Hansard: NCOP: Unrevised hansard
House: National Assembly
Date of Meeting: 17 May 2023
Summary
No summary available.
Minutes
UNREVISED HANSARD
NATIONAL COUNCIL OF PROVINCES
WEDNESDAY, 17 MAY 2023
-PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
Watch: Plenary
The Council met at 14:03
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi) took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMNETS
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Hon delegates, before we proceed, I would to remind the delegates of the riles relating to virtual and hybrid meetings and sittings in particular Rule 21, Rule 22, Rule 23 and Rule 103 which provide as follows:
The Hybrid Sitting constitute a 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 the quorum, all delegates who are locked in the virtual platform shall be considered present. Delegates must switch on their videos if they want to speak. Delegates should ensure that the microphones on their gadgets are muted and must always remain unmuted unless they are permitted to speak. All delegates in the virtual chamber must connect in the virtual platform as well insert their cards to register on the chamber system.
Delegates who are physically in the chamber must use the floor microphones. All delegates must participate in the discussions through the chatroom. In addition, I would like to remind the delegates that the interpretation facility is active.
Permanent delegates, Members of the Executive, Special Delegates and SA Local Government Association, Salga representative on the virtual platform are requested to ensure that the interpretation facility on their gadgets are properly activated to facilitate access to the interpretation services. Permanent Delegates, Special Delegates, Salga representative and Members of the Executive in the Chamber should use their interpretation gadgets on their desks to access the interpretation facility.
Hon delegates, in accordance with Council Rule 29(1) there will be no Notices of Motion or Motion without Notice. Hon delegates, I would like to take this opportunity to welcome Ministers, Deputy Ministers from the Economic Cluster, specifically the Ministers of Finance, Mr Godongwana, Employment and Labour, Small Business Development, Trade, Industry and Competition as well as all Permanent Delegates, MECs and all Special Delegates to the House. I would also like to inform you that the Minister has requested that the Minister of Trade, Industry and Competition follow after the Minister of Finance. That arrangement has been made.
Further, I would like to remind delegates that in terms of Rule 229 of the Council Rules, the time for reply by the Minister to the question is strictly five minutes. Only four supplementary questions are allowed per question. A member who has asked the initial question should be the first to be afforded the opportunity to ask the supplementary question.
The time for asking supplementary question is strictly two minutes. The time for reply to the supplementary question is four minutes. The supplementary question must emanate from the initial question.
Allow me hon delegates to invite the hon Minister Godongwana to come to the platform so that he can be comfortable and be a seamless exercise. Hon Minister, you can have your microphone, there on the podium, on. Hon Delegates I call on the Minister of Finance to respond on Question 116 asked by hon D G Mahlangu.
Question 116:
The MINISTER OF FINANCE: Hon House Chairperson and hon delegates, the response to the question is, yes, differentiation between types of municipalities including urban versus rural has always been the key principles underpinning the local government local government grants framework which informs the formula for equitable share and conditional grants allocation to municipalities.
The formula or criteria for allocations is published annually in the explanatory memoranda in the Division of Revenue Bill published as part of the annual budget and the related Annexure W1: Explanatory Memorandum to the Division of Revenue., all available on the Treasury website. The differentiation between municipalities can be observed in the household per capita. Allocation to municipalities were in transfers the household to the most rural moments but are more than twice as large as those to the metropolitan municipalities.
We Table for the benefit of the hon member some graphs which demonstrate how that allocation works. Nevertheless, work is underway in order to re-evaluate the local government funding model to take into account the context that municipalities face and how they influence service delivery cost as some have argued that distance topography and settlement types have the significant impact on the cost of delivery services. To that end, the model must take into account the different contexts that municipalities must navigate and the potential impact of those contexts on service delivery cost.
This could potentially lead to a fairer and more efficient allocation of resources. In the formula we only use reliable verifiable data so that the new data that incorporated these variables must be official or credible data that is widely accepted. Local government capacity building is an important tool for improving effectiveness and efficiency of municipalities. However, in recent years municipalities have been faced with an increasing number of challenges affecting the quality of service that they deliver.
It is for this reason that over 2023 Medium-Term Framework, MTF, National Treasury will continue to lead the review of the capacity building of local government that would have to ensure the whole of municipality approach.
This review will culminate in the reduction of complexity in the programme design and implementation and the streamlining of processes and systems. The review will also help to ensure that capacity-building programmes are cost effective and are implemented in a co-ordinated manner. I thank you, House Chairperson.
Ms D G MAHLANGU: Hon Minister, thank you very much for your elaborate answer that you have given to the initial question. What I also wanted to make as a follow up is the initial policy intervention that you have as a department towards addressing the challenges that are facing the municipalities. I know for a fact that you have elaborated on the plans and the intentions that you’re having as a department, but maybe also in addition to share with us the policy intervention.
Also considering that there is a proposal of the Debt Bill of Eskom that is on the Table of appropriations to deal with it. Can the Minister share with the House? Thank you.
The MINISTER OF FINANCE: House Chairperson, thank you to hon Mahlangu. The interventions that we are doing on the debt side issues are twofold: The first intervention is to support Eskom’s balance sheet in that sense so that they can be able to do what they are supposed to do in terms of improving their plant. We are providing, therefore, a debt relief for Eskom and that Bill is coming before the National Assembly next week, which over the next three years will provide R254 billion to Eskom.
On commitment to that we are beginning to deal with those that owe Eskom, the municipalities. The interesting thing is that some of these municipalities are too small. I normally use Maluti-a-Phofung as a point of departure. Maluti-a-Phofung owes Eskom R7 billion. There is no absolute chance of them ever paying Eskom back the R7 billion, is next to zero. So, what we are trying to do is to achieve two things at the same time in this strategy. First thing, we want to achieve is to make sure that Eskom has a reliable repayment structure moving forward. However, for that to happen we have to incentivise the communities to have that reliable structure.
So, what we will do is to say that any municipality whether it is Maluti-a-Phofung or City of Johannesburg, across the spectrum, what we need to do is to get each and every person who owes the municipality any amount, that debt will be written off on condition that certain strict conditions are met. That the individual will probably undertake to go through a prepaid meter system. Once they do that and a meter system is installed, the debt is written off and moving forward that resident will be able to pay Eskom. That is the structure of the debt relief we are trying to structure for municipalities. It’s both a carrot and a stick. Thank you, hon Chairperson.
Mr W A S AUCAMP: Hon House Chairperson, just before I ask my question I would just like us to welcome Councilor Ashwin Johnson with the youngest member of the Cape Town City Council that is here with us today. He is sitting in the gallery there. So, we can welcome him. It is nice to see the young people here as well and I consider myself as a young person as well.
Hon Minister, we all agree that the majority of municipalities are dysfunctional and poorly run. The fact is that this is more often a result of poor management than it is of underfunding. Every year we hold discussions on the Division of Revenue, the subject of equitable formula comes up. The original question I have spoken about is, leveraging the capacity of municipalities to improve service delivery in part
(b) of that question. Hon Minister, we so often see the equitable share being spent on the salaries of political appointees or the purchasing of a new Mercedes-Benz for the mayor. We see vanity projects that have got nothing to do with service delivery but are funded from the national fiscus.
Minister, when will Treasury insist and put measures in place to ensure that funds that are meant to be spent on the people of the country find their way to meaningful service delivery rather than into the corrupt pockets of individuals? Thank you.
The MINISTER OF FINANCE: House Chair, let me also welcome the young councilor over there. Let me also say to hon Aucamp that any mayor who has got a new car or a new Mercedes, you must know that mayor has bought that car illegal. I have not made a determination thus far of what the new cars must be or the value of the new cars should be. The second point is that there is a challenge with municipalities. I made the point that 175 out of 257 municipalities have passed unfunded mandates.
What does that mean? It means the council sits like this and they make a decision that they will fund things when there are no funds available for such things. That has implications for the funding of this sustainability of the municipality moving forward. Part of the difficulty, you are correct in saying that people are choosing equitable share, when in fact, the problem is the management. I wouldn’t take the view that they are funding politicians because in most cases municipalities just employ people yet they don’t have the budget.
Let me just give you an example with Mangaung. Mangaung decided to create their own policy division. A noble course but there is no money for that division. It is not about politicians. So, what that means is that we have a difficult when most municipalities have more personnel than the municipality can afford. What does that do? It crowds out expenditure on the more critical expenditure; on roads maintenance, on closing the potholes and so on. That requires a political intervention by all the political parties by the way. If you think that - like all other parties, people are excited with these changes that of vote of no confidence for this and vote of no confidence for that, I am not excited as the Minister of Finance because it means instability for me.
I was addressing the metro mayors right in Bloubergstrand where they were running a programme for the metros. I said to them the difficult I have I am not sure how many of you would be mayors next week. So, that creates instability and that instability is compacted by all the parties in this room. So, what will be required is that parties in this room take a conscious effort that the key principle for us is stability in municipalities. We must all work together in ensuring that in each of the municipalities that we participate in are stable and there is delivery of services. This point has been raised by all Ministers of Co-operative Governance and Traditional Affairs that 80% of their major problems are political than administration. So, as political parties in this room we have a challenge deal with that question. Thank you.
Ms M DLAMINI: Minister, rural municipalities are ill-equipped to effectively collect revenue and rely heavily on national government to finance their budgets through grants and subsidiaries. They encounter various revenue collection challenges that have a negative effect on service delivery.
Which interventions has the Minister taken to ensure that rural municipalities develop revenue enhancement strategies? Thank you.
The MINISTER OF FINANCE: We have a division whose main function is to assist municipalities with revenue management capacity. We are more than happy if there is any specific municipality that you know you can work with together with you dealing with that municipality how they should collect their revenue. I have said that in the equitable share formula, we take into account in the allocation of revenue the issue of ruralness and per capita population.
We have the different programmes of assisting municipalities in their capacity. I have alluded to those programmes in my response to the initial question. In that regard, we are more than happy to work with any specific municipalities. I have also made reference to the fact that we are beginning to review the equitable formula taking into account, among other things, the cost of delivering a service. It is one of the contested terrain problems.
That debate started when I was MEC for Finance. That was called the costed norms approach. In other words, how much does it cost you at the rural municipality compared to an urban municipality to deliver service. It is clearly more costly for a rural to do that. I can tell you when we can start that debate, we will be divided here, interesting enough, not according to political lines but according to the regions you come from. That debate, for instance, if I can tell you, in our term as MEC for Finance, the MEC for Finance in the Western Cape, Markovitz and Jabu Moleketi from Gauteng, the other one was DA and the other one was ANC. They were on the other of the debate because they come from the urban side of the population. Then on the other side Peter Miller from the IFP and Enock Godongwana from the ANC were on the side of the debate representing rural municipalities.
So, that debate takes not only political parties but the different topographies and demographics of each province. Therefore, it is not an easy debate, hon member. Nevertheless, I appreciate the point you are raising and I am raising this history to tell you how difficult this issue is. Thank you.
Mr N M HADEBE: Hon Minister, my follow-up question would be if you are taking to review the trials which the government has conducted already, to ensure that this new funding model do not lead to the same issues experienced currently? To ask again if not taking to review and if government has any plans to improve these current funding models to ensure that the issues raised here are addressed? Thank you, hon Minister.
The MINISTER OF FINANCE: I think hon Hadebe’s question is related to the last follow-up question. Whether are any plans
- and in my initial response - I said, yes, there are debates to restructure and review the formula in its present form. I then said that if we will review, that will be a consultative process not something that we will conclude in Treasury without this consultative process. We will definitely be consulting the National Council of Provinces as well as part of that process. Thank you, House Chairperson.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Thank you, hon Minister. We acknowledge the presence of the Ministers;
Minister Nxesi, Deputy Minister Moloi and Minister Ndabeni, who is now part of Mpumalanga officially ... [Laughter.] ... Hon Minister, we now come to Question 103, asked by hon Ryder.
Question 103:
The MINISTER OF FINANCE: Hon House Chairperson, the question relates to what conditions are to be placed on the movement of Eskom debt swap. We table below some of those conditions.
Below is a detailed list of proposed conditions that are attached to the Eskom debt relief arrangement, which are contained in the Annexure W3 of the 2023 Budget Review. I repeat, are contained in that review, and I’m inviting members to read that review.
These conditions will enable Eskom to convert the loan to equity if the entity complies with them. Underline that. It will allow Eskom to convert the loan to equity. It will convert the loan to equity if the entity - that is Eskom – complies with these conditions. What are these conditions?
Eskom’s capital expenditure is restricted to transmission and distribution. I am going to come back to [this point] on generation. The only capital expenditure that may be
undertaken for generation relates to minimum ... [Inaudible.]
... standards, fuel gas decalcification, and required maintenance. And I must make this point. Generation is not totally precluded and Eskom will have to do required maintenance on generation. No other green field projects will be allowed during the debt relief period. I will come back to this point later.
Eskom may not use proceeds from the sale of non-core assets for capital and operating needs. All proceeds from the sale of non-core assets including Eskom Finance Corporation, and any property sale would be used for any debt relief arrangement.
No new borrowing would be allowed until the end of the debt relief period. Which means of the next three years. Unless with written permission granted by the Minister of Finance. In other words, if they want to borrow over the next three years I will have to give an authorization.
The intention of that is to prevent further debt accumulation by Eskom moving forward. Eskom’s guarantee framework agreement for the R350 billion facility, which expires at the end of March 2023, will reduce in line with National Treasury’s recommendation.
Positive equity balances in Eskom ... [Inaudible.] ... contract cannot be used to restructure new debt or loan agreements without the approval of the National Treasury. Nor can any such balance be used as margin financing for another derivative contract.
The debt relief can only be used to settle debt and interest payment. Eskom may not implement remuneration adjustment that are negatively affecting its overall financial position and sustainability. In addition to the above conditions, there are other operational conditions that are to be incorporated into Eskom’s corporation plan that seeks to address operational influences that Eskom is experiencing which will be augmented by the recommendation from the independent assessment of all Eskom coal power stations that is being undertaken by VGBE Energy Consortium that has been appointed by National Treasury. The VGBE Consortium is expected to complete its work by mid-July 2023.
How will performance against such conditions be monitored or enforced? Compliance by Eskom with the conditions will be over a period of three years commencing from the date of the first advance. Quarterly meetings between the National Treasury, and
the Department of Public Enterprise and Eskom will take place to discuss progress made in achieving conditions. It is also expected that the board will sign-off on a quarterly basis on compliance with these conditions.
A failure by Eskom to achieve and adhere to specific conditions will cause the loan amount from the quarter to be repaid to the National Revenue Fund at a market rates at the end of the period. Prior to such repayment, government will offer Eskom one quarter to rectify noncompliant.
Lastly, in terms of the proposed Eskom Debt Relief Bill, the Minister of Finance must determine the conditions for the conversion of the loan to Eskom, outlined in the Budget Review 2023, into equity. Thank you.
Mr D R RYDER: Minister, thank you very much for your reply. Minister, yesterday you raised the flag of the cost of our international relations crisis and the economic impact that it will have and is already having because we see the rand trading above R19,00 to the dollar at the moment. Noting how much of our debt is already dollar denominated, this is going to have a material impact on our ability to repay the debts
that we already have and the future debts we are going to need to take on to expunge the Eskom debt.
So, we already see the SA Revenue, Sars, and National Treasury warning us that we will not be meeting the targets that we set in terms of achieving the primary surplus in our budget that we had already hoped and that our economy actually desperately needs. This makes the handling of this Eskom debt incredibly important to manage.
The new Minister of Electricity indicated that the unbundling of Eskom into three entities was no longer part of the plan. Then he quickly retracted that a few days later and he backtracked on his statement and confirmed indeed the unbundling was going to be part of the plan.
Minister, if ever there was justification for the ... [Inaudible.] ... to take on the debt of Eskom, the unbundling is that exact reason why we should justify it. With the role confusion between the Ministers of Mineral Resources and Energy, the Minister of Electricity and the Minister of State- owned Enterprises, together with the potential for future changes on these roles, will you confirm that the unbundling
of Eskom within a defined timeframe will be a condition of the debt swap?
The MINISTER OF FINANCE: The hon member said a lot of things, but it was not questions and so I don’t want to be tempted. I wanted to just point at one of the assertion he was making. I will respond strictly to the question. We said we will attach conditions from time to time as we move. But let me tell you the economic rationale for the unbundling. With the introduction of the Independent Power Producers, IPPs, beginning from 2010. It became clear that Eskom cannot be a referee and a player in the sense that you can’t have Eskom as a generator, but at the same time controlling the transmission. The transmission must be accessible to all generators on an equal basis. Therefore, need some independence from Eskom. That process is going through.
Cabinet has approved an amendment to the Electricity Bill, which is proposed by Minister Mantashe, to create that institution. Eskom is in the process of appointing a board of the transmission company separate from the broader Eskom.
Therefore, that process of unbundling is underway and it’s not been changed to my knowledge. That’s why Minister Mantashe is
bringing an Electricity Regulation Amendment Bill to Parliament. Thank you.
Mr Y I CARRIM: Thank you, hon House Chair. Minister, can you see any alternative to the proposals you have that you have put before us in a Bill? My own view remains that you give a very precise answer and quite a comprehensive answer to the question. I might ask my colleague why didn’t he just read the review and listen to what happened this very morning in the Appropriations Committee that covered the Bill. But that’s between him and me. I’m here as a Member of Parliament holding the Executive to account.
So, the question I want to ask you is, what is the alternative? Secondly, as I know it, what I read anyway, again, I don’t know where my colleague reads what he has referred to, in respect of your comments on the international issues we are confronting. You said, yeah, it’s a challenge, but you said you don’t think it’s going to affect us in any material way. Is that not true? And thirdly, do you see any alternative to the breakdown of Eskom in these three categories? What alternative is there? Thank you.
The MINISTER OF FINANCE: Let me start from the bottom. It is not an easy answer to give, hon member. At the moment, we have a court case by the South African Local Government Association, SALGA. And SALGA is contesting the terrain that distribution belongs to municipalities. That’s a matter for the courts to settle. What are the implications of that on the model? It’s got implications on the model we are beginning to craft. So, alternatives are not easy to make.
The second set of issues is, what is our major trust at the moment? Our major trust at the moment is power to the grid. Our pre-occupation is power to the grid. Alternatives that we must think about must be, how do we bring power as much quickly as possible to the grid? That is going to require a whole range of discussion. That is the discussion, for instance, we are having with the Minister of Electricity, and a couple of us agree with him on that point. A couple of us agree with him on that point, that our preoccupation must be not to decommission power, coal power stations, not at this stage. It’s something which is not in the national interest given that we don’t have electricity now. And our preoccupation to keep as much power as we can. So these alternatives that we must discuss must talk to that point.
In so far as the international situation, I will just say a couple of points. One of the things is that National Treasury has got a standard proposition or principle that the split between foreign and domestic debt is quite critical. That split is such that foreign debt is marginal, precisely because you want to protect yourself against currency fluctuations.
so in that sense, we cushion ourselves by taking on less external debt but more domestic debt. There is a standard split between those two. And so we can say with certainty, whatever happens, it will have serious implications. There can be serious repercussions whatever happens, even though the split is like this. Because if the South African Reserve Bank decides to keep raising interest rates to protect the currency
- mind you, that’s one of the constitutional rules that it has
– that’s good for the currency and bad for fiscus. Because that means our borrowing costs will go up, our debt levels will go up, and our debt service costs will go up. So in managing the economy, you have to reconcile all of those challenges.
Minister Mantashe was saying to me, “Oh no, I’m happy with the rand because my sector is making a lot of money in the mining
industry.” Can you see the challenges that you are facing? We have two of us knocking heads on whether the depreciation of the rand is useful or not. Those are challenges. On the one hand, it costs and on the other hand, it is a benefit for each sector. Thank you, Chair.
Mr S F Du TOIT: Hon Minister, up to now, none of the Ministries has taken any responsibility for the demise of Eskom and other state-owned entities. And then, with reference to the Eskom debt swap, the National Treasury indicated that regular engagements will be taking place between Eskom and the Ministries, as well as National Treasury, to see that Eskom basically sticks to the deal and keeps to the end of the commitment.
Minister, I would like to know what the consequences will be for the Minister of Public Enterprises, the Minister of Minerals and Energy, the Minister of Electricity, and you as Minister of Finance, if Eskom does not meet its responsibilities in terms of the use of funds and so on?
The MINISTER OF FINANCE: The other Ministers have no relationship with this debt. The contract on this issue is
between us and the Department of Public Enterprise and Eskom, the Department of Minerals and Energy and the Department of Electricity are not part of the contract. I want to clarify that for starters. Secondly, I have said in this thing, we have designed this thing in such a manner that it’s going to be transferred on a quarterly basis and Eskom will have to perform on a quarterly basis. That is the balance, checks and balances we are building for ourselves so that we can ensure that Eskom performs.
If Eskom does not perform in any particular quarter, that debt is not going to be converted into equity. That is the point I was raising. We have built checks and balances to ensure that Eskom performs. That is why we are not transferring the money in a tranche once and for all for the year. We are transferring it per quarter in order to make sure that they pay for it. Thank you.
Xitsonga:
Man B T MATHEVULA: Ndza khensa, Mutshamaxitulu.
English:
Minister, the challenges faced at Eskom are huge so much so that even taking out Eskom debt would not be enough to stabilise this entity. Eskom’s return to financial sustainability would therefore require more than just one intervention. Which other measures will the Minister put in place in local government and municipalities to ensure that Eskom debt will not pile up again?
Xitsonga:
Ndza khensa, Mutshamaxitulu.
