ATC140325: Report of the Portfolio Committee on Economic Development on its activities undertaken during the 4th Parliament (May 2009 – March 2014), dated 11 March 2014
Economic Development
The following report replaces the report of
the Portfolio Committee on Economic Development which was published page 1782
in ATC No 34 dated 24 March 2014.
1.
Report of the Portfolio Committee on Economic
Development on its activities undertaken during the 4th Parliament (May 2009 March
2014), dated 11 March 2014
FOREWORD BY CHAIRPERSON
The Economic
Development Department (EDD) was established in July 2009, when President Zuma
announced a restructured national executive after his inauguration. Subsequent
to the establishment of this new Department, on the 27
th
of May
2009, I was nominated as the Chairperson of the Portfolio Committee on Economic
Development. Central to the work of the Committee was the renewed call to step
up efforts to change the lives of our people for the better. The focus on
education, health and the economy sent one clear message, that is, we could not
continue with business as usual. The Committee therefore had a mammoth task
ahead of it and being a new Committee meant it had to put in extra effort. High
levels of unemployment, deepening poverty and growing inequality were
acknowledged as the biggest challenges that the Committee had to deal with. I
am glad to say that despite being a new Committee, the 4
th
Parliament term of the Committee was a resounding success.
The achievements
of the Committee would not have been possible without the support of a
dedicated and resilient team. Great appreciation goes to my fellow Comrades
from the African National Congress (ANC) who relentlessly ensured that we serve
the nation and ensure attainment of national objectives. My appreciation also
goes to the Honourable Members of the Opposition Parties that served in the
Committee who ensured unity and professionalism throughout. Our Committee, like
any democratic formation, allowed for debate and despite difference in opinion,
it still remained conscious of the crucial importance of the task ahead.
To the support
team, which ensured efficient and effective functioning of the Committee, I
cannot thank you enough for all the support you gave to the entire Committee
and individual Members.
To the
Department and all the entities reporting to the Department, it was really
great experience working with each one of you and one can not hesitate to say
that as a Committee we also learnt a lot from the good work that each of the
entities is doing.
I have the
pleasure of presenting this Legacy Report, hoping it will ensure a smooth
transition into the 5
th
Parliament. Indeed, the Legacy Report for
the 4
th
Parliament continues to tell the good story of all the
achievements of the Committee in the past 5 years of its term.
Thank You
Honourable Elsie
Mmathulare Coleman
Chairperson
1.
Introduction
The purpose of this report is to provide an
account of the work of the Portfolio Committee on Economic Developments work
during the 4
th
Parliament.
The report provides an overview of the way in
which the Portfolio Committee undertook its oversight and legislative programme
in relation to Executive actions, policies, budget, legislation and programmes
as driven by the Department of Economic Development and its Entities. The
report further identifies challenges that emerged during the period under
review, makes recommendations and highlights issues for consideration and
follow up in the coming 5
th
Parliament.
1.1
Committee Members
The Committee on Economic Development like all other
Committees is represented by Honorable Members of different Political Organisations.
Some of the Members were changed during the years. However, the Committee
Members as at closing of the term included the following members:
AFRICAN NATIONAL
CONGRESS (ANC
|
DEMOCRATIC ALLIANCE
(DA)
|
CONGRESS OF THE
PEOPLE (COPE)
|
INKATHA FREEDOM
PARTY (IFP)
|
UNITED DEMOCRATIC
MOVEMENT (UDM)
|
Coleman,
Mrs EM
- Chairperson
|
Motau,
Mr SC
|
|
Hlengwa, Mr M
|
|
Ntuli, Mr ZC
(Whip
|
Van
der Westhuizen, Mr AP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mabasa,
Mr X
|
|
|
|
|
Mohai, Mr S
|
|
|
|
|
Mohorosi, Ms MM
|
|
|
|
|
|
|
|
|
Other
members that have served in the Committee include:
AFRICAN NATIONAL
CONGRESS (ANC
|
DEMOCRATIC ALLIANCE
(DA)
|
AFRICAN CHRISTIAN
DEMOCRATIC PARTY (ACDP)
|
INKATHA FREEDOM
PARTY (IFP)
|
UNITED DEMOCRATIC
MOVEMENT (UDM)
|
INDEPENDENT
DEMOCRATS (ID)
|
Ms
P. Bhengu
|
Mr R Coetzee
|
Mr SN Swart
|
Dr M Oriani-Abrosini
|
Mr
BH Holomisa
|
Mr H Hoosen
|
Ms PM Daniels
|
Mr
G Krumbock
|
Mr W Thring
|
Mr N Singh
|
|
|
Mr
NE Gcwabaza
|
Mr
JF Marais
|
|
|
|
|
Dr S.B. Huang
|
Mr KS Mubu
|
|
|
|
|
Ms H. Line
|
Dr P Rabie
|
|
|
|
|
Mr K Manamela
|
|
|
|
|
|
Mr E Nyekemba
|
|
|
|
|
|
Mr G Scheeman
|
|
|
|
|
|
Ms RM Sonto
|
|
|
|
|
|
Ms S van der Merwe
|
|
|
|
|
|
The change of Party Members is the prerogative
of each party, thus most of the changes were as a result of Members being deployed
and redeployed by their Parties.
2.
Background on the establishment of the Committee
The Economic Development
Department (EDD) was established in July 2009, when President Zuma announced a
restructured national executive after his inauguration. The
President stated on 10 May
2009 that Cabinet has been reorganised to achieve better alignment between the
structure, our electoral mandate and the developmental challenges that need to
receive immediate attention from government. In line with this, the President
announced that [a] new department of Economic Development has been established
to focus on economic policy making. Meanwhile,
on 27 May 2009 the Committee unanimously voted
Ms E.M. Coleman (ANC) as Committee Chairperson.
