Hansard: NCOP: Unrevised Hansard

House: National Council of Provinces

Date of Meeting: 02 Nov 2017

Summary

No summary available.

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Minutes

Deputy President Cyril Ramaphosa’s Replies to Questions in the National Council of Provinces, Parliament
 

Question 1 - Government strategies to boost township economy
 
The development of township enterprises is a critical part of inclusive growth and real economic transformation. The spatial geography of apartheid has created a divide between where the majority of residents live and where they work and shop, and imposes enormous costs on workers and consumers.
 
Many township entrepreneurs are excluded from opportunities in the major commercial centres. We are already implementing key elements of a strategy to boost township enterprises, increase involvement of all South Africans in the economy and expand opportunities.
 
Through the Small Enterprise Finance Agency, many small businesses located in townships have received loans and industrial funding to enable them to enter new markets or expand their businesses. Last year, disbursements by the Agency totalled around R1 billion and this was targeted to township and rural enterprises.
 
As was announced in the Medium-Term Budget Policy Statement last week, a new fund for small business and innovation will be established, which will be allocated R1 billion in 2019/20. The National Informal Business Upliftment Strategy is also available to help township enterprises to upgrade their activities.
 
Through the Competition Commission Market Inquiry into the grocery retail sector, government is looking specifically at the competition spaza shops face from larger malls and the factors that may limit the growth of the township grocery retail market.
 
The actions against cartels and monopolies are further means of opening space for township enterprises. It was through the complaints of township shops that the investigation into the bread cartel was launched. With respect to youth entrepreneurs, government provides financial support to youth owned businesses through SEFA, the National Empowerment Fund and the IDC.
 
In the past financial year, the IDC approved R2.3 billion funding to youth-empowered businesses, which are those with more than 25% youth equity ownership. Last year, SEFA reported that it approved funding of R222 million to over 10,000 youth owned businesses. Much is being done to empower youth and develop township enterprises. However, given the legacy of apartheid planning and the dire extent of youth unemployment, there is still much that needs to be done.
 
I thank you.

 
Question 2 - The role of the Leader of Government Business in Parliament
 
As Leader of Government Business, I regularly table to Cabinet a report on the activities of members of the executive in relation to their responsibilities to this Parliament. But it is not the function of the Leader of Government Business to discipline members of the executive. 
 
As I have also said in the National Assembly, where difficulties arise between Ministers and Committees, such issues should be escalated to the appropriate Parliamentary structures. Parliament has the full right and authority to sanction members. Those who miss scheduled meetings without reasonable explanation can be sanctioned by Parliament.
 
Such powers do not reside with the Leader of Government Business. As members may be aware, Minister Dlamini appeared before the joint meeting of SCOPA and the Portfolio Committee on Social Development yesterday, 31 October 2017, and that engagement is expected to continue later today. As the interface between Parliament and the Executive, the office of the Leader of Government Business will continue to work with Parliament to ensure that there is effective coordination and accountability.
 
I thank you.

 
Question 3 – Agricultural Policy Action Plan and the Draft Preservation and Development of Agricultural Land Bill
 
Government is not considering legislation that will ensure that a certain percentage of farms produce cash crops. However, there are policies in place – such as the Agricultural Policy Action Plan – that aim to ensure that agricultural land is preserved and developed appropriately.
 
The draft Preservation and Development of Agricultural Land Bill, which is currently at consultation phase, has provisions for the declaration of protected agricultural areas which will be used for production purposes.
 
The Bill makes provision for the establishment of a scheme to provide financial assistance to land owners and land users to, among other things, preserve agricultural land for purposes of food production and promote a specific agricultural enterprise within a specific geographical area for purposes of food security.
 
Our policies need to take account of the fact that agricultural production depends a lot on the agro-climatic conditions, availability of water and the soil type which will determine which crops can be produced.
 
Economic viability and sustainability also play a role in the decision on what to cultivate, where farmers respond to market needs. Through the Agricultural Policy Action Plan, producers are given guidance on key commodities to be planted depending on the agro-climatic. The plan places the imperative of food security within the broader objective of equitable growth through increased labour absorption and broadened market participation, while maintaining a resilient and competitive sector.
 
I thank you.

 
Question 4 – Public procurement as a means of supporting local manufacturing and transformation
 
The National Development Plan and Industrial Policy Action Plan both place significant emphasis on leveraging public procurement to grow the domestic manufacturing sector and to create decent jobs.
 
Since the state is a very large consumer of a wide variety of products, public procurement is a very strong policy instrument to support local manufacturers and support transformation. The Department of Trade and Industry works closely with National Treasury to support localisation and industrial development through policy instruments such as designations.
 
For designated products, the Preferential Procurement Regulations require that all organs of state purchase only locally produced products at a prescribed level of local content. This policy lever has been used with considerable positive results to raise aggregate demand for local manufacturers and to improve the competitiveness of these manufacturers.
 
Further work is needed to maximise its impact.
 
This includes ensuring that there is compliance across all public sector procurement and that we build the requisite capacity across all organs of state for local procurement and supplier development. The localisation and supplier development processes enshrined in the Competitive Supplier Development Programme, which is the responsibility of the Department of Public Enterprises, has met with considerable success across the energy and rail value chain including localisation, empowerment, support for new market entrants, technology transfer and absorption and job creation.
 