The MINISTER OF FINANCE: Didn’t I deal with this question earlier on? I thought I dealt with it. Let me just come back to it. I thought I dealt with it. Let me just... [Interjections.] ...
The HOUSE CHAIRPERSON (Mr AJ NYAMBI): Order!
The MINISTER OF FINANCE: ... I have said what we must do at the level of the municipality. We are going to the municipality where hon Mathevula lives. If hon Mathevula owes the municipality R2,000, we will say, okay, hon Mathevula, if you want to apply for the write-off of this R2,000, we expect
you to install a prepaid meter first. Once you install the prepaid meter, if you are indigent, that prepaid meter will include the free basic electricity, and so your R2,000 will be written off. That’s how we are going to start. Once we write off that R2,000, we will also write it off for the municipality.
Here is my danger at the moment. My danger right now is that I am providing free basic electricity to municipalities worth about R16 billion. But the people who are supposed to be subsidized do not pay, and the municipality is not loading the free basic electricity. So what happens? The money is diverted to pay for other things. And also for the efficiency of the indigent policy, we need a prepaid electricity meter so that the municipality is able to provide the free basic service.
Right now, people are not paying, and the amount of R16 billion, that we are providing for free electricity is being used for other things. So there are these programmes that we are doing to reduce the debt, but also to bring efficiency into the system. Thank you.
Question 117:
The MINISTER OF FINANCE: Hon Njandu, yes there are systems for reporting regularly on revenue, borrowing and expenditure against approved budget. In terms of section 71(1) of the Municipal Financial Management Act, MFMA, 56 of 2003, each municipality must report to its mayor on a monthly basis on the state of its budget including its actual revenue, borrowing and expenditure compared to its approved budget.
In addition, in terms of section 71(7) of the MFMA, each municipality must submit to the Provincial Treasury within ten days after the end of the month a detailing report on the state of its budget including on actual spending, revenue collection and any borrowing.
The Provincial Treasury must submit the budget information to the National Treasury as well as make such budget information public in a conspirative form within 30 days after each quarter per municipality and municipal entity in that province.
The Member of the Executive Council, MEC, of finance must also submit such consolidated statements to the provincial legislature no later than 45 days at the end of each quarter.
It should be noted that nothing prevents each municipality to make its state of budget information pubic.
National Treasury publishes the unconsolidated revenue and spending information against budget for all municipalities on a quarterly basis in terms of section 71 of the Municipal Financial Management Act together with the section 30 of the Annual Division of The Revenue Act.
More specifically to your question, National Treasury has a system that facilitates that spending information on conditional grants in terms of the purpose and against the conditions served in the framework, the first process serves a as quality check is in the assessment of business and support plans, implementation plans, projections, project registration, allocators letter and so forth that are undertaken by various transferring national officers.
The business plan approval process translates into compliance with the conditional grant frameworks that are gazetted as part of the Annual Division of Revenue Act applying to that fiscal year. This framework informs the approval process of the municipal payment schedule and is published by the
National Treasury in terms of section 22 of the Division of Revenue Act.
The payment schedule is coordinated in a consolatory process between municipalities, transferring officers and National Treasury in ensuring that projects have adequate funding available to be transferred during the financial year.
Once the payment schedule is approved and transfers are made to municipalities, the Division of Revenue Act monthly and quarterly reports serve as another tool to determine whether funds are spent for those carried purposes. If there are any delays or challenges, it would be during this process that the transferring officers are required to provide support in instances where there are spending or performance challenges.
In terms of the Division Revenue Act, if there is a persistent non-compliance with conditions of the grant framework including slow spending, ... [Inaudible.] ... National Treasury may at the request of the Transfer National Officer consider withholding and ultimately stopping a portion of the allocation.
These are considered as some of the coordinated integrated system of the quality checks in municipality developing plans regarding the spending of contractual to avoid funds retinting to National Treasury.
Yes, the current monitoring and oversight mechanism of our municipality expenditure does not have early warning system to address possible underspending. In terms of section 52(7)(2) of the Financial Management Act and Division of Revenue Act, municipalities are required to provide monthly expenditure reports to the transferring authorities.
These processes are used as management tools to mitigate poor performance and support municipalities where necessary. More importantly, municipalities receive support from different stakeholders such as provincial departments through their respective regional offices, national departments, and provincial treasuries.
House Chairperson, as I conclude, it will be useful for legislatures and Parliaments to read the published reports. We publish section 71 reports every quarter and provinces must send to legislatures every 45 days. We would request the
legislatures to take interest in these publications. Thank you.
Mr E Z NJADU: Minister, thank you for a detailed, procedural, and legislative response. Minister, my follow up question will be the persistent return of funds to the National Treasury which are meant for infrastructure development in municipalities reflect on the poor monitoring, oversight, and support by the national and provincial governments.
Firstly, can the hon Minister highlight some of the key challenges identified so far? Secondly, how the National Treasury and other relevant sector departments seek such challenges? Thank you very much Chair.
The MINISTER OF FINANCE: There are couple of challenges but before dealing with the challenges, I must repeat, what we are doing is that we are providing useful information for the legislatures to exercise oversight in terms of municipalities who provide section 71 reports on quarterly basis; in terms of national government who provide section 32 reports on a quarterly basis which track the spending trends which can be
useful for the legislature to hit hard on departments at an earlier stage.
So that’s the most important point to deal with this question. The challenge really relates to capacity. In other words, ... before dealing with capacity, the first challenge arises, the reason we have the Medium-Term Expenditure Framework, particularly on infrastructure is to assist departments to plan over a longer-term horizon.
In other words, if you are going to build a road, and the road is going to stretch over a three-year period, you must therefore look at your budget and budget over that three-year period. Secondly, we have got what we call indicative figures. Planning is critical. There is no reason that you should only start after the 1st of April, you knew before hand in your Medium-Term Expenditure Framework that this is the amount you are going to get. You should have issued the tender even if it’s December so that you are able to get it by March. Come the 1st of April, you hit the ground running.
So, the first challenge is planning which we need to overcome. Thes second problem is capacity which impacts on planning. If
you do not have the requisite skills in any municipality to be able to assist with this plan, then you are not going to have a plan. So, the second challenge is the skill. The skills impact on two processes. Firstly, the planning side and secondly on the execution part.
So, fundamentally if you were to ask me the key question on what we would to do, it is to assess the skills in each of these municipalities and begin to say how we transform municipalities in such a manner that the personnel is not just in numbers but related to the skill requirement of each municipality. Thank you.
Mr N M HADEBE: Hon Minister, may I ask if the finance department has early warning systems to raise red flags to point out potential underspending, if yes, may I further ask why the department continues with the distribution of funds when it is aware that it will most likely be underspend instead of redirecting those funds to other ailing departments? Thank you, House Chairperson.
The MINISTER OF FINANCE: We have the red flags. We have the early warning system in the form of quarterly report section
32 and section 71. You will know by now that several municipalities are complaining, precisely because that is what we do.
We send them letters in December and say, in all likelihood, you are entering the second and your expenditure is insufficient. Up until the end of March when we require that they will not have finish the money by the second-third quarter. In this case we transfer funds from those municipalities.
I don’t know which province the hon member comes from. If he comes from KwaZulu Natal, I am in the battle with eThekwini now because I have redirected the funds. So, we do. Thank you.
Mr M S MOLETSANE: Minister, apart from quarterly reports that are sent to Treasury, in case they fail to send the reports, are there any measures in place to improve the coordination between the national, provincial, and local government so that funds meant for service delivery and uplifting communities are not transferred, withheld, or allocated elsewhere? Thank you Chair.
The MINISTER OF FINANCE: It is an interesting question. hon Hadebe was saying why are we not transferring the money elsewhere. Hon members says why should it be transferred elsewhere. [Laughter.] I’m just showing this contradiction. First and foremost, ... [Inaudible.] ...direct triple vision over the municipalities, whatever we do, we work with those provinces.
When it comes to withholding funds, we would not do that without prior coordination with the province and the relevant municipality. In conditional grants for instance, I made remarks with what you call transferring departments. What is that?
If the grant belongs to the Department of Human Settlements, any change that Treasury does will have to be consulted with the Department of Human Settlements and make the decision along with the province. So, there is a consultation process before funds are transferred. I just wanted to make that point.
Mr F J BADENHORST: Minister, listening to you answering this question this afternoon, there is very little political
oversight in section 71 committee meetings in most municipalities where underspending takes place because that should be the purpose of a mayoral committee member in that municipality. But I guess, what people vote for is what they are going to get in some municipalities, which leads into my question.
Minister, underspending is generally a symptom of poor oversight like I have alluded to, poor planning and poor governance. Why are dysfunctional municipalities repeatedly rewarded with funding they cannot spend while well run municipalities and in most instances DA run municipalities that adhere to good governance need to be punished with minimal allocation and otherness conditions? Thank you, Minister.
The MINISTER OF FINANCE: I would like to thank the hon member for welcoming me in this House. The first thing we need to do is to depoliticise the debate because we have just come out of DA municipality run metros in Gauteng. As we speak, all are in bad shape. It is incorrect to extra politicise what is happening in Cape Town, Cape Town is doing well.
To think that Tshwane, Ekurhuleni, and City of Johannesburg under the DA were doing well is to politicise the debate. What we need to be talking about ... let’s not politicise and say I’m doing well, I know we are going to an election, I was talking to colleagues yesterday in the National Assembly.
So, to appease yourself with this notion that all of sudden you will be running this country in 2024, that is not going to happen.
You will be surprised because you have given yourself the false notion to a point that you now believe it. Let us not politicise this and say how do we look at well-run municipalities. We have got well-run municipalities., even small municipalities. I will give you an example of a small municipality in the Eastern Cape called Senqu, a well-run municipality which is not DA run. There is a whole range of municipalities.
Let us agree with you, I have transferred funds to the Western Cape because of the municipalities that have been doing well. And to deal with anger of my colleagues in the ANC, and what do I get for that? The DA to tell a lie that have taken 90% of
the conditional grant from the DA run Western Cape which is not true. I think it’s a political statement.
When I use this measure, I use a measure which is objective, which is performance to see which municipalities will be able to spend the money. I don’t look at whether they have a blue label or not. I look at whether the municipality will be able to spend money. That is what I do every year. I transfer money to a municipality which I think this municipality will deliver, even provinces.
I am fighting with my own province. I don’t even know whether I will be able to go home. I took R100 million from their school programme. So, let us not politicise these issues.
Let’s say, how do you ensure that you can give efficient running of the resources? Once we do that, we will be operating not in the interest of the political party but in the interest of South Africans and our nation. Thank you.
Question 114:
The MINISTER OF FINANCE: Chapter 13 of the Constitution and the Public Finance Management Act 1 of 1999, determines the framework, norms and standards for the management of all
revenue received, including the revenue collected by SA Revenue Service, Sars. Such funds are generally deposited into the National Revenue Fund or in some specific instances to a fund organ of state as determined by an Act of Parliament. The National Treasury is mandated in terms of section 11 to 16 of the Public Finance Management Act on the control and management by National Treasury over the national revenue. The National Treasury prepares consolidated financial statements in terms of the section 18 of the Public Finance Management Act submitting them for audit to the Auditor-General within three months of the financial year, which the Minister of Finance is then required to table in Parliament within one month of receiving the audit opinion of the Auditor-General.
Oversight over the public finances from a spending perspective in a multidisciplinary obligation governor ... [Inaudible] the Constitution and various laws of the Republic of South Africa. This includes the Public Finance Management Act, the Public Audit Act, the Public Service Act, the Intergovernmental Fiscal Relations and the Municipal Finance Management Act, amongst others, the Treasury oversees a transparent and a comprehensive national budget process which determines how these funds should be used and proposed to Parliament in a
Medium-Term Budget Policy for its consideration and the enactment of legislation to appropriate and divide these funds.
Funds are only allocated to other spheres of government or national departments while the annual Division of Revenue Act, various Appropriation Acts and other direct charge Acts of Parliament. Once funds are received by other organs of the state such organs of the state are directly accountable to Parliament or their legislatures or municipality for the spending of such funds which is regulated by the Public Finance Management Act or the Municipal Finance Management Act, also subject to auditing with their annual reports submitted to their legislators or council by ... [Inaudible.] deadline dates.
Parliament has the final oversight responsibility over all executive functions and portfolios with regards to national organs of state with similar responsibility for provincial legislatures municipalities. National Treasury provides Parliament with quarterly reports and make itself available to participate in parliamentary hearings in this regard. Beyond this, the Auditor-General has a mandate in terms of the Public
Audit Act, Special Investigating Unit has authority to launch an investigation in terms of the Special Investigation Unit and Special Tribunals Act. The Public Protector has constitutional powers to investigate. The SA Police Service has authority to investigate crimes and enforce the laws, and the Public Service Commission is empowered in terms of the Constitution and the Public Service Act. I thank you.
Mr S F Du TOIT: Thank you, hon Minister, for the answer. Hon Minister, it’s common knowledge that state capture did take place and I appreciate that you said that the Public Protector and the Special Investigating Unit, SIU, do have the authority to do investigations. However, at the end of the day it's National Treasury that presents a report to Parliament. A report that they as National Treasury are compiling that’s on funds that were deposited or paid over to National Treasury from Sars. Sars which is an institution that formed part of state capture as well as national intelligence and other
state-owned entities, SOEs.
Now, Minister, can you perhaps tell us what guarantee do we have that your word is, in fact, the truth in stating that state capture did not take place? And what other entities
though do play an oversight role in ensuring that the funds that National Treasury say they have, and that National Treasury pay over is actually the true and correct figures, because the Auditor-General obviously does its investigations when funds are paid over from Treasury to other entities and not necessarily in the financial books of National Treasury itself. Therefore, I want to know will the Minister agree that it would be wise to open a door to enable private companies to maybe do an audit on National Treasury’s books for us to have oversight and a second opinion as to what is really going on in Treasury. Thank you, Minister.
The MINISTER OF FINANCE: In so far as Sars and state capture is concerned, yesterday in my Budget Vote in the National Assembly I made a point that Sars has turned ... [Inaudible.] and that is reflected by the public confidence in Sars which has moved from 48% to more than 70% now that public confidence. Secondly, because of that public trust, as a result of that trust, compliance has increased ... [Inaudible.] taxpayers now trust Sars, and they are complying, that has an increase compliance to 76,5%. Which means Sars to the extent that we attempt to hijack it into state capture it has now recovered. That is the point the hon member must take.
The second point is, can Treasury open its books to a private company to do that? That decision is not the decision of National Treasury. That decision is the decision of the Auditor-General. The Auditor-General can decide that I don’t have the capacity to audit National Treasury, I will therefore seek the assistant of private companies. That is not our judgement call. Again, even here people would be fighting with us once we bring private sector people. How do we explain that to Parliament because Parliament requires us to ... [Inaudible] with the Auditor-General suddenly, we bypass it with Auditor-General and go look for private companies. It doesn’t work that way in the legislative framework, hon Du Toit. Thank you.
Mr D R RYDER: Thank you, Minister. Minister, Treasury is always, particularly is scathing of departments, provinces, municipalities and entities who are found to be spending money wastefully and an endeavour that proved to be fruitless. And yet, Minister, Treasury has been caught out wasting billions of rand on an information technology, IT, system that does not work. In 2017, Standing Committee on Public Accounts, Scopa, asked questions about the billion rand that had been squandered at that time without results. In 2022, Mr Momoniat
is on record telling us that Treasury was trying to worm out of the Integrated Financial Management Systems, IFMS, contract or at least ... [Inaudible] he didn’t mention who had agreed to the foolish terms in the first place.
However, now we find that as of today R2,4 billion has been lost with no outcome for South Africans. The very system that is to be used as a tool to ensure the appropriate spending of funds and the control that was mentioned in the original question. That very system has ended up costing devouring the equivalent of 80 new schools. Therefore, Quis custodiet ipsos custodes, who will watch the watchmen, Minister? Who will repay the wasted money? Who have you fired for wasting taxpayers’ money that some of your staff work so hard to get, and yet it is so easily wasted by some others. Thank you.
The MINISTER OF FINANCE: Thank, hon House, and hon Ryder. The IFMS issue is an unfortunate mishap. I’m the one to first agree that the manner in which it has been handled is bad. The way it has been handled is bad and you don’t earn your credit by not accepting your own mistakes. The manner in which the IFMS has been handled is bad. Treasury carries a better part of that problem but mind you IFMS has a contract between three
entities: the Department of Public Service and Administration, Sector Education and Training Authority, Seta, and National Treasury. I will not stand in this platform and ... [Inaudible.] blame to anybody. What I will say is that we have mishandled it.
Therefore, for that reason we owe the South African nation an apology. We have mishandled it and I’m not proud to stand up here and say that we’ve been dealing with the problem from 2015 to date and we have not made any ... [Inaudible.] is mishandled. Therefore, I’m not proud to stand up and defend that mishandling. And I’ve made an undertaking with Scopa when appeared before Scopa this year that before the end of a year, I would have dealt with that matter once and for all in terms of cost. Therefore, that’s the undertaking I can make to you today. Thank you.
Ms S B LEHIHI: House Chairperson, through you to Minister, which mechanisms have the Minister put in place to prevent irregular and wasteful expenditure? Thank you, House Chair.
The MINISTER OF FINANCE: Let me just say that there is this notion called wasteful and irregular expenditure. We are doing
a review of the Public Finance Management Act in order to deal with this question once and for all. Let me just give an example, National Student Financial Aid Scheme, NSFAS, has paid R77 billion to students. However, there is some legal requirement that before they do that there must be some publication of some guidelines. Their mistake was to pay this thing before the publication of the guidelines. The money is not stolen, it has done its purpose. However, because it was spent before the publication of those regulations, it is called irregular expenditure.
Therefore, what does that mean? The nation of irregular expenditure sometimes is utilised to ... [Inaudible.] innovation in the public service, and that in my view is an interesting point. There is one province which was telling us, and I suspect is the province of the Western Cape, they wanted to do a water project. They wanted water and they simply did what they ... [Inaudible.] to do to get water from dam to provide services. However, they were told the expenditure is irregular because the function belongs to somebody else ... that mean it was that they stole the money. Now, what I’m trying to suggest, hon members, yes, we need to caution to people against what is called irregular and wasteful
expenditure. However, the notion of irregular and wasteful expenditure needs to be recast. Thank you.
Mr Y I CARRIM: House Chair, of course, it’s the responsibility of National Treasury and government as whole to ensure that wastage is reduced to minimum and corruption too. However, what is your response to the view that Parliament has huge powers in this regard and is doing far more than it is doing. The question we should really be putting to the House, House Chair, as one of the powers that be in Parliament, how we actually doing what we should be doing that applies to all the people who asked questions here.
Secondly, tackling corruption surely is not the responsibility of government alone and not just Parliament. It involves business, trade unions, nongovernment organisations, NGOs, community-based organisations, CBOs, other sectors of civil societies and individuals. Would you agree with that view?
Thirdly, do you really think the Auditor-General, AG, is useless so that we require the private sector to come in? for what I can gather this AG like most of the other AGs, almost all of them, are well-class. Would you agree with that view?
The MINISTER OF FINANCE: I agree, our AG not the individual but the office of the AG in South Africa has been very excellent. If they were not doing their job rural class will be happy. If they were not doing their job, I would be happy because they would not have done what they did to Treasury itself. We have got an excellent AG’s office. The second point, I want to say that I think I don’t want to blame legislative, but I’m saying we should do more in oversight. It’s quite easy for committees to call Treasury into a police meeting, instead of asking the head of the police, the commissioner and the Minister. I’m using them as an example. Therefore, we should be exercising that oversight quite effectively. I’ve referred now to section 32 reports which every quarter you should be able by the end of the first quarter, by June this House should know which departments are not spending. At an earlier time ... [Inaudible.] if Parliament must do its work and be vigorous.
The second part which I should agree ... okay, the issue of corruption is something that needs to be delt by everybody. You know, I was talking to some business people, and I said even something like the business against crime was useful in the sense that it will be useful as watchdog to tell South
Africans that this is what is happening, I may be scared to go to the police, but I can go to an institution such as that.
Therefore, there is a need to be corruption in such a scourge that we need the whole effort of the South African nation than merely a government. I would agree with that proposition.
Thank you.
Question 104:
The MINISTER OF FINANCE: Hon House Chairperson, oh this is with regards to the famous Eskom. However, initially it seems the hon members might be inadvertently referring to the audit requirements rather than the Public Finance Management Act under which the Minister of Finance Consider the exemption for Eskom. It terms of section 2(b) of the Public Audit Act, the Auditor–General must provide for the auditing of institutions and accounting entities in the public sector. It is therefore the responsibility of the Auditor-General and the external audit at Eskom to develop any audit requirements applicable to the state-owned companies.
The Minister of Finance will make a final decision on the Eskom exemption once all commence received during the public consultation have been fully considered and further
consultations have been completed with key stakeholders which includes the Auditor-General. That is what I said when I withdrew the exemption.
I do not want to put the cart before the horse and say no, we will bring it back. For that will be tantamount to undermining the consultation process. That will depend on the outcome of the consultation process. Thank you.
Mr W A S AUCAMP: Hon House Chairperson and hon Minister, the auditing profession in South Africa is known for its integrity and high standards. It was therefore shocking to see your announcement in your Government Gazette of 31 March this year where you exempted Eskom from declaring the irregular, fruitless and wasteful expenditures for the period of three years. This exemption would have devaluated the auditor’s outcomes of Eskom which would have had far reaching effects on the credibility of all Eskom’s auditing outcomes. Hon Ministers, it smacks of desperation and sure case government’s attempts to protect the perpetrators of corruption at Eskom.
