Hansard: NCOP: Unrevised hansard
House: National Council of Provinces
Date of Meeting: 01 Sep 2022
Summary
No summary available.
Minutes
UNREVISED HANSARD
NATIONAL COUNCIL OF PROVINCES
THURSDAY, 1 SEPTEMBER 2022
PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
Watch: Plenary
The Council met at 14:02.
The Deputy Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Thank you, hon Chairperson and good afternoon. Good afternoon to everyone on the platform and inside the House. Before we continue, let me wish all of you a happy Spring Day. This month, September, we also commemorate our own heritage and Heritage Month.
However, it is also being termed as the Tourism Month and 01 September also as the Tourism Day.
Also, Pope Francis of the Roman Catholic Church have declared the 01 September as the World Day of Prayer for the creation. So, it is quite a very important day and important month for us in our national calendar and that is why I just want to remind our members about those very important issues and also want to wish you a happy Spring Day.
Let us continue. Before we proceed, let me just make the following announcement: The hybrid sitting constitute the sitting of the National Council of Provinces. Delegates in the hybrid sitting enjoy the same powers and privileges that apply in the sitting of the National Council of Provinces. For purposes of decorum, all delegates who are locked onto the virtual platform shall be considered present. They must switch on their videos if they want to speak and they should also ensure that the microphones on their gadgets are muted and must remain muted unless they want to speak.
All delegates in the Chamber must connect to the virtual platform as well as insert the cards to register on the Chamber system. Delegates who are physically in the Chamber must use the floor microphones and should switch the microphones on when they need to address the Chairperson. All delegates may participate in the discussion through the chat room and the interpretation facility is active.
Delegates on the virtual platform are also requested to ensure that the interpretation facility on the gadgets are properly activated to facilitate access to the interpretation services. Permanent delegates and members of the executive in the Chamber should use the interpretational gadgets on their desks to address the interpretation facilities. With that, you are all welcome.
We will now allow an opportunity to delegates to give notices of motion. In total we have 20 minutes for both notices and motions without notice. So, you can raise your hand on the raise your hand function and we will then start with the process for notices of motion. There are notices of motion.
Hon Gillian.
NOTICES OF MOTION
Ms M N GILLION: Thank you, Deputy Chairperson. I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debate ways to put to the end the continuing torching of the Golden Arrow buses in the Western Cape black townships of Nyanga and Khayelitsha in particular. These senseless acts of violence put the lives of passengers in danger and cause unnecessary public transport disruptions.
Ms N NDONGENI: Thank you, Deputy Chair and good afternoon. I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debate the use of traditional practice of “ukuthwala” to disguise kidnapping, rape and gender-based violence on the unconsented young girls by old men.
Ms S SHAIKH: Thank you, hon Deputy Chairperson. I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House debates the mechanisms aimed at eradicating mass shootings and killing of people in public places like taverns that have engulfed areas like Khayelitsha, Soweto and Pietermaritzburg. We believe that communities’ safety is paramount and can’t be compromised.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): If there is no other notice of motion, I will now allow an opportunity to delegates who wish to move motions without notice. Delegates who wish to ... [Interjections.] ...
The ACTING CHAIRPERSON OF THE NCOP (Mr K M Mmoiemang): ...
Deputy Chair, Deputy Chair in the House, there is hon Mokause and hon Motsamai.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Are they the ones who want to give notices of motion? Is it notices of motion?
The ACTING CHAIRPERSON OF THE NCOP (Mr K M Mmoiemang): Yes,
hon Deputy Chair.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Okay. If
there is a notice of motion, Hon Mokause.
Ms M O MOKAUSE: Thank you, Deputy Chairperson. The problem is that we are here and you are not here. So, you can’t see us.
... [Interjections.] ...
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): ... welcome that you are there for a change. I have been there all the time. Welcome that you are there for a change. You may continue.
Ms M O MOKAUSE: You lost the by-elections yesterday, I’m told
... [Interjections.] ...
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): ... So
What? We are here in the House, let us continue with the business ... [Inaudible.] ... hon Mokause.
Ms M O MOKAUSE: I hereby give notice that on the next sitting day of the House I shall move on behalf of the EFF:
That the House debates the ongoing violence which is happening in hospitals in Gauteng where Operation Dudula people aligned with the ANC are blocking ordinary Africans to access health care.
Mr K MOTSAMAI: Thank you, Deputy Chairperson. I rise to give notice that on the next sitting day of the Council I shall move on behalf of the EFF:
That the Council debates the lack of alternative land provisions made for the residents of Lethabong informal settlement who had their homes demolished and were evicted from the land that they have been occupying since 2015.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Noted.
Thank you, hon Motsamai. Hon Chairperson, is there any other person that want to give notices of motion that is in the House? If none, let us move then to the motions without notice. I will immediately start with those ... [Interjections.] ...
The ACTING CHAIRPERSON OF THE NCOP (Mr K M Mmoiemang): ... hon
Deputy Chair, there is hon Motsamai.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): He has
moved.
Ms M O MOKAUSE: Ai, J T is in charge.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): He has
moved. We are now going to notice without notice and I will request hon Bartlett to start.
COUNTLESS CHARITY
(Draft Resolution)
Ms B M BARTLETT: Thank you very much, hon deputy chairperson. I am sorry for not switching my video on and I am not feeling well. However, hon Deputy Chairperson, I hereby move without notice:
That the Council-
(1) notes that next week on Monday, 05 September, marks International Day of ... [Sound muted.] ...
(2) ... acknowledges and appreciates the countless charitable interventions and selfless efforts of nongovernmental and community-based organisations across the country to continue serving our people, especially the poor, underprivileged and downtrodden to spread the message of hope. Hon Chair, hope, love and humanity.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Thank you,
hon Bartlett. Is there any objection to the motion?
The HOUSE CHAIRPERSON (Ms W Ngwenya): Yes, Chair. There are two members, hon Labuschagne and uh ... [Interjections.] ...
Ms M O MOKAUSE: ... the Chair is objecting! The Chair is objecting.
The HOUSE CHAIRPERSON (Ms W Ngwenya): No, it is not an objection. Chairperson, I am saying that I have been advised
that there are two members that will do motions without notice.
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Hon
Chairperson, just allow me. Is there any objection? If there is none we will continue. The next motion will be carried by
CORONATION OF AMAZULU KING CELEBRATION
(Draft Resolution)
Mr E M MTHETHWA: Thank you, Deputy Chairperson of the House. The ANC moves without notice:
That the House-
(1) celebrates the coronation of AmaZulu King, Misuzulu Sinqobile Hlomesakhisihlangu kaZwelithini, has officially been introduced to the ancestors and his people during his ukungena esibayeni (entering the kraal) ceremony, known traditionally as ukugcotshwa kweSilo;
(2) a strong contingent of amabutho, dancing maidens, aboMama, nezinsizwa and dignitaries from around the country and further afield descended at KwaKhangelamankengane Royal Palace on Saturday 20 August, kwaNongoma, for the sacred ceremony;
(3) the ceremony comes after His Majesty’s lion hunt this week which paved the way for him entering the kraal;
(4) thousands flocked to the royal grounds to witness the historic event last seen 52 years ago when the departed King Goodwill kwaZwelithini was crowned the King of the AmaZulu Nation; and
(5) therefore, we congratulate the King for ascending to his rightful throne and the Zulu Nation for a graceful occasion.
THE PASSING OF MR PIETER VAN DER WESTHUIZEN
(Draft Resolution)
Mr S F DU TOIT: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with great sadness the passing of Mr Pieter van der Westhuizen, a respected member of the community near Zeerust, a former police officer, a loyal fiend to many;
(2) also notes that Mr Van der Westhuizen was fatally wounded after responding to a robbery in the North West Province, while acting in the interest of the community;
(3) further notes that this giant will be missed by his friends, family and the community; and
(4) conveys heartfelt condolences to the Van der Westhuizen family.
Motion agreed to in accordance with section 65 of the Constitution.
THE SUDDEN PASSING OF LORRAINE BOTHA
(Draft Resolution)
Ms C LABUSCHAGNE: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with deep sadness the sudden passing of Lorraine Botha, a member of the Western Cape Provincial Parliament;
(2) further notes that Lorraine served the Western Cape with distinction and during her time, served as the Chairperson of the Standing Committees on
Education, Social Development as well as Premier and Constitutional Matters; and
(3) also notes that Lorraine was the DA Constituency Head for Bergriver and was elected as the Chief Whip of the DA’s Western Cape caucus in May this year, so her presence will undoubtedly be missed within the political sphere, and may her soul rest in peace.
Motion agreed to in accordance with section 65 of the Constitution.
The DEPUTY CHAIRPERSON OF THE NCOP: Hon members, let me also convey our deepest and sincere sympathy to the family of Ms Botha and the party, the DA, for the untimely passing. We have just heard at about 13:00 about it. The House will send a motion of condolences to the family.
ARREST OF THREE MEN FOR THE POSSESSION OF A COCAINE CONSIGNMENT
(Draft Resolution)
Ms A D MALEKA: Deputy Chairperson, I move without notice:
That the Council-
(1) commends the Hawks, together with Crime Intelligence and the Western Cape Traffic for arresting three men for the possession of a cocaine consignment worth an estimated value of over R400 million on Thursday, 04 August 2022;
(2) notes that the team of law enforcement agencies followed up on information about a truck suspected to be transporting drugs and an operation was organised on the N1 freeway where the truck was intercepted and a large quantity of drugs was found hidden in false wooden boards at the back of the truck;
(3) recognises that, if more drug traffickers are arrested and brought to book, the level of crime associated with drugs decreases; and
(4) calls upon peace loving South African citizens to continue working with law enforcement agencies, to rid our communities of drugs and drug dealers.
Motion agreed to in accordance with section 65 of the Constitution.
THE BY-ELECTIONS IN THE NORTHERN CAPE
(Draft Resolution)
Ms D C CHRISTIANS: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with joy that the DA has won the by- election in Sol Plaatje, Ward 21 in the Northern Cape yesterday;
(2) further notes that the DA has won 100% of the by- elections in the Northern Cape province since the local government elections took place;
(3) recognises that the first win was in Ward 3, Kareeberg, a previous ANC ward, where the DA support grew significantly from 13,35% to 42,77%;
(4) further recognises that the second DA victory was yesterday’s by-election, where the DA support grew significantly from 51,14% in the local government elections to 58,87%; and
(5) congratulates the Northern Cape DA under the sterling leadership of Harold McGluwa and Isak Fritz.
Motion agreed to in accordance with section 65 of the Constitution.
SERIOUS ALLEGATIONS AGAINST THE DA LEADERSHIP
(Draft Resolution)
Mr M DANGOR: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with concern the serious allegations levelled against the DA leadership in the Tshwane Metropolitan Council for interfering in the procurement processes;
(2) further notes that, whilst our firm believe is that the allegations remain allegations until tested, we believe that the DA must act with the same zeal and vigour against their implicated
leader in these allegations, as it does against other people who are accused of corruption;
(3) recognises that the DA cannot investigate itself around these serious allegations; and
(4) calls on the Minister and the MEC of COGTA in Gauteng to unleash a forensic investigation around these allegations, as a matter of urgency.
In light of the objection, the motion without notice will become a notice of motion.
THE COMRADES MARATHON 2022
(Draft Resolution)
Ms B T MATHEVULA: Deputy Chairperson, I move without notice:
That the Council-
(1) notes that on Sunday, 28 August 2022, the Comrades Marathon: The Ultimate Human Race, one of the most notable running events on the international calendar was held in the province of KwaZulu-Natal between Pietermaritzburg and Durban;
(2) further notes that 13 213 runners took part in the 2022 Comrades Marathon on Sunday;
(3) congratulates Mafikeng-born, Tete Dijana, on winning the race in time;
(4) recognises that the runner stormed to victory, beating his teammate and defending champion, Edward Mothibi who came in second and Dan Mosalekwe who finished third; and
(5) further congratulates the winners of all the other categories, and the thousands of runners
from around the world who participated in the 2022 Comrades Marathon.
Motion agreed to in accordance with section 65 of the Constitution.
PASSING OF MUSICAL ICON, TOKOLLO TSHABALALA
(Draft Resolution)
Ms N E NKOSI: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with great sadness the passing on of musical icon, Tokollo Tshabalala, affectionately known as Magesh;
(2) also notes that the renowned musician was famously known for his immense contribution
towards the development of South African arts and culture especially kwaito music;
(3) further notes that Magesh will forever be remembered as a musical and cultural pioneer, who used his artistry as a weapon to uplift and develop the youth of postapartheid South Africa; and
(4) conveys our heartfelt condolences to the Tshabalala family, members of TKZE and his friends.
Motion agreed to in accordance with section 65 of the Constitution.
THE SENTENCING OF A 60-YEAR-OLD MAN TO LIFE IMPRISONMENT
(Draft Resolution)
Mr E M MTHETHWA: Deputy Chairperson, I move without notice:
That the Council-
(1) welcomes the sentencing of a 60-year-old man to life imprisonment for kidnapping and raping a teenager in the Greytown Regional Court this week;
(2) notes that the offences took place between February and July 2019, when the man asked the victim’s relatives to arrange a suitable bride for him, following which the victim’s aunt chose her to be his bride;
(3) also notes that upon meeting him, she changed her mind when she realised his age, however, the family proceeded with premarital rituals, including the payment of lobola, fully aware that the complainant was resisting;
(4) further notes that the victim was then kidnapped by the accused and taken to his home in
Ntembisweni, where she was held captive and repeatedly raped; and
(5) commends the court for rejecting the man’s defence argument of using the traditional practice of ukuthwala, and uphold the rule of law and hopes that the sentencing of this man to life imprisonment will serve as a deterrent to those who perpetuate gender-based violence and violation of women’s rights under the disguise of traditional practices.
Motion agreed to in accordance with section 65 of the Constitution.
LACK OF SERVICE DELIVERY IN THE FREE STATE PROVINCE
(Draft Resolution)
Ms M O MOKAUSE: Deputy Chairperson, I move without notice:
That the Council-
(1) notes with concern the continued lack of service delivery in the Free State province, where the Chief Whip of this Council comes from, particularly in Mangaung and Maluti-A-Phofung;
(2) further notes, that Free State municipalities continue to face difficulties in the delivery of basic municipal services like water, sanitation and sewage spillages, poor road quality and substandard infrastructure;
(3) acknowledges that Free State Municipalities have no capacity to provide any services to the people and are merely instruments for the facilitation of looting by the ruling party and those who captured them in business;
(4) further acknowledges, that Maluti-a-phofung, Mafube and Tokologo are far worse, as there is no coherent plan for service delivery in those
municipalities, there is no capacity to prepare even basic financial statements;
(5) recognises the collapse of service delivery is a direct consequence or manifestation of weak governance, municipal capacity constraints and poor planning; and
(6) calls for drastic interventions in the Free State so as to rescue service delivery around our municipalities.
