenditure Framework 2014-15, it was R262 billion. In 2015-16 it is forecast to be R273 billion and in 2017-18 it is forecast to be R266 billion. [Interjections.] That is a lot of money. Yes, we are doing something. Siyaquba. [We are working.] [Applause.]


In the implementation of economic policy, how do we position the Department of Economic Development? The Portfolio Committee on Economic Development is responsible for oversight of the department. Its mandate is to support job creation, inclusive growth, industrialisation and social inclusion through policy work, planning co-ordination and the use of social dialogue, as well as integration and co-ordination between departments, spheres of government and public agencies.


There are three major policy shifts and emphases in the Department of Economic Development and its agencies and they will have an immediate effect on what the state wants to achieve. The first thing is the reorganisation of the department. The department has cut down on the size of its bureaucracy and has created specialised positions instead. The department is crucial in the co-ordination of infrastructure planning, development and implementation. It further acts as a secretariat to the Presidential Infrastructure Co-ordinating Commission.


The restructuring of the department has two effects on the organisation. It changes the strategic thrust of the organisation from policy development to policy implementation. This is in line with the focus of the Medium-Term Strategic Framework and the National Development Plan. Secondly, while reducing the size of the organisation, the idea of bringing in specialists is that it focuses its capacity and ability to effectively monitor development.


Issues around impact assessment analysis of tariff policy were focused on by the International Trade Administration Commission, Itac. Tariff policies are important instruments for industrial policy. South Africa’s trade policies, specifically trade negotiations, will completely change with the output from the impact assessment... [Time expired.]















Mr S J F MARAIS: Chairperson, when responding to the demands of citizens and the responsibilities of the state, economic development and growth should be at the forefront. Without sustainable economic growth, jobs cannot be created and revenue cannot be generated to appropriate to departments, provinces and local government for the delivery of essential and basic services.The state will not be able to constantly increase its public sector wage bill beyond the current R400 billion, which begs the question: Where will the jobs for the over 7,3 million unemployed South Africans come from?


Without a sustainable economic growth regime, an environment conducive to investment and job creation by the private sector will not be created. The National Development Plan is clear that the state must not be at the centre of our economy - which contradicts the New Growth Path.


In this budget, which is 27% bigger than the previous year, 83% will be transferred to the competition authorities,Itac and the Small Enterprise Finance Agency, Sefa. The amount to Sefa that will be transferred to the small business department has increased to 46% of this budget. One must still question, firstly, the provision for the Presidential Infrastructure Co-ordinating Commission secretariat while it accounts to the Presidency; and secondly, the 33% increase for “growth path and social dialogue”, which sounds much like a SA Communist Party old boys’ club and talk shop, without tangible economic growth prospects.


Within the context of its work, the department must observe, evaluate and align the state’s responses to, among others, the global economic performance and its impact on South Africa’s economic environment; domestic economic performance and the identification of constraints and challenges that need to be addressed; and addressing the triple challenge of poverty, inequality and unemployment.We must evaluate the performance of Minister Patel in bringing about sustainable economic changes that will deal with these and put the economy on a new and progressive trajectory. Minister, your performance is being informed by the following indicators, among others, which is really the bottom line of your evaluation.


Firstly, our GDP of 1,4% is unsustainably low. Unless we achieve a GDP of 5% or more, we will not be able to grow our economy and create real jobs. Secondly, our GDP is lower than many sub-Saharan African economies, where there are GDPs of around 4,5%. Thirdly, according to the International LabourOrganisation, we have the eighth highest unemployment rate in the world, which is expected to increase to the sixth highest in 2019. Lastly, 66% of unemployed South Africans are young people.


Minister Patel might be impressed with the job opportunities created, mainly in the public service sector, but these must be compared with those lost, as well as the youth becoming eligible for jobs. The bottom line is that 1,4 million more South Africans are unemployed since Jacob Zuma became President in 2009. [Interjections.] That is a reality.



Onsoorweeg u begrotingenprestasievandag, niedié van die staat of u kollegas’nsoos wat u vironsvroeërgegee het nie.Ditblykdaar is min direkteimpak van u op onsekonomiesegroeienontwikkeling, want onsmoetkyk wat u begrotingmoetondersteunenregverdig.



Minister, this is a ticking time bomb waiting to explode and you will be judged by history on whether you were able to address these issues effectively. Dialogue and talk shops are insufficient; real action, real economic growth and job creation must flow from this.


To a question to the director-general, asking what constraints and challenges were identified prior to and post the agricultural and mining unrests and what corrective actions were being taken by the department, the answer was, and I quote, “Nothing.” This was a huge failure by the department to respond to domestic economic challenges, which needed to be unblocked, not only to preserve jobs but to stimulate economic growth in one of the primary job-driving sectors.


While government must be sensitive towards the unemployed, it is important that they embrace the challenge of employment and job creation and develop strategies in support of these NDP targets.The Minister must be less fixated on the state-centric approach of the NGP and rather apply the NDP in its entirety; on ticking the boxes of key performance indicators and strategic objective programmes and being involved in dialogue only with their social partners, mainly Cosatu.These mean nothing if we cannot grow the economy and support our small, medium and micro enterprises and corporate investors to grow the economy and create sustainable jobs. We need, among other things, 49 000 SMMEs growing at 20% per year to achieve 11 million additional jobs by 2030.



Kragtens die DA se Handves van Waardes, onssogenaamde Values Charter, moetekonomiesegroeienaktiwteitegebruik word om,ondermeer, die vryheid van individueteversekerdeurmiddel van ’n werk, om geld teverdienensodoendesywelvaartteverhoog, asook om sytalentenatejaag. Hiervoor is die besteopvoedingenwerksgeleenthedenoodsaaklik. Kragtens die DA se Handves van Waardes, moetekonomiesegroeienaktiwteitegebruik word om ’n regverdigesamelewingteverseker, waarwerkskepping tot gelykeenoopgeleenthedeaanalmalkan lei;waaronsprestasiesdeurhardewerkverseker word enniedeur die omstandighedewaarinonsgebore word nie.


Die ekonomiesegroeienrelatiewelaewerkloosheidbinne die Wes-Kaap is bewysdat die DA weet hoe omhulpbronneenmensetelaatsaamwerkterbereikinghiervan. [Applous.]


Ons mag nooit die verledevergeetwaaronsvandaankomen die lessedaaruitnie, maar dit is meerbelangrik om teweetwaarheenonsoppad is, en hoe onssaam as ’n samelewingdaardiedoelwittekanbereik, tot voordeel van almal. Ditgaanvirsekerniegebeurmet die regering se huidigeekonomiesebeleidenbenadering van bevoordeling van enkeles, enwaar die regeringsentraalstaan tot almalnie. Ek dank u. [Applous.]










Mr M S MBATHA: House Chair, fighters at home, fighters present here, distinguished guests, the EFF rejects this Budget. We believe that the existence of this department is not necessary. We believe that the work of the Ministry, which the Minister is talking about, could be done by various departments that existed before this department was created. We believe that the R885,8 million could be used profitably to reinforce the programmes of those departments, particularly programmes of the Department of Trade and Industry.