South Africa is constrained by its commitments as a signatory to the WTO in prescribing local procurement requirements to the domestic private sector. Nevertheless, government is working with business and labour through Proudly South Africa to promote the ‘buy local’ campaign.
 
Our social partners understand that there are massive economic benefits from buying locally.
 
If, for example, large corporates in just the retail, construction, health, tourism and mining sectors could clearly commit to local procurement and supplier development, this would raise aggregate domestic demand supporting transformation and supporting new entrants into key value chains.
 
The government deploys a range of incentive programmes for companies that produce value-added goods locally with a range of conditions, which include local supplier development and transformation criteria.
 
These include the Manufacturing Competitive Enhancement Programme, the Special Economic Zones incentive, the Black Industrialist programme, a range of tax incentives, and other sectoral incentive programmes and financial support measures designed to support the productive sectors of the domestic economy. South Africa has a number of critical initiatives to promote local procurement.
 
We need to expand and intensify these initiatives as part of our strategy to significantly grow our manufacturing sector, encourage the development of SMEs and create new jobs.
 
I thank you.

 
Question 5 – Financial footing of South African Airways
 
In the 2017 Budget Speech, the former Minister of Finance Pravin Gordhan said proposals for putting the capital structure of SAA on a sound footing would be agreed in the next few months and that this would be dealt with in the Adjustments Budget later in the year. 
 
However, the rapid deterioration of SAA’s cash flow position necessitated more urgent action.
 
In particular, the necessity for action in terms of section 16 of the PFMA was initially triggered by one lender, Standard Chartered Bank, which insisted that the R2.2 billion in government guaranteed short term bridging facilities that it had provided to SAA be fully settled by 30 June 2017.
 
Another lender, Citibank, initially required full settlement of R1.8 billion in government guaranteed short term bridging facilities that it had provided to SAA by 29 September 2017.
 
SAA was unable to settle this debt.
 
Failure to settle the debt would have resulted in SAA defaulting on its R1.8 billion debt to Citibank and would have resulted in cross-defaults on SAA’s other guaranteed debt of R11.9 billion and general banking facilities of R830 million.
 
There have been protracted deliberations within government on how to recapitalise SAA and there have been protracted negotiations with SAA’s lenders in a bid to rollover the maturity dates of SAA’s loans. These negotiations were only concluded during the last week of September 2017.
 
In addition to the R1.8 billion due to Citibank, SAA also had R5 billion due to other lenders maturing at the same time. These lenders agreed to extend the date of maturity on condition that the Government inject R3 billion into SAA.
 
A R10 billion equity injection, which includes the R2.2 billion provided in June 2017 and the R3 billion provided in September 2017 has now been tabled by the Minister of Finance. With a reconstituted Board and a new permanent CEO, Government believes that SAA can and can be put on a path of financial sustainability. However, for that to happen, the shortfall in the capital structure and the over reliance on debt by the airline needed to be dealt with.
 
I thank you.

 
Question 6 – Development of skills required to grow the economy
 
The Human Resource Development Council is contributing on a number of initiatives to develop scarce technical and other skills. The first area of focus is to improve access to universities, TVET colleges, and community education and training centres.  The Council is doing this is by facilitating the establishment of partnerships with industry.
 
For example, the Automotive Industry Development Centre is playing an important role in up skilling TVET college teachers in highly specialist automobile skills. The HRDC works closely with SETAs and the National Skills Fund to ensure that resources are allocated where the needs are identified.
 
For example, the Chemical Industries Education and Training Authority entered into a partnership with Flavius Mareka TVET College and Sasol where learners are not only offered industry-related occupational qualification, but also that they are considered first for all vacancies in their relevant disciplines at Sasol.
 
The quality of the skills programmes is another area of focus of the HRDC.  Here, the Council works very closely with the various regulatory bodies responsible for qualifications and quality assurance in the post-school system.
 
We have set targets for increasing the numbers of graduates who qualify with scarce skills. For example, we are aiming to increase the number of engineering graduates from 9,700 in 2012 to 13,000 in 2019.
 
Teacher Education graduates are expected to increase from 13,700 in 2012 to 23,500 graduates in 2019. Although these targets are ambitious, we are confident we will attain them. South Africa enjoys a number of collaborative relationships at an international level, which assists in producing valuable skills needed by the economy.
 
One example is the Employment Improvement Programme implemented in collaboration with the Japanese International Cooperation Agency involving six of our universities. There are also a number of scholarship opportunities for undergraduate and post-graduate South African students in countries like China, Russia, Hungary, Ireland, Sweden, Japan and Chile.
 
The Ministry of Higher Education and Training signed an action plan with China for training 2,000 public servants in short term skill programmes. We also have a partnership between France and South Africa’s higher education institutions in the form of specialised training centres to strengthen human capacity development in the fields of science, engineering and agriculture.
 
All of these programmes are helping South Africa meet its need for scarce technical and other skills. The task of the HRDC is to assist in taking these initiatives to scale and ensuring that they are properly coordinated, monitored and evaluated.
 
I thank you.

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