In light of the objection, the motion without notice will become a notice of motion.
ANNOUNCEMENT
The DEPUTY CHAIRPERSON OF THE NCOP: At our sitting on 14 June 2022, we adopted the report of the Joint Committee on Ethics and Members’ Interest, which dealt with the 2021 registrar of members’ interest, in respect of late disclosures,
contravention of the code of ethical conduct and the disclosure of members’ interests.
The House agreed to the recommendation of the Joint Committee on Ethics that the delegates who contravene the code be reprimanded in the House. Hon Mathevula was one of those delegates. She could however not be reprimanded, since she was on leave at the time.
In view of this, I now call on the hon Brenda Mathevula. She must first stand. Hon Mathevula, you are hereby reprimanded in the House for breaching the code of ethical conduct and disclosure of members’ interest, in that you submitted your disclosure of members’ interest form late. Thank you very much.
CONSIDERATION OF CRIMINAL LAW (FORENSIC PROCEDURES) AMENDMENT AND REPORT OF SELECT COMMITTEE ON SECURITY AND JUSTICE THEREON
Ms S SHAIKH: Thank you very much, hon Chairperson and greetings to all hon members, chairpersons, the Chief Whip of the Council and all hon members of this august House. The
Select Committee on Security and Justice, has agreed to the Criminal Law (Forensic Procedures) Amendment Bill [B 25 - 2021] without proposed amendments and reports as follows:
The Criminal Law (Forensic Procedures) Amendment Act, 2013 provides for amongst others, the taking of buccal samples from all persons who have been convicted of a sentence of imprisonment in respect of any offence listed in Schedule 8 of the Criminal Procedure Act, 1977, within a period of two years from the date of commencement of the Act. Examples of Schedule
8 offences include amongst others murder, rape, sexual assault, any sexual offence against a child or a person who is mentally disabled, child stealing, etc.
However, in terms of the Act, there was no possibility to extending the transitional period of two years. The Act commenced on 27 January 2015 and the period of two years determined in the Act expired on 26 January 2017. However, the police service was not able to complete the process of the taking of buccal samples from all convicted Schedule 8 offenders within the period of two years provided for in the Act.
This resulted in a large number of persons convicted and sentenced for imprisonment in respect of Schedule 8 offences, upon having served their sentences to be released without Deoxyribonucleic acid, DNA, samples having been taken from them.
However, in terms of the Act, there was no possibility to extent the transitional period of two-years. The Act commenced on the 27th of January 2015 and the period determined on the act expired on January 2017. However, the police services did not to complete the process of the taking buccal samples sample from all convicted Schedule 8 offenders within the period provided for in the Act. This resulted in a large number of persons convicted and sentenced for imprisonment in respect of Schedule 8 offenders upon having served their sentences to be released without DNA samples having taken from them.
Following the expiry of the transitional period of two years, it became necessary to amend the Act in order to re-empower authorized members of the police service to take buccal
samples from convicted Schedule 8 offenders serving sentences of imprisonment.
A significant obstacle encountered by the police in taking buccal samples from such persons serving sentences was the refusal by such person to have their buccal samples taken. This clearly is as a result of the fear that they could be linked with other unsolved cases where their DNA samples have not been taken before. The Bill also proposes to address this obstacle.
Hon Chairperson, in terms of the clauses 1 of the Bill, clause 1, provides that any word or expression to which a meaning has been assigned in the Criminal Law or Forensic Procedures Amendment Act, 2013, bears the meaning so assigned thereto.
Clause 2 (a) of the Bill, substitutes section7(7) of the Act for a provision identical to the previous subsection (7), but without a limitation to the period allowed to take buccal samples of persons convicted for Schedule 8 offences. As well outlining reporting requirements and in addition, the proposed subsection (7)(b) provides that the National Commissioner of Correctional Services must report the prescribed information of Schedule 8 offenders to the National Commissioner of the
South African Police Service at least three months prior to the planned release date of such persons.
Clause 2 (b) of the Bill, addresses the challenge of convicted Schedule 8 offenders that refuse to submit to the taking of their buccal samples. The proposed new section 7(7A) in clause 2(b) provides for the lodging of an application by the National Commissioner of the South African Police Service to a judge or a magistrate for a warrant to compel a convicted Schedule 8 offender who refuses to submit to the taking of his or her buccal sample to submit thereto.
The Bill provides for the enforcement of an obligation for taking of buccal samples through the proposed new section 7(7B), in clause 2(b), which provides that an authorised person assisted by correctional officials may use minimum force against a person who refuses to submit to the taking of a buccal sample despite being compelled by a judicial warrant.
Furthermore, the proposed new section 7(7C) in clause 2(b) requires the National Commissioner of the South African Police Service, in consultation with the National Commissioner of Correctional Services, to issue and publish in the Gazette
National Instructions regarding the use of minimum force contemplated in subsection (7B).
It is important to note that in terms of the proposed new section 7(7D), the provisions of section 32(5) and (6) of the Correctional Services Act, 1998, relating to use of force apply with the necessary changes to the use of force requirement as provided for in the proposed new section 7(7B).
Hon Chair, in terms of the committee consideration of Bill and public participation process, the select committee received a briefing on the Bill on 15 June 2022. The Bill was advertised for public comment on Parliament’s electronic platforms as well as in newspapers from 26 June to 15 July 2022. The committee received two written submissions from the following organisations, ActionSA and Cosatu. Both organisations were in agreement with the Bill and Cosatu raised a concern on the provision of necessary resources by government to SAPS and Department of Correctional Services, DCS, to collect buccal samples in order to ensure the Bill can be implemented.
On 10 August 2022, the select committee received a further briefing from the Civilian Secretariat for Police Service on
the written public submissions and the department’s response to said submissions. During the committee deliberations, members queried the use of force as proposed in the amendment which was explained further by the department. On 24 August 2022 the select committee considered and adopted the Bill.
Committee members were of the view that, the Bill shall ensure the effective maintenance of a comprehensive forensic DNA database, in order to enhance the forensic investigative powers and capacity of the South African Police Service. This is expected to have a positive impact on the reduction of high crime rates, and shall contribute to the protection of a person’s constitutional right to freedom and security of a person.
This Bill will go a long way in ensuring that the necessary evidence is collected particularly in gender-based violence cases and the committee encouraged the department to ensure that the Bill is capable of full implementation and that backlogs in forensics are addressed speedily to bring perpetrators to book.
The Select Committee on Security and Justice, having considered the Criminal Law (Forensic Procedures) Amendment
Bill [B 25 - 2021] referred to it on 15 June 2022 and classified by the Joint Tagging Mechanism, JTM, as a section
75 Bill, recommends the Council pass the Bill without proposed amendments. Thank you.
Mr E M MTHETHWA: Hon Deputy Chair, I don’t know whether my hand was recognised because on my side it kept on indicating “Lower” or maybe they were lowering that side.
THE DEPUTY CHAIRPERSON OF THE NCOP: If they raised your hand it will automatically indicate that you must lower your hand. It’s just automatic. So your hand had been noted. It seems as if we have concluded but just for procedure, those that abstain should also raise their hand.
Debate concluded.
Voting
Question put: That the Bill be agreed to.
Bill agreed to in accordance with section 75 of the Constitution.
CONSIDERATION OF REPORT OF SELECT COMMITTEE ON PETITIONS AND EXECUTIVE UNDERTAKINGS — EXECUTIVE UNDERTAKINGS MADE BY THE MINISTER OF HEALTH DURING THE HOUSE SITTING OF 11 MARCH 2021 AS ADOPTED ON 24 JUNE 2022
CONSIDERATION OF REPORT OF SELECT COMMITTEE ON PETITIONS AND EXECUTIVE UNDERTAKINGS — EXECUTIVE UNDERTAKINGS MADE BY THE MINISTER OF SOCIAL DEVELOPMENT DURING THE HOUSE SITTING OF
27 OCTOBER 2020 AS ADOPTED ON 24 JUNE 2022
CONSIDERATION OF REPORT OF SELECT COMMITTEE ON PETITIONS AND EXECUTIVE UNDERTAKINGS — EXECUTIVE UNDERTAKINGS MADE BY THE MINISTER OF TRANSPORT DURING THE HOUSE SITTING OF
27 OCTOBER 2020 AS ADOPTED ON 24 JUNE 2022
Ms A D MALEKA: Deputy Chairperson, the Select Committee on Petitions and Executive Undertakings requested the hon Minister of Health to appear before it in order to provide a progress report on the implementation of the following
executive undertakings made during a House sitting on
11 March 2021.
The first executive undertaking is with respect to the vaccination roll-out plan. They can confirm that there is a comprehensive geo-mapping of all facilities and vaccination sites that will ensure equitable access to vaccines by everyone, irrespective of where they live;
Secondly, government will indeed ensure that the vaccination programme is geared towards reaching rural communities through platforms with high reach in audience share in those areas;
Thirdly, their plan includes communicating vaccination messages in all official languages on national, community, regional and commercial radio stations, featuring dramas and generic adverts;
Fourthly, the awareness campaign will make use of outdoor platforms across the length and breadth of the country, including rural communities, which, amongst others is the use of outdoor billboards, taxis, electronic screens in public
places, as well as boards in shopping malls and branding of busses to communicate the message of vaccination;
Fifthly, all registered vaccine centres will be published on platforms for all citizens to have access to this information and they are working on increasing the number of testing laboratories to expedite quality assurance of all vaccines that are produced;
The other one ... [Inaudible.] ... all suppliers will be requested to produce laboratory certificates to buyers, providing a unique identifier ... [no audio]
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Unmute, hon
Maleka. You are muted.
Ms A D MALEKA: Oh, must I start afresh?
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): No, you can
continue.
Ms A D MALEKA: Okay. The eighth one is the following. They are working on adopting open contracting principles as part of ensuring transparency in procurement.
The concerned executive undertakings were referred to the Select Committee on Petitions and Executive Undertakings. After its referral, the committee proceeded to extend an invitation to the Minister to appear before it.
Furthermore, in noting the progress report made by the Minister of Health, the committee observed that the executive undertakings had been adequately implemented and therefore recommends that they be closed.
Can I continue with the second one, Chairperson?
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Please
continue, hon Maleka.
Ms A D MALEKA: Okay, thank you. There were three executive undertakings that were made by the hon Minister of Social Development during the House sitting of 27 October 2020.
The first one is that they are focused on efforts to ensure that there is a model, gender-based violence one-stop centre in each of the identified 30 hotspot areas;
Secondly, they are therefore working to expand the Khuseleka One-Stop Centres in the first phase, in Cape Town, Sol Plaatje Municipality, eThekwini, Mangaung, Ehlanzeni, Tshwane and Johannesburg; and
Thirdly, in the second phase they will identify buildings in the Eastern Cape, North West and Limpopo to enhance the existing Khuseleka Centres and expand all sheltering services in the provinces.
The process was followed and the committee invited the hon Minister in order for ... to scrutinise and to subsequently report to the House on the implementation. After its referral, the committee proceeded to extend an invitation to the Minister.
Furthermore, in noting the progress report made by the Minister of Social Development, the committee made the following observation and key findings. Intervention centres
need to reach rural areas and should not only be concentrated in urban areas. There needs to be monitoring and training of gender-based violence and femicide, GBVF, ambassadors and local government needs to be involved. There is a lot of duplication in GBVF programmes. The last finding is that there is a lack of facilities at SA Police Service centres for GBVF victims.
Furthermore, in noting the progress report presented by the Minister of Social Development, the committee observed that the executive undertakings had been adequately implemented and therefore recommends that they be closed.
In moving to the undertakings by the Minister of Transport during the House sitting of 27 October 2024, the following undertakings ...
The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Just a
correction. It’s 2021. You said 2024.
Ms A D MALEKA: Sorry, 2021. There are three executive undertakings. The National Treasury has granted approval of R900 million for the implementation of the Passenger Rail
Agency of SA’s, Prasa’s, security plan to combat the theft and vandalism of rail infrastructure. Part of the plan is to immediately appoint security personnel and to deploy remotely piloted aircraft systems to conduct virtual patrols on high- risk infrastructure.
In terms of the second executive undertaking, the plan will also involve the creation of an internal security capability for armed response, control room operations, as well as increasing the number of physical security officials on the ground.
The third one is an e-guarding solution that will be introduced for the protection of mission critical assets such as substations ...
We are also embarking on ensuring that we very thoroughly identify those who have been involved in vandalising, destroying and stealing infrastructure that is meant to support the livelihoods of our people.
In the fifth and last one, they are going to ensure that they beef up security at key rail installations and they will make
sure that, using technology, they will be able to identify those who get involved in criminality. They will be using drones to oversee rail lines.
After its referral to the committee, and further noting the progress report made by the Minister, the committee made the follow observations and key findings. The committee notes that Prasa was in a rebuilding process and security plans had already been implemented. The committee noted that the Minister admitted he was not happy with the performance of Prasa and further admitted that there were delays on some plans because of changes to personnel and depletion of capacity.
Lastly, the committee noted the submission by Prasa’s acting group chief executive officer, CEO, that an attack on Transnet was affecting their service and required collaboration in an integrated approach between Eskom, Prasa and Transnet.
In noting the progress report presented by the Minister of Transport, the committee recommended the following. The department should expedite the process of attending to the following projects: to increase the security capability; a
faster recovery in rebuilding the stations and corridors; the problem of ghost payments be finalised; and the department to ensure that there is greater transparency and communication around the procurement process.
The committee concluded that a timeframe of three months must be set for the department to report back to the National Council of Provinces on the implementation of the above recommendations by providing the National Council of Provinces with a progress report in this regard.
The Select Committee on Petitions and Executive Undertakings tables the reports for consideration. Thank you, Chair.
Debate concluded.
Question put: That the Reports be adopted.
IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.
Report of Select Committee on Petitions and Executive Undertakings — Executive Undertakings made by the Minister of
Health during the House sitting of 11 March 2021 as adopted on
24 June 2022 accordingly adopted in accordance with section 65 of the Constitution.
Report of Select Committee on Petitions and Executive Undertakings — Executive Undertakings made by the Minister of Social Development during the House sitting of 27 October 2020 as adopted on 24 June 2022 accordingly adopted in accordance with section 65 of the Constitution.