We also believe that the majority of the agencies that were taken away from the Department of Trade and Industryshould actually be returned to the DTI. It looks like this department keeps collecting and giving away entities, which is a significant and clear indication that there was no clearly thought-out plan for how it was going to live sidebyside with the entire state machinery and other departments. Your clinging to the Industrial Development Corporation is causing incapacity to the DTI, particularly in the implementation of the industrial policy.


Despite the fact that this department is irrelevant, we need to share with you the economic realities. You will never succeed in stimulating industrialisation and economic development as long as you are not in control of your natural resources. You will never succeed as long as multinational corporations continue to ship out our chrome and steel while exploiting our labour in South Africa.


Twenty-one years after democracy, your economic policies combined have dismally failed to industrialise our country. You have failed to create sustainable jobs. Townships are deserted, with no local investment. Former mining towns are ghost areas today. You have no political will to create economic development in rural areas and alter the structural oppression imposed by white monopoly capital.


You have eloquently claimed that this year is the year of the Freedom Charter, so why are you not implementing the clause in the Freedom Charter that says:


The mineral wealth beneath the soil, the banks and the monopoly industry shall be transferred to the ownership of the people as a whole;

All other industry and trade shall be controlled to assist the wellbeing of the people.


We, the EFF,believe in the extra involvement of the state in redirecting economic ideology and philosophy and the future fortunes of our economy. Thank you. [Applause.]










Ms S J NKOMO: Hon Chair, firstly, the IFP would like to send our condolences to the family on the passing of an ANC stalwart, Mrs Mompati.We really do hope that her family will be given support, as much as is possible.


The IFP takes note that curbing unemployment must be regarded as our most urgent and pressing priority in these challenging times of a deepening economic crisis and slow economic growth, with the related socioeconomic issues of poverty, poor-quality education and health services, the lack of adequate housing and basic services and the high crime rate.


Unemployment is at the root of most of the socioeconomic ills that plague South Africa today, with general unemployment at approximately 25% and youth unemployment nearing or just above the 50% mark. This is a crisis; one that cannot be mitigated by simply stating that we are in the midst of a global economic downturn.


The National Youth Policy seeks to address the issue of youth unemployment through its objective to place the economy on a labour-absorbing growth path and to support youth absorption into employment. It has also stated that it will achieve this through public employment schemes, the Expanded Public Works Programme and internships in government departments, municipalities and state-owned companies. This must be supported and provided with additional impetus. It should be monitored in a genuine way as well, so that we can check on the impact this has on unemployment.


South Africa has also been economically underperforming when measured against the performance of its peers, with below par economic growth and higher rising debt ratios. This underperformance can be attributed to factors that are largely of our own creation, such as labour unrest, complex and prohibitive regulatory frameworks, taxes that target capital formation and investment viability, the energy crisis and even the present corruption, ineptitude and incompetence that is commonplace throughout our Public Service departments today. These factors create a super storm of barriers to our economic growth and development.


The IFP further acknowledges that in order to generate economic growth we should be looking, firstly, at reducing the ever-increasing burden of government and ways in which to make necessary government spending more effective and efficient, as inefficient expenditure only lowers the economic multipliers. Small, medium and micro enterprises are another excellent key to unlock growth and create employment. Our laws and regulatory frameworks must be aligned and supportive to the creation of business environments that is conducive to the financing, start-up and running of such enterprises.South Africa must actually move away from a dependency and welfare mindset to one of entrepreneurship, self-help and self-reliance.


The IFP states that we remain of the view that political freedom must now be translated into opportunities and access to economic and socially sustainable livelihoods for all. The National Development Plan must not lock out new entrants to the job market, but rather endeavour to be supportive of the impetus to introduce active labour market policies, whereby the large-scale absorption of young people and women may be brought into economic activity. The IFP supports this Budget Vote. Thank you. [Applause.]











Mr M S MABIKA: House Chairperson and hon members, the NFP is aware of the crucial importance that the Department of Economic Development has in fulfilling its mandate to drive the economic engine of our economy. We are also painfully aware that the South African economy, which was once the most powerful in Africa, has now been surpassed by that of Nigeria and might well be surpassed by other countries on the continent in the foreseeable future.


From 2002 to 2008, our gross domestic product grew at an average of 4,5% year on year - the fastest expansion since the establishment of democracy in 1994. However, in recent years, successive governments have failed to address structural problems such as the widening gap between rich and poor, a low-skilled labour force, a high unemployment rate, deteriorating infrastructure, and high corruption and crime rates. As a result, since the global recession in 2008, South Africa’s economic growth has been sluggish and below the African average. In the first quarter of 2014, we hit an all-time low, with a negative growth rate.


In addition to the structural problems mentioned, which have been around for several years and which our government is consistently failing to address, we now also have to consider the negative impact of our energy supply crisis and the effect of xenophobic violence on investor confidence. To add to our economic decline, we also have to contend with the negative impact of the following: the general failure of black economic empowerment to benefit the majority of South Africans; the increase in the incidence of service-delivery protests; the rocketing price of fuel; stagnant rural development; and the steady erosion of the value of our currency. It is evident, hon Minister, that when we take all the above into consideration, our economy is ailing - some might say even critically so.

The question that now comes to mind is this: What strategic plans does the Department of Economic Development have in place to halt the decline in our economic growth; to turn it around and place the economy on a positive growth trajectory? When we look at the structural problems that inhibit economic growth, it is clear that the Department of Economic Development is not positioned to deal with social issues such as crime and a low-skilled labour force. However, it is well within the competence and the mandate of this department to address issues such as the widening gap between the rich and poor, the increasing rise in unemployment, the lack of rural development and the derailing of BEE.


Unfortunately, the budget tabled here today does not in any meaningful way seek to address these crucial deficits in our economic dispensation. Hon Minister, we submit that South Africa has enormous resources at its disposal.We support the budget, though. [Time expired.] [Applause.]












The DEPUTY MINISTER OF ECONOMIC DEVELOPMENT: House Chair, I want to start by thanking the Minister for the informative budget speech. Hon Minister, the series of examples that you have ... [Interjections.]


The HOUSE CHAIRPERSON (Mr C T Frolick): Order, hon members!


The DEPUTY MINISTER OF ECONOMIC DEVELOPMENT ... shared with the people of this country are but a few of the many that one experiences in every corner of the country. Our development finance institutions and provincial and local agencies are hard at work. To point out a few examples, the National Youth Development Agency, NYDA, assisted a young man who decided to join a cut-throat competitive township enterprise that we thought was being dominated by superior and experienced foreign national enterprisers who had outplayed local business people. He managed to claim his space in the Free State.


Again in the Free State, in Bloemfontein, the Small Enterprise Finance Agency, Sefa, assisted a young man to establish a fitter and turner manufacturing initiative where he is manufacturing bolts and nuts to supply the local industry. We also visited a sweet industry funded by the Industrial Development Corporation, IDC. Workers own shares in this company, besides the salaries that they earn. The day that I visited this factory was the day when they had braved five years of enduring work and were reaching their break-even point. [Applause.]


The provincial development agency has also revamped the industrial development areas in the various regions of the province, in one of which they established a bed manufacturing company. This bed manufacturingcompany supplies beds to different shops around the Free State. In this region, the National Empowerment Fund funded a couple of BEE mining deals in the province. I visited one diamond mine where such financing is involved.


At the beginning of the term of this democratic government, we indicated that part of the critical task to improve economic performance is to get our institutions to function efficiently. We highlighted that the major focus would be on the effective co-ordination of provincial and local efforts. These included a major effort towards the alignment of the work of government and the people of South Africa in general towards effective economic development.