Now this brings us to the question. What or is it that you were trying to protect? Is it the incompetency of this ANC-led
government and its failed policy of cadre deployment? If not, who are the individuals that you are trying to protect, because clearly you are trying to protect somebody? Thank you, hon House Chairperson.
The MINISTER OF FINANCE: Hon House Chairperson, the presentation of that exemption the timing was unfortunate. For it came at a time when De Ruyter had made all these allegations of corruption at Eskom. Therefore, an assumption is made that when we wanted to grant the exemption, then it appeared as wanting to protect certain individuals rather than the institution.
I made a point and a suggestion and humble suggest that the intention was a good one of protecting the institution. I am going to come back to this point, because last year, we did a similar thing for Transnet.
What does thing do? Does it hide information or does it protect individuals?
What we did with Transnet is in order to protect Transnet to go to the market and have their financials credible, was to
say yes, we are willing to take all these things which in the audit profession, go to any private sector company is not sanctioned for what is called irregular payments. No such a thing exist in the international financial standards. It does not exist.
In the Johannesburg Stock Exchange, JSE, listing, mind you all of these companies are listed in the JSE for their bonds, there is no such a requirement.
[Interjections.]
No, no, no. Let me just say, and allow me to finish. So, what did this information we are saying, alright, this information is not necessarily in international standards an audit information for the purposes of the financial statement.
Publish this information not as the financial statement. Publish this information as part of your annual report and rebound for it in Parliament. It was not hidden.
So, that is why I am saying it was unfortunate and the timing was unfortunate. It was exactly when De Ruyter had made the allegations. Everybody said oh! Godongwana is trying to
protect people. By the way, that accusation is not only from the opposition it is also from my colleagues!
When one of my colleagues and a member of Cabinet went on to say if Godongwana brought this thing in Cabinet we would have rejected it! For it is assumed that I am trying to protect De Ruyter. On one hand it is assumed I am trying to protect the ANC thieves that is what people are saying.
It is a good intention and I am attacked from all sides of the political spectra, but the intention is to protect Eskom to be able to go to the market with a clean audit, but create an instrument where they can report this information via the annual report. Thank you.
Ms D G MAHLANGU: Hon House Chairperson ...
IsiNdebele:
... angithokoze kumhlonitjhwa, ngitjho nokobana kungenzeka kwaphela kwa-ANC lapho sivuma khona imphosiso zethu. Besibawe nephathelo abantwini bekhethu laphe khengesibaphathe khona kuhle sithi, tjhebetjhebe.
English:
Having to follow-up on the question by the hon Oucamp, hon Minister, I am happy that you have outlined and went beyond the specific question.
In case of any future possibility of revisiting the possibility which you have since withdrawn: Will the Minister take Parliament as an apex of oversight authority over the national executive into confidence, prior to tabling such auditing requirements to the Cabinet for approval? Thank you, hon Minister.
The MINISTER OF FINANCE: Hon member, I think as I have indicated that the timing is unfortunate and the institution is clouded in controversy, given that context, if I were to do it again, I am going to broaden the consultative process, including taking Parliament into confidence. I am not going to simply move in. I will have to find ways of consulting with the relevant committees and so on before making the final decision. That I can assure you. It is quite a complex matter. It is also quite a heated issue specifically because of the nature of the beast which is Eskom. Thank you, hon House Chairperson.
Mr M DLAMINI: Hon House Chairperson, the Minister’s decision to amend auditing requirements at Eskom demonstrates that he has no regard for accountability. He is completely disinterested in creating an open and accountable sector. As Eskom is uncounted with extreme levels of corruption which involve senior ANC members of the executive whose main goal is to steal billions of rand meant to stabilise the institution.
Beside an attempt to hide the rampant corruption at Eskom, that has plunged our country into an unavoidable electricity blackouts: What are the reasons that lie behind the decision to amend the auditing requirements? Thank you.
The MINISTER OF FINANCE: There is first and foremost, a myth which people have internalised and in internalising this myth, makes people feel comfortable when they go and sleep. That myth is that there are these corrupt politicians that are running around Eskom stealing money at Eskom. When you ask the question: Who are those politicians? No one gives you an answer.
[Interjections.]
Who are they?
No, no, no, no!
The character who told you people are stealing money he said he did an investigation. When he is called by Parliament, he cannot give names! Under the protection of Parliament. So.
No, no, no, no!
The HOUSE CHAIRPERSON (Mr A J Nyambi): Order hon members! Order, hon members.
You have asked a question and you must be ready to the responses.
The MINISTER OF FINANCE: Yes, because it is quite important as a starting point to not start from there, but ask from the rational which I have given. This thing we have done for Transnet. For the chief executive officer, CEO, of Transnet was running around saying they cannot get money from the market with the current status that they have to go to deal
with something where they were not present that translated to my statements and they have to go and raise money.
Therefore, we provided a similar exemption. By the way you as legislatures make provision in the law for secondary legislation. In other words you say once we have made this law, we will give the Minister, powers to do the x and y. That is what the law says. This section of the Public Finance Management Act: Is it 92 or 95, I cannot now remember, give the Minister to grant exemption. It does not say I must go around and call public hearings and so on. It says I must exempt. I am saying I accept that given the nature of Eskom I should have taken the sensitivity and be sensitive in the context of this one! For I deal with exemptions every day. I do not say oh, this one I must go and consult and this must go to Cabinet. I deal with them, but, I accept and acknowledge that I should have taken care of the fact that given the toxicity surrounding Eskom, I should have taken care, before making that decision. That, I accept.
It was not an intention and I have the powers to do exemptions. If I was to go to Parliament and exempt people, there will be no exemptions. So, let us be please be careful.
That power was granted to me by the Public Finance Management Act. I am happy to say how many people have been exempted and for what? Parliament can ask me those questions to account.
So, there is no intention.
The rational for the exemption, is poorly to assist Eskom to have credible financial statement which Eskom the entity and not the individuals, credible financial statements so that it should be able to go to the markets. That was the intention. We can debate and bring a number of credible accounting people to debate at the time when I am bringing it so that you know that there are disputes in the accounting profession over that. Thank you, hon House Chairperson.
Question 118:
The MINISTER OF FINANCE: Government has taken account of the evidence submitted to the State Capture Commission on how the procurement system was abused under state capture and taken onboard its recommendations in preventing corruption and abuse in our procurement system.
We recognise that corruption is one of the highest risks facing any procurement processes and we need to strengthen our
planning, preventive and internal control systems to reduce the scope of such corruption. Based on our analysis of the problems, we will be introducing a Public Procurement Bill in Parliament in the next few weeks to improve governance transparency, integrity and oversight system. However, we recognise that we have to go beyond just the enacting of the new law.
To modernise our procurement system, we also work closely with the World Bank, the Organisation for Economic Co-operation and Development, OECD to learn the best lessons internationally.
We will be commencing a review with the OECD called Methodology for Assessing Procurement System, Maps, to guide the modernisation process by identifying areas of deficiencies and vulnerabilities in our current system.
I must tell hon delegates that Cabinet has passed this Procurement Bill after a process of going through National Economic Development and Labour Council, Nedlac, and all of these places. As someone new in government, the process is time consuming. Finally, the Cabinet has given a nod after those amendments we were waiting for and accreditation by state law advisors and tabled in Cabinet. Thank you.
Ms D G MAHLANGU: Hon House Chair, to the Minister, we were pleased to note from the recent Cabinet factsheet that the draft legislation on the public procurement reform has been approved by the Cabinet of which, according to us as the ANC, is a very critical milestone and we welcome that.
I have two interrelated critical questions that arise from that. Firstly, to what extent has the draft legislation or any patent and policy discussion document on the legislation been canvased with the key stakeholders prior to being approved by Cabinet, if there was any? Secondly, to which extent has the process thrash out continuous issues, if any? Thank you.
The MINISTER OF FINANCE: Hon House Chair, I said this thing is time consuming and I have learnt a great deal out of it. Let me outline it. First and foremost, the document went to Cabinet, then public hearings, then Nedlac from 6 May last year and I received it back from Nadlac on 6 October, and it went back to Cabinet.
One of my critiques is sitting here, they kept me on my toes from 29 March until last week in the Cabinet system and fighting over it. Oh, I forgot, you were also giving me a
headache over your small and medium enterprises. It is a robust debate. The consultation processes have been wide as I indicated that I was frustrated when it was with Nedlac from May to October going through consultations with stakeholders, I think. It is going to come now to Parliament and Parliament is also going to do the same thing by taking it to public hearings for comments.
Precisely because of the nature of the transformation it is going to do, the legislation is quite controversial.
Therefore, there’s going to be a huge interest. If my colleagues in Cabinet kept it for a month, you can imagine how the society is going to be like.
Let me just gossip about him. I get an amendment from his department, and he comes back and says no, no, I want to change and here is my proposal.
It was a robust, fascinating and engaging debate. I was impatient at the beginning but I realised that my impatience is ill-founded because the nature of the document attracts a lot of attention. I then developed patience. As I am bringing
it to Parliament, I am going to be patient for that consultation. Thank you.
Ms B T MATHEVULA: Hon House Chairperson, to the Minister, the EFF has, since in its inception, advocated for the abolishment of tenders as it is clear that the only way to stop all the corruption related to the looting of state resources is the abolishment of tenders. Which measures has the Minister put in place to build its internal capacity so as to bring long term benefits to government to date? The ANC-led government has done absolutely nothing to build its internal capacity. Thank you, House Chair.
The MINISTER OF FINANCE: What the EFF is proposing is a recipe for corruption. Let me just say that our Constitution is quite a perfect Constitution. This Constitution says a couple of things. In section 217(1) it says we must have a fair, transparent, equitable and competitive process. In other words, any procurement must arise as a result of a competitive process, meaning that I can’t stand up and say I’m going to give this contract to Ebrahim Patel. Why am I not giving it to Stella Ndabeni? There must be criteria to distinguish why I gave it to him and not her. They must compete on an equal
footing. How does a constitution build that footing, which is an interesting thing? It then says under section 217(2)(a) you can, if you like, design a preferential category. In my view, you can decide that there will be a preferential procurement for Small Business. That is your category. You can do that discrimination and preferential procurement. That is what the Constitution says.
Subsection 2(b) is specific that the procurement must give preference to previously disadvantaged groups. So, that is what the Constitution says that there must be competition to bid amongst equals, and there must be a transformational part of that competitive bidding system. It is a perfect Constitution! Perfect Constitution!
I can see these ones don’t want commenting about tender procuring because they don’t want this affirmative action in favour of previously disadvantaged black people. It is some kind of racist connotation because we are talking about a society cast in a racial mode. You can’t simply say, in a society which is cast in a racial mode, that you can simply disentangle racism and it is going to melt away. Racism will discourage true proactive action. That is what we are talking
about. These ones will coin terms to retain the status quo as if they are in favour of the poor. I have been listening to this language even yesterday. It is incorrect. We know the racists undertone of these allegations. So, part of what we are saying is that we have a society cast in a racial mode and to transform that society you need proactive action, and the Constitution allows us to do that. Thank you.
Mr S F DU TOIT: Hon House Chair, to the hon Minister, you have actually taken quite a few words out of my mouth, but I want to pose to you what section 217 of the Constitution says with regards to equitability, transparency, competitiveness and cost effectiveness. What is troublesome is the fact that you refer to some members in the House as ‘these ones’ and you refer to them as being ‘racist’ and it comes across as if you might put yourself as being superior to others.
It appears that the implementation of the Public Procurement Policy under your government may be imbalanced with a notable preference given to Black Economic Empowerment, BEE, classification over crucial factors such as equitability, competitiveness and cost effectiveness. How do you plan to address this issue and ensure a more balanced public
procurement policy process that places greater emphasis on equitability, competitiveness and cost effectiveness thereby safeguarding the state from the risks of bankruptcy and potential state failure resulting from the well-known corruption caused by BEE policies which is racist? Thank you, House Chair.
The MINISTER OF FINANCE: You know members from the opposition have a tendency of incorrectly quoting the Constitution. They selectively quote it. This member is doing exactly the same thing they were doing to Minister Nxesi the other day in the National Assembly. To quote section 217(1) in isolation from the borders section 217 is misleading. Section 217 deliberately says you will have preferences. That is the Constitution of this country which we all agreed to. Secondly, there is no denial in South Africa that we are a product of a racial engineered society. If people want us to apologise for that, unfortunately they are not going to get that apology.
Therefore, section 217(2) enjoins us to disentangle that apartheid kind of ... [Inaudible.] ... by taking proactive action in support of those who were previously disadvantaged. Now where these people are called tenderpreneurs we should accept that categorisation as part of the South African
lexicon. It can’t be right, and when we reject that we are called racist. It is part of ... [Inaudible.] ... because people are labelling black businesses who are emerging, and we must then not support them. It is lexicon which we cannot accept as part of South African discourse. I make no apologies for that. thank you, House Chairperson.
Mr T J BRAUTESETH: Hon House Chairperson, to the Minister, let us get away from those talks of racism and let us get down to what we are going to do to fix things. The Public Finance Management Act, PFMA, and the Municipal Finance Management Act, MFMA, I know them as well as you do, together with substantial regulations, practice notes and circulars create a morass of red tape as you know. Sometimes they can have counterproductive consequences to the point where it appears that, with a couple of rare exceptions, the only people prepared to come and try and do work with government are those who are prepared to go through the whole morass of paperwork with the intended goal at the end to try and extract some sort of arranged seeking effort out of the whole process. So, the question that comes in here is the new Procurement Bill, which as you said, has been met with huge interest by your Cabinet and raised many concerns which makes us wonder why it’s taking
so long and is it possible that some of the Cabinet members are concerned that the avenues of income might be curtailed to a certain extent.
So, you have said to us today that you are glad to report that the Cabinet has approved it and we can get going in the legislative process. But of course, we know about promise versus reality in government and in particular yours. I would like to ask you this question today. Will you commit to do everything you can to make sure that this Bill comes to Parliament in the next four weeks and is expedited through poll? Thank you very much.
The MINISTER OF FINANCE: Let me start with the easy part. I make this commitment to you; we start counting from today that in the next four weeks this Bill will be tabled in Parliament. I make that commitment to you calculating from today. You have my deal. The next issue where we might find each other is your starting point that we need to reduce as much red tape as possible in the procurement system.
Since the beginning of this year after the Constitutional Court judgement, to deal with the instruction notes and
everything, we have sifted one critical instruction note that says that from now on each organ of state will design its own procurement system. That is what was said. Each organ of state means that Minister Patel must have his own procurement system, Minister Ndabeni must have her own procurement system, the City of Cape Town must have its own procurement system.
All we are going to do is to set up standards as required by the Constitution in order to deal with that red tape. More broadly if you can speed this procurement Bill and make it successful as quickly as possible, I am not saying let’s take shortcuts; shoot at us because that is what Parliament is about. We represent different interest groups here and I accept that. We can have those discussions and then get this Bill back into the process as quickly as possible. You will see that the red tape will go.
I said that we are doing a review of the PFMA itself. The PFMA itself has a certain regulatory, and it was no longer relevant is 2003 as it was in 1999. Sometimes we don’t distinguish between the PFMA and the Procurement Bill. For instance, my irritation is what is called regulation 16 for the public private partnerships, PPPs. It is cumbersome it can take you three years to consummate a PPP. So, I like your point. Let’s
get down into fixing the details. That is the constructive debate we would like to engage in. I thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Thank you, hon Minister. Hon members, Ministers, Deputy Minister, we have come to the end of questions to the Minister of Finance. I would like to take this opportunity to thank you, hon Minister Godongwana, for availing yourself to answer questions in the National Council of Provinces. Thank you, hon Minister. [Applause.] We also acknowledge and welcome the Minister of Trade and Industry. A reminder to the hon Ministers that have joined us that the response to the original question will be five minutes and the supplementary follow-up is four minutes. Now, allow me, hon members, to invite the hon Minister of Trade and Industry, Minister Patel, to the podium to deal with the department.
Question 109:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Good
afternoon to all hon members and thank you, hon Londt, for the question. The G7 does not fall within the mandate of the Department of Trade, Industry and Competition. But I wish nonetheless to provide a response to the question.
The G7, or to use its full name the Group of Seven consists of seven countries, the United States, Canada, France, Germany, Italy, the United Kingdom and Japan. South Africa is not a member of the G7. There are other groups of countries. We have the G12, which strangely is made up of thirteen countries. We have the G20. South Africa is a member of the G20.
Let me return then to the G7. Each G7 member has an opportunity to chair the annual Summit of the G7. Japan chairs the next one, which is held from 19 to 21 May.
It is the prerogative of the chairperson of the host country to invite observers. They can invite countries or they can invite regional groups. Japan decided to invite the country that currently chairs the African Union. To another words the regional group.
We valued the economic relationship with each of the G7 countries. We engage with those countries on investment and on trade. Turning to the specific issue, hon Londt, that you have raised, if there are any negative views our diplomats, our members of Cabinet and our officials engage trading partners and investment partners. It’s part of what we do.
But the matter of invitations will always be the prerogative of the chair of the Summit. So, that’s the matter that South Africa has no control over. I thank you.
Mr J J LONDT: Good afternoon, Minister. You will have to a few times look to the left but I think that your ideology as well. So, that’s all good. So few have joined us.
Hon Minister, I do appreciate that you said that you valued the economic relationships with each of the G7 nations. Now as you are aware the African Growth and Opportunity Act is up for renewal in 2025 and the advantages that South Africa gets from Algoa and other trading partnerships with none Russia aligned countries cannot be understated.
Well, trade with Russia is almost insignificant totalling less than trade with Botswana, Mozambique and Namibia respectively. Our continued alliances with individuals and countries that negatively affect our global position is putting thousands of jobs at risk and millions of lives is in danger with our economy that is already incredible fragile. Are you satisfied that we continue on this path risking losing trading partners and even floating with sanctions being put on South Africa for
our ill advice positions we have taken under your government? Thank you.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon Londt,
perhaps a few remarks, sir, could help. The first one is that South Africa trade poster is very clear. We have enormous challenges of unemployment, poverty and equality. We want to trade with all countries in the world. We want to welcome investment both from the domestic investors and foreign investors. Our job is enormous to deal with the problems of the South African economy.
And so, what we do is, we maintain good relations with everyone. Hon Londt, you will know that there has been much media discussion on the relationship with the United Sates and Algoa, which is Africa growth opportunity sector. The economic relationship with the United States is important for South Africa. It’s a source of investment. It’s a market for trade. It’s an opportunity for technical and technological exchanges.
South Africa in turn is a significant supplier of critical raw materials to the United States. We have some foreign investment into the United States and of course, we market for
goods made in the United States. And so, we engaged with the United States using diplomatic channels.
One lesson we have all learned is when you want to do good diplomacy when you want to reach solutions be careful of taking out the megaphone and the microphone. Sit down and talk. Share ideas. Share facts. Find solutions. And so, I don’t believe it is in our country’s interest that we put more heat on this matter. It is in the process of being dealt with and I remain confident that South Africa will ensure that we try to find ways of opening up as many markets as possible to our goods and that all South Africans can benefit from our efforts. Thank you.
The HOUSE CHAIRPERSON (Mr A J Nyambi): The second follow up question is from hon ambassador. Hon Dangor?
Mr M DANGOR: ... [Inaudible.] ...
The HOUSE CHAIRPERSON (Mr A J Nyambi): Sorry, hon Dangor. Hon Dangor, have your mic on.
Mr M DANGOR: Question 122. Not with this one, Chairperson.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Oh, is hon Rayi. I like you, hon ambassador. Its hon Rayi.
Mr M I RAYI: Greetings to the Minister. What is more important to us as the ANC more than just to be observers in the G7 meeting are the relations between us and the G7 countries as well as the rest of the African continent. So, my question therefore, hon Minister, what is South Africa’s relation with the G7 countries and the rest of the African Continent is like? Thank you so much.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Greetings to
hon Rayi. Hon Rayi, let me start by saying if I look to the overall trade flows the matrix we keep a watchful eye on is the success with our exports. Exports create an opportunity for jobs in South Africa. It adds value to our GDP. It increases the tax base which enables the country to finance all of its development goals. So, exports is really very important. We do quite a bit of exports to a number of G7 countries. We also do a significant amount of exports to the rest of the African continent. We are working now on the African Continental Free Trade Area to expand that further.
Last year, we were something of a bumper here for us on exports. South Africa exported about R2 trillion with our goods and of the order of about just short of R500 billion was to other African countries with whom we have trading relationships.
With the European Union we demanded to about R430 billion, R235 billion and is so significant some of about R77 billion for our exports to the United States. There are a very large exports to China, India and a number of other countries. We increasingly trying to export more to the Golf Co-ordinating Council. Those are countries like Saudi Arabia, Qatar, United Arab Emirates and so on because they have a large consumer markets with a growing appetite for South African made goods.
Yesterday, we met with the Prime Minister of Singapore and we worked out how we can we indeed get more red meat into the Singaporean market. So, that is by way of the aggregates. As regards, some of the economic relationships we have economic partnership agreement with European Union, its reciprocal arrangement, we have access to the African Growth and Opportunity Act and while its unilateral arrangement meaning that it applies to South African goods being sold in the
United States. They are benefits the United States gets and one example of it is the Paul Creedal that was done in the number of years ago in respect of empty dumping duties on American poultry that comes into the South African market.