Report of Select Committee on Petitions and Executive Undertakings — Executive Undertakings made by the Minister of Transport during the House sitting of 27 October 2020 as adopted on 24 June 2022 accordingly adopted in accordance with section 65 of the Constitution.
DEBATE ON THE SOCIOECONOMIC IMPACT AND THREAT OF PRODUCTION AND TRADE IN COUNTERFEIT PRODUCTS: WAGING A CONCERTED BATTLE AGAINST THE PRODUCTION AND DISTRIBUTION OF COUNTERFEIT PRODUCTS
(Subject for Discussion)
The DEPUTY MINISTER OF TRADE, INDUSTRY AND COMPETITION (Mr F Z
Majola): Hon Deputy Chairperson of the National Council of Provinces, Chief Whip of the National Council of Provinces, House Chairpersons, hon members, MECs present, SA local Government Association, Salga, delegates and fellow South Africans, illicit trade is a global problem that abuses the international trade system and negates the foundations of the multilateral legal framework. This underground economy destabilizes institutions, recognizes no frontiers and nullifies the collective objective of fair trade.
Research undertaken by the Organization for Economic Co- operation and Development, OECD, reveals that international trade in counterfeit and pirated products could have been up to US$200 billion in 2005. This total does not include domestically produced and consumed counterfeit and pirated products and the significant volume of pirated digital products being distributed via the internet. If these items were added, the total magnitude of counterfeiting and piracy worldwide could well be several hundred billion dollars.
The OECD report shows that the items that counterfeiters and pirates produce and distribute are often substandard and can
even be dangerous, posing health and safety risks that range from mild to life-threatening. Counterfeiting and piracy are illicit businesses in which criminal networks thrive.
Economy-wide, counterfeiting and piracy continue to undermine innovation, which is key to economic growth. Thus, the magnitude and effects of counterfeiting and piracy are of such significance that they compel strong and sustained action from governments, business and consumers.
According to studies conducted by the OECD, it is estimated that trade in counterfeit goods is worth more than 5% of world trade. This can be attributed to a number of factors, such as: firstly, advances in technology; secondly, increased international trade especially in emerging markets; and lastly, increased share of products that are attractive to copy, such as branded clothing and software.
Hon members, it is hard to obtain accurate statistics on counterfeiting mainly because it is an underground activity. However, the copyright industries of the United States of America have collected detailed information on piracy of their products for a number of years. These industries suffer huge
losses. About half of all motion picture videos, more than 40% of all business software and a third of all music recordings sold in 1996 alone were pirated copies. Counterfeit clothing, both fashion and software is very prevalent in Europe.
A common technique is to import plain clothing and attach the labels in one European Union, EU, member state and then release the products for sale in another member state, benefiting from the free movement of goods across borders.
In the spare parts industries, counterfeits are part of the overall problem of unapproved spare parts. They are traded on the grey market, together with overruns, recycled items, copy parts and stolen goods, making it very difficult to control the market and separate the illegal items from the legal ones.
According to research conducted by Canon, a digital equipment company, International Criminal Police Organization, Interpol, describes Counterfeit Production and Trade as, and I quote:
A transnational crime, run by extensive and complex criminal enterprises and make it clear that the money
made is used to fund terrorism, the purchase of firearms, human trafficking and cybercrime.
The term counterfeiting is described by the OECD in its broadest sense as it covers any manufacturing of a product which so closely imitates the appearance of the original product to mislead consumers. This may include trademark infringing goods, as well as copyright infringements. The concept also includes copying of packaging, labelling and any other significant features of the product.
The definition of illicit trade according to the World Trade Organization, WTO, means any commercial practice or transaction related to the production, acquisition, sale, purchase, shipment, movement, transfer, receipt, possession or distribution of any illicit product defined as such by international law or any licit product for nonlicit purposes as defined by international law. Illicit trade also covers any conduct intended to facilitate such activities.
One of the biggest challenges we must confront is to establish what drives this phenomenon in order to develop proper response mechanisms.
According to Canon, the counterfeit trade has a long history and has been deeply connected with many types of crime. This is simply because it has proven to be a really effective way to make huge sums of money with very low risk - that is easy money.
When compared to other illegal activities, for example, drug smuggling, the penalties for making and selling fake goods are generally very weak.
The collective term of criminal gangs as described by Interpol, for instance, is often used to describe the organizations behind the counterfeit trade really does not do justice to the extent of the problem.
House Chairperson, what is the socioeconomic impact of this unwanted phenomenon particularly for our country? Industries across the world lose large amounts of business to counterfeiters. These losses not only affect the producers of genuine items, but they also involve social costs.
The ultimate victims of unfair competition are the consumers. They receive poor-quality goods at an excessive price and are sometimes exposed to health and safety dangers.
South Africa as a global player continues to be directly impacted by the scourge. For the 2019-20 financial year, the Sars performed 1 301 counterfeit goods seizures to the value of R1,1 billion. Counterfeit goods find their way into and out of the country through the same trade supply chain used to carry legally traded goods.
According to Business Leadership SA, BLSA, illicit trade is one of the biggest contributors to South Africa’s fiscus constraint, as the country is losing about R250 million a day in tax revenue as a direct result of illicit trade.
The BLSA also added that the bad state of South Africa’s economy was being exacerbated by contributing factors such as illicit trade. This phenomenon, in some countries, has undermined regulations, resulted in political interference, caused reputational damage to legitimate brands and marred the achievement of the United Nations Sustainable Development Goals.
As a result of these counterfeit products being manufactured in the underground economy, there are usually no minimum standards to be adhered to and quality checks, leaving the final consumer exposed to dangerous and ineffective products with health risks and hazards. Governments lose out on unpaid tax and incur large costs in enforcing intellectual property rights.
The BLSA study finds that in South Africa the illicit trade in the tobacco industry is estimated to be between 30% and 35% of the total formal market in the country, and 42% of the informal market. Their study further reveals that the government loses between R7 billion and R8 billion annually due to most prevalent of cigarette packs being sold at below the minimum collectable tax.
In size by volume, the illicit trade segment here comprises smuggling, which is 28%, tax leakage at 24,8%, counterfeit at 24,3% and artisanal products at 22,9%. When turning to value, smuggling still remains at the top of the ladder at 39,5%, with counterfeit at 38% and artisanal products at 17,7%. Owing
to this, government is losing an estimated R6,4 billion in excise tax and job losses as a result.
The study indicated that the underdeclaration of customs value in the clothing and textile industry had increased from
R5,2 billion in 2014 to R8,5 billion in 2018. In turn, the economic impact of this has led to the closure of many South African factories in the industry, which has resulted in more than 80 000 jobs having been shed in textile and 100 000 jobs in clothing.
In a broader sense, illicit trade, as a result, influences South Africa’s compounded unemployment rate, which is currently at a high of 33,9%. Regrettably, human rights are often violated in the world of counterfeit trade.
Undercover factories, operating under the radar of law are often cheaply staffed through child labour or those who have been trafficked and enslaved for this purpose. Conditions are generally found to be profoundly unsafe and workers are abused, often in ways that grossly violate labour laws and human rights.
Illicit trade is a global problem, a threat to production and trade. It abuses the international trade system and negates the foundations of the multilateral legal framework. It destabilizes institutions, recognizes no frontiers and nullifies the collective objective of fair trade across the world.
One of the biggest threats associated with the production and trade of counterfeit goods is the fact that the products will most probably have not gone through proper safety tests even if the seller makes that claim.
Criminals have discovered that by conducting small parts of their counterfeiting process in multiple locations, they have a higher chance of evading authorities.
Trading Standards in the UK frequently discover a branding room when conducting raids where counterfeit items are finished with brand labels just before they go on sale. Again, these sites are often linked with human trafficking and modern slavery.
Hon members, illegal imports continue to pose serious threats to economies particularly emerging ones. Let me highlight some of the issues to illustrate the impact of illegal imports: firstly, they lower revenue for the fiscus given that not all customs duties and value added tax due to the government are paid; secondly, circumvention of support put in place by government for local industries; thirdly, the erosion of productive capacity in the country; fourthly, job losses, particularly in the manufacturing sector; fifthly, limiting our potential to grow and create jobs; sixthly, lower company profits, unfair competition for legitimate trade; and lastly, undermining government’s efforts to promote health, security, standards, the wellbeing of its people and the efforts to curb corruption.
The geographic spread of production and trade in counterfeit products across the world varies considerably. While most countries have some trade in counterfeit goods, some have become notorious for producing and exporting large quantities of fakes.
Information from the customs services of the United States and EU member states provide insight into which countries are the biggest exporters of fakes and the types of products that are being counterfeited.
The top five suppliers of counterfeit goods to the United States in 1997 were China, Korea, Chinese Taipei, Hong Kong and the Philippines. The most common products were CDs, videos, computer games, wearing apparel and lighting or power goods.
In total, the US customs seized Intellectual Property Rights- infringing, goods worth US$54 million during fiscal year 1997.
The main sources of fakes imported to the European Union were Poland, Thailand, Turkey and the United States. Clothing accounted for more than half of the items seized.
The SA Revenue Services has made some findings on illicit financial flows: firstly, 60% of illicit financial flows derives from large commercial companies; secondly, 30% of illicit financial flows is through criminal activities and drug trafficking; and lastly, 10% from corruption activities.
House Chairperson, despite all these challenges, it is not all doom and gloom. There are international trends that are emerging to combat counterfeiting. Companies, as well as enforcement agencies are becoming increasingly aware of the problems of counterfeiting. All companies need to make sure that their trademarks are adequately protected to implement anticounterfeiting policies to deal with the threat.
A number of technologies, such as holograms, smartcards, biometric markers and inks can be employed to protect and authenticate genuine products. The lack of information sharing is often perceived to be one of the main obstacles in the fight against counterfeiters.
The World Customs Organization, WCO, and Interpol now react proactively. They employ databases on counterfeits and conduct training for officials in partnership with private industry.
A number of policy initiatives exist at both the private and the official level. Countries with a strong representation of trademark owners have established anticounterfeiting associations. These are membership organizations, whose main
activities include promoting adequate IPR protection, information gathering and liaison with enforcement agencies. Some trade associations are very active in assisting their members to combat counterfeiting. These include the Business Software Alliance, BSA, and the International Federation of the Phonographic Industry, IFPI.
The latest international initiative is the Global Anticounterfeiting Group, GACG, which is a forum for discussion aimed at raising awareness of the health and safety hazards of fakes.
Governments, business and society at large must continue to wage a concerted battle to address or mitigate against the production and trading in counterfeit production. Despite the kickbacks from the counterfeiters, the government of South Africa will not rest until this menace is on its knees. To this end, government has been engaged in various initiatives to combat production and trade in counterfeit products. Some of these initiatives include, cutting down the turnaround time for the registration of trademarks and tightening of border controls, leading to confiscation of counterfeit product and arrest of the perpetrators.
The private sector and all the other economic and social players, including the customers are encouraged to come on board for a united front against counterfeits in the economy as the fight to revive the economy and to create employment continues.
Hon House Chair, together we can defeat the production and trade in counterfeit goods. I thank you.
Mr J J LONDT: Good afternoon hon Chair, hon Deputy Minister, members and fellow South Africans.
Hon Deputy Minister, I firstly want to thank you for giving us all the definitions as well as indicating how big the problem is.
I now want to say that we often hear the quote:
“Imitation is the sincerest form of flattery.”
This is what people use when they defend buying counterfeit goods. However, as is often the case when people use quotes,
the only use part of the quote and the second part of the quote is also important.
“Imitation is the sincerest form of flattery that mediocrity can pay to greatness.”
Although this Oscar Wilde quote has its root in literature, it becomes dangerous when we consider that imitation, often with substandard products can negatively impact the health and wellbeing of pharmaceuticals, food or vice products like alcohol and cigarettes.
Hon Deputy Minister, although the illicit trade is an international phenomenon, the effect is much more pronounced and felt much more acutely in South Africa where our expanded unemployment rate is sitting at 45,5% and the youth unemployment is touching 70%
The illicit trade costs the South African economy billions every year, with estimates that vary. Sars indicated a R100 billion, Global Financial Intelligence report of 2019,
using IMF, International Monetary Fund data at R152 million, Business Leadership South Africa estimated that the country
loses more than R250 million worth of tax revenue a day. That is the scale.
Whichever way you look at it, this is a major problem that has a debilitating knock-on effect on our economy that is already struggling with crippling unemployment and that can ill afford such losses. Eliminating the trade of illicit goods is essential to contributing to the economic recovery.
Although we’ve heard numerous pledges from ANC officials that there should be a war waged on the trade in illegal goods, the fact of the matter is that little to nothing is done in real practical terms to not only combat the trade, but contribute to our economy by just doing what is expected.
The SAPS, the Department of Trade and Industry, customs and judiciary all have a role to play in clamping down and making it extremely uncomfortable, unattractive, financially risky and hopefully one day close to impossible to benefit from operating outside of the legal market.
Unfortunately, the opposite is true with the actions of our cadre deployed Cabinet, with porous borders and an
understaffed and overwhelmed judiciary, we are set up for failure and we cannot tackle this.
As a member of BRICS, we are supposed to use our place at the table to address the fact the by far the vast majority of counterfeit goods originate in countries such as China and India.
However, as was the case recently when another BRICS member invaded and started a war in Ukraine with devastating knock-on effects on our own economy, with the cost of living being pushed up by the ever increasing fuel price and the exponential rise in basic food commodity prices, yet we keep quiet.
What is the value of our government having a seat at the table to help and fight for our citizens and our continent yet we never stand and take that seat? We seldom are willing to stand up to transgressors? Is it because the ANC itself lives in a glass house and it is clear for all to see that you cannot address corruption, human rights abuses or other transgressions when your own hands are bloodied?
It is actually quite a simple calculation, ensure that we tackle the losses due to the illicit trade in goods and you will add billions to the state coffers, money that can go to extra health care professionals so that we do have a xenophobic MEC trample on the human rights of a Zimbabwean patients acquiring basic health care. Billions that can go to employing more police so that our mothers, wives and daughters are safe and a joker in a hat won’t make ridiculous comments about being lucky to be raped once.
The problem with the ANC government and the Ministers that serve at the behest of the buffalo is that when they have to start fighting and questioning where illicit goods or revenue come from, the starting point should be at Phala Phala and then we wonder why the liberators in this country cannot speak up for the freedoms of the Ukrainians because they do not even speak up for the freedom of South Africans.
It is time that we stand up and fight for this country. This current ANC government is unwilling and unable to stand up and fight for South Africans.