I must point out that the work we do when we visit provinces is to make sure that we align our understanding of our economic development imperatives and our socioeconomic development programmes so that we do not go off on a tangent. One aspect of the things that we discuss is how, at local and provincial level, we can actually align that. I can see that it seems we have to start this task again at national level because when we talk about economic development I can hear many sounds being made.


It is our duty as the Department of Economic Development to co-ordinate all efforts – wherever they are – that assist us to develop the economy, to create jobs, to fight poverty and to fight inequality. No department has ever been in the situation that this department is in to take that particular kind of responsibility. That is the duty of Economic Development. When you talk about where the jobs are coming from, then we are talking about mining, agriculture, manufacturing, tourism, the oceans, learning institutions and research, and the green economy. There is no one department that has all these functions in one. That is why it took the leadership of the President to identify that we needed a co-ordinating department. That was very important. [Applause.]


We also want to point out that our intention when we go to the provinces is to work with the provinces to identify opportunities in the various provinces and localities, so that we can trace where these jobs are, identify where these opportunities are and work together towards realising those. Colleagues, while we bicker, Ihave realised, during my visits to the provinces, that the people of South Africa, together with their government, workers and society, are hard at work to address this.


I hear hon Marais saying that to date he has not understood what the National Development Plan and the New Growth Path, NGP, are all about.[Interjections.] Go to page 90, hon member, and you will understand what the NDP is actually talking about. It is about the relationship between the NDP and NGP. I think today is the first time that I am explaining this to the hon member. The NDP says that when it comes to Economic Development and the work we must do, you as a country must have already started with the task of carrying out what it is supposed to do. You have already established work on your NGP, and this NGP is recognised as an action plan that is going to put South Africa on a new trajectory of economic growth.


I do not know how you read our ... [Inaudible.] [Applause.] ... because that is exactly what it says. That is exactly what it says we should do; and it is exactly what we are sharing with our people and the officials at local level. If you want to understand ... [Interjections.]


Mr A M MATLHOKO: Hon Chair, on a point of order: The audience up there is participating in proceedings with us. They are clapping their hands and doing all those things. [Interjections.]


The HOUSE CHAIRPERSON (Mr C T Frolick): Thank you, hon member. Members of the public in the public gallery, we are glad that you are here but in terms of participation in the debate, it is for Members of Parliament only. Can we request that you just observe that, please?

The DEPUTY MINISTER OF ECONOMIC DEVELOPMENT: Thank you very much. If you want to understand that and if members of the DA want to understand that, they must go and consult their officials in the Western Cape, who understand exactly what this is supposed to do. We are working closely with them because ... [Inaudible.] ... they are the citizens of South Africa who understand what it is that we must do in our work. [Applause.]


Hon Marais comes and says, you know what, there is a lot of crises in the country because you are growing the economy at 1,5%. He wanted it to grow at a rate of 5% in order to create jobs. No, man, let’s be realistic! In 2009 we had an economic crisis. We had work to do and we came up with the means to pick up our economy. [Interjections.] We are saying to you that the average growth rate of South Africa’s economy since 2000 has increased to 3,7%.The Western Cape, Gauteng and KwaZulu-Natal are growing at 4% -and I am saying that the Western Cape is included - from the year 2000 to date. [Interjections.]


Coming to job creation, we are pointing out to you that in the work that we are doing, together with the provinces, we see that Gauteng, KwaZulu-Natal, the Western Cape and Limpopo are reflecting that they are the largest growers since 2011, with the others - Mpumalanga, the North West and Limpopo - being the largest gainers in percentage terms, not in relation to the others. That is work and those are measures that we have actually put in place to deal with what it is that we need to do. [Applause.][Interjections.]


When we talk about manufacturing jobs, I wouldagain like to refer you to the NGP, which points you to the areas that we call growth drivers. I do not know where you read your economics ... [Interjections.] I do not know where you read your economics because wherever you go in the world you should understand these basic things. [Interjections.] When you want growth, you must identify growth drivers and be able to make inputs into them. [Applause.][Interjections.]


I want to point out that the work that we are doing today is because we have made choices. We have made the choice to lead. We have made choices because we want it to be like that. We want South Africa to develop.


In 2010, in his book Why Africa is poor,Greg Millswrote that the main reason that the people of Africa are poor is that their leaders have made these choices. I wondered why he said so and why, in the colonial environment that we have, we would blame other people. However, I picked up why. It is because the apartheid leaders like Verwoerd, who today we hear is celebrated as a smart tactician, made the decision that the majority of the people of South Africa should stay poor - and today they are poor. Those were the choices that Verwoerd made. [Time expired.] [Applause.]









Mr N L S KWANKWA: Chairperson, hon members, you know, I really thought that this was going to be quite a small affair. I had no idea that I would come here only to attend an ANC rally!


Molweni. [Good afternoon.]I have the report of the committee on this Budget Vote and I agree with its recommendations. In this regard, the UDM supports Budget Vote 25. [Applause.] But I want to say and agree with the chairperson, Ms Coleman, that indeed, hon Skwatsha, niyaqhuba, niyaphambilinorhwaphilizo. [You are really moving and going forward - with corruption.] [Laughter.]


In particular I want to agree with the committee’s recommendation that the department needs to pay specific attention to the implementation of its accords. For instance, while the Youth Employment Accord, signed in 2013, was an effort to prioritise youth employment and skills development, not enough has been done to achieve this.This is important to ensure, among other things, that when we grow the economy, we are creating an environment that is conducive for business, in particular for small business, to flourish. This will go a long way towards ensuring that we reduce unemployment and inequality and grow our economy. This is also important in ensuring that with the increased allocation of resources to the Small Enterprise Finance Agency,Sefa, will come the commensurate rise in disbursements to youth-owned business enterprises.


IsiXhosa: 15:06:58.05




You know, when we talk about the issue of small businesses, we normally patronise small business owners ...


IsiXhosa: 15:07:13.28

 ... abantuabaneziphazaemakhayasithi ...



 ... their business are failing, because they are competing with businesses that are run by foreign nationals. There are many instances where foreign nationals ...



 ... ingakumbi aba baneziphazasingazekelisangabo. Bayebadibanebangqinelanengeqhingalokuthobaamaxabisoukuzebatshitshiseiziphazazabantubethuezilokishini.Ayingabobonke.



And then, when our people complain, what do we say? We are quick to jump when big business complains about uncompetitive practises, but when our people complain about the same thing, what do we say?



Mabakhuphisanebayekeukubazisifede.[Let them compete and don’t be weaklings.] That cannot be right.So, we welcome the market inquiry that ...


IsiXhosa: 15:07:56.93

 ... ohloniphekileyouMphathiswaebethethangayongaphambiliesithiizakujongayonke into edibanisanezozinto. Kalokuoyenanobangelawombakokuhlaselwakwabantuabaphumakwamanyeamazweayingobantubakuthiabanobundlobongela.Kukhoiimpembelelozemibayezentlalonezoqoqosho.



If you go to the communities, people complain about real issues that are affecting them. The problem here is that we debate here and do not go and listen to them. We do not interact with them. We downplay and understate ourselves.