We have an important investment relationship. Just a short while ago the President closed a successful Investment Conference in Sandton at which we reached our five-year target. In fact, we exceeded that target by getting pledges of R1,5 trillion. Now it is with noting that at that investment conference we had companies coming up and making pledges.
Twelve of those pledges were from countries that are members of the G7. They included pledges from the United States, Canada, France, Germany and the United Kingdom and so we remained opened.
As a country, we believe in having a rules-based system globally that might empower should not be the basis in which countries engaged with each other that we negotiate dates and arrangements will be set down and we shape the Rules and then we adhere to the Rules. So, that set out our poster and our view with regard to both the rest of African continent and the G7 countries. Thank you.
Mr M S MOLETSANE: Is the Minister aware of the reasons why Mr Ramaphosa was not invited to the G7 meeting whether can be reasons related to the way he responded to the military operations between Russia and Ukraine? Thank you, Chairperson.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Chairperson,
thank you very much for the question. I repeat what I said earlier. Let me repeat it again. South Africa is not a member of the G7. We attend meetings of the G7 when we are invited by whoever host per particular meeting. In the case of this year’s meeting the host is Japan. Japan shows to invite the countries that shares the African Union to represent all African countries as an observer. Japan has offered no other explanation. It is not my job to speculate. Thank you.
Mr N M HADEBE: Hon Minister, is there a possibility of the establishment of an Inter-Ministerial committee between this Ministry and the Ministry of International Relations and Co- operation to ensure harmonious efforts amongst government departments in achieving the common goal of maintaining South Africa ‘s rightful place in the global stage? Thank you, House Chairperson.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you,
hon Hadebe. Let me start by saying that it’s an excellent idea that there should be a close and warm collaboration between the Department of International Relations and Co-operation and the Department of Trade, Industry and Competition to ensure that South Africa is successful in pursuit of our national goals in the global trading system.
The good news is that what we are doing. Minister Pandor and I work very closely together in dealing with ways in which we can open up markets for South African goods. We work closely together to enable a higher level of investment to come in and there are a number of international forums in the G20. For example, we work closely together to ensure that the inputs that comes in the various streams of the G20 are fully and adequately captured in the Summit declarations.
In the United Nations when there are matters relating to trade we work closely together to that as well as in the agencies of the United Nations when it comes to investment. Similarly, in the World Trade Organisation, which is a body that has been set up that incorporates a large number of countries who negotiate treaties and agreements on trade. I have been fully
supported by the Department of International Relations and Co- operation, by our ambassador in Geniva and by the full machinery of the Department of International Relations and Co- operation.
In respect of the African Continental Free Trade Area, the Minister of International Relations and Co-operation represent South Africa in the Executive Council of the African Union the President represent us at the Summit of the Assembly of the Union and gain we collaborate very closely as we did indeed in February this year in securing African Union support for a number of decisions that affects trade and the protocol’s driving trade. So, yes, hon Hadebe, we work closely on those areas. Thank you.
Question 122:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much, Chairperson. Let me start, perhaps, with the premise of the question which is, what is Black Industrialists Programme? It is a programme where we nurture and support the emergence of firms owned by black South Africans particularly in the productive economy. Manufacturing is an example of it. The idea is to shift away from the old arrangements where
black South Africans would seek to secure 5%, 10% or 15% of a company, into giving opportunities to set up companies, to run companies, to succeed, to stumble and to get up again because this is the essence of entrepreneurship.
In July last year, we convened Black Industrialists and Exporters Conference. That conference deals substantially with the question that has been put to me today by hon Mamaregane. For example, what we were able to showcase in that conference is the progress that we have made that more than 900 firms had now been partnered with the DTIC group and programmes that the DTIC group had supported over the last six years. Those companies taken as a whole over that period it employed 70 000 workers. Those companies over a 12-year period had added
R160 billion in gross value add to the South Africa economy.
But in the conference we also had a marketplace, and not just a talk shop, but a market place. A marketplace where black South Africans who own firms were able to showcase their products. We heard there are 139 exhibitors. These were companies run by black South Africans in food, making of components for cars, chemicals, cosmetics, energy, fashion and clothing, film making, furniture , metal and mining,
innovation and technology and many other areas. We have made much progress.
There are challenges. Some of those challenges have emerged. The first challenge is the challenge of scale of where we are successful. Instead of having four black owned companies we should be having 40, 400 or 4 000. So, it is about increasing the number of success stories that we have.
The second challenge is the spot of ecosystem. The DTIC provides support, but you need the whole system to work. Minister Godongwana has just made the point about the important role of the Procurement Bill in an enabling procurement as another driver of economic inclusion.
The third challenge deals with the be haviour of dominant firms, a large firm that is close to an effective monopoly in the market who are conduct himself sometimes in ways that keep newcomers and smaller players out. The Competition Act has been comprehensively amended to address this matter and we hope to see some of the successes of that fairly shortly.
There are many positives that we have also seen with large companies where major businesses in our economy has accepted
the import role of the Black Industrialists Programme and they now supporting supplier development funds, for example, Tepseco which is a global company has said that they want to work with small businesses and black farmers and expand the production of farming output that can go into their industrial products. They do so sometimes with loans, sometimes with grants and sometimes with technical assistance. We have seen with the Black Industrialists Programme a number of real successes and we look forward to being able to get many more of those successes in future. Thank you.
Mr M DANGOR: Thank you very much, Minister. Minister, you have largely answered the follow-up question. However, as a matter of emphasis, the Constitution enjoins the sake to address all historical injustices of the past, and in our view as the ANC this programme is precisely about addressing economic injustices of the past. Can the hon Minister be kind enough to take this House into confidence in terms of the total spend of this particular programme per province without going into details about the nature of the projects funded to determine the equitable share in the nine provinces? Thank you very much, Chair.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much, hon Dangor for that question. Hon Dangor points out that our programme is about redress - dealing with the injustices of the past. There is a very nice word in the Afrikaans language for dealing with the word affirmative action, that is, “regstellende aksie” [affirmative action].
So, what you are doing is that you are correcting. What we have seen is an importance to that. But I want to suggest, hon Dangor, that the Black Industrialists Programme is not only about addressing the injustices of the past, but it is also a growth strategy for South Africa. If you have an entrepreneurial base, a group of people who run the economy that is drawn from a tiny part of the population, you will always underperform. China doesn’t rely on only 5% of the Chinese population to drive its economy. The United States does not rely on 5% of its population, neither does Germany, nor India. They use all their talents. We as South Africa have to use all of our talents, even accounting for addressing the historical injustices of the past. Even say, put it aside for a moment. There is an economic argument why we need to widen the enterprise pool of the country to drive our growth.
If I look at the last financial year as an example, hon Dango, the DTIC directly and through some of its agencies would have spent about R7 billion in various forms of loans, mainly loans, in a few cases grants and equity to support the emergence of black industrialists in our economy.
Perhaps what I can do is to provide a broad typology of the provincial spend because we can measure it by transactions, or project or finance. It is demand driven. In other words, it is based on the applications before, say the Industrial Development Corporation of SA, IDC, or the nonappropriated funds, NAF. They look at the business case because generally it they are not grants, but most of them are loans. So, you have to satisfy yourself. The black industrialist has real prospects of being able to pay it back. If I look at that I would say the two top provinces that has more than 30 transactions in this period would be KwaZulu-Natal and Gauteng. The ones that I would classify between 10 and 30 transactions would be provinces like the Eastern Cape, Limpopo, Mpumalanga, Western Cape and the Northern Cape. Those provinces with less than 10 transactions would be North West and Free State. We have to look for more opportunities particularly in those provinces that are not generating the
business cases at the moment. Make sure that there is technical and other support available because even there, there would be entrepreneurs and there would be opportunities and it is about unearthing them.
Hon Dangor, I want to submit, yes, it addresses the historical injustices, but also lets talk about how black industrialists are actually creating wealth for the country by paying taxes and employing workers. Thank you very much.
Mr F J BADENHORST: Thank you, Chair. Minister, with your acknowledgement of the black industrialists development programme’s achievements in creating jobs and supporting the growth of black-owned enterprises, you must also address the concerns about economic concertation. According to the latest Gini coefficient statistics which measures inequality on the bases of wealth, regardless of race, South Africa is one of the most unequal societies in the world. Given the Black Industrialists Development Programme’s substantial funding support of more than R36 billion towards 1 000 black industrialists, this could be seen as further concentrating the wealth within a select few rather than distributing it more evenly across the whole South African community. How does
the department plan to prevent the Black Industrialists Development Programme from exacerbating the concertation of wealth and potentially exacerbating economic disparities?
Thank you, Chair.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much for the question. Let me start by saying that we have a common objective to address the problems of economic concertation. Regrettably, much of the economic concertation in South Africa is still reflecting demographic patterns – that’s the reality of it. The Competition Commission produced a detailed report with the names of the top three companies in more than 120 subsectors of the South African economy. It makes for interesting reading. I am happy to make copies available to any of the NCOP hon members who would like a copy of it. It is a thick document, but really it is worth reading. It would underscore the point that I have made.
Our empowerment and transformation programme has a number of different elements to it. I have spoken today about black industrialists. We need black South Africans who can run successful business - small businesses, medium-size businesses and, yes, large businesses. What we do then is that we
complement that with a focus on worker ownership in the economy. I would be addressing this august House, I think it's next week and I will provide information on the successes we have made in having more workers in the economy a shareholders. That spreads wealth very, very widely.
But there is a third leg to it. The third leg is skills development. Many of our programmes of empowerment is about providing opportunities for black South Africans to have opportunities as managers and as technical people when they have requisite skills and experience. When you look at the demographic profile of professions, 30 years ago many professions reflected one demographic. Today, those very professions are beginning to reflect some of the diversity of the South Africa society - not fully yet, but to a much greater extend. I can now a surgeon that is a black South Africa. I can now have a pilots, I can now have scientists, I can now have a range of professionals servicing me. I can have white South Africans equally servicing my needs in medical, law and in any of it. Overtime, those issues will no longer be important when we see reflected in the upper echelons of management and the technical professions being black and white South Africans. That’s what our programme is about.
To reduce our programme only to black industrialists is to glue an injustices to what we do, to put the responsibility for economic concertation in the hands of the relatively small number of larger black owned businesses is at odds with the facts and does again does injustice to what we seek to do.
I would want hon members on my left to support actively and passionately the Black Industrialists Programme.
Your children need as much as you do. It is about building a balanced society, a society with a talent of black South Africans who can help grow this economy, who can help us to fight poverty and can help us to reduce inequalities. I thank you.
Mr S F DU TOIT: Thank you, hon Chair. Good day, hon Minister. Hon Minister it is a fact that the whole economical sector in South Africa is under pressure, and you have alluded to it just now. For how long would black people be degraded and labelled by this government as being neglected, disadvantaged and forgotten since government has since 1994 advanced and promoted black people with more than 116 race-based legislations? It sounds as class for this Black Industrialists
Development Programme who would determine when this would be a success because if anyone support this Black Industrialist Development Programme, you basically support a programme legislation that is not advantage to other minority groups in this country. Thank you, Chair.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much, Chairperson for the opportunity. I am so pleased that hon Du toit has raised the question. Thank you, hon Du Toit. What that question does is that it allows us to yet again affirm, what does our law say? When we talk about the black industrialists, what do we men by black. The law is crystal clear. It refers to Africans, coloureds and Indians. When we talk of the other minorities, I would like to see what they are. Of course, there are many opportunities for white South Africans in our economy. But historically what we are seeking to address is the reality that privilege in the past has given one part of the South African population an advance and disadvantage has resulted in large numbers of South Africans being left out of the economic mainstream. That’s what we are seeking to do.
Hon Du Toit, the argument is sometimes made, but look since 1994 you have done this, almost 30 years. When we look at disadvantage, it has a lineage, a history that is older than
370 years and is deeply embedded in the outcomes that we see.
Let’s look at it in this way. If I have wealth and education and my son is looking for a job, he has finished school, first thing is I know how to navigate that he gets into the university because he has a place where he can study. He has tutors where necessary, he has access to education, and I may have been to the university myself and I can assist that young boy or that young girl to navigate. I can use my contacts at the golf course and he can get a holiday job. I can then say to him let me help you fill in the form to get into the university. When he is at the university I can connect him with other people in my social circle who are studying or are graduates in that field.
Imagine that parent is a clothing worker or someone who work in another person’s household as a domestic worker. They themselves have not finished high school. They can’t help the young boy or girl with mathematics. They cannot help them because they are not members of a golf club. They can’t help
them because they don’t have friends and colleagues who are this professionals. That’s the reality inherited.
It is not that every black South African is working in circumstances like that, but look around you. There are still many, many millions of South Africans and South Africa families who have that as a reality.
Instead of us polarising the debate like this, I would want hon Du Toit and members of all the parties who have made that point, join us in this journey of empowering more South Africans. You and your families too will benefit in the long run because it creates social stability, it creates greater equity and it provides opportunities. I can show you examples of black South Africans that have created a wealth for our country and really powered this democracy forward. Rally, that’s my message, hon Du Toit. I hope you can join us in what we seek to do to build an inclusive South Africa. I thank you.
Xitsonga:
Man B T MATHEVULA: Ndza khensa, Mutshamaxitulu. Holobye, eka tifeme ta 900 leti ti nga pfuniwa hi DTIC, xana i tifeme tingani leti rhangeriwaka hi vanhu va ntima leti mi nga ti
pfuna ku xavisa swimakiwa swa vona eka matiko ya le handle? Ndza khensa.
English:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: First, thank
you very much, hon Mathevula. What we seek to do with our trade relationship we are selling and buying between countries is to foster a world in which where each are able to secure that which we don’t have and we can in turn offer the world that which the world need. South Africa is a big mining economy. We have enormous stocks of raw materials. We sell raw materials to the rest of the world. We cannot eat gold, we can’t need platinum and they need to be processed. Our raw material export is one element of what we do. But we must watch out for the neocolonial trap. The neocolonial trap is where we only sell raw materials to the rest of the world and we buy finished or manufactured goods from the rest of the world. Industrial policy is about changing that reality. What we have done over the last number of years is tangible examples of success in being able to sell more value-added products to the other parts of the world.
I want to turn to COVID-19 as a striking example of getting to what we sell to others and what we get buy from others. When the COVID-19 pandemic started we had very limited industrial capability on medical grade, face masks, vaccines, ventilators and a number of medications that are used. We used South Africa’s industrial capabilities and we became Africa’s supplier of COVID-19 materials. We were able to export billions of rand worth of hand sanitisers and we have become a significant exporter of vaccines. We have been able to produce ventilators in the period that was utilised.
I see that as an example of why we have got to be able to change our trade relationships and sell more high value beneficiated products to the rest of the world. Do we benefit from all of our minerals? No, we have such enormous stocks that we have an opportunity to sell finished goods and raw material.
What we must avoid though is becoming principally or only a supplier of raw materials. Let me give you one brief example of how we are changing that. We have the world’s largest known reserves of platinum. We can sell platinum, or we can sell catalytic convertors. We now have companies making catalytic
convertors in South Africa which we then export to other parts of the world. We can sell raw platinum, or we can use platinum as a feedstock in fossil technology. We are now backing fossil technologies so that we are able to utilise those platinum in that application.
I can give more examples if time permits. But it is really about rethinking as to how we engage with the world on Africa’s terms, on industrialisation source and foundation to our trade with the rest of the world. I thank you.
Question 108:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Through you,
hon Chair, let me say to hon Nhanhla ... [Interjections.]
Mr M NHANHA: Point of order, Chair.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Hon Minister, you can just say, hon Chocolate. Order members, over to you, hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon Chair,
thank you very much. Is it a locally made chocolate? So, the
question relates to the partnership between the Industrial Development Corporation, IDC, and a company that makes automobiles’ version to auto industrial corporation. The partnership between the IDC and bike motors is a green field project. In other words, from absolutely nothing, a new plant had to be bought. When fully implemented, the project investment will amount to R11,2 billion. To date, the phase 1 has seen an investment of R1,5 billion from the IDC and
R2,7 billion from Bike.
The project has created just over 3 000 construction jobs, and 92% of the workforce was drawn from neighbouring communities in the greater Nelson Mandela area. Most of the workforce have been youth and females. Currently, Bike SA has 106 employees, 70% of whom are the South Africans. Once the factory is completed and operational, it is anticipated that, about 1 000 jobs will be created and sustained. In addition, more than 150 local small and medium enterprises, SMEs, have been used for subcontracting work with over R400 million. So, this is building the structure.
Now, the project was delayed because of COVID-19. It was delayed because of construction delays a number of projects
went through that. It was delayed because of a significant slump in demand for auto mobiles during that period, and in fact, we are still recovering from that, even last year sales, have not fully recovered. It was delayed because there was change in company that delivers the contract for engineering, procurement and construction. It’s a foreign company, and so it is a matter between the majority shareholder and the company.
However, when this is done, they will have a very large industrial capability in the Coega Industrial Development Zone, IDZ. The construction of phase 1 will include the construction of a body shop and welding line, the paint shop and assembly line, and I am advised that it is near completion. The overall completion of the plant is scheduled to be completed within the next three months. This will the certify the plant’s readiness to produce the late bike models.
They do sports utility vehicles, SUVs, sedans and pickups. The start of production and assembly will depend on the recovery of market because, when the companies build green field operations, they make some assumptions about the demand because, these are projects that normally have a 45-to-50-year
period when you recover all of your investment, and so, they will look on the demand on both locally and globally.
Therefore, there is no doubt that we will be able to see an expansion of production in South Africa as soon as the market recovers. I thank you.
Mr M NHANHA: Good afternoon, hon members, and thanks, Minister, for your response, but I’m afraid, something is not adding up here. In your response you assert that, about 92% of the workforce that was sourced during construction was from PE. I can put it to you Minister that, it is far from the truth because the truth is that the Chinese brought the workforce from China, that is the first point, secondly, the Chinese brought their own construction material from China, which is rather unfortunate.
So, Minister, coming to my question, since the announcement of the joint venture between IDC and the Beijing Automotive Group Co Ltd, BAGIC, in 2016, indeed, as you’ve also confirmed, that a massive 88 969 square meters factory was constructed in Coega, and Minister, you can tick that box. In 2018, President Ramaphosa and President Xi Jinping presided in the opening of the plant, and again, Minister, you can tick that box.
However, residents of the Eastern Cape were once again led to believe that thousand of job opportunities were on the horizon, and that small-medium and micro enterprise, SMMEs, were going to thrive.
However, seven years after the initial announcement, and five years after the pomp and grandeur unveiling ceremony, not a single car has rolled out of the plant. Please, will you tick the following boxes for the following? Firstly, of course, you did mention how much has been spent, of the R11 billion, but the question is, how much of the R11 billion investment in that white elephant, is the South Africans taxpayer’s money?
Secondly, what is the role of the Eastern Cape government in this project because they claim to be in the dark? Thirdly, why it has taken such a long time for the production to commence?
I understand your response, Minister, but does that really mean that, if there is a disagreement between parties in your own country, your hands are tight? Lastly, Chair, will you commit to a specific date for the commencement of the operation of the plant? Thank you very much, Chair.
The HOUSE CHAIRPERSON (Mr A J Nyambi): Okay, before the Minister can respond, so that I can be very consistent about it, I want to clarify it. Concerning the two minutes follow- up, if I had to disturb hon Nhanha, it would sound that I am protecting the Minister, and therefore, I don’t want the Minister to account.
So, we must be mindful. The question was proper, but the remark that you did when you started. So, there is two minutes for follow-up questions, if you could stick to that so that it’s clear and it is a fair process. Over to you, hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Through you,
hon Chair. Hon Nhanha, the implication of the questions, particularly the fourth question, is very interesting, and I think that it is a historic moment in the NCOP, the moment we should mark, where it appears that hon Nhanha would like the South African government to nationalise a private company in the Eastern Cape, because, the implication of the government committing to a specific date, is that the government says that it will take over the operations. That is the only way in which you do that.
The government’s role in this investment is very clear. The IDC as it does with hundreds of companies, make industrial funding in the form of either loans or equity available, generally speaking, with a few notable exceptions, it doesn’t take a majority stake, it lets the private sector runs the business of a business plan, and that’s what is happening with Bike. Coming to the specific questions on the matter of the South African taxpayers’ where we use the balance sheet of the IDC.
The IDC is not recapitalised probably for the last 40-50 years. So, what the IDC does, it is a very interesting institution. It has to have commercially viable and profitable investments in the broader economy. It takes the dividend flow that comes from those investments, and it applies it to new investments. Sometimes it gets its investment spectacularly right and it makes a lot of money. Sometimes it gets its investment wrong, and it loses money. On balance, over the period that we’ve seen now, the IDC’s balance sheet has gone strongly and stoutly.
So, our job is to try to utilise the balance sheet not recklessly, but prudently, carefully, but where necessary,
with boldness to help to industrialise South Africa. So, when a foreign investor comes to us and say that they would like to build a factory in South Africa, here is our business plan, would you be prepared to be our partner? All of us being equal, we say yes. Do we seek the right for them decide the date that they start? No. Do we seek from them the right to decide that we will run the factory? No.
I will also caution hon Nhanha that, we should not look on the identity of the investor, and in this case, it’s a Chinese investor, and we are prepared to say that the government must ride a rough shot over the right of the investor, and tomorrow, when it is the investor from another nationality that one or more persons may be warmer towards, then we say no. The government respects the rights of private property.
It’s a dangerous line to cross.