It is important to note that the EDD, being a new organisation, was
indeed established in May 2009 together with the Committee. However, the EDD
was formally established and operational in July 2009. This was to ensure that
all systems, setting up of office and establishment of capacity was put in
place, prior to formal establishment.
When the EDD was established six agencies
were transferred from the dti to EDD: three Regulatory Bodies (the Competition
Commission, the Competition Tribunal and the International Trade Administration
Commission (ITAC)) and three Development Finance Institutions (the Industrial
Development Corporation (IDC), Khula Enterprise Finance Limited (Khula) and the
South African Micro-finance Apex Fund (Samaf)). Subsequently, in Parliament
these entities were also transferred from the Portfolio Committee on Trade and Industry
to account to the Portfolio Committee on Economic Development.
3.
The Role of the Committee
Parliament, through committees such as the Portfolio Committee on
Economic Development (the Committee), is tasked with:
·
Making
law;
·
Maintaining
oversight over national executive authority and any organ of state;
·
Facilitating
public involvement in the legislative and other processes of the Assembly and
its committees;
·
Participating
in, promoting and overseeing co-operative government; and
·
Engaging
and participate in international participation (participate in regional,
continental and international bodies)
The key role of Committees is to exercise
oversight over the Departments and its Entities, ensure that Government organs
are performing their functions and are delivering services that guarantee a
good quality of life for citizens. The key reasons for oversight are to:
·
Monitor the implementation of government policy by
departments
·
Conduct impact assessment of government policy on
the lives of the citizens of the country
·
Evaluate the performance of departments against the
strategic plan of the departments and hold the Executive accountable for
non-performance
·
Hold departments
accountable for the expenditure
of departmental budgets;
By and large the role of the Committee on Economic Development is to
ensure that the Department and the Entities reporting to the Department are
effectively implementing the key Government Policies, namely the New Growth
Path (NGP); the Industrial Policy Action Plan (IPAP), the National Development
Plan (NDP) and the National Infrastructure Plan. The Committee is also tasked
with ensuring that the Department and its Entities are contributing to
Governments imperatives of job creation, the reduction of income inequalities
and eradication of poverty.
The Committee had to maintain constant
monitoring of the actions, policies and activities of the Economic Development
Department and the Entities.
In facilitating its work and oversight the Committee promoted that
decent jobs be created, projects be completed within schedule, results be
achieved and economic development projects be aligned with the National
Policies and objectives.
In the execution of its oversight role, the Committee identified
the following key priorities which informed and guided its programme:
·
Ensuring
thorough monitoring and evaluation, as well as participatory public
consultation, that the economic policy developed by the Department of Economic
Development results in the realisation of the objectives of the Decent Work
Agenda.
·
Encouraging
the attainment of a low-carbon economy which is energy efficient and addresses
the energy demands for economic growth.
·
Following
trends on the local impact of the global economic crisis and progress with the
implementation and results of the Framework for South Africas Response to the
Economic Crisis.
·
Engaging
the department on progress with the implementation of its programmes and
encouraging their integration with other economic development programmes across
Government.
·
Ensuring
that the mandates of the agencies and Development Finance Institutions (DFIs)
reporting to the department are aligned and coordinated in order to ensure that
their actions address the growth requirements of the productive sectors of the
economy and contribute towards the expeditious reduction of unemployment.
·
Determine
where areas of poverty are located in the country which includes rural and
urban areas and ensure that economic policy focuses on these areas.
·
Participating
in the development of the Comprehensive Rural Development Strategy as a key
component of economic development in South Africa.
·
Contribute
towards South Africas global economic relations and standing in the community
of nations.
·
Contribute
to policy co-ordination and coherence, by working in collaboration with other
committees in the National Assembly (NA) and National Council of Provinces (NCOP)
across portfolios.
·
Promoting
local economic development across the country.
·
Contribute
to efforts of the executive in creating a conducive environment for businesses
in order to create jobs.
·
Ensuring
that the electoral mandate of government and the strategic plan of the EDD and
the Entities are aligned.
·
Participating
and contributing to the development and implementation of the New Growth Path.
·
Tracking
progress with the implementation of IPAP I and II.
·
Monitoring
progress with international trade negotiations and bilateral investment
agreements as well as the impact of tariff reforms on the economy.
4.
Methods and Tools for Oversight
There are many assessment methods and tools that were used by the
Committee to perform its oversight role. The key ones included:
·
Quarterly
and annual reports of the Department and entities;
·
Briefings
by the Department
and the Entities
·
Oversight
visits, including visits to companies and DFI funded institute;
·
Follow-up
on oversight;
·
Presentations
by Experts in various fields
·
Joint
meetings with other Departments;
·
Engaging
stakeholders, including Non Governmental Organisations (NGOs) and Trade Unions;
·
Summits
and Conferences;
·
Public
hearings, feedback and advisory panels;
·
Passing
legislation; and
·
Budget
Review and Recommendations Reports budget.
5.
Resources and skills
As a newly established Committee, there were bound to be challenges at
first. Thus the Committee initially had capacity constraints, especially in
terms of having the appropriate staff support.
It was until in the last term (2013) that the
Committee had a full complement of support staff.
The support staff enables the Committee to do its work, coordinates the
programme of the Committee, provide research and content on matters brought
before the Committee. The support staff of the Committee included the:
·
Research
support;
·
Content
Advisor
·
Committee
Secretary
·
Assistant
Committee Secretary
·
Secretary
to the Chairperson
·
Secretary
to the Whip
6.
Key Achievements
The table below provides an
overview of the number of meetings held, legislation and the number of
oversight trips and study tours undertaken by the committee during the 4
th
Parliament:
Activity
|
2009/10
|
2010/11
|
2011/12
|
2012/13
|
2013/14
|
Total
|
Meetings
held
|
15
|
27
|
24
|
29
|
31
|
126
|
Legislation
processed
Comment:
For the period under review, the EDD intended to introduce three Bills before
Parliament. These were the Competition Amendment Bill, International Trade
and Administration Amendment Bill and the Infrastructure Development Bill.