The other issue I want to focus on is the role of entities such as the development financing institutions, for example the Industrial Development Corporation ... [Time expired.] [Interjections.]









Ms C MATSIMBI: Chairperson, hon Ministers, hon Deputy Ministers present, hon members, our guests in the gallery, ...


Sesotho: 15:09:09.89

Ke re kgotsong.


BOHLE: Ha e ate!



Chairperson, we meet today on a high note, as ever, but our sole reason is to discharge one of the duties mandated to us by the masses.


Since 1994, South Africa has been rapidly reintegrated into the global economy with our contribution to imports and exports, which rises to support our gross domestic product. We have realised that the economy has become more productive and more outward orientated. The adjustment is partially a response to domestic factors and the ending of the country’s trade and political isolation. As a country, we have weathered the storm of the global financial crisis fairly well, considering that even the most advanced economies suffered huge setbacks.


A message written in 1977 by our late Tata President Nelson Mandela to Mme Adelaide Tambo – may their souls rest in peace – went as follows, and I quote:


Significant progress is always possible if we ourselves plan every detail and allow intervention of fate only on our own terms. Preparing a master plan and applying it are two different things.


The ANC’s 53rd National Conference adopted the NDP. Linked to this, in 2014 the executivedeveloped the Medium-Term Strategic Frameworkfor the five-year period ending in 2019.When the ANC took over from the apartheid government, it had a clear and intensive plan for how to run the country and making it a better place to live in, while ensuring that wealth is shared equally.


Relationships were established with other countries and trade agreements were reached to combat previous trading barriers. It is indeed a milestone that others refuse to acknowledge and see. We are currently trading with 10 top countries, which are as follows: Germany, Japan, Botswana, Namibia, India, United Kingdom, United States, Belgium, China and Mozambique.



Ndibalantonina? [Kwaqhwatywa.]



South Africa is an open economy. Exports and imports each equal almost a third of the GDP. Under these circumstances, getting trade policy right is particularly important for our economic development. The Department of Economic Development has an important role to play in this regard. It is responsible for the International Trade Advisory Commission, Itac.


Itacis charged with translating government’s developmental trade policy into practical measures of tariff rebates and so on. For the coming year, the Department of Economic Development has two key performance indicators related to trade. The first is to ensure that Itac and trade policy support industrialisation, employment and other national developmental objectives. The second is to increase administrative efficiencies at Itac.


In this context the department is working with other economic departments to implement and increase developmental trade policy, which means long-term diversification and job creation should be key criteria for trade measures. In particular, trade policy may provide temporary protection against foreign goods. For instance, because a surge of imports threaten local jobs on a large scale, those measures would only be sustainable if at the same time supply-side interventions are used to improve the competitiveness of local producers.


We are aware, hon Minister, of the progress made since 1994 and we agree that much still has to be done in improving and monitoring our trade policies and ensuring proper implementation. In light of the above, the ANC supports Budget Vote 25. [Applause.]Trade has created more than 230 000 jobs in 2014. We are aware of the rate of unemployment and the shortage of skills in our country, but we cannot sit in a corner and cry.






We will soldier on in the interest of our country. The ANC-led government will ensure that the Social Protection Implementation Loan of the NDP is in place. In the past few years we have seen improved co-ordination between Itac’s trade interventions and other industrial policy measures to support diversification, for instance. The establishment of local taxi assembly involved both some trade protection and support from the Industrial Development Corporation and the Department of Trade and Industry. Similarly, when Itac provided protection to local poultry producers, the IDC was expected to assist producers to improve their competitiveness.


Hon members, being arrogant and attacking other members while talking is not going to assist you.



Hodio, hodio - fonyofonyo!



It is not going to assist you as we continue to move South Africa forward. We are just puzzled by our colleagues who praise the NDP so much but oppose the developers.



Keboseilakgaka se nwamoro!



However, we are a forgiving organisation. That is why we do not even blame them when they praise and claim our Tata Madiba. They try so hard to forget the route he travelled before he was released. It is a thorn in their flesh, but bazostrongisha. [They will be fine.]



Hon Minister, we are aware of the decline in employment, especially in mining and manufacturing, which was caused by the intensive labour strikes in both sectors. Exports to China fell by 15% in 2014 in response to ... Thank you very much. [Time expired.] [Applause.]


The TEMPORARY CHAIRPERSON (Ms L M Maseko): Order! I would just like to remind members of the public that you are not supposed to participate. Do not clap hands, please.












Adv A D ALBERTS: Thank you, Chairperson. Minister, analysing government’s economic policy is not a simple exercise and it is compounded by the fact that economic management is divided into various portfolios, namely Economic Development, Trade and Industry, Finance and Small Business Development. Interdepartmental co-operation is poor, thus creating unnecessary duplication, obstructions due to nonaligned policy execution and personal kingdom building.



Dit is ironies dat die ekonomiesebestuur van die land aktiefgedesentraliseer word tussendepartemente, maar dat die ANC-SAKP ekonomiesebeleideen van sentralisering is. Daarbyspreek die regering se verskillendeekonomieseplannenie tot mekaarnieenhulleword om die beurtvoorgehou as die meesterplan, afhangende van watteraspekbeklemtoon word. So word die NasionaleOntwikkelingsplan as die meesterplanbeskou; anderkereweer die NuweGroeipad, of die Nywerheidsbeleid-Aksieplan.Daar word selfsverwysna die ANC se Vryheidsmanifes, wat nieenigeregstatusgenietnie.



This policy incoherence is taking place within an environment of a growing fiscal deficit, an unstable labour environment, power supply shortages, a current account deficit and a looming junk status sovereign credit rating. The aim of this department's Budget Vote is to promote economic development policy formulation and planning for the benefit of all South Africans. It seems, therefore, that this department should be the leading one in taking charge of the economy. However, this is not the case.


Given this context, it is of the utmost importance that South Africa’s economy is set on the right path of development and growth by making use of a focused, evidence-based policy driving all the departments in the same direction. Ideally, what should be accepted as the principles for development are the following.



Die voorvereistevirenigeregeringsaksie is om vas testel of ditinderdaadgrondwetlik is. Daarommoet die Grondwet as die enigsterigsnoergebruik word,ennieenigeanderdokumentsoos die ANC se Vryheidsmanifesnie, want dit het geenregskragnie.



Furthermore, it is clear that the current economic policies are not working. Unemployment is at the same level as that of 2009. This means that we must look at the policies of countries that actually do work, like the UK, USA and Germany, not basket cases like Cuba and Zimbabwe. [Interjections.]


Laastens, die regeringmoetbeleggersnaSuid-Afrikalokenniewegstoot met beperkendebeleidsrigtingsoorgrondeienaarskap, onteieningeneienaarskap in sekeresektoresoossekuriteitsmaatskappyenie. Dit is asof die regering dink handel met Brics gaanopmaakdaarvooras onsniemeer met die EU of VSA handeldryfnie. [Tussenwerpsels.]



Minister, in the end we will have to open up spaces for entrepreneurs to create value and jobs. This means that we cannot merely act as run-of-the-mill politicians like you, but we will also have to become political entrepreneurs that create value for growth, unlike the ANC at the moment.









Mr M A CELE: Hon Chairperson, Ministers and Deputy Ministers present, members of the portfolio committee, hon members, comrades, friends and guests in the gallery, I am pleased to speak today on the Budget Vote of theDepartment of Economic Development.