So, what we seek to do, is to create an enabling environment we would like us to be produced in the Eastern Cape. I concluded an agreement now with Stellantis, where they are looking at the viability of another car operation in South Africa. We back as many possibilities as possible. We would like them to get to the finish line as quickly as possible. I
would celebrate when the first car comes out of that production line at Bike as soon as possible, but it is not the government’s role to prescribe the date when the company starts the production. I thank you.
Mr M NHANHA: Chair, on a point of order. I just want to place it on record that I will never support nationalisation.
Mr N M HADEBE: Through you, hon Chairperson. Hon Minister, I would like to know, will the ministry, of course, through the Minister, make an available continuous and consistent update on the development of agreements such as this, without being counted by the House to do so? Thank you, House Chairperson.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Through you,
hon Chairperson. We provide updates from time to time on projects. Sometimes, we indicate when projects are going faster that we have expected, and sometimes when they go slower than expected. Of course, given that this is an investment by the IDC, the IDC itself, is also able to provide those updates from time to time. So, hon Hadebe, the answer is, in a number of investments, we do provide those updates.
Thank you.
Ms M L MOSHODI: Through you, hon Chairperson. Hon minister, while we appreciate the continued investment of the Industrial Development Corporation in pursuit of the twin objective of leveraging economic development and the Broad-Based Black Economic Empowerment, B-BBEE.
My follow-up question to you, hon Minister is, has the department, as the main shareholder considered that encouraging the Industrial Development Corporation to be more transparent, not only in terms of reporting, but also about the high-level strategic transaction to mitigate against their persist of selective and rationalised pattern of demands of accountability? Thank you very much, hon Chairperson and hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon Moshodi,
let me thank you very much for the question. A number of years ago, probably in, if my memory serves me, about 2016, I requested that the board of the IDC changes the policy of the IDC. Until that time, the IDC regarded that all of its transactions, as any banks does, in other words, it’s a confidential transaction between the IDC as the industrial bank and the client. I also requested that all IDC
transactions should be publicly disclosed, and that the IDC must publish on its website on a regular basis, who are its clients.
I have also taken that one step further in its administration. I now report on a regular basis to Parliament through the portfolio committee in the National Assembly on a range of projects that we support. A number of them are drawn from the IDC, others are drawn from the National Empowerment Fund and others yet, are drawn from the projects that are supported directly by the department. Transparency, hon Moshodi, is very important. It is important not just to tick the box, it is important not just to address those with racialised criticism as you say.
It is also important to make sure that money goes to companies that are genuine and that, in fact, we don’t promote a culture that leads to corruption. You can’t avoid corruption, but what transparency does, it allows the public to see when there’s corruption. It allows the law enforcement agencies to act. So, I am very committed to maintain the transparency by our institutions and say to them that, one of the conditions they must put into their client’s arrangements is that we do
report, who are the clients that we support, and we remain firm in that. Thank you.
Question 123:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much to hon Mmoiemang for the question, which is on the African Continental Free Trade Area, AfCFTA. Indeed, hon Mmoiemang, we’ve come a long way in putting in place the elements for a successful launch of the African Continental Free Trade Area.
Let me recall. When the Europeans, after the second world war, decided that they needed to avoid conflict by finding greater economic co-operation, they started something called the coal and steel pact. It took them, perhaps, the better part of 30-
40 years before they merged with anything close to a fully- fledged many nation free trade area. They’ve now moved to the next step, which is a single market.
We are trying to do that in much shorter space. So, we spent the last year working very actively. South Africa chaired the Council of Trade Ministers, for an 18-month period, in order to speed up the processes that were required. Under our watch
a large number of products now have agreed rules of origin; which means we can start trading with it.
Recently, we have reached an agreement with Namibia, Botswana, Lesotho and eSwatini for a joint offer of the five countries to all other trading members of the AfCFTA that has been submitted. We have concluded the protocol on competition, we’ve concluded the protocol on intellectual property. We have the basic elements of an investment protocol, largely agreed.
I’ve come back from a meeting where I accompanied President Ramaphosa to Addis Ababa in February, where we put many of the finishing touches in place to enable us to move ahead.
We now have, of the 54 member states who have signed the AfCFTA agreement, 46 of those countries have ratified it. That’s an extraordinary achievement in a relatively short space of time.
But we are not only working on products, we are also working on services. So, 48 member states have submitted initial offers on services; these would be things like retail, finance, legal and so on.
We’ve recently, a few weeks ago, co-hosted the first ever business forum of African businesses on the continent as part of the AfCFTA, and it was held here in Cape Town, with more than a thousand delegates drawn from businesses across more than 48 countries on the continent.
Our trade profile shows a strong level of trade between South Africa and the rest of the continent.
I responded earlier to one of the questions by noting the very significant exports of South African-made products to other African countries.
We’ve hosted, very recently, a number of incoming state visits and we accepted a number of outgoing state visit invitations. We’ve met with the Heads of State of Uganda and Kenya, we met with Nigeria about two years ago, we met with Côte d’Ivoire, with a number of other countries, Tanzania more recently, Ghana, Namibia, Botswana. We doing it soon with Lesotho. So, there’s a growing level of economic coordination and interaction between African countries.
The reason for it, hon Mmoiemang, is very simple, it’s the task of Africans to change our destiny. We’ve looked, for too long, for solutions from outside the continent and after many, many decades of freedom across the continent, the anticolonial struggles delivered the vote, but it’s our job to deliver economic growth and a distribution of that wealth so that more people benefit. And so, our focus is on being able to take that mission forward as the defining mission of the next generation. It will come with many challenges, but we’ve got to be prepared to do what is necessary to grow our economies as Africans. I thank you.
Mr K M MMOIEMANG: Good afternoon, Minister. Let me start by expressing an appreciation in the manner in which you have responded to the question on the Africa free trade agreement.
I think the Minister will agree with me that the free trade agreements are complex and fragile, and their impact is only as strong as the willingness of signatories to adhere to the rules of the game.
Given the threats that are happening, whether it is in Northern Mozambique, whether it is more than hundred South
Africans who went to Syria and also the challenges in the Democratic Republic of Congo, DRC, the question that I want to ask from the Minister: Given sometimes the threat of economic nationalism that can, to a larger degree, impact on this new baby of African Union, what is it that the country is doing to make sure that we are able to overcome the threat economic nationalism? Thank you, House Chair. Thank you, Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon
Mmoiemang, I think you are on the money, as they say, in saying that these kinds of processes are complex, they are fragile and they do require buy-in from trading partners. And the basis for buy-in by trading partners is if we are able to show that everybody benefits. A free trade agreement where you have only one winner or a small number of winners won’t last. Parliaments would tear up the treaties and disengage. And, so, that means that you’ve got to be able to negotiate with 54 other countries in trying to get these modalities together.
And it’s been heart-warming to see the backing we getting from political principals, heads of state across the continent now talk about how to reindustrialize.
Is there a challenge of economic nationalism? Yes, there is. Can that challenge be completely overcome? No. But we can manage it. We can manage it because economic nationalism thrives, in particular, when countries and populations feel they don’t benefit. And as we build a wider African consciousness, and we build great supply chains that are cross border supply chains, we build greater commitment to this very important project of African integration.
Let me give an example, the South African auto industry is being held up across the continent as a great success story. It’s a story of Africans making cars. I made the point that if you get to see a C-Class Mercedes anywhere in the world, it’s made in one of three places, it’s either made in Bremen in Germany or Beijing in China or Buffalo City in South Africa.
And, so, chances are that the C-Class that you are seeing was made in South Africa, but not just in South Africa, by South African hands. We can either say, okay, well, given that, South Africa is benefitting, we should grab all of the pie.
But what we did was we accepted that Botswana would do some of the wire harnessing that goes into every vehicle. And today there are probably close to 3 000 workers in Botswana that are producing product for the South African auto industry.
When you do that kind of thing you build a commitment by neighbouring countries to see South Africa succeed in its car making efforts.
The best way to deal with economic nationalism, which is a kind of more narrow view, is to recognise the legitimate concerns of populations and deal with it. That’s what we seek to do.
We won’t get all of it right, hon Mmoiemang. You can’t have a big project like this and not make some mistakes. But, our generation and the next generation will have to, as we make mistakes, learn from it, recalibrate and see where we go forward.
But in a world where we are only 60 million we can’t compete with big nations. So, to be able to be successful, to industrialize deeper, we need the larger African market. Thank you very much.
Mr J J LONDT: Hon Minister, on your very first question today you answered that good diplomacy sometimes requires you to put away the megaphone. Now, that sounds very much like the quiet
diplomacy that we applied when the crisis unfolded in Zimbabwe and that was a massive, massive failure of South Africa, where we didn’t speak up when the neighbours abused electoral systems, and now we have so many Zimbabweans living in South Africa.
One of the big risks to South Africa’s image and relationship with our African partners and the consequential knock-on effects is how we treat our fellow Africans. South Africa has struggled with incidences of xenophobic sentiment and related prejudice, violence and crime for many years. The cost of xenophobia is high, it puts lives in danger, stuns economic potential by deterring investment, tourism and cross border trade, and risks making South Africa a pariah on the go, not just on the African but on the global arena. We have already tarnished our brand internationally, putting at risk trade deals and partnership worth billions.
Has the department flagged these risks with Home Affairs as well? And are they willing to reconsider some of our policies to align with proposals such as introducing a trader’s permit or visa for all other African countries and to support the rollout of an African passport? Thank you.
The HOUSE CHAIRPERSON FOR COMMITTEES (Mr A J Nyambi): Hon
Bebee! Mama! I love you mama. Can you please mute, mama! [Laughter.]
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon House
Chair, I’m not Minister Mama ... [Interjections.] [Laughter.] but ... [Interjections.] ...
The HOUSE CHAIRPERSON FOR COMMITTEES (Mr A J Nyambi): Hon MEC,
please! Hon ... can you mute them on the virtual platform. Hon MEC! Can they be muted, please? Thank you.
Sorry for that, hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon Londt,
thank you for the question and let me say that I’m also delighted to say that we are in agreement that xenophobia is not only undermining our African identity but it’s also costly to the economy.
So, what are we doing about it? Some years ago when we had a challenge, in particular townships, we did two things: we calculated how many South African jobs are dependent on trade
with the rest of the African continent, and we did factory visits; I visited factories, went to communities and put that information forward. Because what we need to do is to be able to show that our fates are interdependent.
Having said that, hon Londt, I should also caution that easy solutions are often not good solutions. Matters of visas, matters of movement of people are complex ones. Even in countries that have, apparently, free movement policies, when they see the backlash from local communities they are obliged to act. We’ve seen Europe has become closed, increasingly.
We’ve seen in the United States, US, similar pressures.
I would say what we need, hon Londt, is a more thoughtful set of policies, and that’s what government is working on.
Minister Nxesi, who leads our engagement on labour policy, Minister Motsoaledi, who’s responsible for Home Affairs, have worked very closely, not only themselves but also with the other members in the economic cluster, to find a balanced approach.
Recently we agreed to a visa-free travel for a specified period for residents and citizens of Kenya. It was an example.
It took the technical work first, it worked out, proper arrangements between the two governments, it made sure when anybody is in breach of the visa requirements that the sending government would be a partner with South Africa in addressing that. That is the balanced approach that we are looking for.
I would then make the point, hon Londt, that Minister Motsoaledi is also trying to work on an improvement and modernisation of our system.
When we going into townships there was a very interesting observation that came out of hon Mmoiemang’s question; and it was around economic nationalism. And I made the point that if you want to combat economic nationalism, understand what its roots are and deal with the problem. If the roots are high levels of unemployment and people are desperate, you’ve got to deal with that. Similarly, when you have xenophobia, we also have to deal with the underlying roots of it, which is economic opportunity.
For that reason, hon Londt, I hope you would support our efforts on black industrialists, on promoting greater levels of empowerment, because as township dwellers see more economic
opportunity they walk away from those who preach xenophobia. And so, you must see these different connections between policy. You don’t only address the issue through the messaging, you deal with it through the content of your policy. I thank you.
Ms M DLAMINI: Hon Minister, which advancements have been made in the productions and manufacturing of our own goods, as if we do not produce and manufacture our own goods and products?
The free trade agreement will mean that the continent will freely trade Chinese, American and European goods and products. Thank you.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon House
Chairperson, first, I would like to say, hon Dlamini, the caution that you raise is necessary and valid. By that I mean the free trade area is intended ... the legal construct is that is about goods made on the African continent. But where you have weaknesses in our customs and excise arrangement, in your borders, it is possible that goods made elsewhere in the world can pour over the border of one country and into all African countries. So, you need very strong customs management
and South Africa would need to invest more in building the capabilities of SA Revenue Services, SARS, and the Border Management Agency, BMA, to ensure that in this new world we in we can trace the origin of goods.
The legal agreements make it clear. You can only get the preference if that good adheres to a rule of origin. A rule of origin means if I take the suit that I’m wearing, as a good example. This could be a suit made elsewhere in the world, where all that we do is we put the buttons on and we package it, and we sell it to a shop, and the shop in turn calls it ‘made in South Africa’; because maybe the label was made in South Africa and so non to the suit.
But the rule of origin says ‘no’. You’ve got to be able to show that in that suit you’ve added a very significant value here on the continent. So, if I take, for example, some equipment, we would have a rule of origin that requires – let’s say – 40% or 50% of that content to be made here on the African continent. That, then increasingly goes up over the years.
South Africa favours the highest level of content, plus if it’s 100%, even better on many products. There are some, of course, that we won’t be able to have the raw materials, fair enough. But other African countries have a lower level of industrial development. Sometimes favour a lower level so that they can begin to get into production, doing what you call semi processing rather than full processing. So, we found each other, we found a way in which we can still have strong rules of origin, but on some products we allow countries to emerge on that industrialization ladder.
I would say, let’s keep a cautious eye as we implement the continental free trade area, that we don’t suddenly have a leakage in one of the 54 countries of products that are made in Asia or Europe or the Americas, or wherever it may be and it’s labelled as ‘made in Africa’, with a particular country’s name.
But just because there is a den doesn’t mean we must walk away this important project of the African Continental Free Trade Area. We’ve got to step us to build our capability. Others have done it. In the European Union, EU, if a product is labelled ‘made in Europe’, you can’t always trust it, so,
they’ve built-in systems in after the United States, Mexico and Canada. If something is labelled ‘made in Canada’ it could have been made in ... somewhere in Asia or somewhere in Europe. So, they’ve go systems. We’ve got to build that system. So, we working very closely with Commissioner Kieswater and his team to ensure that our capability is enhanced. Thank you.
Mr S F DU TOIT: Hon Minister, it’s a fact that the free trade is meant to eliminate unfair barriers to global commerce and raise the economy and develop developing nations alike.
But free trade can and has produced many negative effects, in particular deplorable working conditions and job losses, economic damage to some countries and environmental damage globally.
What has the South African government done to mitigate these negative effects? Thank you, Chair.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon du Toit,
I think you are right, that there are risks and there are opportunities. But doesn’t that describe life itself? That
when you do anything big, there are dangers and there are opportunities. So, the opportunities are that you can grow, the dangers are you can lose jobs, you can lose industrial capability.
How do you square that circle? You do it by building the competitiveness and the capabilities of your own economy. We work with a number of firms across the South African economy to help them find ways to upgrade the technology, the skills of their workers, the product innovation. For example, we have a programme in the Department of Trade, Industry and Competition that promotes innovation. It looks at projects coming from small and medium-sized businesses and it backs those where we can see that it will enable that company to be more productive. For example, in the clothing industry we’ve had a competitiveness programme for a number of years now where if companies upgrade their technology or their skills base they are able to utilise the resources that are available. We are not the only ones doing it, countries across the world do it. So, we got to be able to double down to strong and purpose of ways of improving the country’s competitiveness and industries competitiveness. That requires, vitally, things like building a stronger social compact.
When the President calls for a social compact he means let’s get workers in a factory and managers in a factory to collaborate with each other in building that firm.
So, I spoke earlier about worker ownership. When you give workers a stake in the business you able also, hon du Toit, to build their commitment to ensure that the company is run effectively, efficiently and profitably, because they too get the benefit.
The free trade agreement has got dangers, life itself has got dangers. But our job as policy makers is to mitigate that and one of the most significant ways of mitigating it is to build South Africa’s industrial capability. Thank you.
Question 110:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon House
Chairperson, thanks to hon Londt for asking the question. In November last year, I published a notice and a regulation in the government gazette, approving the implementation of measures to deal with the theft of copper cable and metal from public infrastructure. I pointed out at the time that research had shown that, that theft was causing damage of more than
R47 billion annually in the economy. And so, in the measures we outlined, the first phase was a temporary six months prohibition on exports for certain products, which came into effect on the 1st of December.
We then started to work immediately on phase 2. Phase 2 was about metal trading system where every person who has scrap metal must be able to show who they bought it from and who are they selling it to. So that we are able to track completely what happens in that and it’s something we as government will normally do in the market economy. These are all transactions between consenting individuals, but in this case the collateral damage is the South African economy.
Because people damage and looting the infrastructure to get to the able. So, we’ve done quiet a bit of work in designing metal trading system, but further work is needed.
I had undertaken at the time to review the decision once six months has expired. I published a notice in the gazette on Monday, this week, the 15th of May. And I would like to quote from the gazette, it says:
Phase 2 of the policy includes the enhancement of the regulations of scrap metal trade through amendments to the regulations published under Second Hand Goods Act ... to bolster the applicable metal trading registration regime ... The policy provides that if sufficient progress had not been made in the implementation of the Phase 2 interventions and / or the extent of copper and ferrous metal theft had not been sufficiently reduced, the temporary export prohibition may be extended.
Feedback received in particular names the companies indicates that from 30 November, the theft of copper and ferrous metal has reduced but remains a very high levels and continues to cause considerable damage to the infrastructure and to the economy.
Although progress has been made in the implementation of Phase
2. It’s estimated that Phase 2 will take approximately nine months to implement. Such implementation includes development of an electronic registration and trading system, for which a service provider has been appointed. And then I called for interested parties to make submissions on the proposals we’ve put on.
Now, hon Londt I think you will recognise that, since I am considering the matter, I would want to refrain from commenting on the detail and on the evidence until I have had an opportunity to receive all the submissions which will be within a week and half from today and I will be able to consider those and make a decision. Thank you.
Mr J J LONDT: Hon House Chairperson, it’s difficult – you can see the Minister is an old politician, he keeps that point properly detached. So, let me try and take a different approach then with my follow up. I mean when this scrap metal ban was introduced, there were examples listed of countries that it did not work. It negatively impacts the legal operators and in fact it forces quiet a lot of the legal operations to then go underground and operate illegally.
Now, thus far you might want to refrain from commenting on it at this stage but what I can tell you from the feedback we get; is that cable and infrastructure theft is still continuing unabated and in fact in some reports that it is increasing. With the increasing of unemployment levels in our country, people are becoming more disparate, trying to find sources of income, even illegally so.
Now, we warned that this blunt instrument will not work and that in fact it is legal operators that will suffer the most. And it is also clear that the solution lies in incapacitating law enforcement agencies to ensure that the provincial and local interventions that the DA in fact submitted last year of May, gets implemented.
Now, my question to you, hon Minister is, can you indicate which of the DA proposals that were submitted in May last year did you find mostly likely to work and what has been done to bring that on board in the policies? Thank you.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much hon House Chairperson and hon Londt, I am going to ignore the first sentence which was said, it’s just gratuitous and focus on this issue. Economics is one of disciplines that we use in the process of thinking through policy. When people steal copper cable, they do it because there’s a market, they don’t do it out of just one wanted destruction, this is not irrational, this is people stealing because they can cash it in, they can sell it, they can make money.
So, we’ve got two ways of dealing with that, one is to try to catch people in the act of destroying the public infrastructure or being in possession of stolen property, that requires law enforcement. And there’s reporting role for law enforcement and the DA, the ANC, the EFF, the FF Plus, every political party, naturally will say when you have a problem of crime, one of the remedies is you got to strengthen the capability of your law enforcement. So, that’s an absolute truism.
But the second thing you do is that you want to reduce demand. When demand is high the incentive for people to steal, to break into public infrastructure is high, because they are able to monetise it.
The point of the export prohibition was to reduce demand. There are places where we find demand found, the one is in domestic economy, you use scrap metal in your foundries for example. The other one is in export markets. And we could see from the export data over a number of years that exports were growing quite strongly over a number of years. And so, to reduce demand the prohibition was put in place, simple economics.
Now, let’s look at the other part of it. Precisely because we recognise that there are legal operators, we take genuine scrap, not scrap that was stolen, scrap that comes because a factory is now no longer able to use the machine, it’s scraping the machine, it’s selling it and it wants to monetise the metal in that machine. Precisely because legitimate players will also be involved, we needed to make a decision.
Do we look only at the interest of those who may be negatively affected, or do you take a macro view where you balance that against the interest of society.
And when it was so compellingly evident that the extent of damage was R47 billion or more, it was clear that the size of the economic interest affected was just a fraction of that.
And so, in the balancing that every policy is about. Policy is about this careful balancing to get the judgement right of what is in the aggregate interest, we made this decision.
But we also said precisely because there are legitimate businesses, don’t do a permanent prohibition, don’t do a ten- year prohibition. Do it for a limited period, see if we can get phase two quickly in place. If we get phase two in place and we are convinced in can move seamlessly then the
prohibition can stop, and you move to a better regulated system.
If you can’t get a better system in place, you may need consider whether to extend it. If in fact theft has gone to such level, there’s no longer a problem, you may not need a prohibition. If it’s still a problem, you may need to stretch out until you get the alternate system in place. That’s what the content of policy is about. I hope that helps hon Londt. Thank you.