However, only the Infrastructure Development Bill could be introduced and
processed, resulting to the Committee only considering one Bill.
|
None
|
None
|
None
|
None
|
1
|
1
|
Oversight
trips undertaken
|
1
|
3
|
2
|
2
|
4
|
12
|
Study
tours undertaken
Comment
:
For the period under review, the Committee undertook a study tour to Brazil
during the 2011/12 financial year. This was due to the fact that Committees
were only allowed to undertake one study tour per parliamentary term.
|
None
|
None
|
1
|
None
|
None
|
1
|
During the first year of establishment, the
Department had a small team and had to spend most of its time and focus on
setting up corporate governance processes and structures and ensure filling up
of critical posts. This also contributed to the slow take off in activities of the
Committee.
There were no international agreements processed
and statutory appointments made during the term of the Committee. However, the
Department considered and reviewed contracts of the ITAC Commission in 2011 and
in 2012; the Competition Commission Deputy Commissioner positions in 2012 and
established the Board for SEFA in 2011.
7.
Oversight visits undertaken
during the term of the
Committee
As per the
Constitutional mandate, Committees have to conduct oversight visits so as to ensure
that all executive organs of state in the national sphere of government are
accountable to Parliament; and to maintain oversight on the national executive
authority, including the implementation of legislation.
The oversight visits that
were undertaken by the Committee focussed attention on the following areas:
·
Infrastructure (Rail, harbours, roads, pipelines);
·
Local Procurement;
·
Manufacturing, Agriculture and Agricultural processing
(with more focus on local content, beneficiation, clothing and textiles,
machinery (industrial) consumer goods and agro-processing);
·
Green Economy (with more focus on green jobs,
Green jobs,
waste management (recycling/manufactory), wind turbines, solar water heaters,
hydro-electricity and nuclear power/energy);
·
Regional development and integration (with more
focus on border posts, ports) and Coordination, ensuring that the three spheres
of Government, inter and intra-departments, government and social partners work
in a more coordinated and aligned manner.
The following oversight trips were undertaken:
7.1
Oversight visit to South African
Revenue Services Centres
On
17-19
November 2009, the Committee undertook an oversight visit to
Durban, Mpumalanga and Gauteng Provinces. The objective of
the oversight visit was to assess the extent of Customs fraud and its impact on
trade and economic development. The visit focused more on the work of Customs
and Excise, which
is the section of the South African Revenue
Service (SARS) responsible for the collection of revenue at all points of entry
into the country. Revenues collected at points of entry include import tariffs,
dumping duties and value-added tax (VAT) on imports. Customs and Excise is also
responsible for the collection of other duties on certain goods produced
locally or imported.
The Committees theme and focus for the 3
rd
term of the
2009/10 financial year was on the Economic Crises Response Framework. Customs
fraud has led to many job losses, which has a fundamental impact on the
economic development of South Africa.
The Committee visited the following SA Revenue Service Centres:
·
Komati Poort Port of Entry between SA and
Mozambique
·
Durban Harbour which is probably the busiest
harbour on the African continent
·
OR Tambo International Airport the biggest and
busiest airport on the African continent
The Committee noted that considerable progress had been made with regard
to risk management at those points visited, especially at OR Tambo
International Airport and Lebombo Border Post. However, the Committee
acknowledged that there were still loop-holes in the risk management system
particularly with reference to customs fraud in the air and land modality. The
Committee therefore undertook to endeavour to assist SARS (and other
departments) in addressing a range of critical issues that emerged during the
oversight visit.
7.2
Oversight visit to Companies in
distress
The Committee also visited Companies that were in
distress as a result of the economic crises.
The purpose of the visits was to investigate how the specific companies
in distress had performed after the Industrial Development Corporations (IDC)
financial intervention. Four companies that were said to be in distress and
financed by IDCs intervention fund were identified. The committee specifically
set out to check the authenticity of these companies and investigate the
impacts of such intervention by the IDC.
These
companies were:
·
Vrede Textiles (Pty) Ltd (Western Cape)
·
Laser CNC (Durban, KZN)
·
The York Timber Organisation Ltd (Sabie,
Mpumalanga).
·
Automotive Leather Company Group (Pty) Ltd,
Pretoria (Gauteng).
The evidence from the oversight visit on the four companies
in distress showed that the financial assistance of the IDC had managed to save
4 696 jobs. The Committee was pleased to note the assurance by all the
companies visited that they would in future re-employ those employees
retrenched, once the respective companies became viable and self-sustainable.
However, the delegation was concerned that there was little or no co-ordination
between the activities of the IDC, the Departments of Trade & Industry and
Labour. The Committee noted that even though there were successes with those
interventions, the IDC still needed to strengthen and reinforce its
interventions so that the intentions and objectives of the interventions could
be fully realized.
7.3
Oversight visit to the North West
Province
On the
29 30 July 2010 the Committee undertook
an oversight visit to the North West Province. The aim of the visit was to:
·
Investigate and ensure effective and
efficient implementation of projects funded by Government, and assess the value
for money on those projects;
·
Establish whether the Provincial Growth
and Development Strategies are aligned to the national plans, especially the
New Growth Path objectives;
·
Determine and explore the impact of
Development Finance Institutions (DFIs) and Economic Regulatory Bodies (ERBs)
in communities.
The
Committee received a briefing from the Provincial Department of Economic
Development that assisted in ascertaining that developments took place and
progress was made with regard to Provincial Growth and Development Strategies
(PGDS) of the North-West Province, relating to the following:
The alignment of the PGDS with the national plans regarding a new Growth Path
and the Industrial Policy Action Plan (IPAP2)).