The ANC’s approach in dealing with competition in the economy is informed by the philosophical outlook of promoting a mixed economy. Mixed economies by their very nature bring about inherent contradictions that are necessary for the growth of an economy. Part of this is the question of competition.


The ANC, which governs the state, is informed in its approach by Strategy and Tactics, the policy-guiding document that is applied to all given material conditions. This approach positions the state as one that is both democratic and developmental, and rests on four pillars:Firstly, a state that sets the national agenda; secondly, a state that drives and influences the character and shape of society, and as a part of this economic agenda; thirdly, a state that builds its capacity in the provision of goods and services; and finally, a state that pays attention to building its technical capacity.


At the 2007 52nd national conference of the ANC in Polokwane, the distortionsin the economy created by monopoly capital were discussed. This undesirable practice, which is at times supported by the negative behaviour of cartels, led the ANC to accept that greater regulation of the economy was necessary. In this, the competition authorities play a key role. Whilerecognising the role of competition in a mixed economy, it is necessary for the state to regulate such economic behaviour so that economic behaviour in general is influenced in the direction of being developmental in character and not just accumulative.


One of the biggest challenges we face in the economy are the monopolies and cartels that impose higher prices on industry and consumers and keep new entrants out. A monopoly is a single company that dominates an industry and has no real competitor. A cartel is a group of companies that meet, often in secret, and illegally collude to raise or divide markets. Let us be clear; we inherited this from an inward-focused and corrupt apartheid economy. We cannot realise the vision of the Freedom Charter while we have these monopolies.


In 1999, the new Competition Act came into existence. It is one of our key weapons against monopolies and cartels. The Competition Commission, the Competition Tribunal and the Competition Appeal Court were all created through this Act of Parliament. The commission and tribunal have fallen under the broad oversight of the Minister of Economic Development since 2010. It reports to the Portfolio Committee on Economic Development.


In the past five years, we have seen a truly remarkable development. Our institutions acted swiftly and effectively against those who abuse their power. There have been investigations into industries like construction, cement, steel, fertilisers, bread, chicken and many others. The decision of the Competition Tribunal on the Sasol polypropylene case was very good because it showed the way in which companies abuse market power. We are disappointed that Sasol has taken the matter on review. Parliament will have to regulate more clearly on this matter in future.


The competition authorities are imposing harsh fines and penalties on companies who transgress competition laws, including thefines amounting to R1,4 billion to the construction industry. For mergers and company buy-outs, the competition authorities are now putting tougher conditions in place in order to protect jobs and industrial capacity. As a country, we made sure that Walmart cannot simply come into South Africa and import goods. They must also support local industry. That is the vision of the ANC that will ensure success in the fight against unemployment, poverty and inequality. [Applause.]


While we fully support the efforts of the Ministry and the department, we want to send a signal to businesses that collude: You will go to jail because we will tighten the rules. You will see even stiffer penalties being applied if you do not respect the laws of a democracy. The corporate sector needs to create jobs and increase the levels of investment through working with government.


In the next 12 months, we will want the competition regulators to look at basic products that South Africans use on a daily basis and investigate why prices are so high. We must look at the structure of the retail sector. More of our people are being squeezed out of spaza shops by the growing power of large companies. We are pleased to note that the fines and penalties imposed in the past five years was more than R5 billion and was bigger than the budgets of the department and the competition regulators together.


In conclusion, at the core of the ANC's economic mandate is the transformation of the economy for inclusive growth. At the heart of radical economic transformation is the need for co-ordinated interventions in a number of sectors, to fundamentally alter the structure of the South African economy. This requires an effective state that is decisive in its pursuit of structural change.


The role of the competition authorities in what we refer to as the radical socioeconomic transformation of the second phase of our transition will require greater focus in dealing with the distortions in our economy and ensuring that inclusive growth is a reality. The mandate of the competition authorities will not automatically be achieved, given the contesting forces with which it has to contend.


Promoting the greater spread of ownership relates to the ownership and development of the economy, and this will require greater progressive regulation. The ANC stands committed to seeing this happen. That is government in action - an ANC-led government that is implementing the policies in our manifesto. For these reasons, we in the ANC support the budget. [Time expired.]












Mr M G P LEKOTA: Madam Chair, members of the House, the most pressing issue of the time in our country is economic growth - and vigorous economic growth. As a matter of fact, the recent social unrest we saw in our country stemsdirectly from the fact that our economy is so sluggish at this time. Jobs are not being created, so large numbers of unemployed people are becoming uneasy.


I like the points you were making earlier on, Minister, about somebody who started a little shop –a shoe-making business - and other people starting their own businesses. All of these activities would be useful and helpful if we maintained what economic achievements our country had already made.


At the present time, the country isde-industrialising. Our big companies have been closing down. Sitting there, listening, I tried to compare the numbers you were talking about - the shoe makers and so on. MasimongMine inthe Free State announced yesterday that they were shedding 4 000 jobs. We celebrate 30 jobs here, 20 there and 15 here, but when we do the mathematical calculation, our economy is going down; our country is going down. We must do something about sustaining what we inherited.


Let us accept this one thing: There are things we inherited from the very unpleasant circumstances of apartheid which are still useful, such as big business. The infrastructure we inherited - we do not need to break it down first and rebuild it again. What we need is to be able to identify what those things are that we inherited that we can build on them and take the country forward.At the present time, unless we recognise that hard reality, we will be take our country backwards.


Capitalism is expansive in its growth. If we lose some of our own market today, I promise you that by the time we develop companies that can move into that space, there will be so many companies from other countries that will have moved in there thatwe would not be able to regain that space again. It is vital that this is done.


The third point I would like to make is that our departmentsmust work as a team. I talk as a critic, but one with a sense of patriotism because we want South Africa to advance. We cannot have departments of education passing children at 30% and think we will get the skills that we need to build our economy. We must produce the best students, trained people, so that we are able to deliver the best outcomes to take our country forward. [Applause.] The departments ceased this area of work. We must work as a team, not as competitors or in silos. That is vital.


The fourth point I would like to make is this: On Sunday I read what Robert Gumede said about one of the black economic empowerment companies he heads that is not sustainable; it is finished. The fact of the matter is that BEE is not the answer to the problems in our country. We need to discuss that tool and agree on the right thing to do. Thank you. [Applause.]












Mr S A TLEANE: Hon Chairperson, Minister and Deputy Minister of the Department of Economic Development, other Ministers and government leaders present - all protocol observed, the ANC most unreservedly supports this Budget Vote and our unambiguous reasons follow below.


The 10th clause of the Freedom Charter is, “There shall be peace and friendship.” For the effective and meaningful implementation and actualisation of this clause of the historical document of the people as it relates to the future of the people, the women, children and those South Africans living with disabilities, we need to begin from the premise that says their future is inextricably intertwined with that of the people of the Southern African Development Community, SADC, region, and indeed that of the African continent as a whole.


No sustainable economic development can be realised in our country if the rest of the continent remains a sea of poverty and underdevelopment. Likewise, the achievement of peace and friendship can only materialise in conditions of abundance, self-reliance and a better life for all.