A simple calculation is ensuring that we fight the trading illicit goods, we will have more police, more educators, more healthcare professionals, we can actually look after the wellbeing of South Africans but this ANC government does not care about South Africans. They only care about those closely connected few that are being sent across the country by cadre deployment committee.
Hon Deputy Minister, you should be ashamed that one of the basic task of your department in protecting the country trade the fiscus you are not doing that.
It is time we as South Africans get rid of this entire ANC cabal, because the rot is just too deep and the cartel running the country under the guise of a political party has no interest in challenging the cartels running the illicit trade market. I thank you.
Mr M P MOHALE (Free State): Thank you, Chair. Hon members, delegates of the NCOP, we would like to start our debate by looking at the definition of what are counterfeit goods. In terms of the definition, counterfeit goods are phony or pseudo products that are offered for sale and distributed within the
trade supply chain as authentic. The Consumer Goods Council of South Africa estimates that the counterfeiting could currently constitute about 10% of the South African economy.
According to Sars, the total value of all the goods confiscated between 1 April 2018 and 31 March 2019 amounted to more than 3 billion out of more than 6 828 busts, or that represent an increase of more than 1 900 from the previous
4 800. In 2019-20 financial year, as per statistics from the revenue services, it has performed more than 1 300 Counterfeit Goods seizures to the value of R1,1 billion.
The increase in counterfeit goods is mostly on the black market and has the potential to destroy the local economy and could lead to more unemployment, as this practice diverts taxes from the fiscus. We further take note of the legislation that provides for the fight against counterfeiting. And this is done under the Counterfeit Goods Act, No 37 of 1997, together with the Customs and Excise Act, No 91 of 1964.
The purpose of the Counterfeit Goods Act in the main is to protect the owners’ intellectual property, which includes the trademarks and the copyrights. It further indicates the role
of the customs in the monitoring and policing of counterfeit goods. The Act further gives protection to intellectual property owners that have registered trademarks, unregistered trademarks, copyrights and prohibits those unauthorised marks under the Merchandise Marks Act.
The Act further protects the owners of the trademarks, copy marks, and a significant portion of counterfeit goods circulating in South Africa are imported from foreign countries. Those trading in counterfeit goods take advantage of the logistical loopholes in the flow of goods. For an example, many containers and airfreight consignments are imported on a transhipment basis which are purports to be destined for the neighbouring states and end up in the South African market.
The Acts that are being defined to be constituting counterfeiting includes being in possession of infringing goods in the course of business, manufacturing, making or producing infringing goods for non-private or domestic use, selling, hiring or exchanging infringing goods. Amongst others, the act of dealing in counterfeits or suspected counterfeits goods and the example is on the branded clothing,
sports apparel, footwear, and all the other amenities, the electronics, including motor vehicle accessories.
One of the key aspects that the counterfeit goods do to the economy is that it contributes to an increased unemployment because imported counterfeit goods means that manufacturing was done elsewhere in the world or outside the borders and not in the country. And those jobs were then created outside the borders where production has taken place. The companies manufacturing copyrighted goods in the Republic of South Africa are forced to retrench employees due to inflow of fake goods, which provides unfair competition.
Those that are incurring high overheads continue to suffer because their market has been eroded by counterfeit products. For an example, in the Free State, the Free State Development Corporation has Industrial Parks in Botshabelo, Thaba Nchu and QwaQwa, where copyrighted items are manufactured. However, these factories employ a lot of people and unfortunately, they suffer the job losses because of these fake commodities.
The second aspect that counterfeit goods to do the economy is that the massive inflow of the counterfeit goods discourages
those who have copyright to continue in business. Many who are in the manufacturing sector decides to close shop because their market has been unfairly eroded and the cost of business continues to rise. The lower or declining investment continuously lead to the collapse of the economy. That is why the province like the Free State has waged a battle against the production and distribution of counterfeit goods.
The third aspect is the law tax collection because the illegal and counterfeit goods are produced by those who don’t pay taxes. The highest share of tax revenues in South Africa in 2019 was contributed by personal income tax of 36%. The second-highest share of revenues in 2019 was derived from value added taxes by 22%. The revenue service is forfeiting both personal income and value added taxes from the production of counterfeit goods, as those are not able to be taxed accordingly. With lower revenue, the country will be unable to build houses, roads, schools and invest in infrastructure, as the income revenue tax stream is the one that is very key to sustain the national fiscus.
Now the Free State’s response to this current phenomenon is that, the province has established a consumer protection
office whose role is to be the custodian of the Consumer Protection Act amongst others in the province, as well as the provincial legislation on consumer protection. Section 110 of the consumer protection makes it an offence for any person to alter, obscure, falsify, remove or omit displayed price, labelling or trade description without authority. The department and inspectors don’t have sufficient investigators that ensure that there is compliance to the Consumer Protection Act, Counterfeit Goods Act 37 of 1997, and all the others.
Part of the problems or observations that we made during the routine inspections by this office is that most counterfeit goods are sold in the informal sector. And the lack of tight controls and regulation of the in formal sector has led to a proliferation of counterfeit and illicit products. Food products are non-compliant with applicable regulations, and non-compliance within by-laws by some of the traders makes matters worse, and non-compliance with some of these regulations.
In the province of the Free State, we have taken a number of inspections in all the five regions just in the quarter one of
2022-23. In the Lejweleputswa district we have undertaken 64 inspections, Fezile Dabi 11, Thabo Mofutsanyane nine, Xhariep five, and Mangaung Metropolitan three, and the inspections at liquor outlets were undertaken by the Free State Gambling Liquor and Tourism Authority, jointly with Sars and SAPS. The purpose of which was to ensure that there was compliance to the liquor trading licencing conditions.
An estimated value of counterfeit products that we have found to date in the first quarter is around 8 million. Most of the counterfeit goods discovered are the popular consumer goods such as the sanitary towels, baby nappies, branded clothing, alcoholic beverages, as well as traditional Basotho blankets, personal care products, and the motor vehicle parts.
Part of our response as a province was the introduction of the Free State Integrated Local Economic Development and Transformation Bill whose objectives are, amongst others, to provide a regulatory framework which makes it possible for Free State citizens to establish viable and thriving businesses where they live; and to also strengthen the norms and standards in support of the legislation that provide for business licencing for all businesses by municipalities in
terms of the by-laws and the Businesses Act. These measures are meant to strengthen the existing control measures so as to ensure that our economy does not continue to suffer the negative impact of counterfeiting and illicit trading.
This debate takes place at an opportune moment, when the Free State is in the business of changing legislation and ensuring that we deal with illegal businesses and counterfeit goods. It is clear that the battle against the production and distribution of counterfeit goods needs all stakeholders. We shall continue to work with all the stakeholders to find the lasting solution to take this challenge. And during this month, in conclusion, of the Tourism and Heritage Month, we also commit our agenda for economic transformation to ensure that we change the ownership patterns, and to ensure that we protect this economy, and ensure that this economy continues to belong to all South Africans, majority of whom are blacks and females and young people.
We would like to take this opportunity, as the Free State, to address this august House, to say that the fight shall continue. We will not be deterred by all the difficulties that
we encounter. At the end of the day we hope that we will win the battle. Thank you very much.
Ms M O MOKAUSE: Thank you, Chairperson of the session from the Northern Cape Province. Acting House Chairperson, it was 25 years ago when the streetwear brand, Loxion Kulca, was born. Loxion Kulca was founded by two young black entrepreneurs; Wandi Nzimande and Sechaba Mogale, who started out by selling T-shirts, caps,
light-knitted jerseys which promoted township culture and black identity, to their peers out of the boot of their car. The brand grew so much that in 2003, their annual turnover was reported to be around R80 million.
However, seemingly out of nowhere, trouble set in when the brand faced its biggest challenges - the mass production of counterfeit goods. Suddenly there was 60%-70% of fake Loxion Kulca goods on the streets of South Africa. Customers could hardly differentiate between what was real and what was fake. This then led to the retailers pulling out from selling their products at their stores, as customers questioned the authenticity, because there was now a growing market on the streets, selling the same product at a quarter of their real
price. This drove the clothing label into a difficult period where sales dropped and jobs were lost, bringing the brand to its knees. Loxion Kulca has never recovered, Acting House Chairperson.
It is often said that imitation is the sincerest form of flattery. But this is not the case in the counterfeit goods markets, which has moved far beyond merely copying designer bags and clothing. Counterfeit is a big problem in South Africa, with equally big socioeconomic cost.
Acting House Chair, Nzimande, one of the founders of Loxion Kulca, carefully identified the battle against the production and distribution of counterfeit products as “a horrible form of flattery”. Horrible in that it robs small companies of
sales proceeds needed to support local brands and the
hard-working teams of people behind these brands. Counterfeit
also poses a real risk to consumers themselves, as it potentially exposes them to unsafe or dangerous products, while making it difficult for local authentic manufacturers to remain competitive.
It deprives governments of revenue, vital public services and puts a burden on public servants as well, dislocating millions of people from legitimate jobs. Counterfeit can no longer be thought of as a trade with minor significance, instead it is a serious economic, political and social issue.
The counterfeit industry affects a wide array of products and virtually leaves no product category unscathed. Clothing, handbags, shoes, watches, medicines, health and beauty products, airplane parts, car parts, electronics, toys and even food, almost every type of consumer product is counterfeited in this country.
Many of the products that have been counterfeited often have serious impact on health and safety of consumers, as products are often not suitable for consumption, are of substandard products which are not approved and as such put further strain on the health sector, as well.
Acting House Chairperson, counterfeit has also taken on leading mobile phone brands, producing copies of cell phones and batteries which explode in the faces of the users, electric appliances that can catch fire and cosmetic products that can cause detrimental allergies.
Counterfeiters have even gone as far as penetrating the pharmaceutical sector, producing dangerous fake of well-being brand. They have attacked the automobile industry, producing poor quality imitation spare parts, from windscreen to brake pads. They have even infiltrated the food market creating fake mayonnaises, sodas and ready to eat meals, of dubious origin.
Counterfeit poses a threat to economies and national security. Illicit trade itself Acting House Chairperson, is not petty crime, it is crime against owners of intellectual property. It is not a victimless crime, but it is made up of big time syndicates which sponsor other criminal activities such as terrorism, and other form of syndicated crimes. It destabilizes institutions and seeks to undermine the legal system which tries to facilitate trade in a legal way.
South Africa, counterfeited goods are spotted in many places such as residential areas, busy streets and transportation terminals in big cities.
Acting House Chairperson, these crimes continue unabatedly despite legislation in place which criminalises counterfeit. And that little has been done by the police to reduce such crimes. The presence of counterfeit goods in our streets and pirated products that are sold
in the streets and shops across all provinces attest to these challenges.
More initiatives are needed from government to raise awareness against these crimes. And sadly, the reality which we face, is that the growth within counterfeit industry can be attributed to the demand of consumers for such goods which fuels the continued success of such trade.
Our people must know that if they buy counterfeit products, it fuels this illegal industry and it supports such organizations. Currently, the act of counterfeiting in our country is one regarded as victimless offenses, and as a chance to get a desired branded product at a far lower price to that of the authentic product.
Acting House Chairperson as such, programs are needed to raise awareness in our communities so that to promote innovation and support legal economic growth and the entrepreneurs within our countries who are primarily, black entrepreneurs who suffer, relating to such crimes. I thank you.
Mr M I RAYI: House Chairperson, the last time I was on this podium was on the 12 March 2020. [Interjections.] [Laughter.] Actually, I was a sweeper - I was the last speaker then. House
Chairperson, Deputy Chairperson, House Chairpersons, Chief Whip, Deputy Minister of Trade Industry and Competition, MECs present, special and permanent delegates, and Salga representative, good afternoon.
I think this is a debate that all of us say we agree on across people colour affiliations. I think I'm reminded by hon Mokause, on the lokshin culture: Yesterday, I was checking on Facebook that someone posted a picture of the counterfeit design of a label called Maxhosa Africa - thee Maxhosa design label. Already now, there's a counterfeit, hon Deputy Minister, of that new design label.
The production and trade in counterfeit is not particularly a local phenomenon, but an international phenomenon from which South Africa is no exception. The production and trade in counterfeit goods occurs through illegally infringing on
the copyrights or trademark of a company, which is legitimately producing such products in the formal sector of the economy.
The Deputy Ministers has already mentioned the report of the OECD on the counterfeit products and its definition. So, I
won't go into that. This is just to say that these are generally inferior manufactured products, to the branded products, which are illegally sold at a cheaper price in the market.
However, the socioeconomic impact and the threat which flows from the production and trade in counterfeit products in South Africa, and the impact on the economy, as well as a country's international standing, has to be our focus. For developing economies which require industrial development innovation and entrepreneurship, the production and trade in counterfeit products is a source of concern, given the negative impact on the economy.
In recent times, the production and trade in counterfeit products has increased globally and in South Africa. A concerted battle must be waged against counterfeit goods as a domestic market in all provinces is flooded with counterfeit goods.
The African continent is also affected through the production and trade in counterfeit products, which has a negative impact
on the development of countries in Africa, as international investors tend to bypass such markets.
The production and trade in counterfeit goods exist in different sectors, such as a designer label, a spot clothing, clothing in general, shoes and in branded watches. It has also affected the electronic industry with free fake products such as DVDs, CDs and electronic games, perfumes, as well as pharmaceutical products.
These are brought into the country illegally and sometimes as part of importing legitimate goods. These counterfeit products are not manufactured on the same standards in quality as genuine products, and therefore cheaper and inferior. A lot of these counterfeit products are imported into the country through different parts, in different provinces of the country and these products are either entering the country illegally or generally under invoiced and underdeclared in terms of value to customs.
This negatively impacts on the customs and excise duties
and on value-added tax, VAT. these products are distributed throughout the country, which means that there are established
network logistics and markets for these products. The money generated from this trade is unproductive for the country as it leaves the country through illicit financial flows from the country by no stress of any imagination is a trade in counterfeit product small as the international chamber of trade estimated the value of this trade at $600 billion and it is accounted for between 5% and 7% of global trade.
This trade functions on well organised trade routes and logistics for production and trade in counterfeit goods. The production and trade encounter freight boards has a negative impact on the investment in the formal sector of
the economy. Many global companies with established global brands invest in manufacturing and in developing economies like South Africa, and these companies avoid investing in countries where there is production and trade in counterfeit goods.
Those who have invested in such countries with counterfeit a trade merely disinvest if the market also has
counterfeit products which reduce their revenue. This is a negative impact on the manufacturing sector in the economy and therefore on job creation this also has a negative impact on
the fiscals in terms of tax custom and excise and value-added tax in the global economy countries which are seen not to be taking action against.