The relationship between the North-West Province and the Development Finance
Institutions (Industrial Development Corporation (IDC), Khula Enterprise
Finance Ltd, the South African Micro-Apex Finance (SAMAF) and the Economic
Regulatory Bodies such as the Competition Commission, Competition Tribunal and
the International Trade Administration Commission (ITAC);
The
Committee also visited a project funded by the Provincial Department of
Economic Development and met with the community and business in Rustenburg
(Bojanala Platinum District Municipality) on the role and impact of the DFIs
(Industrial Development Corporation, Khula and South African Micro-finance Apex
Fund) and the ERBs (Competition Commission, Competition Tribunal and the
International Trade Administration Commission of SA) with the focus on the
creation of jobs and poverty alleviation.
The
Committee appreciated the honesty of the North-Wests Provincial Department of
Economic Development in its presentation regarding its Provincial Growth and
Development Strategy (PGDS) where the Department acknowledged that Municipalities
were not involved in the initial development of the PGDS. The Committee was
however re-assured that efforts were underway to include Municipalities and all
the other stakeholders in the review of the PGDS. The Committee noted that it
became evident from the meeting with the community and business that the
community was not aware of the existence of some of the DFIs and ERBs, or even
on the services that they can provide.
The
Committee recommended that the Economic Development Department needed to
undertake, with the development finance institutions, to review the application
processes for funding (limiting the red tape). The IDC, Khula and Samaf were
to ensure that monitoring and evaluation process are strengthened and
reinforced. The EDD also needed to ensure that the coordination between the
DFIs and other departments were strengthened and reinforced in order to
minimize the silo approach within government. The EDD was to assist Khula, to
explore avenues of reinforcing their presence and accessibility in the local
areas, where for example, offices might be shared in the local municipalities
LED divisions. The EDD was further to ensure that the DFIs adapt and implement
the Batho Pele principles.
7.4
Oversight visit to the Limpopo Province
On the
05 06 August 2010 the Committee undertook an oversight visit to the
Limpopo Province. The aim of the visit was to:
·
Investigate and ensure effective and
efficient implementation of projects funded by Government, and assess the value
for money on those projects;
·
Establish whether the Provincial Growth
and Development Strategies are aligned to the national plans, especially the
New Growth Path objectives;
·
Determine and explore the impact of
Development Finance Institutions (DFIs) and Economic Regulatory Bodies (ERBs)
in communities.
The Committee received a briefing from the Limpopo
Provincial Department of Economic Development on the Provincial Growth and
Development Strategy. The Committee also visited the Modomole Goat Cooperative
and held a meeting with the public and business in Modimolle on the role and
impact of the DFIs and ERBs, focusing on creating decent jobs and poverty
alleviation.
The Committee noted that it was evident from the meeting
with the community and business in Modimolle that they were not aware of the
existence of some of the DFIs and ERBs, and the types of services that they
could provide.
The
Committee therefore encouraged Economic Development Department to explore
expanding the presence of the DFIs in the local areas where the communities are
able to access the necessary information and guidance and the Provincial
Department of Economic Development was also encouraged to conduct a road show
to educate people on tender processes and the reporting of possible
tenderrigging.
7.5
Oversight visit to the Western Cape (Khayelitsha Township) and KwaZulu-Natal
Province (Durban, Newcastle and Harding Areas
)
On
2628 January 2011 the Committee visited the areas below with the aim of
ascertaining the impact of SAMAF funding to the Financial Services Cooperatives
(FSCs) and the impact of the finance support on poverty alleviation and job
creation.
The Committee visited clients which were funded by these
FSCs. In the Khayelitsha Township, the Committee visited the Sibanye Cape SACCO
Limited and Tetla Development Services. In KZN, the Committee visited the
KwaZulu Ladies Empowerment Financial Services Cooperative, the KwaMachi
Financial Services Cooperative and Siqalumnotho Financial Services Cooperative.
The Committee further visited clients of the above-mentioned FSCs.
From the clients visited (all of them are saving at the
various FSCs), it was evident that the creation of a savings culture in South
Africa was crucial for economic development. Clients (especially those in the
rural areas) who save with an FSC were in a position to access funding to start
their own business which leaded to an improvement in their socio-economic
conditions. The money they borrowed was used to meet their basic needs, e
.
g. food, shelter, health, education
etc. FSCs created a second tier in the banking industry. Members of the FSC were
in a position to establish micro-businesses in both rural and urban areas which
raised their standard of living. The capacity grants provided by Samaf enabled
the members of the FSCs to gain knowledge and skills with regard to leadership
and management, record keeping, the importance of savings and basic financial
management. The development of FSCs provided financial service to vulnerable
groups including women, the youth and the disabled. This helped to elevate
their status in society through economic and social empowerment. Interests
charged differed by the various FSCs, in other words there was no consistency
in applying the interest rate charges, e.g. some charge rates per month and
others per year. The implementation of Samaf rules and procedures differed from
province to province. The recovery of bad debt remained a challenge in some of
the FSCs visited. Samafs assistance contributed to the viability and
sustainability of the FSCs visited. The Small Enterprise Development Agencys
assistance to the FSCs was minimal. FSCs faced significant competition for
borrowers with good credit from formal lenders such as commercial banks, who
offered a broader array of financial products and greater number of locations. Due
to the high unemployment rate, most South Africans were entrepreneurs out of
necessity rather than choice, and many were to switch to formal employment if
it became available. Once members of the FSC found employment they left the
FSC. During the oversight visit members observed that clients of the FSCs at
certain times were afraid to converse with the committee. The committee
commended some of the FSCs for the difference that they made to many of their
members.