The progressive government of South Africa, since its establishment, and particularly from the year 2009, after the formation of the Department of Economic Development, has focused on the accelerated development of industrial infrastructure such as roads, railways and telecommunications in the SADC region. This infrastructure was and still remains the necessary prerequisite for the movement of South African goods and services to the rest of Africa and for the entryof manufactured goods into the country from the continent. Without this movement of goods between countries in the SADC region, raising our economic integration and co-operation will remain but a hollow dream.


Improved infrastructural conditions have clearly triggered a marked increase in investment by South African companies in the region. This augurs well for much-needed job creation and development for the people of the host countries. It also exposes the host countries to South African technology and expertise through the training of local human resources.


The recent xenophobic attacks on our brothers and sisters from the continent and elsewhere has no place in our being and we condemn those attacks with contempt. We are one, as Africans and as members of the human race. It is only by joining hands as Africans that we can defeat the legacy of colonialism on the continent. No one will do that for us, except ourselves.When a sound foundation for economic development has been created in the region, it will no longer be necessary for Africans to leave their own countries and to migrate to others as economic migrants. We want our brothers and sisters from other parts of the continent to know that they are welcome in our country, particularly in the capacity of investors.


Hon Minister Patel, the ANC and the people of South Africa highly appreciate the good work that your department and its entities, particularly the IDC, have done for human development in South Africa and the region. We urge you to continue the wonderful work of industrialisation, renewal and the reinvigoration of our region.


Rise and shine, Minister Patel, because you and your Cabinet are the chosen ones; a collective anointed by the President of the Republic of South Africa, His Excellency Comrade Jacob Zuma. You were chosen to be at the vanguard of this noble process of tackling unemployment, poverty and inequality, primarily in our country but in the region as well. We are therefore not surprised that the African Union declared South Africa the champion of industrialisation and development on the continent. [Applause.]


Although time constraints prevent us from telling the real story of your success, we will quickly touch on a few of the worthy investments undertaken by the Industrial Development Corporationin the region. The IDC funded the Agribank of Zimbabwe as part of its strategy to find development finance institutions that operate outside South Africa but which provide funding to companies that import South African manufactured goods and services. The Agribank investment of US$60 million helped to create 2 500 permanent jobs and over 2 374 seasonal jobs in Zimbabwe.


The investment also helped with the preservation and creation of additional manufacturing jobs in South Africa, in addition to the goods and inputs that will be imported to Zimbabwe. The other worthy investment is that of the company Cimentos da Beira, which is based in Mozambique and owned by Consolidate General Minerals. It manufactures cement. The company has the capacity to produce 800 000 tons of cement per annum and has created hundreds of jobs for the locals in Mozambique. Given the high demand for cement on the continent, this project will treble its value in due course and benefit the people of the region and continent in a big way.


Another investment that we must mention here is that of Namib Poultry Industries. The ANC, my beginning, the world, my oyster. The ANC, my ending! Thank you very much.[Time expired.] [Applause.]












Mr P G ATKINSON: Hon Chairperson and hon members, ithasbeenoneofthegreat privileges of being a member of the Portfolio Committee on Economic Development over the past year to meet participants in the national economy acrossmanysectors and in businesses large and small. It has also been possible toheardirectly fromthose affectedofthechallenges experienced in thecreation of sustainable businesses inSouth Africa,.


Thesuccessoftheprivate sectorinparticular is criticaltoeconomicgrowthinSouthAfricaandto the creation ofjobs inanenvironmentwhere unemploymentlevelsconstituteanational emergency.WithSouthAfrica’snarrowunemployment rateofaround 23,4%, almost fivetimeshigherthan any of the Brics countries,andwith almost66% of our youthunemployed, the creation ofjobsisabsolutelyfundamentaltoour economicsurvival.


Weallknowthatpolitical freedommeansverylittle if so manyof our people are unabletoprovidefor themselves. Everypolicy devisedby thisgovernment shouldbe checkedfor itspotential togrowjobs,andanything thatkills jobsshouldbeimmediatelyscrapped.Anexampleisthelatestproposed Broad-Based Black Economic Empowerment, or B-BBEE,legislation,whichlookstodowngradebroad-basedempowermentandtofocusprimarilyonequityownership in businesses -surelyacaseof thegovernment preferring the connectedfew over a much wider application of advantage tothemany.Thissurely runscountertothe idea of the broaderandmoreinclusiveeconomywe aretrying to create.


Undoubtedly, the worstobstaclebusinessowners havehadtofaceinrecenttimesisinsufficient powerandthecrisiscausedbyEskom’sregularload sheddingor, tocall it by itspropername,job-sheddingblackouts. It isacceptedbythis governmentthatasignificantincreasein economic growthcannottakeplaceuntiltheelectricity crisis isresolved.Onan oversightvisittoMiddelburglastyeartoa produceroffinished chrome steel,I wasshockedtodiscoverthatSouthAfrica’sshareintheworldwideproductionof chrome steel has fallenfromaround52% in2008 toonly33% last year.


I would just like to make the comment that I completely agree with the hon Lekota about the issue of the de-industrialisation of South Africa. If you need an example of that, you can just look at those statistics from Middelburg to explain to you how our economy is de-industrialising.


The results of this fall in chrome and chrome ore is that chrome ore is nowexported directly fromSouth Africa to China, where they have sufficient electricitytoproducethefinishedproduct.Think not onlyoftheraw chrome ore thatis exported to China,butallthejobsthatareexported withit. Anyplansforbeneficiation really are deadinthewater untilour electricity supplyproblems are resolved.


Creatingacultureofinnovationand entrepreneurship among our peopleis absolutelycriticaltoacceleratedjobcreationin SouthAfrica. Government’s intervention inthissectorhasseen thecreationofthe Small Enterprise Finance Agency, Sefa, and Small Enterprise Development Agency, Seda, and much supportisoffered to smallbusinessesthroughthe privatesectorandthrough investmentfunds targetingstart-upbusinesses.


Ata recent meeting I attended withmanyofthoseinvolved in assistingsmallbusiness,itwaspointedoutthat SouthAfrica’sproblemisnotalackoffundingavailabletosmallentrepreneurs, butthelackof bankableideastofund. In thisvein,I was privileged tomeettheformer United Kingdom coalitiongovernment minister Vince Cable in January.His ministry is very aptlynamed“Business,SkillsandInnovation”.Wehad a discussionaboutthecloserelationshipbetweenhis department and other universities and technical institutions in helping to monetiseinnovativeideas. These institutions provide theideasthatthe Innovation departmentcan then assist to turn into large businesses.Hiscolleaguesmentionedthattheydraw heavily on the ideas of the GermanFraunhoferFoundationwhenlooking at expanding innovationintheUK.


This has no doubtbeenone of theingredients thathave helpedtheUK to create more than 2 million jobs over the past five years - and that is after 2009, Deputy Minister; after the massive economic crisis in the world. The UK has actually created more jobs than all the other countries in the European Union combined.


Financing entrepreneurship has been adequate in South Africa, Minister, but creating a real culture of new ideas and innovationthrougheducationand a closer partnership with institutions thatcreateideasisfundamental. I was very pleased to hear in your speech that you mentioned that you are looking at creating a closer relationship with Wits and the University of Johannesburg and I would just like to encourage you to take that further. And maybe you should also look at the University of Fort Hare because there are obviously people there who already have good ideas. [Applause.] Rather than just trying to create a handfulofindustrialists, thisgovernment needsto broadenitsambitionstocreatea culture ofnew ideas and millions of entrepreneurs.