The production and trade counterfeit goods are part of the international agreement against the production and trade encounter faith goods suffer reputational damage as an investment destination South Africa is and remains a good destination for investment and it is imperative that there is a concerted struggle wage against production and trade in counterfeit goods the production and trade in counterfeit products stifles innovation and entrepreneurship.
In a domestic economy, the country needs to attract innovation technology entrepreneurship and investment in the manufacturing sector in all provinces, as part of the economic reconstruction and recovery plan, Africa, as a continent, has been a prone to the production and trade in counterfeit goods. The production of counterfeit goods has occurred locally and imported countries in Africa have been negatively affected by production and trade in counterfeit goods this is largely due to the weak manufacturing base in Africa and porous borders. border controls on the continental forest which enables the
movement of counterfeit goods and illicit financial flows through different ports in different countries on the continent.
This leaves many countries with less revenue to implement social development plans such as schools and hospital all countries on the continent have started to tighten controls and restrict production and trade in counterfeit goals on the continent as there are major revenue and developmental impacts on the countries on the continent due to the trade encounter products with its associated illicit financial flows.
An OESD report, a while ago, suggested that counterfeit clothing, old-fashioned and sportswear is very prevalent in Europe, as the hon Minister and Deputy Minister was dictating. A common unique technique is to import plain clothing and attach labels in one of member states and then release their products for sale in another member. it is important that in the context of African continent and the African Free Continental Trade Agreement or area, that the production of counterfeit goods is not allowed to occur and release for sale in another country on the continent.
It is clear that after will enable investment on the continent and ensure development of primary industry and beneficial beneficiation of resources on the continent which will give rise to manufacturing sector from both the mineral and agricultural sectors therefore this progressive development should not be marred by production and trade in counterfeit goods the continent has agreed on ensuring that intellectual property brands and trademarks are respected legally as part of the African free continental trade agreement but it is important that this finds expression in enforcement the country and continent must have a positive impact on trade and export of products which are domestically manufactured to ensure local and continental economic development the production and trade in counterfeit goods is largely a cage- based activity and they are vast sum of cash associated with the production and trade in counterfeit products which is not part of financial or tax system to the detriment of the country its activity by its nature produces illicit cash flows in the country's way to occurs and also illicit financial flows out of the country through illegal foreign exchange transactions this means that the country loses out both at the level of economic development through investment in productive sectors of the economy as well as through a net illegal
outflow of cares which impacts on the financial system this reduces the value of economic activity in the economy and does not bode well for job creation in the provinces
In conclusion, hon House Chair, legislation dealing with counterfeit products is in place in South Africa and requires being implemented and strictly enforced. This becomes more important in the context of developing local industrialisation and beneficiation through the economic recovery and reconstruction plan.
A domestic market in the production and trade of counterfeit goods must be disrupted by itself, custom officials and law enforcement agencies, as it is illegal activity which has negative economic consequences for the country and negatively impacts on the investment and job creation.
In manufacturing sector, the fiscal leakage which flows from the production and trade in counterfeit goods must be stopped as it deprives or the price deprives the country of valuable revenue for development and transformation. It is important that the public be educated on negative effects on the economy
of pro reflection of production and trade in counterfeit goods and should not support the production and trade in counterfeit goods.
It is high time that there is more rigorous implementation of the legislation which prohibits the production and trade in counterfeit goods the ports and borders of the country must be closed off for conduct fake goods in favour of local production and job creation this will benefit economic development of all provinces. Thank you very much.
Mr S A DUMA (KwaZulu-Natal): Thank you so much, hon Chairperson, for affording us this beautiful opportunity, today we meet in this sitting of the NCOP a few days after the Organisation for Economic Co-operation and Development, OECD, has made its pronouncement on the South African Economic Survey for the year 2022. It must be highlighted that the survey examined the impact of the COVID-19 crisis on the South African economy and society at large. The survey also proposed reforms that have to be implemented to overcome long-running economic structural weaknesses and measures that will raise the standards of living for the population.
House Chairperson, as we debate and present today the question of the flow of goods, in particular counterfeit goods in our economy, I agree with all the colleagues that have presented before us. We do this in the context of the global supply chain both in the local economic environment and the very world at large. The flow of goods in the South African economy is considered within our national trade policies, patent laws and supply chains that are recovering from the disruptions emanating from the lockdown’s protracted impact. These local, continental and international supply chains, as we address the issue of counterfeit goods, we are looked at through the lenses of our economic exposure to the rest of the world.
South Africa is indeed a player in the regional, continental and global import and export supply chain, and this is the scope of our reflection, with a local reference.
Mindful of this global context, the global supply chain of good is directly affected and exposed to the risks incurred in the Russian-Ukraine stand-off, the rising costs of fuel, food and raw materials, as well as the rising instabilities in neighbouring countries that creates uneven migration that is motivated by the search for economic livelihood. Internally we are mindful of these rising costs of living, and depressed
socioeconomic living owing to the aftermath of the long and hard lockdowns that took place in the entire global village.
Having noted these realities, I would like to draw the attention of the House, the NCOP in this debate, on counterfeit goods, to the specific context of Kwazulu-Natal, in relation to the flow of counterfeit goods that are in circulation in the province. One, I would like to draw your attention; firstly, to the consumer protection enforcement and compliance; Secondly to the activities of inspections conducted on counterfeit goods in the process of the province; Perhaps highlight some significant findings at inspections conducted at the port; Touch on engagement with key stakeholders; As well as the impact of counterfeit goods in the local market; and lastly make some recommendations moving forward. I think it is all being understood in the context of the Counterfeit Goods Act 37 of 1997 as to what counterfeiting goods is. As already highlighted, “intellectual property right subsisting in the Republic in respect of protected goods.”
As we understand, the Consumer Protection Services Unit within KwaZulu-Natal Economic Development, Tourism and Environmental Affairs recently conducted a series of inspections at the
Durban port to augment efforts to curb counterfeit and illicit goods entering the province. Furthermore, the Consumer Protection Act 68 of 2008 states, “It is an offence for any person to alter, obscure, falsify, remove or omit a displayed price, labelling or trade description without authority.” Pursuant to the above, the Office of the Consumer Protector KwaZulu-Natal has rigorously undertaken a series of port inspections on a weekly, monthly and yearly basis aimed at curbing the influx of illicit, counterfeit and non-complying goods entering the country.
The strategic objective of the port inspection has been to assess and check the goods coming to our country for compliance with the provisions of the Consumer Protection Act, CPA, amongst other things. Inspections have commenced periodically and are proving to yield positive results. These in loco inspections are undertaken together with other stakeholders inclusive of the SAPS, SA Revenue Service, and the National Consumer Commission, NCC.
Brand owners of the original products have also been contacted to hear their views towards establishing the authenticity of the fake foods. The inspection findings have provided an
opportunity to raise awareness in this area. This is over and above the planned campaign to further engage the public through workshops, community blitzing and mall activations.
The role then of the process of highlighting the Consumer Protection Services Unit at the port inspections is to ensure ultimately to oversee and is responsible for ensuring consumer protection by seeing to it that products are labelled according to the contents of their packaging, in other words, protecting them from misleading or misrepresentation products sold and exported. The most common identified counterfeit goods found especially or more predominantly in the CBD areas are the following; Cigarettes; Retail goods, footwear, designer jeans, t-shirts and handbags; Electric goods; Medicines, scheduled medicine in particular; the issue of nappies, jewellery respectively. The purpose of the ongoing inspection is to deliver radical economic transformation by formalising an integrated approach within KwaZulu-Natal contributing to an enabling business environment through regulatory compliance for the benefit of our communities and economic sustainability. From our overall findings and meetings with stakeholders, we have mostly found that counterfeit goods are prevalent throughout the province. The
sales of counterfeit goods are very rife among foreign-owned businesses operating businesses in the city centres and informal trading found in townships in particular and rural areas.
During 2020, the enforcement unit inspectors worked closely with the Durban Chamber of Commerce and other law enforcement authorities to curb the sale of counterfeit baby nappies found especially in the rural business districts. We identified the sale of counterfeit nappies in the Ixopo area as well. This was removed from the mostly foreign-owned shops. In two of the shops, the owners abandoned the shops and prosecutions were unachievable. The brand holder attorneys pursued further private investigations but with inconclusive findings as the masterminds were believed to be untraceable foreign nationals as we speak.
Inspections were conducted on counterfeit goods in the province. The following port inspections were concluded and conducted at the Durban Harbour with the NCC during the financial year 2021-2022; A total of 50 compliance notices were issued by the NCC. Some of the counterfeit goods that were discovered during joint operations were seized by the
SAPS members in conjunction with brand attorneys. From there the prosecutions were made and unfortunately, statistics to that effect are not available to us in the current.
Inspections of the Durban Port, the Port of Durban, commonly called Durban Harbour, is the largest and busiest shipping terminal in sub-Saharan Africa. It handles up to 31,4 million tons of cargo each year. It is the fourth-largest container terminal in the Southern Hemisphere. Recently the Consumer Protection Services Unit within the Department of Economic Development, Tourism and Environmental Affairs conducted a series of in loco inspections at the Durban Port to augment efforts to curb counterfeit and illicit goods entering the country. The Office of the Consumer Protection Services has undertaken a series of ... [Inaudible.].
Let us also highlight the issue of the goods terminal inspections at King Shaka Airport. The Consumer Protection Services engages in weekly inspections together with the SAPS at the King Shaka International Airport. Subsequent to the COVID-19 outbreak and the ban on flights from April to October 2020, these inspections were interrupted. These weekly inspections have commenced since the opening of international
flights. These inspections focus largely on the goods entering through the airport. Compliance checks are conducted to check compliance with the Consumer Protection Act. Overall, mainly counterfeit and illicit goods are identified. Previously pharmaceutical goods commonly were found and confiscated pending further inspections and testing by the SA Pharmacy Council. Some of these cases were enrolled on the criminal justice system.
A number of products related to sanitisers and sanitising products were found to be counterfeit. This increase had been observed since the start of the national lockdown. This is due to the demand factor where we had observed consumers flock to the shelves of shops to buy essential goods, among others, sanitisers which had become a daily household necessity.
Stakeholder engagement; on the basis of the statements gathered and the verification of the information collected. As I conclude, we must highlight that the local Consumer Protection Unit is engaging with the National Consumer Commission to intensify such inspections to combat counterfeit goods entering through the ports. I want to thank you so much for affording us this opportunity. Thanks, House Chair.
IsiZulu:
Nk L C BEBEE: Siyabonga Somdumazi! minus one. Siyabonga! Somdumazi!
English:
The HOUSE CHAIRPERSON (Ms W Ngwenya): Order, Mama! Bhungane [Clan name for Hadebe surname]
Mr N M HABEBE: Hon House Chair, we have fought to establish, develop and promote the South African brand. That attempt has not been one without challenges. One of those challenges has been the fight against the production and consumption of counterfeit products. We have all come across a duplicate or a replica of a brand or item when you look similar and although at face value, it is a harmless and affordable alternative to a genuine product. It is not as harmless in relation to employment and security.
Items as small as toothpaste to, as, as ... [Inaudible.] ... as designer items have been the blueprint for those counterfeit versions. South Africa, like all countries globally, has seen the manifestation of counterfeit products
in most of its sectors, including health, clothing, and technology. The manufacturing, distribution and buying of counterfeit products have then continued to have adverse effects on genuine and meaningful entrepreneurship, and also destabilise the foundation on which businesses and the development thereof are built. They have crippled and displaced many businesses and economic activities impeding our ability to foster industries based on genuineness and originality and compromising the integrity of legitimate trade systems. And ultimately discouraging the very much-needed investment which contributes to job creation and opportunities. The production and consumption of counterfeit products does not only have social costs but also leaves consumers such as you and me as victims. Illegal trade markets exist in a vacuum. that cannot be regulated. Meaning no tax can be collected from any activity taking place there. The country, the government and our people has lost out on about R250 million worth of taxes a day in illicit trade. This is R250 million that could potentially have contributed to providing basic services in the Eastern Cape and or adequate housing in KwaZulu-Natal.
In a country such as ours, which has a 34% unemployment rate, we cannot afford to lose any more tax revenues from these illegal channels. Yes, it is convenient and affordable to go to shops which offer goods at a lower rate than reputable stores. However, it is also bargaining with our lives to consume those products. Some spaza shops, for example, sell fake or non-health-compliant cold drinks which at times have no clear expiry date exposing a health danger for everyone who goes in there to get a drink. A bargain for cold drinks or any other counterfeit products is a bargain on a life. A consideration can and should be given to the socioeconomic factors that push people to consider counterfeit products. And it is affordability and restricted buying power. The accessibility of these products is what opens them up as an option. Therefore, we would like to plead with the Competition Commission to beef up its capacity to protect consumers from these products and also for technology to be enhanced in making it easy to do so. We have to continue to fight to protect our brand and provide a platform for genuine and original brands to exist and operate in a secure market that does not threaten its very existence. That battle can only be won through the rejection of the producing and consuming counterfeit products and the closing of all and any other
channels that allow for its ... [Inaudible.] ... Thank you, hon House Chairperson.
Ms C LABUSCHAGNE: Chairperson, when you mention the word counterfeit goods one invariably thinks of counterfeit sneakers or handbags making its way into South Africa in a container, or an opportunistic hawker trying to sell a few items at a traffic light. Looking at reports and actual cases where manufacturing facilities in recent years were found in South Africa, it has become apparent that there is a real threat to brandholders and the public from within our borders.
The impact of counterfeiting in South Africa and the unprecedented influx of these goods into the economy is multifaceted and has led to a direct negative impact on the economic competitiveness and robustness of the country’s economic value chain, breaking down the country’s prospects for an improved economic growth outlook. The practical consequences of not taking action against the sale of counterfeit goods in the market results in huge losses in sales and profits of the genuine goods and brands market.
Unless there is a co-ordinated approach between stakeholders
in the counterfeit industry, government and law enforcement, a quick turnaround against counterfeiting will remain elusive.
One of the most common and popular trading channels in South Africa are the simple small-spaza shops that are set up on the side of the road in order to capture the passing trade. They are supported and supplied by an efficient network. This has resulted in the increase of counterfeit goods being sold, to the detriment of the state coffers and law-abiding citizens.
The Lebombo and Beitbridge Border Posts are very porous and this can in all possibility be ascribed to the lack of sufficient policing by the border police and SA Custom’s officials. South Africa also sits with many smaller border posts with access to neighbouring countries, and advantage of the logistical loopholes in the flow of goods is taken.
Customs and border police are trying their utmost at the various ports of entries, but more than necessary still do filter through.