7.6
Oversight visit to Free State (Bloemfontein)
and Gauteng Province (Soweto and Pretoria)
On the
03 - 05 August 2011the Committee visited the areas
below with the aim of:
·
Engaging with the Provincial Officials so as to assess the extent to
which
the Municipal and Provincial Economic
Development strategic plans, programmes, projects and priorities are aligned
with those of the national Department of Economic Development.
·
Visiting some of the State Owned Entities funded
projects to get a first-hand experience of the work of development finance
institutions (DFI)and examine their impact on economic development
·
Meeting the community of Soweto to establish the
level of knowledge and awareness about the Economic Development Entities.
Furthermore, the Committee wanted to educate and empower the community with
information on the roles and responsibilities of the Development Finance
Institutions and the
Regulatory Bodies.
7.6.1
Visit to Bloemfontein
In Bloemfontein, the Committee met with the Provincial Department of
Economic Development, member of the legislature and representatives from Khula
and South African Micro Apex Fund. While in Free State, the Committee visited
two Khula projects and one SAMAF project. The Provincial Department gave a
synopsis of economic opportunities and challenges faced by different regions in
the Free State. The overarching issues were poverty, unemployment, under
development of rural areas, ageing infrastructure, radiation from exposed
uranium, the contamination of the land and water in affected areas and
declining mining activity due to mines that are closing down. The Provincial
department further presented on the progress made on the Growth and Development
Strategy (FSGDS) and on emerging growth and development trends.
The Committee visited three businesses financed
by Khula Enterprise Finance Ltd. namely A & R Creations, MJP Specialised
Services cc, Tiro Procurement and BBT Electrical & Plumbing cc. The
Committee also visited the Motheo
Womens Savings Group
funded by SAMAF.
The Committee in its engagement with SAMAF and Khula
clients, the following establishment that:
·
The clients preferred to pay off the loans through
monthly rather annual instalments.
·
Clients were content with the financial services
provided by the financial intermediary because they were able to access funds
timeously to pay their employees when government department fails pay the
businesses within 30 days.
·
The intermediaries were concerned that the
establishment of Khula Direct would pose unfair competition for their
businesses.
·
There was a need to grow SAMAF and other cooperative projects to an
extent where they would able to alleviate poverty in a significant way.
7.6.2
Visit to Soweto
The Committees aim for the visit was to meet the community of Soweto and
also establish the nature of the services offered by the entities that report
to the Committee. Furthermore, the Committee used the opportunity as a platform
to educate and empower the community with information on the mandate of the
Development Finance Institutions (DFIs) and the regulatory bodies as well as
accessing these services. The Committee held a meeting with the residents of
Soweto at the Orlando Community Hall where officials of the DFIs and the
regulatory bodies were introduced to the community. The Committee also visited
two Industrial Parks in Orlando West and Emndeni townships.
The Community raised the following issues;
·
Concerns
that the Metro police raids did not take into consideration that there was
difference between legal and illegal traders.
·
The
need to revive the vandalised empowerment zones and make effective and
efficient use of abandoned buildings such as the former Pimville Technical
College
·
Dissatisfaction
with government for allowing the importation of products that can be produced
and manufactured in the country.
·
Government
failure to regulate the quantity of imported goods in the country.
·
The
view that unemployment is partly due to the fact that government allows foreign
businesses to invest in the country and when profits have been made, citizens
are left abandoned.
·
Concerned
that malls kill the SMME development in townships.
·
The
Department needs to assess the impact of on the SMME development in the
townships.
·
A
lack of sufficient capital to bid for tenders.
·
Complaints
about cumbersome DFI processes.
·
Skepticism
that the meeting was just another talk shop but also a yearning for the
beginning of a relationship between the entities and the Soweto community was
expressed.
The Committee
visited the small businesses zones in Orlando West and Emndeni townships. The
zone in
Orlando West is
situated next to Orlando West Station. The Committee was briefed about the
challenges in the Zone and these challenges were highlighted as being that:
·
Only
a few tenants paid rent.
·
Vandalism
of the public property.
·
Potholes
in the internal roads.
·
Illegal
sub-letting of the units by the tenants.
·
Tenants
refusing to sign lease agreements
·
Tenants
refuse to relinquish units in the hope of owning them.
·
Tenants
refused to sign lease agreements.
·
Squatters
in the yard.
·
No
tarred roads in between the property.
·
Rental
boycotts and refusal to sign lease agreements were common.
7.6.3
Visit to EDD offices in Pretoria
The Committee visited the offices of the Department of Economic
Development and its entities at the Department of Trade and Industry Campus in
Pretoria. The Committees intention was to familiarise itself with the offices
of the Department and its entities. On the 5
th
of August the
Committee had a meet and greet session with Department and its entities at
their respective offices at the DTI Campus in Pretoria. Of major concern was
the shortage of office space, and related problems such as the non-adherence to
security standards and impact on staff relations. The Committee was also
disturbed to see that different sections of the department were placed in
different buildings on the Campus.
Recommendations
The Committee recommended the following;
·
Khula should look at the possibility of offering
different repayment options based on discretion and client needs.
·
The Department should ensure that the IDC, Khula,
SAMAF merger is sufficiently equipped to create large cooperatives that are
able to alleviate poverty and create wealth for the previously marginalised
people.
·
The Committee should conduct public hearings to
establish the state of cooperatives and consider ways to overcome existing
hurdles.
·
The EDD and its entities should embark on a follow
up community outreach programme in Orlando, in order to respond to the
communitys plea for a meaningful relationship after the August parliamentary
oversight visit in Soweto.
·
The Municipality, Province and the relevant
national department should come up with an integrated strategy for restoring
the small business parks in Soweto to their full potential.
·
The Provincial Department of Economic Development
should invite and engage the National Department on strategies that could
assist in unlocking the poverty and unemployment bottlenecks in the province.