Mr M I RAYI: Hon House Chairperson, I think the Minister has covered the follow up question I wanted to make. We will follow up in the committee specially with the enactment of the regulation and its implementation. Thank you very much.
Mr N M HADEBE: Hon House Chairperson, again on my part the hon Minister has partly touched on the question I was going to ask. But I would like the hon Minister to expand more on the bearing the cable theft has with regards to energy crisis, the country is facing. And to touch on the pace at which the progress is made to contribute to fight against infrastructure theft. Thank you, House Chairperson.
The HOUSE CHAIRPERON OF THE NCOP (Mr A J Nyambi): Thank you hon Hadebe, even though towards the end you were dealing with the part that the Minister touched when he was responding to the follow of hon Londt. But I will allow the Minister to deal with your first part, hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon House
Chairperson, hon Hadebe’s question points to something very important, which is the damage that the theft of metal and cable has on availability of infrastructure. No doubt many members of Parliament will have personal experience of being without energy not because of loadshedding but because an electric substation has been cannibalised, the metal has been taken and sold at scrap or copper cable has been in the middle of the night ... [Inaudible.] ... off the ground and sold to others. So, part of what we seeking to do in addressing the energy crisis – this is of course one contribution, it’s a fairly focus contribution but this contribution will assist in enabling more South Africans to have access to energy.
I have seen young people studying in the middle of exams, unable to study for three, four days because the area that they live in has been without energy. We’ve heard of hospitals
that were not able to operate for a period because the infrastructure feeding the hospital has been damaged. We’ve seen examples of community taking law into their own hands because they are angry as they rightly should be at criminals who seek to monetise this essential means.
So, while this is not the whole of the energy story hon Hadebe and I recognise that, it is one element of it. It is sometimes an overlook element because of course the bigger issue is the shortage of energy compared to demand, supply constraint, but this also contributes to energy outages in communities. Thank you.
Mr F J BADENHORST: Hon House Chair, may I rise on a point of order: Hon Rayi, according to what I know about the rules is that there’s four follow up questions allowed. Hon Rayi, didn’t want to make use of his opportunity to do the follow up question ... [Interjection.]
The HOUSE CHAIRPERON OF THE NCOP (Mr A J Nyambi): Members,
order! Let’s allow him to raise his point of order, I will deal with it.
Mr F J BADENHORST: ... thank you very much. Would I be able to then just get clarity on the question that hon Londt posed and he didn’t get the answer, as the fourth question, hon House Chairperson?
The HOUSE CHAIRPERON OF THE NCOP (Mr A J Nyambi): Hon
Badenhorst, we have our rules and we have allowed and allocated the follow up to different parties and different individuals for order. Once you start doing what you are doing, then you will create chaos in the House, so let’s allow it to flow as planned. Because you will be accusing the presiding officer of some preferences, so the question was allocated to hon Rayi and even the unfortunate part is that you are coming from a different party, to make it even worse. So, your point of order is dismissed is not sustained. Thank you.
Mr M S MOLETSANE: House Chairperson, I think the Minister has covered me on the issue of the entrepreneurs that are involved in trading in scrap metals that they should not be harmed, thank you very much.
Question 124:
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Firstly,
thank you very much to the hon Mmoiemang for the question. The question relates to the National Lotteries Commission, NLC. I will seek very briefly to sketch an initial reply hon Mmoiemang by saying that we have had a history of fraud and corruption in the National Lotteries Commission, I heard it stretches over a number of years, allegations of improper conduct stretches from years even before 2017.
In March 2018 my predecessor wrote to the NLC board requesting that it sets up an investigation into allegations involving a Limpopo proactive project. And this was followed ... [Interjections.]
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): I requested that the hon MEC be muted, please. We are sorry for that, hon Minister. Hon Minister, you can continue.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you. I
will just draw the Table’s attention that the clock has being moving so I am going to rely on a bit of tolerance there. So, that was followed up by further request in 2019. The new administration came into office in June 2019, and we
immediately put the board under terms. We asked them to report on what they had done to deal with the allegations of corruption. The board and the commission relied on an interpretation of the Public Finance Management Act that says that the Minister and the department has no role, the accounting authority alone will be able to decide on the matter.
We took the view that we needed to have a real approach to dealing with this problem. So, the first pillar was to do a proper investigation. I requested the Department of Trade, Industry and Competition internal audit team to visit some of these projects and report back. Based on that information, I appointed external forensic investigators with wider skills and they presented me with report. Based on that report, I wrote to the President to support the appointment of the Special Investigating Unit, SIU, to utilise the powers that the SIU had in the law, and I further directed the department to lay criminal charges at the SAPS on the evidence that was before us and we then saw to extend the scope of the forensic investigation. They are now set to ... [Inaudible.] ... court, and they thought to set aside the decision to have an independent forensic investigation and the court upheld the
decision of the Ministry that it is our responsibility and we are entitled to appoint an independent forensic investigator in the circumstances that they were.
The second leg was to ensure transparency in reporting annual reports and the beneficiary information. It goes to the question that was asked earlier on transparency for the Industrial Development Corporation, IDC. So, every time we have a parliamentary question in the NLC, we would want to indicate that the information is confidential. Beneficiary information cannot be released and they would point to some regulation in terms of the Act.
I instructed the NLC to make that information available. It’s an enormous amount of information that got into the public domain that we were then able to get more commends on it and more communities would say that but there is no such a project in our area. The third one is that we took action. And that action included investigation of the culpability of the board
- the chairperson of the board. One of the board members was immediately implicated and put on terms, and he resigned.
Other board members eventually, after threatening legal action were replaced. A new chairperson was appointed following
consultation with Parliament. A number of officials of the NLC were implicated and subsequently left – they either resigned before they were put under disciplinary action or they resigned whilst they were undergoing disciplinary action. We were also able to get SIU to play its own role in this matter. The SIU itself attached assets valued at R27 million from one individual who was implicated. And it is our intention to ensure that further steps are taken. When you resign, that is not in any way – you are not absolved from being party to civil and criminal prosecution. So, we are now looking at this enormous file of evidence at the SIU. They are available and we want the law enforcement agency, the National Prosecuting Authority, NPA, to act swiftly. Thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Thank you, hon Minister. The first follow-up question is from the hon Mmoiemang.
Mr K M MMOIEMANG: Thank you House Chair and thank you hon Minister for your comprehensive response but also a word of gratitude to you for the leadership that you displayed in terms of ensuring that the board is held accountable for the wrongs that occurred under their watch. Given the
repositioning of the board and also the process that you have alluded to in terms of investigations – ensuring that those that committed the misdeeds are held accountable. What is the role that the department will be doing to ensure that there are internal controls from the department side though respecting the co-operate structure of the board to ensure that where there would be signs of misdeeds they are detected early? Thank you, hon Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: First let me
thank the hon Mmoiemang because that is an important question. When we see evidence of wrongdoing it’s an opportunity to reset the system and make sure that we have measures in place that can avoid this in future while we hold accountable those who exploited the system. So, there is a number of measures we have identified and I reported a number of these measures to Parliament. The first one is to begin to bring in place integrity measures involving staff members of the NLC board and ensure that everybody can account for the wealth that they have.
Secondly, it’s to make publicly available on an ongoing basis all of the projects of the NLC. I have also asked them to look
at a geospatial system where communities should be able to see exactly where a project is. So, if there is a claim that the project or something has been build, members of the community can be able to see. We have asked that the proactive finding programme be thoroughly reviewed and that new systems be put in place to avoid what we have seen – the corruption that has taken place. We have asked for the role of the NLC regions to be reviewed because we have seen that the extend of corruption in the court systems may well be more generalised and though we have caught some, we needed to be able to do more. We have asked them to review all the forensic reports that have come out in the past and all the internal reports to ... [Inaudible.] ... those recommendations and then implement them where they are warranted.
We asked them to review the findings of the Auditor-General in all the management reports. We have given feedback to the Auditor-General that we were disappointed that many of these wrongdoings were not picked up in those audits but where there are systems issues that the Auditor-General ... I wrote to the Auditor-General by the way, to draw to his attention some of the findings that have come out of the investigations. I have asked the NLC to support whistle-blowers who were threatened
or dismissed. We have asked them to promote a greater oversight where board members and others can visit projects and where the department can hold the NLC accountable for this.
So, that’s just some of the steps the board itself has also identified. Of course, in our system, we appoint a board which is responsible for governance and administration and Ministers normally have a broad oversight role. Where systems have collapsed as we saw there, we needed to step in. We now have a board of any eminent South Africans led by Dr Barney Pityana as the chair of the board. So, we have to give them the responsibility now to implement all of these measures. I thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Thank you, hon Minister. The second follow up is from the hon Dlamini.
Ms M DLAMINI: Thank you, Chairperson. Does the Minister agree that there has been a room widely open for systematic looting? Much more could and should have been done to prevent the abuse of power and misappropriation of funds. Thank you.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you
very much, Chair and hon Dlamini. Let me start by saying that I have always believed more should be done. When you see a problem you can never be satisfied, however hard you apply yourself to it. So, that’s the easy part of the question - I think absolutely.
But now, let me come to the difficult part. We did a number of steps where we found a very interesting thing that has developed and that is a systematic attempt to roll back the efforts by government, by the Minister and by the department. We were taken to court a number of times - sometimes by beneficiaries saying that their information is confidential and sometimes by the very board of the NLC that was appointed. The board itself solicited senior council opinion to say that they could not be removed by the Minister. We had marches on our offices with petitions where people were busting in large numbers, presumably paid to attend these protests. And what it required was that we needed to be tough. We needed to say that we are not going to be intimidated in the face of all these measures. We are going to clean up the NLC. Some of the whistle-blowers’ reported that they had physical threats, cars being burned and all sorts of things.
So, when there are large sums of money that is stolen – money that belong to the poorest people in our society – then those who stole the money will go to extreme lengths to hold on to it and to avoid accountability. And ultimately, those who are responsible, must go to jail. And they know that that is our determination that the law must take its course. While we can always do more – and we must never be happy with what we have done.
I think the record will show that it’s been considerable effort and that effort must be redoubled in future so that we clean up the NLC. We have to bring that institution back to what it was intended to do. It was intended to build the capacity of communities, to support sporting and cultural organisations, to build crèches and old-age homes, to enable youth centres and anti-drug campaigns – these are the things that the NLC can do. A well-run NLC should be something that we are proud of as a country. And NLC that is corrupt takes the hopes of communities away with them. Thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Thank you, hon Minister. The third follow up is from the hon Du Toit on the virtual platform.
Mr S F DU TOIT: Thank you, hon Chair. Hon Minister, it is said that the politically connected Nevhutanda was the former provincial chairperson of the ANC in Limpopo. He was the chair of the National Lotteries Commission board at the time of these fraudulent payments to the tune of about R27 million payments and purchase of the house in the ... [Inaudible.] He was one of the key fund raisers for the ANC 2009 election campaign in Limpopo. One can just think of the amount of funds these individual might have allocated towards campaigns since 2009, but that is just a thought by some.
Minister, I want to know if you are aware of any other politically connected individual that served on the board? And is there any possibility that the ANC benefited in every way in the appointment of any of these board members? Thank you, Minister.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Hon Du Toit,
firstly, let me recognise your questions. Let me say hon Du Toit, that when you see these examples of an ANC-led government that is taking action against corruption; that is rooting out the wrong doers and making sure that the action of the law enforcement agencies enables funds to be frozen; when
you see board members being replaced so that those who have not under the watch being able to ensure proper accountability
- celebrate it and say to the ANC that you believe that they are doing a great job. Because that really is what I would have expected the question to cover.
Hon Du Toit, I would say that I was asked the question at one of the debates of the National Assembly. And on of the members who raised the question, raised matters relating to the board members and the debates inside Parliament on the appointment of the board members. I then went back to the record of the decision of the committee, and this was many years ago – perhaps nine years ago. It was before I was responsible for the NLC. I took responsibility of the NLC only in 2019. I quoted to the representatives of one of the opposition parties, it happened to be the DA and I said that the record shows that you voted for individual “X”. That individual “X” was implicated in the corruption. So, I don’t think that we need to play this political games, hon Du Toit. Check what we do and see if we are blind to whether you are male or female, whether you the DA, EFF, FF Plus, ACDP or ANC – if you have stolen the money of the people, you must be held accountable.
That is what we are about. Celebrate it, hon Du Toit. Give us a round of applause. Thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Thank you, hon Minister. The fourth follow-up question is from the hon Londt. Hon Londt?
Mr J J LONDT: Thank you, hon Chair. I do just want to follow up on what hon Badenhorst raised earlier. I would appreciate if you can just double-check because the Rules do allow that four supplementary questions are asked. And if somebody do not take up their question, it doesn’t mean that we have to take away from this House to ask that. But you can check it and come back. You made a ruling and so accept that I asked you to come back another time on that. Thank you, hon Minister. I don’t even have to belabour the point on what complete utter mess happened at the National Lotteries Board, and how we have failed millions and millions of the vulnerable - whether it’s a crèche that gets help or an old-age home that gets help.
It’s the most vulnerable in society that got affected because there was a greedy corrupt few and it took way too long to hold them accountable.
So, the public have lost their trust in that entity and also in government for not holding them accountable. So, the question is: “How do you restore the confidence and the trust and ensure the public that the funds are managed properly?” Could we not explore models where leadership positions are not permanent but instead tied to performance where those in positions of power are regularly held accountable to avoid complacency and ensure continuous improvement? Thank you.
The MINISTER OF TRADE, INDUSTRY AND COMPETITION: Thank you,
hon Londt. I think you are right that the NLC needs to ensure that it fully restore public confidence in the institution.
When an institution has been damaged, not by one incident of corruption or theft, bad as that would be, but by a systematic pattern of people taking the money of ordinary South Africans then we need to be able to recognise that that will take extraordinary efforts to ensure that we restore that confidence.
So, how do we do it? The first thing that we do is to start at the top. We would say we need a board that can ensure transparency, accountability and clean operations. So, we have put forward a board of eminent South Africans. They include
people who have a track record of fighting this for a period. The new board included Willie Hofmeyr who was the head of the Assets Forfeiture Unit. We brought him in specifically for that expertise in that area. It includes a well-respected civil servant Dr Cassius Lubisi who brought knowledge of the Public Finance Management Act. We had eminent chartered accountants and others.
The second thing is to put the spotlight on the management. If this happens, the commissioner and the senior management must be held accountable. And the board initiated action against the number of senior officials, including the chief operating officer. The SIU pointed questions to the commissioner and I put a number of questions to the commissioner and eventually the commissioner resigned. And the investigations of course, as I said, it’s not stopped because someone resigns.
The third thing you do is you relook at all of your systems. It is a question that came earlier about how to improve systems. And so the board now has put on hold the proactive funding for a period while it reviewed where the theft took place, how it took place and what were the deficiencies in the system. The fourth thing that you do is to expand the scope of
your focus - not only to go to where you know but also to the areas where the potential for corruption may be hidden. So, we have expanded the investigation, not only into the head office but also the provinces – and not only the provinces but we are now asking for the scope to be extended beyond the list of proactive projects to also cover other procurements - procurement of legal services, public relations, PR, services and so on.
It was striking to me that the NLC was able to buy the services of many professionals who appeared to either turn a blind eye or to be wilfully ignorant about the theft that was taking place. We saw professional companies in the private sector appearing to either collaborate or alternatively turning a blind eye to it. Enormous sums of money moved through bank accounts and even the banks have a responsibility under Financial Intelligence Centre Act. None of those appear to have been the basis of report to the law enforcement agencies.
So, it’s a thorough root and branch cleanout of the institution. And I think you will agree hon Londt that that’s how we should go about it. If it requires as part of it
performance-based systems that are inadequate because they are there in place for example the commissioner is on a contract and it’s not a permanent position, then it’s supposed to be evaluated regularly, then that needs to be strengthened. I think what I have tried to say as I conclude is that the across a wide front, we are dealing with this problem and not dealing with the problem as in a process but dealing with it fund frozen and investigations taking place. Obviously, the separation of powers is that the executive doesn’t decide how the NPA does its work. But we want all of that to be speeded up. So, let’s celebrate when we can take action against corruption because it’s a cancer that can destroy the potential for growth, for economic inclusion, for transformation and for jobs. I would like to thank you very much.
The HOUSE CHAIRPERSON OF THE NCOP (Mr A J Nyambi): Thank you. Hon members, Ministers, Deputy Minister, we have come to the end of the question to the Minister of Trade, industry and Competition. I would like to take this opportunity to thank the hon Minister Patel for availing himself to answer questions in the National Council of Provinces. Thank you, hon Minister.
Question 98:
The MINISTER OF EMPLOYMENT AND LABOUR: Thank you, hon
Chairperson and good afternoon to all the hon members. Yes, it’s correct, the Department of Employment and Labour through the Unemployment Insurance Fund, UIF, has a directorate whose objective is to improve the employer’s compliance with the Unemployment Insurance Fund Act, by: Registering employees; declaring; and paying the UIF contributions.
The compliance directorate a strategic focus on three areas, namely building awareness, inspection, noncompliance or in terms of the employees, unleash the full might of the law against the noncompliant employers. In its 2023-24 of financial year plans, the directorate will run the national awareness campaigns targeting the noncompliant economic sectors, including the retail sector in the Western Cape.
These campaigns aim to encourage employers to fully comply with the Unemployment Insurance Fund Act. Such campaigns are undertaken in partnership with the organised labour and employer associations. The UIF held such a campaign in the Western Cape Province on 12 April 2023 in partnership with
labour. Shop floor stewards attended the briefing and pledged to work with the UIF to improve the employer’s compliance.
In addition, the UIF has developed an app and need tools to enable employers to verify whether or not they are registered. Nonregistered employees are encouraged escalate their anonymity or anonymously the allegations of noncompliance to the directorate. Noncomplying employers in any economic sector, including those in the clothing retail sector in this province, will then be subjected to focused inspections.
Lastly, where noncompliance is found the UIF and the department, of course, will unleash and will continue to apply the full might of the law to force these entities to comply with the Unemployment Insurance Fund Act.
Setswana:
Mr M K MMOIEMANG: Ke a leboga Modulasetulo.
English:
Greetings to you and greetings to the Minister. Minister, let me take this opportunity to express an appreciation to your response, which indeed underline the fact that our country,
under an ANC-led government is a law-governed country and that there is no one who is above the laws in this country, particularly if the conduct is aimed at trampling the rights of our vulnerable workers who are apparent parcel of the working class and the poor people.
This brings into a question: Whether the legislation in its current form needs to be amended so that there is more penalty that can be meted out against these perpetual transgressors?
The HOUSE CHAIRPERSON OF THE NCOP (Ms W Ngwenya): Hon Minister I would like to remind you that for the response, you have got four minutes; and on the first question, you have got five minutes. Thank you. You can respond.
The MINISTER OF EMPLOYMENT AND LABOUR: Thank you, hon
Chairperson. Thanks to hon Mmoiemang. Indeed, we have met the challenges of noncompliance, but because our approach is always a corrective measure, we sit with the people and we issue out notices where we find the wrongs, and we allow them some time to correct those mistakes. If we come back and then they are still insisting, certainly we have to take a step
further and go for punitive measures. However, our first step is not the punitive measure.
What we have realised, hon member, is that some of the people will go to court and buy time because court processes are not in our control. They can even be fined some money – R10 000 or R20 000 - but the question becomes: What is R10 000 or R20 000 or even R100 000 to somebody who is making millions. They even budget for it.
Now, what we intend doing is to say: You will do it for the first time, but for the second time, if you continue -we are warning all the employers - we are going to change so that the punitive measure will be a fine which is based on your profits, on a particular percentage. Once we do that, people are will realise that it hits hard, because now they budget for it and they do not care. Thank you, sir.
Mr D R RYDER: Thank you very much, Chair. Thank you, Minister. I think the circumstances that were described in the original question that was submitted to you occur across the country.
Singling out the Western Cape, Mr Mmoiemang appears to be a fairly childish stab at a DA-led province, as if the
provincial government controls what retailers in their province do.
Minister, Mr Mmoiemang went to some lengths in his follow-up question, talking about no one is above the law and everyone should be treated the same. So, while we are talking politics, Minister: Can you tell me what action was taken against the ANC for not paying the UIF contributions of their own staff?
The MINISTER OF EMPLOYMENT AND LABOUR: You are correct, that we need to talk about this abuse or noncompliance across the country, but unfortunately the question asked made reference to the province. I hope you got that one. What did we do with the noncompliance? Maybe the better question is: What are we doing with noncompliance of many of the employers, including the private sector and the political parties or the political party which were mentioning?
Once we come to them, we look at them and we want them to explain. Once they explain, we give them notices. I came out in public that, including the political organisation I belong to as an employer, it has to pay the workers. Then, if there
is a dispute, we are there to come in. If they are not complying, we will have to deal with them.
We came out very strongly in relation to that. So, to all the employers, including all the political parties and most of us here who are employers to domestic workers: How many of us are complying? So, we want all the employers to comply, including the ANC.
Ms M DLAMINI: Chairperson, it is hon Dlamini and I will take the question. The noncompliance with UIF by employers denies workers, especially those in the vulnerable sectors like retail, domestic and security, a crucial temporary financial benefits when they become unemployed through circumstances, such as retrenchments, layoffs and dismissals. Which efforts has the Minister taken in creating partnerships with other stakeholders, such as the labour inspectors, to ensure that legal action is taken against repeated offenders of employers?