What we need to see is the establishment of harsher criminal or civil proceedings against known and identified offenders, especially in the case of repeat offenders. The continued
prosecution of offenders will build a valuable precedent and will furthermore send a clear message to these offenders on the severity and the consequences of dealing in counterfeit goods.
One of the largest concerns is the existence of counterfeit goods in the health market, which is posing a massive risk to the public as the pharmaceutical, including veterinary medicines, medicinal and food industries are increasingly being targeted by counterfeiters, who deal in inferior and in some instances toxic counterfeit goods. The revenue risks, including leakage, through the smuggling of tobacco, alcohol and motor parts which are highly taxed goods, as well as the security risks, which includes terrorism, proliferation of weapons of mass destruction, trafficking of small arms and explosives are adding to the grave possibility of the grey- listing of South Africa, as monies are taken out of the formal fiscal system and lost to the economy, especially for tax or government collections.
The Counterfeit Goods Act, 37 of 1997 and section 113A of the Customs and Excise Act 91 of 1964, are excellent regulations and could be supported by the creation of a Specialised SAPS
Unit assisting in curbing this lucrative, but illegal business, and could go far in protecting the law-abiding citizens. Close co-operation between law enforcement and businesses trading in noncounterfeit goods to assist in identifying the illicit trade of counterfeit goods is very necessary. The assistance of the Department of Trade Industry can also be called in whereby the department shall appoint an inspector to lodge an investigation, should it be found that there has been an infringement on their intellectual rights, the trademark owner can request the assistance of the South African Police Service for criminal action to be taken against the offenders. The Consumer Goods Council toll free hotline must be promoted and whistle-blowers must be protected. South Africa cannot afford another Babita Dekoran assassination.
Hon Deputy Minister, in conclusion, with oil and commodity prices skyrocketing due to the Ukraine-Russian war, it can be expected that more counterfeit goods dealers will move to take their sourcing activities in-house and start their own manufacturing enterprises and I call on you to reach out to all departments and private sectors involved to work on a mandate to protect legal branded items and minimise the entrance of illicit products into our country. This is not an
easy task, but with co-operation of all stakeholders this war can be minimised or won. I thank you. [Applause.]
Ms M L MAMAREGANE: Thank you, hon House Chairperson, and good afternoon Deputy Minister. In recent years there has been a proliferation of the production and trade in counterfeit goods which has had a negative impact on the economy of the country. This practice of producing and trading in counterfeit goods is not a particularly a South Africa or African problem, but an international phenomenon with negative consequences for the development of the domestic economy, especially in terms of ensuring the development of the manufacturing sector in the country. There are many negative consequences for the country allowing the production and trade of counterfeit goods.
This has an impact on foreign and domestic investment in the economy. It encourages physical leakage which deprives the fiscus of revenue which impacts negatively on government development plans to ensure transformation. More importantly, it negatively impacts on local industrialisation and job creation. The country has to wage a concerted battle against the production, distribution and trade in counterfeit goods.
It is in the national economic interest to do so. It is also common cause that the negative economic impact from the production and trade in counterfeit goods affects all provinces and need to be combated in all provinces.
The illicit financial flaws which occur outside the financial and physical system are a threat to industrialisation and economic development and also contribute to other illegal activities such as money laundering, trade in arms and drugs. This does require a more concerted and proactive effort on the part of our government and government in ... [Inaudible.] ... on the continent. The country’s reputation can also be negatively ... [Inaudible.] .... international trade and finance institutions as not doing enough to combat the production and trade in counterfeit goods. For all these reason it is important that the trade in counterfeit goods is combated in all its forms and in the different sectors in which it strives.
Our point of departure must be legislation and its enforcement as well as the implementation and enforcement of the regulation. The country has effective legislation which deals with counterfeit products and this legislation is based on
international standards. The legislation also reflects government international agreements and commitments with multilateral organisation such as the World Trade Organization. The key legislation is the Counterfeit Goods Act
37 of 1997. This Act needs to be read with the Customs and Excise Act of 91 of 1964. This legislation is geared towards protecting the Intellectual property of the owners in terms of Trade Marks Act and the Copyright Act and ensures that the SA Revenue Service, Sars, customs plays a role in the policing and combating of counterfeit goods.
Our legislation declares that the production and trade in counterfeit products is illegal and is an offense. Moreover, the country has world-class trademark and intellectual property protection laws and the registration of trademarks and intellectual property is in accordance with the best international practice and this is enforceable in law in the country. The SA Revenue Service Customs, prior to the outbreak of the COVID-19 pandemic in 2019-20, conducted 1 301 counterfeit goods to the value of R1,1 billion. This is no small amount, but there is still proliferation of production and trade in counterfeit goods.
According to Sars, the proliferation occurs as a result of counterfeit goods finding their way into the country and out of the country through the same trade supply chain used to carry legally trade goods. The SA Revenue Service Customs and Excise Act all border points and ports of entry into all border points into the country are the first line of defence against counterfeit goods and the officials are legally empowered to seize such goods.
The offensive is important as counterfeit goods are a threat to the country and economy in many ways. South Africa has international trade agreements that recognise trademarks and copyrights and therefore, the production and therefore, the production and trade in counterfeit goods are a threat. So, to South Africa international economic standing, therefore, the proliferation of the trade in counterfeit goods impacts on the good international standing of the country in terms of multilateral finance and trade organisations to which the country is affiliated and has international agreement to honour.
The finance generated from the production and trade in counterfeit goods are part of illegal financial flaws from the
country and it is part of large scale money laundering. This weakens the economy of the country and drains cash resources from savings and investment in productive sectors of the economy. There is much evidence which indicates that illicit financial flaws from the production and trade in counterfeit is utilised to finance illegal activities such as the drug trade, terrorism and illegal arms sales.
South Africa should not fall victim to such illegal activities and that taints the economy of the country and the continent.
The production and trade of in counterfeit goods impacts on the profitability of the companies which operates in the formal sector of the economy which means that the country benefits less from the operation of these counterfeit companies in terms of tax and job creation. Therefore, the production and trade in counterfeit goods is a threat to the economic development of the country.
Global manufactures operating in South Africa which manufacture branded products for the domestic market and exports are placed under threat due to the trade in counterfeit goods which distorts the market for the sale of
genuine products. Government policy is based on investment in the economy and development of the manufacturing sector through the economy reconstruction and recovery plan.
In conclusion, it is imperative that the legislation on counterfeit goods and customs and excise be reviewed to ensure that it is able to meet the current challenges in relation to the production and trade in counterfeit goods. The SA Revenue Service Customs and Excise legislation also requires review to ensure that Sars customs, officials at border posts and ports of entry ... [Inaudible.] ... are properly ... [Inaudible.]
... and trade in counterfeit goods. The efforts on the part of government to stop the production and trade in counterfeit goods must increase to ensure that the threat to the development of the economy of the country in all provinces is effectively dealt with through the full might of the law.
The threat to the economic development of the continent is a matter that needs to be raised in the discussion as part of the implementation of the African Continental Free Trade Area, AFCFTA, discussion and negotiation as this will ensure that Africa does not become a large market for the production, import and trade in counterfeit goods. The illicit financial
flaws stemming from the trade in counterfeit goods need to be assessed and action should be taken to stop such illicit financial flaws.
This review should include the issue of underinvoicing and underpricing of imported goods as the Constitution dumps in the local market and raise the import of counterfeit products. All these illegal activities devalue the levels of customs and exercise vat and tax due fiscus resulting in fiscal leakage.
As part of ensuring local economic development in the provinces occur as part of the economic reconstruction and recovery plan, it is imperative that a concerted effort also be made to ensure that the production and trade in counterfeit goods must be eliminated in all its manifestations. Thank you, hon House Chairperson.
Mr M A P DE BRUYN: Thank you, hon House Chair. Government, industries and suppliers loses large amounts to counterfeiters. These losses not only affect the producers of genuine items, but they also involve social costs. The ultimate victims of unfair competition are the consumers. They receive poor quality goods at an excessive price. The
potential for physical harm to consumers, accidental or intentional, of counterfeit goods is clear. Therefore, the results can be devastating and even fatal. A key reason the country suffers from the presence of counterfeiting is the loss in potential tax revenue. A group of people working within a sector of organised crime such as counterfeiting is extremely unlikely to declare earnings of their illegal enterprise to the government. Counterfeiting attracts both organised and petty criminals who not only derives huge profits from this trade, but also use it both to invest the proceeds of crime and to finance other crimes. The recent studies have shown that the loss of global employment caused by counterfeiting was estimated at 2,5 million jobs, with
300 000 jobs being lost each year in Europe alone. As the counterfeiting industry continues to grow steadily, and further five million jobs are predicted to have been displaced by the end of this year.
House Chair, as a country where unemployment, crime and poverty preside, South Africa cannot afford any other contributing elements to worsen the sorry state of affairs. Current legislation contributes to the escalation of imports and sales of counterfeit products. Tobacco farmers, for
instance, are one of the producers that experience the negative impact of counterfeiting the most. Market research has found that two-thirds of stores in four hotspot provinces are below the minimum collectible tax level of R21,60 per pack and that the biggest problem is not smuggling, but illegal cigarettes being produced in this country. Government knows there is a problem, but they should also know who is responsible. Therefore, instead of throwing up their hands in despair, they should follow the money and catch the criminals who are siphoning billions out of our fragile economy.
House Chair, the textile trades also saw a steep increase in manufacturing costs. Before coronavirus disease, Covid, the import cost for one container of textile cost clothing manufacturers approximately R26 000. Now, the same container costs R138 000. Add to that high transport costs as result of over-taxed fuel prices, high labour costs due to labour legislation, minimum wages and trade unions and exorbitant electricity costs, etcetera. Calculating these costs, then paying all the required taxes and adding a small profit and then makes it impossible to compete with counterfeit traders. Sector specific regulations such as health and safety, municipal regulations and charges, minimum wages, industrial
and bargaining council fees and regulations, annual licences and regulations, all create significant costs for local businesses, manufacturers and producers.
Hon House Chair, a concerned battle should be fought not only for the counterfeiting, but also against legislation that prohibits growth, employment and consumer confidence in South Africa. Thank you.
Mr V R SHONGWE (Mpumalanga): Thank you very much, hon House Chairperson. The Deputy Chairperson of the House, hon Lucas, Chairperson of the committees, hon Nyambi, Chief Whip of the National Council of Provinces, hon S Mohai, colleagues from the provincial Cabinet from different provinces, hon members of the NCOP, ladies and gentlemen, I greet all of you. Hon House Chairperson, it is, indeed, an honour and a privilege to partake in this debate. It’s a very important debate that talks about the economy of our country and matter that does not need us as hon members whether we come from any political party, but to look at it from the perspective of trying to address the challenges that we are facing as a country. South Africa ... [Interjections.]
Ms M O MOKAUSE: On a point of order, House Chair, I see that it’s been close to one hour that we don’t have a Chief Whip in the House, and the rules do not allow that. Who is acting Chief Whip or can we appoint a Chief Whip now because it looks like the House is leaderless? This is ... [Interjections.]
The CHIEF WHIP OF THE NCOP (Mr S J Mohai): Can I respond, House Chair? I’m in the House. This House is a hybrid sitting. Thank you, House Chair. [Laughter.]
The HOUSE CHAIRPERSON (Ms W Ngwenya): Thank you very much, Chief Whip. You’ve got the answer. Thank you very much, the Chief Whip is in the House. Can you continue, hon member.
Mr V R SHONGWE (Mpumalanga): Thank you very much, House Chairperson. South Africa as a global player remains directly impacted by the scourge of the production ... [Interjections.]
The HOUSE CHAIRPERSON (Ms W Ngwenya): Order! Order, hon members! Continue, hon Shongwe.
Mr V R SHONGWE (Mpumalanga): Thank you very much. I was saying that South Africa as a global player remains directly impacted
by the scourge of the production and trade in counterfeit products in our country. Considering that we attained our democracy few decades ago, we are relatively young to other countries in the globe, and as such, we are still taking baby steps to keep up with the pace. It is for that reason that some people around the globe see South Africa as a playground of counterfeit goods and all manner of criminal activities which also include, you know, our borders, especially those provinces that are bordering with your countries like Eswatini and Mozambique which is us and other provinces.
Counterfeit goods find their way into and out of the country through the same trade supply chain used to carry legally traded goods, and we are sometimes unable to detect whether this is a fake or a genuine product. These syndicates are aware and we are also alive to the fact that, these fake products lead to industries to lose large amounts of potential revenue from piracy. Industries find themselves in direct competition with counterfeiters and they suffer, you know, a loss in number of sales.
When the country, as well as most countries in the world, were under the lockdown because of Covid-19, these cartels saw an
opportunity to smuggle counterfeit goods into our country. These losses not only affect the producers of genuine items, but they also involve social costs and the ultimate victims of unfair competition are the consumers by receiving poor quality goods at a cheaper price and are sometimes exposed to health and safety danger. Governments lose out on unpaid tax and loss of foreign exchange, and we cannot afford that and the lose out on direct foreign investors as a country.
Therefore, I want to say, hon House Chair, that we must enforce Lotto laws that will be able to assist us to fight this particular matter. We need to refrain a bit to go to our different political corners and want to use this particular topic for politicking, it will not assist our country. This is our country for all of us, whether you are a leading party or you are in the opposition side.
Incur cost in enforcing intellectual property rights causes export losses which in turn implies both job losses, miss sales opportunities, unfair competition for legitimate trade, undermining government’s efforts to curb corruption, counterfeiters in a market discourages investment in our country. We must strive, all of us, to make sure that our
country is stable. There’s stability in our country so that our investors can feel safe to invest their money into our country.
The trade in counterfeit goods is also related to other criminal activities, such as money laundering, trafficking of small arms and explosives and terrorism. This high level of fake goods can be attributed to a number of factors such as: advances in technology, increased internal trade, emerging markets and increased share of products that are attractive to copy, such as branded clothing and software. For an example, the theft of original ideas is the worst form of robbery in the fashion industry and we see it day in and day out at auspicious occasions.
Where do we need to go to resolve the scourge of the counterfeiters in a market? The following measures need to be looked at, hon House Chairperson and members: Significantly reduce illicit trade incidences, improve tax and customs compliance, substantially reduce corruption and bribery in all its forms, strengthen national, regional and international partnerships to improve all legislative enforcement capacity and capability, strengthen recovery and repatriation of stolen
assets and combat organised crime and increased criminal convictions rate.