7.7
.
Oversight
visit to the Eastern Cape Province (Port Elizabeth)
On
1012 August
2011, the Committee undertook an oversight visit to Port Elizabeth and the aim
of the visit was to:
·
I
nteract with Provincial
officials in order to assess the extent to which the Municipal and Provincial
Economic Development strategic plans, programmes, projects and priorities are
aligned with those of the national Department of Economic Development;
·
Ascertain the impact of Volkswagen SAs
investment of R500m on local economic development in the area; and
·
Determine the impact of Coega Industrial
Development Zone (IDZ) on job creation.
The Committee had
meetings with the Provincial Government Officials. There were also visits to
the Volkswagen plant and the Coega IDZ.
7.8.
Oversight
visit to the Northern Cape
, Kwa-Zulu
Natal, Gauteng and Mpumalanga Province
s
On the
19-22 June 2012 the Committee undertook
an oversight visit and the aim of the visit was to:
·
I
nteract with Provincial
Departments of Economic Development
on
the alignment and coordination of plans and programmes, with the New Growth
Path and IPAP2; and also assess the level of cooperation between the spheres of
Government;
·
Observe developments in key infrastructure projects, noting
that the Committee had identified infrastructure as one of the key focus
sectors;
·
Assess the extent in which projects were attributing to
creation of decent jobs, evaluate whether key projects were completed within
schedule and whether the projects were aligned with NGP and IPAP2 objectives;
·
Evaluate awareness levels on the roles and responsibilities
of the
Development Finance Institutions and
the regulatory bodies.
7.8.1
Meeting with DFEAT, IDC, FABCOS, Westra Industry Projects in
Kimberley
, Northern Cape
In Kimberley the Committee interacted with the following key
stakeholders: the Department of Finance, Economic Affairs and Tourism (DFEAT),
Industrial Development Corporation (IDC), Foundation for African Business and
Consumer Services (FABCOS) Griekwaland-Wes Korporatief (GWK) Beperk Limited and
the Bed Manufacturer as well as the Westra Industry Projects.
The IDC, FABCOS and GWK Beperk Limited are shareholders of the Cape
Malting House Project. The IDC owns 15%, FABCOS through FABVEST own 55% and GWK
owns 35% of the Cape Malting Project. The main concern with the project was
transformation. There was a shortage or lack of inclusion of black farmers.
Given that the state owned entity IDC is a shareholder, it should drive the
inclusion of black farmers in the project.
7.8.2
Oversight visit to Richards Bay in KZN
At the oversight visit to Richards Bay, the Committee met and interacted
with the following key stakeholders: the Provincial Department of Economic
Development and Tourism (DEDT), the Universal Services and Access Agency of
South Africa (USAASA), and Sentech.
The Committee was shown the National Fibre-Optic Network Project and
also visited the Thambolini Project which Sentech, the state owned entity,
reportedly supplied with broadband. The Committee was taken to the computer
laboratory and shown computers that had been connected with broadband network,
only to discover that the computers had not been used for about six months due
to connectivity problems. The School reported that attempts had been made to
request reconnection to the Department of Education in Pretoria.
The Committee was dissatisfied with Sentech for not monitoring and
maintaining connectivity at the school. Furthermore, for the school to have to
report connectivity problems in Pretoria, while there were Sentech offices in
KwaZulu-Natal, was cumbersome. This is an indication that the different
Departments are working in silos making access services difficult for the
school.
On the National Fibre Optic Network Project, the Committee saw a gallery
with photos of the construction work that was done when contractors were
installing pipes, carrying optic fibre, in the sea. Although the visit was
interesting, the Committee would have benefitted from obtaining information
from all the role players during construction. In light of the Presidential
Infrastructure Coordinating Commission (PICC
) projects, the Committee
should ensure that it undertakes sight visit during and after construction.
This approach will enable the Committee to track progress, identify and address
pertinent issues that will influence the success of the projects before
completion. Thus assist the Committee to play a more effective oversight role
over the PICC projects.
The Department of Economic Development and Tourism in KwaZulu-Natal
initiated the governments first Broadband Deprivation Index setting an example
for the whole country. The index identifies municipalities that are least to
most deprived of broadband coverage and infrastructure. The Department of
Economic Development could encourage all the provinces to conduct the Broadband
Deprivation Index survey which will speed up the countrys broadband roll out
plan, particularly because there is no Communications Department at Provincial
or Municipal level.
7.8.3
Meetings with Provincial Departments in Northern Cape,
Mpumalanga and Gauteng
The Committee also had meetings with the Department of Finance, Economic
Affairs and Tourism in Northern Cape,
Department of Economic
Development, Environment and Tourism in Mpumalanga and
Department of Economic
Development in Gauteng. These departments were in existence and had developed
their own programmes and priority areas long before the national Department of
Economic Development was established. In their presentations it was evident
that the Provincial Departments had set their job targets in accordance with
the National Departments economic strategy the New Growth Path. However the
Committee identified a need to align the national programmes and other priority
areas at Provincial and Municipal level.
7.9 Oversight visit to
KZN, Gauteng,
Limpopo and North West Provinces
On the 27 November 07 December 2012,
the Committee undertook an oversight visit to the areas below and the aim of
the oversight visit was to:
·
I
nteract with Provincial
Departments of Economic Development
on
the alignment and coordination of plans and programmes, with the New Growth
Path and IPAP2; and also assess the level of cooperation between the spheres of
Government;
·
Assess the
impact of the financial intervention by Khula and SAMAF prior to the merger;
and
·
Evaluate the
impact of economic programmes on creation of decent jobs and other NGP and IPAP
2 targets.