The MINISTER OF EMPLOYMENT AND LABOUR: You are correct, hon member, that this noncompliance is a denial of a basic right to have income during the difficult times. This was exposed even more during the Covid-19 period, where a number of
employers were not complying. What was even worse is that some of them inflated their numbers.
The issue which I am raising, in trying to answer your question, is that these scrupulous people are not just in the public institutions; they are there in the private sector.
What have we decided to do with the very same issue which I am raising? As much as we take some of them to court, we have decided that we need to change the law so that the law is biting when people do not comply with the Unemployment Insurance Fund Act.
But again, our approach has been to go all out into various sessions with employers, associations and the trade union movement to conscientise them so that they understand the benefits of them complying with the law. Some of the worst things, hon member, is when workers are injured and the employer just disappears. So, we are looking into this matter very seriously and we are all out to try and come up with mass public education about workers’ rights.
Mr N M HADEBE: Thank you, House Chairperson. Hon Minister, what progress have these programs made so far in addressing
noncompliance with UIF; and how many affected employees have received their benefits already? Thank you
The MINISTER OF EMPLOYMENT AND LABOUR: I can say the workers continue to receive their benefits, but I know that there is something outstanding about a million rand or more than a million rand which we are dealing with in a number of ways. There is a project which we have started, which is called Follow the Money, wherein we have appointed a number of accounting firms in cases where people claimed money or employers claimed money and did not pass over those monies to the workers.
We are following that up and we are able to arrest those who have not been able to pass the monies, because that is fraud. At this stage, although the number keeps on reducing for those who have not been paid, we have paid more than R5 million of the workers, coming from the Ters Scheme. However, with the normal Ters, we are continuing to pay.
What I must admit is that our systems live much to be desired. We are in the process now where we are upgrading our IT systems because, as we have heard from Minister Godongwana, we
have been relying on Sita and somewhere we have been failed by the IT system of government. That is why we are trying to upgrade, so that we are able to follow everything. By the way, if you are running an insurance fund or an unemployment fund, you need highly specialised skills. The skills which we currently have live much to be desired.
We are now in serious negotiations with the private sector, so that we are able to follow each and every cent and pay it directly to the workers. When we do pay claims through the employers, we realise that some are so unscrupulous and so on, but we have been able to arrest some who have tried to do funny things.
Question 90:
The MINISTER OF EMPLOYMENT AND LABOUR: Hon House Chairperson, hon Londt, let us start by speaking the truth, which means facts. You are not using the latest data and you have decided and chosen to be selective. The latest data is as follows: Western Cape has lost 62 000 – the latest; Gauteng has gained
80 000 and Limpopo 71%, a smaller province which performed far better. However, statistics are not used like that. They changed from quarter to quarter. You cannot just focus on one
quarter. It is important to look at the year to year trends, which you are not doing.
Compared to the quarter four of 2021, the largest increases in employment were recorded in Gauteng, which was up by 381 000, followed by the Western Cape with 333 000; Mpumalanga up by
134 000, Limpopo by 133 000 and Eastern Cape up by 122 000.
So, there is a quarter where the Western Cape declined. This was the second quarter of 2021, where it lost 53 000 jobs in that particular quarter. The North West gained 45 000, Gauteng gained 22 000 and Mpumalanga gained 9 000.
At that time, you kept quiet and you did not raise any questions. That is why I am factually saying, statistics are not used like that. So, don’t just become short-termed, you know, short-termism. You look at the trend. Yes, as they change in the different regions, you might have a point on that, but that is short-termism is not helpful.
The number of the employed persons for that matter increased in five provinces in quarter three and four of 2022. For instance, the North West province saw an increase of 23 000, the Eastern Cape saw an increase of 20 000 and the Northern
Cape saw an increase of 12 000. So, as compared to quarter four of 2021, the largest increases were recorded in Gauteng, as I have said and so on.
However, the issue that I am trying to raise is, don’t just look at one quarter, for a particular province. Be holistic when you do the statistical analysis. I do know your party composed the song for all of you to sing – the one of federalism. Even that is branding and flaunting only one province. As the national government, we are consistent with the Constitution that our country is a unitary state.
Mr J J LONDT: Hon House Chairperson, you know, as you were responding, something really came to mind. You know that the Progress in International Reading Study research was released that the reading for comprehension for Grade 4 kids have deteriorated from 78% to 81%. I think that is a reflection in some our Ministers, because if you want to talk about an overall figure, let us talk about an overall figure. Over the past year, the unemployment in the one province, where they create an enabling environment for businesses to thrive, decreased from 25 to 21%. It is a 4% decrease., whilst your party has seen a ballooning unemployment rate.
Youth unemployment is over 45% and you stand here shamelessly trying to defend failed policies. There are millions of South Africans that are unemployed because of your failed policies and you come and stand here and you try to defend that. How is it possible that you think that the South Africans will forgive you for standing here, year after year after year defending failed policies, when more people are added to the line of the unemployed? You will be punished and you should be ashamed of yourself. How can you continually defend failed policies? Thank you.
AN HON MEMBER: That is arrogance of Londt. That is not a question; it is arrogance.
The MINISTER OF EMPLOYMENT AND LABOUR: Chairperson, you see, when you cannot read, you are very sectarian and you are not open in dealing with the issues, ... And you are right, some people can be idiots and just talk about what is in front of them and not talk about what is national. Here, I am talking about employment statistics nationally, not in one province. I am comparing it to a number of provinces.
Yes, if you are to talk about the employment in the Western Cape in the tourism industry, you can say that in one particular sector, there is an increase, not in all the sectors. And in any case, tourism was the main driver of employment in the Western Cape and in the last three months of 2022.
And all the provinces have natural resources and attractions, but none more than the Western Cape province, when it comes to tourism. This makes it a magnet of tourism. The Western Cape does not only have the sea, but, in fact, it has two oceans.
The Western Cape is also fortunate to have the mountain that is a world-famous attraction, ensuring that tourists flock to the province.
However, it is also a historic reality. Listen to this one. It is a historic reality that the human resources of other provinces were forced out of their provinces to find employment in the provinces such as the Western Cape, due to the Bantustan system. And your party was part of that.
Therefore, the underdevelopment was seen in the other areas.
We know that the DA composed the song, and you are branding and flaunting only one province and the national government is always consistent about it. Let me remind you that the DA government in the Western Cape never built a single ... And this issue of unemployment is linked to the skills. It is structural. You have never built a single university.
However, you have an abundance of the apartheid institutions in the Western Cape. Some of them are world-class. You have not even built a single institution. You have benefitted from apartheid and that is why you have those skills.
Therefore, you come and say what you are saying and forget about the apartheid, which you were part of. We are dealing with that legacy. That is the issue that we are dealing with.
Although, initially established on a racial basis, these institutions of higher learning were racially changed by the South African government. There has been a big debate. We are even talking about this Parliament. It is tourist attraction, because we have chosen reconciliation. We have not removed this Parliament from the Western Cape, because this one government.
The HOUSE CHAIRPERSON OF THE NCOP (Ms W Ngwenya): Order, hon members.
The MINISTER OF EMPLOYMENT AND LABOUR: So, you are not just benefitting from the historical underdevelopment and human resources of the neighbouring provinces but also from the benefits from the apartheid legacy and ...
The HOUSE CHAIRPERSON OF THE NCOP (Ms W Ngwenya): Order,
please.
The MINISTER OF EMPLOYMENT AND LABOUR: ... of an employment. It might even be argued that the provinces ... [Inaudible.]
... below its weight, with all the resources that you have. Thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Ms W Ngwenya): Order, hon member! Hon member! Hon member, please. Can we listen to each other, please?
Mr M I RAYI: Hon Chairperson, hon Minister, it is not rocket science that the Western Cape has a competitive advantage over most of the provinces, because of the objective factors. These
include but not limited to its unparalleled domestic and international tourist attraction the competitive wine farming and the location of the head offices of many local and international companies, particularly in Cape Town. A critical question is however, whether the department has made an analytical breakdown of the key sectors that have contributed to this phenomenal growth, including seasonal sectors of the economy and on the basis of that, determine how the department can incentivise some labour absorbent sectors unique to the Western Cape. Thank you.
The HOUSE CHAIRPERSON OF THE NCOP (Ms W Ngwenya): Hon members, listen, the Minister must answer to the question that you are asking him. If you are drowning him, then he will never be able to answer the question. You are the one that will complain. Please, hon members.
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, there is a story that is not being told. Our townships in the Western Cape are facing massive, massive unemployed youth. That story is not being told. To respond to hon Rayi, we think that the issue of the tourism industry remains very important.
We must also be able to extend and expand it, even in the other provinces. We can only do that, if we improve the infrastructure. You know that one of our programmes that has been announced by the President is to deal with the massive infrastructure programmes in order for businesses to thrive everywhere.
That is part of it and there are a number of programmes that have been mentioned, which must be expanded in all the provinces, even when we are talking about investment. We cannot just focus on the key major centres of South Africa, which is Gauteng, Durban and the surroundings and the Western Cape. We are talking about pulling the investors into the other areas. However, the majority of our people are in those areas. Thank you.
Hon House Chair, hon Minister, I would like you to touch on the topic of infrastructure. With the country’s infrastructure that is in the dire state that it is, how will your department ensure that local citizens are being hired by local contractors that are tendering for jobs in any province, because as far as I can tell, our unemployed citizens of South Africa in any province, have not benefitted from the number of
Sanral tenders that have been given to a Chinese companies, for example? Should we not rather ensure that jobs are coming back to our own citizens and companies to address the unemployment issues, regardless of what province it is and how will your department handle this issue? Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, one of the strategies that we have been taking about in creating local employment is localisation. We have talked about supporting the small businesses in this particular country and with our research internationally, close to 80% of the jobs are created by the small businesses. Therefore, they need support. Hence, we are intervening there. We are not just going to allow and leave them in the market. We need to intervene because they are suppressed by the big businesses. That is one of our strategies.
One of the issues that we are dealing with is a very unfortunate situation, where the employers want to exploit cheap labour and where they want to employ desperate foreign nationals. What would they do? They undermine collective bargaining; they pay them below the agreed wages. And hence, it has forced us ... And for that matter they are not just
employing the documented people but the undocumented people who they know are very desperate.
Hence, we have decided to come out with a national labour migration policy, which is going to regulate all those issues. We addressed the four issues. There are a lot of foreigners in a number of sectors. Go to the farms, the retail that we are talking about, go to the security, go to the restaurants here in the Western Cape and look who is there. Look at what they are earning. After that, they are being dumped at 12:00, after midnight or 1:00 in the morning and then they must see for themselves how to go home. No one is saying anything about it, when they talk about progress in the Western Cape.
We are trying to address that, but we are also trying to say that we have international obligations. Any worker employed in a legal proper way, must enjoy their rights, regardless from where they originate.
We are dealing with all those issues in terms of addressing the national labour migration policy, which we will be able to table to this Parliament before the end of the year. By then, we would have received all ... We are pulling it together.
So, we are trying by all means, but in the meantime, we are trying to scale up the public employment programmes. Those public employment programmes have helped a lot of people. I can just remind you that, at some stage, there was big fight about the EPWP, when I was still at Public Works. I can tell you, accusations were across, in particular, in this city and even in Durban and Gauteng on how that programme was used for political reasons or for political purposes. So, there is a lot that we are trying to do in order to deal with this problem of unemployment.
Lastly, when it said that our unemployment is structural; it is linked to the skills. Working together with Minister Mzimande, Minister Ndabeni and the Minister of the Department of Trade, Industry and Competition, we are hard at work.
IsiZulu:
USIHLALO WENDLU (Nk W Ngwenya): Asibonge Ngqongqoshe isikhathi sakho siphelile manje.
Mr M S MOLETSANE: House Chair, South Africa continues to experience high unemployment rates, which worsens the level of poverty amongst our people. This indicates a country whose
head of state claims that it is not his responsibility to create jobs for the millions of unemployed people of South Africa. Having spoken about black townships in Cape Town, which steps of intervention have been taken to create jobs in black township areas in the Western Cape, such as Khayelitsha, Nyanga, and Gugulethu, which are often left neglected by survey? Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, I think, hon member, the fighter, there was a misinterpretation of what the President said. The President said in the state of the nation address, is that the huge number of jobs are going to come from the private sector, not to say that jobs will only come from the private sector.
If you look at our Economic Recovery Plan, it talks about a number of programmes or initiatives that have to be done jointly with the private sector, but also initiatives which have to be done by government.
So, it is not that we are only looking at the private sector, but the reality is that we will have to create the climate for a number of those jobs for the private sector to do that. If
they are not doing that, we also have to intervene. State intervention is always allowed. It has always been happening.
Where we see that the private sector is not going in a particular way, we have to intervene. One of those is the issue of localisation. That is why we are talking about localisation and support for the small businesses. We need to ensure that we promote manufacturing inside the country, so that we can create more jobs.
Therefore, we are saying that we must invest more in the infrastructure. We are going to create jobs. We are talking about how to expand tourism in the other areas and how to ensure that we expand the public employment programmes. These public employment programmes are very helpful. For example, with the issue of the environment and the announcement that the Premier of Gauteng has made regarding creating jobs for people to clean their own environment, given what is happening in their environment.
So, all I am trying to say is that there are a number of initiatives that are focused at the local level. That is why the President and Minister Patel talked about that. This drive
of the investment is to ensure that we grow the manufacturing in our country, in order to create jobs.
Also, the reform of the SOEs ... In many countries, SOEs are very central in creating jobs. In the past, in this country, SOEs were very key in creating the jobs for the uneducated Afrikaners. They are the beneficiaries of that apartheid policy.
In other countries, it is opened to everybody. So, we must make sure that our SOEs work. so that we can create even more jobs. A lot of technical people with vocational training got it through these SOEs, such as Eskom, Denel or whatever. They were very key in training the young people. So, the training of our young people remains also very key in skilling them.
Thank you.
Question 99:
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Dangor, the UIF
works with various law enforcement agencies which are in the fusion centre. Through this working relationship, the asset for future unit recovered R38,4 million during 2022-23 financial year from the COVID Temporary Employer/Employee
Relief Scheme, TERS investigations. Very interesting, this money was recovered from the private employers, those black and white. Especially investigation which recovered
R61 million from also the COVID TERS investigations. Largely through the acknowledgement of debt agreements because some of the people were not paying. Like somebody talked about the non-compliance. But they wanted to benefit at a very critical time.
As of March 2023, 27 cases were in the different courts throughout South Africa for R46,2 million COVID-19 TERS payment, that’s R46,2 million. Two cases of R151 millions of COVID TERS were provisionally withdrawn for a further investigation, while the other matter was reinstated in
April 2023 to the value of R11 million and 60 cases are under investigation for the value of R90 million. Some companies refunded money received from the invalid applications, and the Unemployment Insurance Fund has so far recovered over
R2,5 billion from the invalid ... And very interesting hon Dangor and hon members, this money people said no, no, we made mistakes after we had announced our follow the money strategy using seven audit firms to follow the money. People - all of a
sudden - came and said, no, no, we made a mistake here. These are private companies. Its no government.
The follow the money audit is currently underway to confirm the correct COVID TERS payment reached. Whether they reached the right employees to recover the wrongful payments and trigger criminal investigation where crime is suspected. There are already people who are in jail. Thank you.
Mr M DANGOR: Thank you very much Minister. Minister, were any officials of the department found to have been suspected of facilitating the fraudulent transactions. If so, are they being subjected to disciplinary processes in this regard?
Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: Yes, hon Dangor. There are officials who are implicated and there are those officials we are dealing with in terms of the disciplinary processes.
And remember, you are talking about two issues here. You are talking about the internal disciplinary processes, but you are also talking about the criminal charges. Those are in progress. But unfortunately, they tend not to be at our own pace, and we have to respect all those steps. I would say at
this stage, I don’t have - at the top of my head - the figures which we have, but I can be able to supply that information.
Mr N M HADEBE: Hon Minister, I would like to know, will government take any steps to ensure that these companies are blacklisted or penalised? And, will these companies be barred from conducting any business with the state or will they be permitted to partake in tenders and state procurement? Thank you, House Chairperson.
The MINISTER OF EMPLOYMENT AND LABOUR: Thank you, hon Bongani. You see Bongani, these people have employed workers and it depends on the scale of the fraud because if you simply say, we are switching off your business, you might have the unintended consequences. It will impact very negatively on the workers. We will just have to retrench all of them. But you will have to find a way of punishing them, without just punishing the workers. This is a matter which we are dealing with.
But as government, to say amongst other options, depending on the severity, we might be able to say, this one might not be able to get any tender from government. But the only thing
which we normally do, we force the people to acknowledge debt, which means we sit with them. They pay back all the money over a particular period. That is what we normally do. So, we are trying to do a balancing act so that we also don’t hurt the workers, especially in this period of massive high unemployment. Provided they come forward and they become honest. Some of them have come forward. Some of them, we discover it on our own, with the millions. That becomes a criminal case, and we take it straight to court. Thank you.
Setswana:
Rre K MOTSAMAI: Tona, lenaneo la madi la nakwana, la batho ba ba emisitsweng ditirong, le ne le tsentswe dithata tsa tsamaiso le di tuelo tsa tsietso go tswa mo tshimologong.
Tona, a o tla tlhatlhamisa tshedimosetso ya di komponi tse di tlisitseng boikuelo bo bo seng molaong? Fa ese jalo, goreng? Ke a leboga.
English:
The MINISTER OF EMPLOYMENT AND LABOUR: We are saying,
leadership [moetapele], that those who have violated, lets deal with them. But as to what the punishment will be, is going to depend on the severity of that particular case.
That’s our approach. But we have to be meticulous that we do not destroy everything. But people must pay for that. Thank you.
Ms H S BOSHOFF: Hon Minister, I am very sorry, I had another commitment for a meeting. One of my questions is - with regard to your mission to get money back - did you mention how much you have been able to recover and from which companies? If you have answered that question just ignore it. Further to that, legal advice was also given that do not name and shame these companies. Minister, would you not say the reason for not naming shaming these companies is because so many of your department officials were involved? And then would you also then inform this House what plans have since been implemented to ensure that all current and future payments will be safeguarded against these shameful and fraudulent activities? And thank you to hon Mmoeimang for the music he played.
The MINISTER OF EMPLOYMENT AND LABOUR: Thank you hon member. I did mention the figures, but I have not mentioned the companies. At some stage we will have to come out and talk about the companies which are responsible. But I think we will have to do it in a legal way because sometimes some might be
able to explain why they have gone overboard. They might be able. It might not be logical but at some stage we are going to be able to do that.
As I have said, Scopa, my own portfolio committee and I guess the select committee, they are interested into what is it that we are doing in order that we don’t have a repeat of what happened in the previous years. As and when I am called, I will be presenting a detailed plan of what we are doing. We have taken a position that if you are running an insurance, if you are running a fund, if you are running a medical aid for the workers, you don’t need the ordinary skills. If you are looking in the private sector, who is running that? Its charted accountant, its accountant, its actuary. Its highly technical people. Its Rolls-Royce, in terms of the IT systems.
We are deep in negotiations with the private sector now, for people to be seconded so that they come and run this. So, we will be able to present a plan which already parts of it are being implemented so that we don’t sit with a repeat of that. But one of the things have to accept is that the normal TERS, that is the normal claim system, was not as bad as when we were faced with covid. When a decision was taken that give
every worker ... that’s when we opened the flood gates, and our systems were not ready for that, and we have admitted. That is why now we are relooking at our systems. But one of the diagnostics which we have done is the skills which we are having to run such a business, and a strategic leadership to run such a business. Thank you.
Question 95:
The MINISTER OF EMPLOYMENT AND LABOUR: My department does not keep statistics of learners taken on by government departments for various programmes, including the learnerships and internships. This is a matter that I will be taking up with my colleagues in the Department of Public Service and Administration, DPSA. But we are also supposed to have an interest as the Department of Employment and Labour. I have just recently requested the information in relation to this from the different departments. I am also aware that it is not automatic that, if learners participate in these programmes they are absorbed. They still have to follow the normal public service recruitment and the selection process. That is what I can be able to say in this one Chairperson.
Xitsonga:
Man B T MATHEVULA: Ndza khensa, Mutshamaxitulu. Ndzi hlamulekile.
English:
Thank you.
Mr F J BADENHORST: [Inaudible] ... is spent effectively. How does the Minister justify the costs of these learnerships and the internships in light of the outputs? Specifically, can the Minister provide a cost benefit analysis of these programmes detailing for us please, return on investment in terms of the enhanced skills, increased productivity and the overall improvement in the public sector performance? Thank you, Minister.
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chairperson and hon Badenhorst. When I came to the Department of Employment and Labour, doing an assessment of all these programmes I said, you cannot just place people for the sake of placing them, train them for the sake of training them, three months or six months after that they have nowhere to go. That is indeed a waste of resources. I indicated that, what I want is a serious review of the programme that this training, whoever is getting
the money, there must be value for money. Train these people but one of the conditions from those who are training, they must link them to the employers for a particular period.
In the public service for instance, we were saying, you can’t take these young people and push them for menial jobs. You will have to give them proper experience. Let us not talk about a year, let us talk about two years. But we said, in the private sector, a number of people in the private sector are ready now they are in tune to say - and the proposal we are receiving is, train them and link them to us we can be able to take so many. We say not - sometimes we know that you cannot train 2 000 people and all of them, but at least half of them or 50% must be able to be guaranteed some jobs for a period of two years. That is what we are saying now, repurposing that particular programme.