All of us, as political leaders have a duty to fight the socioeconomic impact and the threat of production and trade in the counterfeit. I am certain, hon House Chairperson, that through our determined and collective struggles, we shall overcome. We were resolute in our fight against apartheid and we can fight the economic battle and win it. Once more, hon House Chairperson, I thank you the most sincerely privilege to be part of this debate, and all the hon members and acknowledge the topic that you have put in front of us. It makes us wiser. It makes us to provide leadership and it makes us to be sober as Members of Parliament and members of Cabinet. Thank you very much, hon House Chair.
Cllr L J MOJAPELO (SALGA): House Chairperson, Deputy Minister, hon members of the NCOP, Special Delegates, fellow councillors, I greet you all. First and foremost, SA Local Government Association, Salga as the mouthpiece of local government expresses its sincere appreciation to the NCOP for bringing this important topic to light. The proliferation of
counterfeit trade continues to strangle the legitimate businesses and the South African economy at large and if we do not act now, the problem may slip out of our grasp.
Illicit trade is one of the biggest threats to economic order and growth in South Africa. This threat affects various industries which includes but is not limited to alcohol, cigarettes, electronics, media, pharmaceuticals, food, and apparel. Illicit trade and counterfeiting of goods rob the fiscus of taxes and in so doing impairs the government’s ability to serve the citizens of South Africa effectively.
Besides negatively affecting brand reputation and costing millions in lost revenue, counterfeit goods also increase the costs of doing business, impact jobs, erode consumer confidence, inhibit business growth and result in lost productivity and investments, including foreign direct investment. In the South African context at least, a large number of people are brand conscious, but are unable to afford the authentic products due to economic circumstances in part – leading to them purchasing these goods in the illicit market.
Honourable Chair, the true cost of counterfeit goods to the economy is simply staggering. According to the Consumer Goods
Council of South Africa, CGCSA it is estimated that counterfeiting accounts for as much as 10% of the South African economy. The counterfeit market poses a serious threat not only to the economy but to the consumers of these products, specifically as it relates to food and beverages and skin care products.
Hon Chair, we believe the following reasons are enough to make a case of what the country should be doing in clamping down hard on the counterfeit economy: The principal reason is that counterfeiting results in loss of revenue for the brand that is being imitated. Simply put, when counterfeiters sell a product that looks the same as the original but at a lower price, the authentic brand is likely to lose sales and market share. Not so long ago, consumers were able to easily identify fake products. Now, with the explosion of e-commerce and social media, the lines between real and fake are much more blurred. The counterfeit food and beverages specifically, pose a serious health risk to the consumers as the contents of these products are unknown and not verified by relevant authorities. In many cases, vulnerable and bargain-seeking consumers are often lured by below-market prices, oblivious to the underlying and often fatal health risks.
Counterfeiting makes it more difficult for local authentic manufacturers to remain competitive, forcing them to close down, and resulting in the loss of jobs. Counterfeiting deprives governments of tax revenue that could contribute to much-needed service delivery and socio-economic development. In cases of imported counterfeit goods, government loses potential revenue in the form of import duties.
Since many consumers are unaware that the product they purchased is counterfeit, they put the blame squarely on the authentic company when the product malfunctions. This results in the customer losing trust in the brand, and the consequence is that they might not purchase from the retailer in the future. Marketers and brand owners spend vast amounts of money and marketing budgets building their brands over many years, and counterfeiting undermines these efforts and investments.
Also, companies are forced to spend immense sums investigating counterfeiters and their products that may be crippling their brands and organisations.
Hon Chair, even though section 19(1) of the Counterfeit Goods Act, No37 of 1997 makes provision for penalties against the
perpetrators who knowingly trade in counterfeit goods, this is clearly not enough a deterrent to stem the tide of the illicit market. There may be a need to review the effectiveness of the minimum prescribed fines to ascertain the extent to which they have been useful instruments for curtailing the rising wave of the counterfeit market. Also, the powers afforded to the Commissioner for Customs and Excise in terms of section 15(1) of the Act – to seize and detain counterfeit goods – should be supplemented by a more simplified, seamless, and streamlined process instead of the current protracted and bureaucratic one.
When all is said and done Honourable Chair, it is the effective implementation of the Act that will assist us to make a dent in the production and trading of counterfeit goods, and this must be accompanied by effective intergovernmental co-operation at all levels.
Hon Chair, one of the most glaring cases of poor enforcement of the counterfeit laws is in townships where, as a consequence, we have witnessed a deterioration in relations between locals and foreigners. While the attributing factors are many and complex, one of them is due to the fact that
foreign traders have access to cheap, counterfeit goods, which they under-price, much to the detriment of local businesses that rely on authentic brands. This leads to foreign shops flourishing and local ones being forced to shut their doors, and with this, the seeds of conflict are planted.
It is local government that must bear the aftermath of these conflicts, which often spill over to service delivery protests. Therefore, as local government, we are heavily vested in defeating the illicit trade, which in turn we believe will contribute significantly to socio-economic stability at local level.
Hon Chair, Section 152(1) of the Constitution implores local government not only to promote social and economic development but a safe and healthy environment. In the case of the illicit trade, both these provisions are applicable as the illicit market has a detrimental impact on economic development, while at the same time threatening the safety and health of the citizens. Schedule 4 Part B of the Constitution gives powers to local government to issue trading regulations, and the sector should use these powers in a manner that imposes harsh punitive measures to deter the trading of counterfeit goods.
Street trading, also a local government function in terms of Schedule 5 Part B of the Constitution, is an area where the trading of counterfeit goods is rife. Again, local government can use its powers through Bylaws, as provided for by section 156(2) of the Constitution – to put in place solid and effective mechanisms to identify the perpetrators, impose sanctions, or refer them to the relevant authorities on matters that may fall outside the ambit of local government.
In addressing the scourge of counterfeiting, we need all hands on deck. Regulation and consumer education are of paramount importance. Institutions such as Brand SA should put a concerted effort in creating brand consciousness and awareness amongst consumers and encourage people to consume more South African brands.
It is also proposed that joint operations centres be established, especially in high-risk areas such as international border towns that serve as ports of entry, as well as seaport towns and cities. By choking the supply, I am certain we can make headway in suppressing and ultimately eliminating the counterfeit economy.
Local government remains steadfast and committed to supporting the efforts of wiping out the counterfeit market in the interest of our nation’s prosperity. And with that, I thank you!
Mr A VOSLOO (Northern Cape): Hon Chairperson of the session, hon Ministers present, members of the NCOP especially in this gathering, ladies and gentlemen, it gives me great pleasure to address this august House in the debate on the socioeconomic impact and threat of the production of and the trade in counterfeit products. Counterfeit products are manufactured and sold in economies or in markets where they go unregulated in order to and escape normal tax and tariff payments. They also expose consumers to health, safety and quality risks and levy costs on society at large, in terms of employment and crime.
This 6th administration’s commitment to improve border management and control to mitigate the socioeconomic impact on these products in our economy, is unmatched. During the past
few years we have demonstrated our full commitment through various government departments and agencies involved in border control and security to establish an integrated border management agency, accentuating the focus on intergovernmental co-operation. This injunction must be viewed in the context of our economic, social, security and regional objectives.
The National Development Plan provides the strategic framework to put our economy on to a new growth trajectory for the strong emphasis on lowering the cost of doing businesses in South Africa, improving our competitiveness and exports and linking our products with other emerging markets.
To achieve the trade targets set in the National Development Plan, NDP. South Africa will among other measures have to reduce delays and increase facilitation and risk management at border post and forge better strategic trade partnerships with its peers in the continent. This must include plans to harmonise customs and immigration. Efficient and risk managed customs procedures at border posts, for example, which reduce the cost of moving goods is a key barrier to greater regional integration. The co-operation of the private sector and
adequate integration in the processes will enable border authorities to process the imports and exports faster and thereby reduce costs.
Equally, this kind of cooperation will enable immigration, police, agriculture, environmental and other regulators to contribute optimally to facilitating trade and visitor movements.
The objective of an efficient system to manage the movement of people and goods across borders, must strike the ideal balance between trade facilitation and promoting tourism on the one hand, and managing security threats and protecting our local economy from illicit and counterfeit goods on the other. In essence this calls for a balance between service delivery, risk management and compliance. As a vigilant state, this should be our response to the first opportunity faced our country in terms of this particular challenge.
Counterfeiting and piracy in international trade has become a global problem of immense magnitude. Counterfeiting represents up to 10% of the global trade and has become a social issue of
21st century, becoming a significant threat to the global economies and societies.
Counterfeiting is present in almost each and every industry and the culprits’ aim is to target any product where profit can be made with no respect to the safety of the products or its effects on the consumers. For instance, counterfeit batteries can explode, fake automobile spares can collapse the vehicles and counterfeit alcohol can take lives of individuals.
Furthermore, in recent times these products have gone well outside the national limits and including the illegal production and distribution of fake versions of renowned popular and respected brands name products affecting a wide range of organisations in the economy. These products represent a significant number of illegal copies of impersonations of the real or genuine and cover goods such as imitations or lookalike and goods illegally made by trade mark thieves.
According to the SA Revenue Service, a total value of all goods confiscated between 01 April 2018 and 31 March 2019, amounted to R3,6 billion rand. This figure represents a
significant rise in the production and distribution of counter brands in our country. Added to that, the Consumer Council of South Africa estimated that counterfeiting could account to as much as 10% of the South African economy. As a result, government is putting in place a legislative provision which aims to promote awareness on the impact of illegal production of these products. This legislation should be seen as a stop gap measure to prevent escalation of production and impose stiff sanctions towards the said culprits.
In terms of the Consumer Protection Act, Act 68 of 2008, as amended, consumers are entitled to particular rights. Key amongst those are that consumers have the right to fair and honest dealing, consumers have the right to fair value, good quality and safety and the right to accountability by suppliers.
Hon Chairperson, the selling of counterfeit goods in the market place has a negative effect on the economy and should be prohibited in society at all costs. A perpetrator can be charged criminally and civil action can be instituted against them in terms of the Counterfeit Goods Act. It is therefore advisable to report such incidents to the Consumer Protection
Authority and the SA Police Service. The real socioeconomic impact of the production of these products result in the following, lower demand for legitimate goods and services resulting from illicit trade which reduces business revenue; affected companies stand to incur additional costs for conducting investigations and litigations to protect their intellectual property rights against such infringements.
Production and sale of counterfeit products damage the reputation of the trade mark concerned as those products are mostly defective and or harmful and this problem is particularly acute in small and medium-sized enterprises.
Consumers buy worthless products which drain their pockets in exchange for no value thus losing the hard-earned money and become the victims of deceptive practices. The quality of the products is inferior thus making them unusable or ineffective. Counterfeit products are also harmful to consumers as they are often produced without due regard to the health and safety standards applicable.
The decline in the sales and profits of the genuine companies whose products are copied finally result in job losses. The production of these products discourages research and innovation thus making it more difficult and economically
unattractive to find the solution to some of the most pressing challenges faced by modern societies. Additionally, public revenues are affected by unpaid duties and taxes which would have been collected and used by socioeconomic progress.
As I come towards closing my debate, we wish to ensure this august House that we will live no stone unturned side by side with the business community and the SA Police Service to ensure that we eradicate this scourge. Imposing strict security measures at all posts and entry will see our country be placed on a new threshold of excellence. We thank the Northern Cape Consumer Protection Authority for their co- operation in living up to its mandate of putting the interests of the consumers first and hope that they will reach all corners of the province and provide excellent service to ... [Time expired.]
Ms M O MOKAUSE: House Chair where is the Chief Whip? Where is the Chief Whip?
IsiXhosa:
USIHLALO WENDLU (Nksz W Ngwenya): Siyaqhuba.
Ms M O MOKAUSE: We can’t be sitting here and qhuba (proceed) without the Chief Whip. No! where is the Chief Whip of the NCOP?
An HON MEMBER: He’s harboured.
The HOUSE CHAIRPERSON (Ms W Ngwenya): Hon Mokause ... [Inaudible.]
The CHIEF WHIP OF THE NCOP: I don’t think what hon Mokause is doing is fair. Hon Chair, she knows that I am seated, I was in the House and I am logged out here. I am around here. I am here and I am part of the proceedings. More than that, I am consistently attending the business of the National Council of Provinces, not once, all the time
The HOUSE CHAIRPERSON (Ms W Ngwenya): Hon Chief Whip ...
The CHIEF WHIP OF THE NCOP: I want to apologise to the member that I supposed to be debating. So, please let the members not be distracted in this important debate.
The HOUSE CHAIRPERSON (Ms W Ngwenya): Thank you hon Chief Whip. Hon Ryder!
Mr D R RYDER: Thank you House Chair. Chief Whip, you are clearly much loved. House Chair as we addressed the topic of fiscal leakages on Tuesday, albeit in the absence of the Finance Ministry, a debate on the impact of counterfeit goods on our economy is most timeous. It is a fairly dismal reflection on modern society that brand consciousness has reached such frenzied proportions, that we have driven the counterfeiting industry to a point that it is generating fiscal leakages in the substantial numbers that the inestimable hon Londt detailed for us.
As fake revolutionaries and want to be celebrities and influencers popularise the toting of aspirational brands, the man in the street turns to counterfeit clothing, footwear, bags, perfumes and all manner of things. It seemed bizarre when hon Labuschagne reminded us counterfeit bottled water being sold in Gauteng a few years ago. But it is true, you can read the recent headlines that she mentioned about counterfeit snuff, counterfeit condoms, cigarettes, bank notes. The list
is extensive. That is only what has been stopped in the last six weeks indeed, counterfeit condoms.
This shows us the value of brands, that people will go so far as to copy a brand name to sell a product for a higher price. It is confirmation that, the brands should indeed be protected. Hon Mokause gave us a background of Loxion Kulca in her very good speech today and it makes it personal for us.
These are the people that we know and celebrate and those are the ones that are being impacted by counterfeiting. Now, SA Revenue Service, Sars has had a fair share of successes in terms of intercepting counterfeit goods, but a visit to any flea market will tell you that a huge amount of stuff is still getting through our system undetected. With the new Border Management Authority totally off to a shaky indecisive start, there appears to be no real hope on the horizon for us to stop counterfeit importing any time soon.
Let’s look at some of the inputs from members that came through today. The Deputy Minister is from the Vaal, originally my home although we have never met. Deputy Minister Majola, I hope - I doubt that you have been back to the Vaal for some time as the urgency of the need to reinvigorate the
Vaal economy would be plain to you if you had, and your department should be working much harder in that former industrial giant of an area instead of leaving it to be a dumping ground for cheap goods. I think that the proliferation of these outlets for illegally imported counterfeit goods throughout the Vaal region is substantial. Instead, the Deputy Minister told us today how counterfeiting occurs in the European Union. I really had hoped for a much more local focus Deputy Minister and some local solutions.