7.9.1
Visits to the Durban Sheltered Employment
Factories (SEF) Mtunzini and Mabandla in Pietermaritzburg, KwaZulu-Natal
The Committee undertook the oversight visit to various economic projects
namely, the Sheltered Employment Factories;
During the visit, the Committee observed that SEF employees were
predominantly white and many were almost due for retirement therefore, raising
concerns regarding the missed opportunity for skills transfer in particular to
the black youth living with disabilities. The SEFs complained that they were in
competition with Black Economic Empowerment (BEE) companies for government
tenders which they lost most of the time. However, the SEFs reported that some
BEE companies would buy products from them to then sell to Government Departments,
instead of buying direct from SEFs. The BEE companies would therefore serve as
a middleman between a government entity and a Government Department.
7.9.2 Visit to Mtunzini
Telkom Cable Station
The project is
capital intensive and employs very few people and even fewer women. There are
six people employed at the cable station. There are no learnerships in the
project but people are trained through the system as an ongoing exercise.
7.9.3 Visit to Mabandla Forestry
Project
Due
to travel distance, the Committee did not sufficient time to observe all the
work done at Mabandla Forestry and this did not reflect well to the
communities. Nonetheless, the Committee was impressed to note that the IDC was involved
in supporting projects in remote areas. The Committee was told that, with more
funds, the project had a potential to generate more income and create more jobs
in that rural area. .However, the Committee was concerned about the relatively
small amount of money with which the IDC assisted the project. In response the
IDC reported that the project did not have security of tenure because the land
was held by the government for use by the communities.
7.9.4
Industrial Parks in Sebokeng
The Committee visited Sebokeng, Zone 10, Phase 2
and Residential Phase 1, Industrial Parks at the Vaal and Lenasia on the 29
November. 2012 and Pennyville Industrial Hive in New Canada, Johannesburg on 30
November 2012. The industrial parks are owned by the Small Enterprise Finance
Agency (sefa). In engagements with the Committee, the lessees who are running
their small businesses at the Industrial Parks expressed concern about the
maintenance of assets (including land) and properties (structures); and the
possibility of converting lease agreements into ownership. The Committee was
also informed that the industrial parks are managed by a third party.
The Committee
noticed that many tenants who are Small Medium and Micro Enterprises - were
unaware of SEFA and the services that the entity provides to small businesses,
despite the fact that the industrial parks are owned by SEFA. The Committee saw
this as a missed opportunity for SEFA to extend its footprint and deliver on
its mandate.
The Committee was also
concerned about the financial implications of hiring a middleman to manage the
industrial parks.
7.9.5
Visit to SAMAF projects in the North West
In the North
West province the Committee visited South African Apex Funds (SAMAFs)
projects, namely, Boikago Savings & Credit Co-operative (Sacco), Lotlhakane
Financial Services Cooperative and Ditsobotla.
The
Committee noticed that the cooperatives had made some strides establishing
themselves in the financial services sector but were still relatively small
businesses. The Committee would have preffered to see the cooperatives develop
into large entities that would be more effective, efficient and able to create
more jobs. Furthermore, the Committee wanted SAMAF involved in new ventures,
particularly youth owned ones. The Members felt that SAMAF could do more not
only financially but also in terms of mentorship to help the cooperatives grow
into bigger businesses.
The Committee also had meetings with the Limpopo Economic Development,
Environment and Tourism (Ledet) Department, and the North West Department of
Economic Development, Environment, Conservation and Tourism.
The Limpopo Economic Development, Environment and Tourism laid out its
challenges to the Committee. These include the fact that
insufficient
efforts had been made to place the Provincial
economy on a sustainable developmental path
capable of delivering
decent work and sustainable livelihoods on
a scale that will enable the province to achieve the target of halving
unemployment by 2014.
North West is spatially a medium-size
province, which is home to approximately 3.7 million people that constitutes
8.2% of the South African population and contributes approximately 7% to the
national economy. The challenges facing the province are that; it has a low
population density and inadequate infrastructure, especially in the remote
rural areas. The Province has inherited an enormous backlog in basic service
delivery and maintenance that will take time to eradicate.
The population is predominantly poor with
high levels of illiteracy and dependency that seriously affect their
productivity and ability to compete for jobs.
The Province is characterized by great inequalities between the rich and
poor as well as disparities between urban and rural. The Province is faced by
HIV/Aids as a social and economic challenge. Available resources are unevenly
distributed and offer limited potential for improved delivery of services and
growth.
7.10
Oversight
visit to
Gauteng, North
West, KwaZulu-Natal and Limpopo Provinces
On 22 July02
August 2013, the Committee undertook an oversight visit to the following areas
and the aim of the oversight visit was to:
·
Evaluate the
progress made in the development of transport infrastructure in Gauteng, more
specifically Rail transport and the Gautrain and the development of the modal
transport system
·
Follow up on
the visit made by the Committee in 2009 so as to assess the progress made by
SARS, specifically the Customs division in terms of controlling fraud, illegal
imports in the major Ports of entry since and evaluate the interventions
implemented by Customs since the Committees previous visit. The Committee also
wanted to assess how customs was managing the congestion at the Durban Harbour.
·
Conduct round
tables for Small Medium Micro Enterprises (SMMEs) and Co operatives.
·
Assess
progress on key infrastructure projects such as Medupi Power Station
·
Assess the
impact of projects visited on key national objectives such as job creation,
SMME and development of Co operatives, localisation and rural development
The theme of the oversight was
Development of SMMEs, Co operatives, Youth, Infrastructure and Rural
Development, and the named sectors formed the key focus of the oversight.
7.10.1
Oversight
visit to Gauteng
Province
In Gauteng, the Committee met with the Gauteng
Legislature, specifically the Portfolio Committee on Economic Development. The
meeting with the Legislator involved presentations by transport agencies,
namely PRASA, Rea Vaya and Gautrain who gave an overview on their transport
integration plans and developments.