Lastly,whenlookingatestablishingjobcreation zones, this government needs to be serious and honestin the application of its programmes. On an oversight visitin JanuarytoAerosud,a Centurion



-basedaircraft components manufacturer, wewere toldabouttheadjacent Centurion Aerospace Village, which the Department of Trade and Industry has been promising to create since 2010. This wasmeant to be an aviation-focused business zone establishedadjacenttotheWaterkloof Air Force Base.



In an answertoa parliamentary questionIaskedtotheMinisterofTradeandIndustry, we heard that R95 millionhadbeenspentoverthepastfiveyearsin preparation workforthe village,butallthatwas visible to us was a largepatchofopenlandwithpilesof sand. Trade and Industry has been claimingthisas one of their successes in departmental presentationsonjobcreation, butwereforcedto admit,through another parliamentary question this week,that there has been little progress in this village due to thesuspensionof a senior official in the department and aforensicauditintohisactions. Clearly one of the ANC’sfavoritequotesfrom Cabral, namely, and I quote, “Tellnolies,claimnoeasy victories”, doesnotapplytotheMinistryofTradeandIndustry.


Minister Patel, one of your majortasks in the department is to unblock obstacles tothe creation of jobs.I askthatyouconferwithyour ministerialcolleagueregardingtheCenturionAerospace Villageasgovernmentinactionisrobbingourpeopleofjobs.The CenturionAerospace Villageisanexcellentideaandshouldbe broughttolifeasanotherjob-creationhub.Thiscannotbeaneasylieby this government,but it should becomeajob-creating victoryforourpeople. I thank you. [Applause.]












Mr I A PIKININI: Hon Chairperson, Members of Parliament and guests, I will refer to the Economic Report on Africa 2014 by the African Union and the UN Economic Commission for Africa, which reveals:


One of the most puzzling paradoxes over the last decade is that Africa has benefited from unprecedented growth while a large part of its population remained trapped in economic poverty, facing rampant unemployment and inequality.


It is for this reason that the ANC’s 53rd National Conference reaffirmed the economic vision of the ANC as one that rests on the giant shoulders of the African Claims document and the Freedom Charter. The Freedom Charter, in particular, enjoins us to build a society in which its people share in their country’s wealth. It also enjoins us to use mineral and natural resources beneath and above the soil for the actual benefit of the people of South Africa.


As we discuss this budget allocation today, it should be known that this Budget Vote provides us with an opportunity to reflect on the road we have traversed since we adopted the radical stance on economic transformation in 2012. It also provides us with an opportunity to reflect on the extent of our economic and industrial policy trajectory as it relates to economic growth and the success of radical economic transformation into the future.


According to the Department of Economic Development, since 2011 the department has made significant strides in normalising the regulatory environment, particularly the alignment of all provincial growth and development strategies, to talk to the national strategy, with the exception of the Western Cape province. Many provinces in our country are moving with necessary speed to align their integrated development plans with the National Growth Path of government.


In this regard, the department, through this budget allocation, will drive and lead major, important projects in infrastructure development, water and sanitation rehabilitation projects, including the revamp of power stations, communications infrastructure and many more.


These projects are adding desired value to the Presidential Infrastructure Coordinating Commission and its important work to develop and refurbish critical economic infrastructure in the desired effort to bridge inequality, unlock employment opportunities and crush poverty.


Therefore, the establishment of the Department of Economic Development in South Africa was a strategic response to a call for faster change and radical economic transformation. The ANC-led governmentalso recently established the Department of Small Business Development and co-operatives as a fundamental assault on poverty, unemployment and inequalities in our country.


However, in the same vein, the ANC is still of the view that the redistribution of economic assets in South Africa have not met the desired expectation as envisioned by the African Claims document and the Freedom Charter. Therefore, in Mangaungthe ANC resolved, among other decisions, to take decisive and resolute action to overcome the triple challenge of widespread poverty, deepening inequality and large-scale unemployment.


Hence, the essence of this budget allocation is firstly aimed at using industrialisation in South Africa as a necessary economic project into the future, and using the infrastructure programme as one of the elements of beneficiation in South Africa.


The second aim is an active programme of localisation and beneficiation. This resonates with President Zuma’s call for local content in procurement by the state and state-owned enterprises. So, what government buys will help to unleash job-opportunity programmes in the local economy, including the creation of industrial jobs and fighting poverty in South Africa.


The third aim, but not the least, is better co-ordination and planning within the Economics cluster of government, including Nedlac and other forums of social dialogue, so that we unlock and unblock all the obstacles to a successful industrialisation project.


The programme of industrialisation has great potential to unearth many possibilities, such as skills development, to fight energy shortages and the like, among others. We are very sure that under the leadership of the Minister of Economic Development, we will be able to create decent work and decent jobs in our endeavour for radical economic transformation and an inclusive economy. [Applause.]


The department has already increased its funding level substantially. In the past five years, the Industrial Development Corporation has expanded its approval lending level to R59 billion, while the Minister talked today about the availability of R23 billion to do our work through the IDC. It is a bold start to what we need.


A growing part of that investment has gone into areas such as the green economy, film-making, agro-processing and other key sectors of the economy. It is in this regard that we support the stretch targets that the Minister has put to the IDC for the next five years, in relation to the R23 billion that he spoke about. It will need a major shift.


I am pleased to note the progress that the Department of Economic Development has made with the growth of a soya-crushing plant in Mpumalanga and the taxi assembly plants in Gauteng and KwaZulu-Natal. Already, in the past few years, we have gone on to become manufacturers of buses, with factories in Germiston and Cape Town.


These are areas and examples of industrialisation programmes that are pioneered by the ANC-led government. I am definitely sure that in the next four years, the industrialisation efforts of the ANC will assist in the radical transformation of society, especially with radical economic transformation. We need more black industrialists who will help to make food products, clothing, steel, electronic gadgets or cement.


Youth and women empowerment should take centre stage in our programme for the re-industrialisation of South Africa. This programme must bring the energy of young peoplein general, and women in particular, to the forein the productive sectors of the economy.


We must send an important message, namely that if you are a smart young woman or man, you must not only rely on working for government or being a doctor; you can have a successful story by running a successful factory, mine or farm. You can employ your fellow South Africans. This can make you part of our industrial development programmes.


In conclusion, as the Economic Report on Africa 2014 concludes, it outlines that we need to use our governments to intervene through radical economic industrial policy to help speed up the structural transformation of society and our economy by addressing market failures, among other things that the Minister spoke about here.


Another point is that the person there who normally attends meetings is uMbatha. Other people there are usually not part of meetings. [Interjections.]


The HOUSE CHAIRPERSON (Ms A T Didiza): Order, hon Pikinini. You must say hon Mbatha; not uMbatha!


Mr I A PIKININI: Oh, hon Mbatha - thank you very much for the correction. You see, we have one industrialist that we do not talk about: ...



 ... ibalilika Mama uDaphneyMashile-Nkosi.



She is a mine producer of iron ore.






So, we are talking about living examples.



Ngokukei-ANC iyaqhuba, ibhekaphambili ...



... and we are doing very well. Thank you very much, House Chairperson. Enkosi! [Applause.]















The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, I would like to thank all the Members of Parliament for the comments that have been made in this debate.