Mr Mogale from the Free State outlined the issue that enforcement is difficult, especially at the final retailer. Yes, it is hard but that is where you start and you need to work backwards to get to the source. On a lighter note MEC I think that even Bloemfontein Celtic is a knockoff of another brand, rather we must maybe not talk about that. Hon Londt made the point that most of the speakers today have picked up on and that is that counterfeiting is not a victimless crime. We are the victims. The people of South Africa who lose out on services and on government delivery because of economic leakages from illicit trade are the victims.
But also as hon De Bruyn illustrated, consumers are victims here as well as they end up paying too much for a cheap product that just has a fancy sticker on it. You are not getting a great deal on a branded sneaker, you are overpaying for a no name sneaker. Hon Vosloo just raised the importance issue of job losses in the formal economy. I think more victims can be found in the job market because illegal operations seldom comply with employment regulations. So, lost jobs in the formal sector is another set of victims that we need to consider.
Hon members, as a country that has been so long seen as the skunk of the world, we should be fighting now as a rainbow nation at every opportunity to raise ourselves above the lowest common denominator. When Solomon Linda was paid out one pound for the rights to “The lion sleeps tonight” we should have received an endless inspiration to fight for the protection of intellectual property. Instead, under this careless government and its indecisive President and the ineffective Police Minister in the hat, we are again perceived as an easy target for counterfeiters and rogues. Lawlessness prevails. We all know exactly where to go to buy a fake pair
of sneakers, a fake fancy branded shirt. It is not hard to police with the right political will.
All the speakers today have agreed on the issues. As hon Rayi was stalking, it became obvious certainly to me that we were not debating ideology today, we are agreeing. Mr Shongwe also made the same point. What we are not seeing is the waging of a concerted battle against counterfeit ...[Inaudible] ... as today’s topic clearly states. Government as usual has lots of plans but no execution. In politics, when you have a plan and you do not execute it, that is called a broken promise.
Hon Labuschagne detailed some effective steps that can be undertaken, take some serious action, follow through, do your proper investigation ...[Interjections]
The HOUSE CHAIRPERSON (Ms W Ngwenya): Your time is over hon member.
Mr D R RYDER: I am sorry, it can’t be Chair, it is not possible. Not possible, I have ...[Inaudible.]
The HOUSE CHAIRPERSON (Ms W Ngwenya): My watch ... [Inaudible.]
Mr D R RYDER: Chairperson, eliminate corruption and return to the rule of law. That is the DA way. What a shame that elections are still 18 months away and South Africans must remain subjected to these woeful, ineffective tokenists. [Time expired.]
Mr J J LONDT: Chairperson! Chairperson! Can I just check, are you willing to go and do a timing and come back to us and apologise if he didn’t use the full time allowed?
The HOUSE CHAIRPERSON (Ms W Ngwenya): Hon member, the time is in front of me. When it says zero-zero, then it’s zero-zero. Yes, there is the time next to me. I don’t do on my ... [Inaudible] ... there is a time for me.
Mr W A S AUCAMP: House Chairperson! House Chairperson with all due respect, I think with the questions whether the Chief Whip was on the platform, your watch had already started, and that was about a minute and a half that was wasted. So, just check for us please.
The HOUSE CHAIRPERSON (Ms W Ngwenya): When we stop, the Table is also bringing the ... [Interjections.]
Mr W A S AUCAMP: Somebody could have made a mistake. If you can check, we’ll appreciate it. Thank you.
IsiXhosa:
USHLALO WENDLU (Nksz W Ngwenya): Niqalile ke, niqalile!
English:
This is 1 September, we are out of women’s month but it doesn’t mean that it is finished, it is not finished. Don’t start, don’t start.
Mr W A S AUCAMP: If you are so hostile maybe we should have a men’s month hon Chairperson ...[Interjections.]
The HOUSE CHAIRPERSON (Ms W Ngwenya): Don’t start, don’t start we are still on women’s month.
Mr W A S AUCAMP: ... because I feel quite attacked by you now. I just asked you a question.
An HON MEMBER: Order! Order!
The HOUSE CHAIRPERSON (Ms W Ngwenya): I can see that you are busy with me, but the Table is going to help me to put the time when the hon member starts. You must time yourself when you make your speech. Thank you. Can we start? Hon Mmoiemang, you can start.
Mr K M MMOEIEMANG: Already they took my two minutes, hon House Chair, please add that.
IsiXhosa:
USIHLALO WENDLU (Nks W Ngwenya): Siyilungisile, Tata, qhuba.
Mr K M MMOEIEMANG: Thank you. Greetings to you, House Chair and a special greeting to members in the House and those that are on the virtual platform. From what most speakers share, particularly from provinces, it is quite clear that counterfeit goods are a national phenomenon and cut across all provinces. While there is much less domestic production of counterfeit goods in most countries these days, most of them that reach the market are imported into those countries which
are intended markets and our country has not been spared of that.
Counterfeit products, in terms of how we understand them, have been correctly articulated and therefore I will not be going into that. Like in other countries, the production and sale of counterfeit goods have numerous ripple effects. What is important is to note is that it operates outside of the legal framework and therefore it harms the economies of the countries where it is prevalent.
The country has appropriate ... and I think we need to appreciate the role that the government is doing in terms of putting in place the necessary legislation and regulations to mitigate the impact of counterfeit goods. It is also important to appreciate the fact that with the regulations and legislation that we have, the South African Revenue Service, Sars, customs has been leading the war in preventing the import of counterfeit goods at the border posts or ports of entry into the country and this has acted as a deterrent against those involved in the production and trade in counterfeit goods.
However, it is important to note that the problem of the import and trade in counterfeit goods still continues to have a devastating socioeconomic impact. It is also important to note that the impact of COVID-19 has also worsened the low level of economic development and growth. Counterfeit goods have also exacerbated the situation and thereby worsening our triple challenges; inequality, unemployment and poverty.
Of course we appreciate the intervention by the government in implementing the Economic Reconstruction and Recovery Plan to mitigate the slow level of economic growth. The production and trade in counterfeit goods due to its negative impact on the formal sector of the economy only exacerbates the triple challenges. The production and trade in counterfeit goods occurs outside the legal framework and the formal economy and therefore makes no positive impact on the economy as it functions at the level of an illegal economy. Wherever the production and trade in counterfeit products occurs there is a low level of industrialisation in that country as the trade in counterfeit products and goods negatively impacts on the market for the domestic manufacture of goods. It reduces the revenue of the manufacturing sector in which counterfeit
products are produced and sold which has negative impacts on the fiscus and negatively impacts on job creation.
The production of counterfeit goods also exacerbate the problem of deindustrialisation from the contribution of various economic sectors in terms of its contribution to the gross domestic product, GDP. It is quite clear that this problem has led to the reduction of the contribution of the manufacturing sector from 21% to 12%. If you compare this with other countries, manufacturing sector in most cases contributes at least 26% to the GDP.
Therefore, in the context of developing a manufacturing sector as part of the Economic Reconstruction and Recovery Plan it is important that we come with mitigating factors that will cushion this impact on the manufacturing sector. The country’s reputation as an attractive investment destination is critical to ensure economic development and job creation and therefore the production and trade in counterfeit products diminishes the reputation of the country as an investment destination.
The necessity of creating jobs in the formal sector of the economy, especially for the young people in all provinces, is
a national priority and any illicit activity such as the production and trade in counterfeit goods needs to be eliminated. We appreciate the role that was adequately articulated by the Deputy Minister in terms of the role that the Department of Trade, Industry and Competition is playing in order double its success against the illegal trade in counterfeit goods. This they do in partnership with Sars.
All international studies even by the Organisation for Economic Co-operation and Development, OECD, indicate that the production and trade in counterfeit goods discourages investment in productive sectors of the economy. The production, distribution and trade in counterfeit goods are run by well organised syndicates. The trade in counterfeit goods results in companies manufacturing paying less tax due to lower revenues given the effects of counterfeit goods being traded in the domestic market against the genuine branded products.
It is not only the private sector companies which is negatively affected by the production and trade in counterfeit goods, but government is also on the receiving end particularly given the fact that this circumvent the payment
of customs and excise duties because it is traded outside of the formal sector and also VAT is avoided. These operators in the counterfeit sector are also unable to declare their income to SARS for tax assessment due to the illegal nature of trading in counterfeit goods. This deprives government of critical revenue for funding development and effecting transformation for the majority of the population in this country as government has less revenue for critical development. The victims in this respect will be the working class and the poor.
Therefore, the socioeconomic impact of the production and trade in counterfeit goods is that it contributes to poverty, inequality, unemployment and economic exclusion as it exacerbates the problem and makes no positive economic contribution to the development of the country. Imports of counterfeit goods results in fiscal leakage and illicit financial flows, as it was adequately articulated on Tuesday, from the country which only serves to weaken the economic value of the economy and this is unproductive. The South African Revenue Service needs to deal with the fiscal leakage and illicit financial flows from the production and trade in counterfeit goods as this serves to weaken the financial
system of the country. We also need to strengthen our regulatory systems of the country so that we are able to improve our systems in terms of combating these illicit flows.
Hon House Chair, by and large the production and trade in counterfeit goods are functioned by well organised groups and syndicates who have distribution and cash collecting networks in communities. It is well-known through various studies that these vast sums of money also find its way into the illegal trade such as drugs and firearms. In some cases the cash generated from the trade in counterfeit goods is utilised to fund terrorism. This means that crime is financed from the trade in counterfeit goods. This creates a variety of social problems in communities and results in anti-social behaviour amongst unemployed people, especially the young people. It becomes part of the high crime which affects communities in all provinces.
The cash proceeds from counterfeit goods funds crime domestically and even internationally. The distribution of inferior counterfeit medication and pharmaceuticals pose a risk and danger to communities as this when tested by international bodies such as the World Health Organisation
were found to contain harmful substances. Therefore, it is imperative that the import of medication must be on the list of approved products by regulatory authorities in the pharmaceutical sector. People in communities must be educated on the dangers of purchasing such counterfeit medication.
The trade in illegal tobacco products affects the legal tobacco industry which is large tax payer and employer and negatively impacts on the health system without making any financial contribution to the funding of health service or any other service for that matter. The illegal tobacco industry has an unfair advantage over the legal industry as it has less costs and no commitments to the fiscus. Government loses out on unpaid taxes, but has to spend financial resources from the fiscus to enforce copyright and intellectual property to counter the production and trade in counterfeit goods.
What we also need is community awareness on the threat and dangers posed by the production and trade in counterfeit goods to the people and the country must become a critical part in the fight against combatting this illicit trade.
Hon House Chair, the socioeconomic impacts of the production and trade in counterfeit products are many and in this debate most of the critical areas which have a negative impact were highlighted by various speakers and which clearly indicates the necessity for our government to continue taking action and to heighten continued action against the trade in counterfeit products. Legislation in this regard is enabling as it makes the production and trade in counterfeit goods illegal and therefore enforcement is the key to ensure that there is success in waging a determined battle against counterfeit goods in the domestic market.
The South African Revenue Service and the Department of Trade, Industry and Competition need to be seen to be strengthening more effective and co-ordinated action against the production and trade in counterfeit goods. We have no doubt in terms of the articulation that the Deputy Minister has raised in terms of the commitment of the ANC-led government in this front.
Whilst the current efforts by SARS and DTIC are appreciated and acknowledged it has not been completely effective as yet to reduce and eliminate the trade in counterfeit goods, therefore it needs more hands on deck. As the country attempts
to embark on the Economic Reconstruction and Recovery Plan in terms of local industrialisation, beneficiation and local economic development through the District Development Model in the different provinces it is of outmost imperative that the production and trade in counterfeit products must be combatted and even eliminated to enable domestic industrialisation and job creation. Socioeconomic development is critical to ensure inclusive development and economic growth and the production and trade in counterfeit goods does not assist socioeconomic development and transformation of the economy. I thank you, House Chair.
The DEPUTY MINISTER OF TRADE, INDUSTRY AND COMPETITION (Mr F Z
Majola): I would like to thank all the hon members for their participation in this debate. Hon Londt is absent. The scourge of unemployment is a serious matter in our country, that’s why we have to strengthen the fight against the production and distribution of counterfeit products because of the role they play in exacerbating unemployment. I don’t understand, hon Londt, why he wants to discuss the plight of the Ukrainians before discussing the cause of the conflict.
If the DA is worried about the plight of people and their suffering across the world, I want to hear them speak about the weakening solidarity of the people in Palestine and the solidarity of the people in Western Sahara as well. Hon MECs, I thank you very much for your inputs and insight. In the spirit of the District Development Model, DDM, we want to work with you, firstly, to determine the extent of counterfeiting and piracy in each district and secondly, to determine the impact of this phenomenon on local economies. Hon Mokause, thanks for a very constructive contribution.
Ms M MOKAUSE: We are always constructive.
The DEPUTY MINISTER OF TRADE, INDUSTRY AND COMPETITION (Mr F Z
Majola): On Loxion Culture, the pioneers of ... [Interjections.] ... back then might ... [Inaudible.] Yes, counterfeit products do undermine innovation, and they do destroy businesses, especially the small businesses. Hon Rayi and hon Mamaregane, yes counterfeiting and piracy is a global phenomenon that we should act against excessively here at home because, it has the potential to undermine anti-Africa trade, as we continue doing the implementation of the African Continental Free Trade Area, AfCFTA.
Hon Hadebe, we agree with you that the Competition Commission and our other entities, to strengthen their capacity to respond to this danger that is posed to our economy and our society. Hon Labuschagne, I agree with you that we should reach out and work with the private sector against this scourge. Also, let me say thank you, Councillor Mojapelo for your contribution on behalf of our democratic local government system. Hon Rayi, I have spent an enormous of time in the Vaal. We are fast tracking the creation of a special economic zone there. We will reignite that birthplace of industrialisation in South Africa.
Sesotho:
Mohlomphehi Mmoeiemang, re ya leboha sebata hobane ke wena sebata.
English:
On that note, hon Chair, I would like to thank you, and I would like to thank the Deputy Chairperson of the NCOP for the opportunity you have given us for today’s debate. I thank you.
The HOUSE CHAIRPERSON (Ms W Ngenya): Thanks very much, hon member. Order, hon member. Thank you. That concludes the debate. I wish to thank the Deputy Minister, MECs, Salga representative, all permanent and special delegates for availing themselves for the debate. Hon delegates, that concludes the business of the day.
The Council adjourned at 17:35.
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