But also, we are not just training them to be employed, we are also training them for self-employment. The programme we are running together with Minister Ndabeni-Abrahams, is to help that some of those people have the basic skills of running businesses, because you cannot just say you are going to support the people having not given them the basic training of
how to run business, accounting and so on in terms of their own businesses. Otherwise, you are just throwing that money into the river. So, we are looking into all those areas.
Minister Didiza is also coming to the party. When we talk about the small-scale farmers. What training are we giving them to be able to make their farms productive? You know, somewhere there are farms which were given back to the people, productive and fertile land. Those now have remained fallow.
It is not the mistake of the ... it is our mistake. We didn’t give the people the skills. The issue of skills to those entrepreneurs becoming very important. We think that, if we continue along those lines, there will be value for money.
Mr M A P DE BRUYN: Hon Minister, does your department have any partnership agreements with other training facilities to send final year students for practical training in the public sector? If I can think of an example, the Mangaung Metropolitan Municipality’s fleet garage for an example would benefit greatly from this, if they can have final year students doing practical in their fleet garage. Would you not agree that this would benefit not only the already
understaffed departments but also the unemployed citizens as well? Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: One of the things which the President is forcing us to do is not to work in silos.
When I am talking about this programme and mentioning the different Ministries. When I am talking about Small Business Development, talking about Human Settlements, referring to Department of Trade, Industry and Competition through agriculture. We are doing it in a co-ordinated way. But also there is higher education and higher education which is dealing with the TVETs. One of the issues which higher education has been able to face is to say, no, no, no, some of the best people who can be the best trainers in the industry, bring those people from the industry to help those TVET colleges.
But also, some of these young people should do their training in there. I know there is an initiative by Ministers Nzimande to try and talk to the employers through the social compact. That is one of the areas which we are exploring that, the whole industry must come into the party in terms of this particular area. But it cannot be everyone for herself. This
department is doing this, this one is doing that. This is one doing that. If we are co-ordinating and pulling it together, it is going to have an impact.
But also, the other plus of it is the economies of scale. Pulling those resources from the different departments, small as those resources might be, but with our labour activation programme, pulling those resources of the sector education and training together, we will be able to massify. So, the issue of co-ordination, integration amongst ourselves and the private sector has become very critical, which takes the element which you are raising.
Ms M L MOSHODI: My follow-up question to you hon Minister is whether there is a centralised database of all the learners who get enrolled in government internship programme and collaboration with other sectors of the economy to track the employment of these learners in other sectors out of government? Thank you very much hon Chair.
The MINISTER OF EMPLOYMENT AND LABOUR: There is this youth employment programme which we are running with the Presidency. It is one that is going to be in the reports with the National
Youth Development Agency, NYDA where we are talking about the pathway management programme, where we are pulling all the different departments, we are putting a database and the different nongovernmental organisations, NGOs, different companies are able to see that pool and be able to pull from that particular pool. We have put it as the department.
Sometimes there is resistance from some of the private companies because what we have in our public employment services is a very big database where the young people are able to send the information. There is an App which they are using or through the - what do you call this thing ... [Inaudible.] But they are able to post their Curriculum Vitaes, CVs into that particular platform, and it is recorded there.
There are some of the young people who have been able to benefit from that. They are just called instead of applying, and companies are able to look at the different skills instead of just advertising. So, we do have that, but we still have to improve them. Because I think it says a lot about ... it comes back to one thing and hon Chairperson, I must say this thing and I think the parliamentarians must be interested in it.
Question 91:
The MINISTER OF EMPLOYMENT AND LABOUR: The government, led by the Department of Home Affairs and based on the research that was commissioned by the Department of Higher Education, published a scarce and critical skills list. The list is used by our missions abroad to assist in processing applications for work visas in cases where foreign applicants find employment locally and happen to be in possession of those skills.
Like all other countries, we are competing to attract investment and scarce skills. We have witnessed a trend wherein other countries continue to poach some of the high- level skills that we have been using, or using various private employment agencies. It’s very serious. You know that those at high levels, like engineers, have been taken in the Middle East. You know about doctors and so on.
However, there is a new trend. There is a state in the USA, these lower states, that has been recruiting young farmers. It’s very interesting. It’s not racist. Ninety per cent of those young farmers that are being recruited are white. They are recruited by the USA. This was brought to our attention by
the deputy secretary of labour in the USA who said, watch this. We are worried about it. It has some wrong elements. I think people continue to poach in South Africa and the department has also proposed in the current draft national labour migration policy, which is before the National Economic Development and Labour Council, Nedlac, a framework that will include, amongst others an agreed bilateral or bilateral labour migration system with the country that intends recruiting from South Africa or recruiting South African workers, so as to regulate the outflow of scarce skills.
So, we must not just be worried about incoming migrants or workers but we must also be worried about those who are going, and also talk about their conditions of service in the countries that they are going to.
Unfortunately, as we are in this open international system, we can’t stop the free movement of people but we have to regulate it properly, including our own people who go and look for greener pastures. Thank you.
Ms H S BOSHOFF: Hon Minister, it is evident though that the current state of the critical skills visa application process
is falling short of the targets that were set for Occupations in High Demand Opened to Foreign Labour, OHDOFL, and the critical skills list, which ultimately impacts our ability to retain highly skilled migrants.
Can you clarify for us the specific measures that have been taken to engage the Department of Home Affairs to streamline and expedite these visa applications, ensuring that we not only retain these valuable employees but also facilitate their path to permanent residency?
Furthermore, can you provide evidence of tangible improvements in this process and explain how the Ministry plans to hold the Department of Home Affairs accountable for meeting these targets, moving forward?
Rightly said, Minister, we are losing a lot of critical skills and the reason is that there are no jobs for our South African people. They are leaving in droves. We’ve just seen the latest unemployment statistics. So, please do something about these young people that are leaving for this state in America.
The MINISTER OF EMPLOYMENT AND LABOUR: I jut want to say to the hon member that we can’t hold that department accountable. We have to collaborate with that department. All of us have to be accountable. That also includes the Department of Higher Education in terms of dealing with this particular issue.
However, what we are doing is that as we have published that list of critical skills, there are processes and procedures that the Ministry of Home Affairs is dealing with, which is in their mandate, in terms of facilitating that. At this stage I cannot tell you what those procedures are but it is within the mandate of Home Affairs. However, in terms of that, we have to come to the party.
However, there is a question which you raised about facilitating their permanent residency. One of the things we have agreed on with Higher Education and Home Affairs is that we must talk about skills transfer. We don’t want people to come here permanently. Skills transfer means that if a company has been able to import those people, whilst they are working here there must be understudies to them so that we transfer the skills to South Africans. We can’t justify the recruitment of outside permanent people whilst we are sitting with high
unemployment. In those critical skills areas, that is where Higher Education comes in. In the meantime, there must be training.
I can tell you that some of these critical skills might not be as critical as we think or as scarce as we think. A number of young people have qualified academically as engineers but have not been placed in order to get the necessary certificate to be able to qualify. These are some of the issues. How do you fast-track them to be able to get the qualification, because you will have to work for a particular period before you are able to do that. So, it’s a combination of the strategies.
We would also like our own people to be able to access these jobs in the long run but we want those nations to help us.
There is also an initiative and a drive to try and recall some of the critical skills which have left this particular country, both black and white. We need them in the country.
Thank you.
Mr M I RAYI: In our view, the attraction of the best human talents and skills by the richest countries is a reality of globalisation, which is not unique to South Africa. Hence,
most countries, rich and poor, are grappling with this challenge. For us in the ANC, two interrelated critical questions come to the fore. Firstly, how effective are our policies in terms of retaining the existing talent and skills base that we have; and secondly, what steps is government taking to intensify national efforts to build a solid, sustainable and internationally competitive skills base?
The MINISTER OF EMPLOYMENT AND LABOUR: You are correct, hon Rayi. Globalisation ... and when you talk about the open market ... when you talk about this African Free Trade ... which Minister Patel talked about, it not only talks about the movement of goods and services but it’s also about the movement of people. There will be people ... There are people in the region who are more attracted to South Africa as the developed country or as one of the developed countries. Of course, some of them are economic refugees. Equally though, South Africans are also attracted to other destinations. It’s because it’s an open market.
IsiXhosa:
Uyabona xa kusithiwa zakudibana emakethini, kuthethwa ukuba ngubani ohlawula ntoni, ehlawula kangakanani.
English:
You see, you know very well from the trade union movement that, that’s how we stole some of the organisers from you because it was about how much you pay. However, what I’m trying to say is that the effect of that, and I think that is what some colleagues are raising ... There is a whole chapter written about ... I think in a number of political economic books ... about the brain drain from Africa and from Latin America to developed countries. We have to find a proper way of regulating this. That’s why we are saying in ours we have to deal with that particular matter. It’s a complex matter because we have our Constitution which allows for freedom of association and the freedom of choice, even if the people whom you have trained can easily go anywhere where they want to work. It’s not just an easy matter but it’s a matter which we have to think seriously about. I think Higher Education is also dealing with the matter. We are also dealing with it in terms of the labour migration policy, so that there are protocols which we must agree on, including when you talk about quotas, which we are going to come to later on. You might even talk about certain quotas which can be allowed to be taken from one country, especially with regard to critical skills. Otherwise, you will just wipe the poor countries of
what they have paid for their own investment in skills. Thank you.
Mr N M HADEBE: Hon Minister, I would like to know whether, in addressing this challenge, the department can consider encouraging and funding more students to embark on studies majoring in scarce skills, and to give incentives to South Africans to remain in our country. Thank you.
IsiZulu:
UNGQONGQOSHE WEZABASEBENZI NOKUQASHA: Uyangigijimisa namhlanje Bhungane.
English:
You see, we have to trace it back and some of our colleagues do not want to hear this. The situation where we are, where some of our young people were denied better skills than what you call scarce skills, was a result of the apartheid system which promoted certain groups above others. Now, this is the legacy that we are dealing with. That’s why from time to time in other areas we have to talk about coming up with positive discrimination, what we call affirmative action. Other people
... Yes, it’s there. Read the literature. Read the literature
about positive discrimination from maybe your most ... [Interjections.] Read the literature. You see, and I’ve said that when it comes to this part, then people want to protect their apartheid privileges. They get mad when it comes to this because they do not want equity in this particular country. I have said that as this country, led by the ANC, we chose reconciliation over war. We said, let’s share the wealth, fighters. Let’s share the wealth of our country with all our people. Now, what is happening is that people want to protect what they gained from apartheid ... whatever. They want to protect that. They want to protect their apartheid inherited privileges. Now, we have said that at some stage our people cannot tolerate this. We introduce everything, whether it’s affirmative action ... We talk equity, be it in education, be it in funding, be it in employment. We talk about the means of production which you are defending, and which the majority of our people do not have. We are saying that the time has come for you to open up. The time has come for you to open up because if there is chaos in the country, all of us are going to be affected. That’s what we are saying. If you remain very conservative, including on this issue of skilling ... we must open up. We must open up because it’s central. This issue of skilling is central to structural unemployment, which is
facing the majority of which unfortunately is the black youth. You can’t run away from that. So, let’s be open. Let’s have a proper conversation around these issues. Let’s have proper programmes. Let’s not be defensive.
Mr M DLAMINI: Minister, that was such a passionate response that the EFF is willing to share the seven cardinal pillars to attain what you have just been talking about because we have given a clear and decisive way how to attain that. Very progressive, Minister.
One of the main reasons for the exit of technical and scarce skills is linked to remuneration. What measures has the Minister put in place to offer workers competitive salaries so as to keep up and manage critical skills? Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: We are supposed to be sharing this with the fighters because they are our children. Yes, no, no, they have been schooled by us but unfortunately we are very orderly in our approach. You see, unlike them we are very orderly in our approach. However, we know that from time to time they will go overboard. We will bring them back.
However, I think the issue of salaries or the compensation that we are giving to workers is again a labour market issue which is controlled by demand and supply. However, with us it also has to do with affordability. We might want to pay this but can we afford it? We are at a crucial time where there is a demand for everything to increase. What do we increase? I raised the question and became very unpopular on one platform when I was acting somewhere. I said, if we are giving a particular percentage, which we say is 7,5% and the colleagues who are employed say it’s not enough ... Yes, it might not be enough but the colleagues had all the benefits which were paid throughout that period of COVID ... in the private sector there were serious cuts. Other people lost their jobs. I said that. However, what about the 11 million unemployed that are looking to the very state to also get something? However, at least in the labour market that thing is put open in the private sector. With those negotiations, even with us ... and people come to some form of a settlement which is informed by what is realistic, which is informed by compromises.
It’s a very difficult thing to manage but the system in this particular country, the laws that we have and the structures which we have put in place, are able to regulate that. We
might want to pay here but is it possible, given our own fiscal constraints? We must never ever think that even in government ...
IsiXhosa:
... uya emasimini uvune imali ...
English:
... we just go to the fields and reap money. No, whilst we are talking about expenditure we must also look at our revenue.
Those are all difficult issues and it’s a balancing act, which we have to talk about.
Question 100:
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chairperson, to the question by the Hon Mamaregane, the department initiated the Labour Activation Programme, which continues to fund projects that are aimed at stimulating job creation. The lab continues to make a positive impact on the alleviation of unemployment. The department works with service providers and employers to implement what we call the lab programmes on the basis that these must lead to actual employment.
The department also has the Temporary Employee/Employer Relief Scheme, which is known generally as TERS. This normal TERS is different from the TERS introduced during COVID-19. This is a normal one which looks at the companies which are failing. It was there even before. How do we rescue those particular companies? So it is administered through the Council for Conciliation, Mediation, and Arbitration, CCMA, and it provides support to distressed companies that seek to retain their employees.
There's also the Employability Enhancement Programme that is designed to integrate unemployed people back into the labour market. The Business Turnaround and Recovery Programme is implemented by Productivity South Africa and is designed to enhance the productivity, capacity and operational efficiency of enterprises to preserve jobs and minimise retrenchments. So in terms of the challenges of some of these projects, it's the administrative burden which is placed on them, something that I've instructed the department to quickly work on it, especially there.
We have ensured that 50% of all opportunities and subsequent employment goes to women and the youth. This includes white
women, by the way. We also have the Competitiveness Improvement Services, CIS, which is driven by Productivity. South Africa and the CIS promote employment growth and productivity, and over the past three financial years, CIS provided support to SMMEs and consistently achieved 100% performance on the planned targets. We think that these institutions are helping, especially some medium and small enterprises when they are under pressure, for a year to take over and pay the salaries of the employees whilst we're restructuring the enterprise. Thank you, Chairperson.
Mr K M MMOIEMANG: Thank you, hon Chair, and thank you, Minister, for your comprehensive response, appreciating the fact that one of the department’s programmes is the Public Employment Services, which is programme three, which from the appreciation with the department, you more or less play a co- ordinating role across all the departments and even the private sector.
The question that one wants to pose to you, is whether there are any flagship projects that the department is targeting taking into account the fact that we are left with 12 months before the end of this administration and with the view to
ensure that we energise and leave the morale of our people. Thank you, Hon Minister.
The MINISTER OF EMPLOYMENT AND LABOUR: House Chairperson, I'm just thinking for now that some of the projects or programmes which we have are in different areas. I know that we are starting a huge project in Dr K K Kaunda where we're working with the MEC there Desbo Mohono, and we're working through the district mayor. We also have a number of projects which are in the different ... [Inaudible.] ... of the Vaal with a number of NGOs. We have a number of projects in KwaZulu-Natal, projects which we're also trying to do with amakhosi [chiefs] in the Eastern Cave and some parts of KwaZulu-Natal, projects we're doing with a number of NGOs, it is just that I didn't list them to say this or that project but we are starting to say, how do we use the NGOs to have a reach all over the country, especially in the rural areas because that is our preference. It is the rural areas. I can be able to say, we have had a total of 40 projects since the 2019-20 financial year with these apprenticeships and even the skills programmes. We will be able to provide you with the names which will be in written form.
Xitsonga:
Man B T MATHEVULA: Ndza khensa ...
English:
... Chairperson, Minister, which interdepartmental collaborative effort has the Minister taken to expropriate land without compensation and to nationalise strategic sectors of the economy as this is the only way that we will build industries in all parts of South Africa and create employment. Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, isn't it
that we are busy with the Bill, we have not passed it into an Act which deals with this issue of expropriation, and clearly once that has been done, you can be able to ask that particular question but also I agree with you that the issue of the land as a means of production remains very critical.
There's a voice which is very disturbing on my left. I'm not sure what's the problem after haranguing me when I was asked, to respond to their questions, but I'm saying, once we have done with the expropriation of the land which was meant, by the way, to make the land available as a resource for infrastructure or a number of programmes or agriculture, not
the bundus, which were not very helpful as agricultural land where we are supposed to skill our people. Thank you.
Mr M A P DE BRUYN: House Chair, Minister, I'm sure we are all in agreement that it's necessary for the private sector and even foreign investors to invest in South Africa to create jobs but, Minister, it's not only the private sector's responsibility to create jobs and the government should play an essential role in employing our citizens, and having said that, Minister, why is it that municipalities such as the Mangaung Metro, for example, are understaffed in every single department? Or why is it that there are more than 5 000 positions still vacant in the Department of Health in the Free State?
Shouldn't the government set an example by filling these positions when it comes to employment? and the question is hon Minister, is there any collaboration between your department and other departments and municipalities to increase the employment rate in this regard?
The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, you are
correct Hon De Bruyn that we will put our act together. Where
there are jobs which we are supposed to secure and are budgeted for, those posts must be filled in, and you must make us account for every department, why that is not happening because these are critical services, for instance, the sector which is quoting, health, is a critical sector. Remember what happened during COVID-19, where we had our people ... where we had our hospitals, our clinics, our people overloaded because they were understaffed. And I guess that the various Ministries were responsible are prioritising that.
I know for a fact that what you have quoted, health in particular, Minister Joe Phaahla is doing everything to ensure that those provinces are able to fill in the funded posts because it's one thing to have a gap, whether that is funded or not, that's another thing. So at least for the funded ones, it becomes an embarrassment that we've not been able to fill some of ... and I know that the President has been very hard in us on this particular area because you are denying the improvement of the service, but you're also denying somebody a job and it must ... across the levels or state structures whether it's national or it's provincial or even at the local level, we have to deal with this particular question to improve service delivery.
But also it's important that we talk about competent people. We talk about a new work ethic. We talk about commitment because in some ... you find that you do have enough people employed but the work ethic and the management leave much to be desired. Thank you.
Mr W A S AUCAMP: Hon House Chairperson, Hon Minister, during the Sona this year, the President said that it's not the government that should create jobs but the government should create an environment that is conducive for investment for the private sector to create jobs. Now, if one looks at the current unemployment figures that are standing at 32,9% and 46,5% for the youth, it is clear that the government is not creating an environment conducive to investment. Apart from that, and apart from all that was said this afternoon, let's stage this into what projects are being done.
In April this year, you said that you are eyeing and kick- starting three major projects in the Dr Kenneth Kaunda District Municipality in the North West province and that this programme would be driven through the Labour Activation Programme. Now, we also saw the employment statistics for the last quarter of 2022 and I'm going back to the fact that
167 000 of the 169 000 jobs that were created countrywide were created in the Western Cape province.
Now, we can go on about the Western Cape province and other provinces not doing it, the fact of the matter is that here governance is done in such a way that it creates an environment conducive to investment and that is why job creation starts here. To go back to the projects that you initiated.
My question is, can you inform this House whether these projects that you referred to have been kick-started? What the costs of these three programmes are? How many young people will benefit from it, and what opportunities will be put on the table for the beneficiaries of these projects once they've completed their trade? Thank you.
The MINISTER OF EMPLOYMENT AND LABOUR: Thank you, hon Chair and thank you to the hon member, I can see that he has mobilised to go back to the first question, he was not satisfied, how he made a follow-up on the responses we gave. I still want to say it. You were worse in the way you were haranguing me. I still maintain, don't look at the trends in
the short term. Look at the trends over a period so that you are able to say, here are the trends. You can't say on the basis of one quarter, therefore, we've created.
You see, this is your problem. You don't want to listen, but you ask questions. Now, what I am saying and what the President said, a high percentage of jobs are created by the private sector. He was even asked that question in the debate by some of the parties, and he said, let me clarify, it doesn't mean that the government cannot create jobs. The government has employed people in the public service but it's a limited space compared to the private sector, but the SOEs
... that is part of the public service or the public sector when we go broader, those SOEs must create jobs. They used to create jobs. The issue is the management and that has been admitted several times, which we're trying to improve.
So the government equally has a particular role, but also in basic economics, the government has and can be able to intervene. The government’s intervention, when it's necessary, when there is a market failure, those are the basics which we're talking about. Well, what I can do as to how far those projects are, I can be able to give you the details in
writing. The reason being, as Ministers, we ... [Inaudible.]
... the issue of funding and everything, we stand back, but we demand accountability from those who are implementing because once we get in there, we tend to be accused of interfering and we don't want to interfere.
We want to intervene when things are not moving, I'll be able to give the information about even more projects and this which we are quoting is very new. It's not an old project.
That's what we are quoting now, but also remember that employment has been retarded and we have been intercepted by the issue of electricity which is affected all our lives. It has impacted us economically. It has impacted on our social lives. It has impacted everything. That's why we're working hard to come up with a number of options and we can't run away from that. Thank you very much, hon Chair.
The House Chairperson: Oversight and Institutional Support announced that the Whippery has agreed to defer the Oral questions to the Minister of Small Business Development to Wednesday, 21 June 2023 at 14:00.
The Council adjourned at 19:45.
Audio
No related