I would like to go back. A week ago, I addressed an investment conference of investors who control, in their day-to-day decisions, about R6,5 trillion of investable funds. They had a presentation by one of the foremost thinkers on strategy, Michael Power of Investec. In a few deft slides, Mr Power outlined where the South African economy comes from, where it fits into the global value chain, and how it compares with Brics countries and developed countries. At the heart of that presentation was the challenge that, I think, this debate grappled with: How do we create jobs? How do we drive industrialisation? How do we empower our people?


In responses to that debate, there were two broad approaches. On the one side, there is the approach that we have made progress in a number of areas, but we need to do a lot more. We need to do more to create sustainable jobs and to save existing jobs. There is that narrative. Perhaps if I take hon Lekota’s question about how we save and create jobs, it goes to this issue: What do you do in an economy when you have a rapid decline in the global price of iron ore, platinum and gold? What do you do when global demand begins to dry up? You need to deepen your industrialisation. That means giving South Africans, sometimes small and medium businesses, an opportunity to get into the economy. So, when we celebrate a woman who opens a shoe factory, when we celebrate a black South African maize and soya farmer, we are celebrating the roots of our long-term prosperity. We cannot rely only on high metal prices, high iron ore prices, to sustain us. So, that really is the dilemma we face: How do we go about this as government? [Applause.]


So, the first thing that we recognise is that we have to increase the infrastructure platform that the economy relies on. There is investment in transport and logistics now on a scale that South Africa has not seen before. We have seen our investment: I have pointed out 39 renewable energy plants - solar plants, wind plants, hydro-electricity plants - that bring electricity into our grid. We have invested significantly to expand the capacity to bring water to industry and also to communities. That is caught in one statistic. We are spending R1 trillion on infrastructure. You can see that example; you need to visit different parts of the country. It is not only in your airport, driving to the main hotel in the four or five metros. It is not only there. That is where it was in 2010.


Today, you have to go to Witbank in Mpumalanga to see 16 000 to 17 000 workers hard at work. You have to go to areas along the fuel pipeline from Durban right through to Gauteng to see Africa’s biggest oil pipeline, which takes petrol, diesel and jet fuel to Gauteng, being laid. You have to go to where my colleague, the Minister of Basic Education, went a week and a half ago to see what we are doing on infrastructure. He went to the Free State to open 100 schools under the Accelerated Schools Infrastructure Development Initiativeprogramme; schools that give young South Africans hope and optimism about the future


The second thing we do is to invest. Look at the figures of the Industrial Development Corporation. In the last five years, the Industrial Development Corporation put R61 billion directly into the South African economy. For every R1 billion that the IDC invests, private investors bring an extra R2 billion, so we are talking here of investment worth R180 billion that has been facilitated by the IDC. That, for me, is an example, hon Lekota, of us moving away from the fixation we had in the past with only seeing the narrow areas of our work. We are now seeing how we can unlock opportunity.


I must say that while a lot of the points made by the Members of Parliament have been very helpful and appropriate – issues around investment, competition and trade – the debate also sometimes posed some false propositions. It is regrettable, I think, that from one of the DA speakers and one of the EFF speakers the refrain is the following: Everything is bad; everything is broken; everything needs to be changed. Please let us be the government. Please, please, pretty please. [Interjections.] The thing is that you went to the electorate and you lost. [Interjections.] You lost! You lost very dramatically. [Interjections.] The DA said it would get 30% of the vote. It is an opposition party that did not even have the ambition to win! It did not get 30%.


An HON MEMBER: How many seats did you lose?


The MINISTER OF ECONOMIC DEVELOPMENT: Now, let’s look at the question of jobs. [Interjections.] Hon Marais, generally – I hope I am using parliamentary language – is a very decent chap, or I should say an honourable chap. In the portfolio committee, he is more complimentary about our work. When faced with an audiencehere, hon Marais has unfortunately gone against his normal character and has just been extremely critical. [Interjections.]


So, hon Marais says, you know what, when President Zuma got into office, our unemployment rate was X. When hon Zuma is now President, it is much higher. I shared the story of the Western Cape with this House. [Interjections.] During the debate on the state of the nation address, I put to the House that when Premier Zille took office in 2009 in a province without underdevelopment deficits, she inherited from an ANC administration a provincial unemployment rate of 19,9%, the lowest in the country. [Interjections.] Today that rate is 24,5% - almost 5% higher than what it was - and it grew faster than the national rate. Let me say that again: The unemployment rate in the Western Cape grew faster than the national unemployment rate. [Interjections.]


An HON MEMBER: Why,then, are people migrating here?


The MINISTER OF ECONOMIC DEVELOPMENT: When Premier Zille assumed power, there were 525 000 unemployed people in the Western Cape. Today, six years later, there are 705 000 unemployed people in the Western Cape - or an additional 181 000 unemployed people. [Interjections.] I say this with some sadness because the people of the Western Cape deserve better. [Interjections.] If you reduce debates in Parliament to the level of point-scoring, that is what you are going to get back: You are going to get point-scoring back.


If, instead of that, you were to lift the debate to see how we can increase competitiveness, decent work opportunities and investment, we can do better. We can point out the work of the competition authorities, which has pierced the veil of secrecy in the private sector where, in many cases, we had huge levels of collusion. We had cartels; we had price-fixing. We are breaking that up. We are ensuring now thatwe get to the point where people compete fairly and openly. [Interjections.]


There are many businesses in South Africa that are good corporate citizens; businesses that invest and make a difference to things. I can cite the clothing industry, where five, six years ago there were enormous job losses. Through the work that we have done with government and the private sector, we now have an industry with very substantially decreased job losses. Factories are opening. People are employing workers here in South Africa. [Applause.] [Interjections.] That is done through the work of this government.


I see hon Mbatha is very excited. I would encourage hon Mbatha to come to the portfolio committee meetings because that is where we actually debate the issues. [Interjections.] Hon Mbatha would be well advised to be educated on what we are doing in government in those meetings. I think, Chairperson ... [Interjections.]


The TEMPORARY CHAIRPERSON (Ms L M Maseko): Hon Minister, please take your seat. Let’s hear the hon Mbatha.


MrM S MBATHA: Chair, can you protect me? I do attend committee meetings. [Interjections.] Protect me, Chair!


The TEMPORARY CHAIRPERSON (Ms L M Maseko): Please sit down. You are protected. [Interjections.] Hon Minister, please continue.


The MINISTER OF ECONOMIC DEVELOPMENT: Chairperson, I wanted to take a few minutes just to say that this is what happens when we allow the debate to descend into mere point-scoring. This is not where we want the debate to be. [Interjections.] We want the debate to rise to what we need to do to build on solid foundations. We have 15,3 million employed people in South Africa. It is the highest in our history, but we still have significant unemployment problems. So, we need to find ways in which we work together to increase the rate of employment.


Today, we have enormous investment in infrastructure, but we still have large numbers of people in South Africa who need to get to schools, who need to get to health care clinics. How do we work together to achieve that? That is really the message we want to bring.


I would like to thank those parties who supported the Budget Vote. Thank you very much. We have the majority support here. We will work with everybody. Finally, I would like to invite all the Members of Parliament present here today to a reception in the Old Assembly area, where we will continue this debate. Thank you very much. [Applause.] [Interjections.]


Debate concluded.


The Committee rose at 16:02.



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