The Committee observed that the modal transport system
had been highly effective in improving transport needs of the people of
Gauteng, thus making it easy for them to get to work. The Committee had an
experience of travelling on the Gautrain and appreciated the standard of
security provided by the Gautrain.
The Committee also visited the Transnet at Koedespoort
in Pretoria. The mandate of Transnet is to assist in lowering the cost of doing
business in South Africa thus enabling economic growth. The Committee observed
that Transnet had established a new division known as Transnet Engineering
(TE). TE is the backbone of South Africas railway industry and has been
responsible for the development of the most innovative locomotives and is
dedicated to the maintenance, repair, upgrade, conversion and manufacture of
freight wagons. The Committee was impressed with the contribution of Transnet
with TE on promoting localisation, skills development and introduction of new
technology.
The Committee also visited the Nissan Plant in Roslyn.
The Automotive sector is one of the key sectors in terms of job creation. Nissan
like many of the automotive companies is benefiting from the Automotive
Production Development Programme (APDP) an industry incentive that is
administered by one of the Regulatory entities, ITAC. The Committee noted the
contributions made by Nissan in job creation and it was indicated that Nissan
was planning to double employment as it was planning to introduce a new
assembly line which would required that it works double shift. The Committee
recommended that there be a follow up visit to Nissan to assess progress on its
plan to expand and to assess the impact of the expansion on job creation.
7.10.2
Round
table for SMMEs and Co operatives and
Road show
The Committee had round tables in Johannesburg,
Rustenburg, Durban and a Road show in Limpopo. The focus of the round tables
was to engage with SMMEs and Cooperatives with the aim of ascertaining
successes and challenges in the advancement of their businesses or
entrepreneurship development initiatives. The Committee further wanted to
establish whether SEFA was being effective in the advancement of enterprise
development, whether SEFA was reaching out to the SMMEs, Cooperatives, Youth, People
Living with Disabilities and Women Enterprises especially following the merger
of Khula and SAMAF.
In Limpopo, the Committee had a road show where the
economic development entities made presentations about their products,
offerings and services. The purpose of the road show was to ascertain the
extent in which the entities are reaching out to the rural communities and also
raise awareness about the entities.
During the round tables, the Committee ascertained
that there were still challenges with the merger of Khula and SAMAF as a result
SMMEs were still confused about who SEFA was, the lack of accessibility of SEFA
and the slow turnaround time for applications.
During the road show, the Committee ascertained that
there was still a need for the entities to ensure that they reach out to the
rural communities and also simplify the language used in the promotion of their
products, services and offerings.
During the round table in Rusternburg, a small mining,
the Amava Mining Investments (AMI) had made an appeal to the Committee to visit
its mining project. The Company had raised concerns about how their funding
application had been handled by SEFA and also made recommendations that SEFA
should be flexible to the needs of different SMMEs and also improve its
turnaround time.
7.10.3
Oversight visit to the IDC funded projects for Nguni
Cattle in Rustenburg, North West
Province
The Committee visited two Nguni Cattle projects, namely,
the Bafokeng
Nguni Cattle Project and the Khuduthate and Kgolagano Agricultural Cooperative.
The aim was to assess how the Nguni project had
improved the livelihoods of the beneficiaries and the communities where the
projects are.
The Committee noted the good intentions of the Nguni Cattle project.
However, there were concerns regarding the long term sustainability of these
projects, noting that the profits were quite minimal and the input costs were
high. The Committee recommended that the IDC should consider looking at what
additional support the project needed, so as to ensure long term
sustainability.
7.10.4
Visit to the
Customs
Office in Durban and the Durban Harbour
The Committee received a detailed presentation on the
interventions and mechanisms that had been put in place by Customs to deal with
customs fraud and illegal imports. The Committee noted that as much as a number
of good control mechanism had been put in place to mitigate customs fraud and
illegal imports and SARS was doing a good job but the challenges were still
there. The Committee recommended that Customs should consider doing a benchmark
study on how other countries faced with a similar challenge were dealing with
the problem and the mechanisms used thereof.
7.11
Oversight visit to the Norjax Tomato Farm in Tzaneen,
Limpopo
During the road
show in Limpopo, Norjax had raised concerns about how their funding application
was being handled by the IDC and requested that the Committee visit their
project. The Committee consented to the request and visited the project on the
17
th
of September 2013. The aim of the visit was to show support for
SMME and Cooperative development in the agriculture sector, assess what
challenges the business was facing especially with regards to the application
for funding and also to ascertain the impact of tariff instruments administered
by ITAC on the development of small enterprises and job creation.
The Committee
noted that Norjax had made an application for tariff support to ITAC, one of
the regulatory entities. The application had been partially approved by ITAC,
thus the company was protected against cheap imports from China. The Committee
however was concerned that despite all the tariff support, Norjax was still not
competitive and was struggling thus the need for financial support. It was also
not clear how Norjax was structured as a company and whether the funding being
solicited from IDC was going to be helpful in light of the company not being competitive.
7.12
Oversight visit to EDD, IDC and SEFA offices in Gauteng
On 29 January
2014, the Committee visited the above offices with the aim of familiarizing the
new Members of the Committee, on the operations of the
Economic Development Department and its Entities.
8.
International study tour to Brazil
On
29 Nov10 Dec 2011, the Committee undertook a study tour to
Brazil. As the SMME sector had been identified as a catalyst for improving the
lives of ordinary citizens and lifting millions from the poverty line, the
Committee had seen it necessary to learn from best practice as to how best this
sector could be supported. The aim of the tour was to under-study how the
Brazilian Government and various institutions in Brazil were supporting and
promoting enterprise development and what legislations and policies they had to
advance the development of the SMME sector.
·
Critically evaluate how the Brazilian policies, intervention
and implementation strategies in the SMME sector, have led to creating a better
life for its people to an extent of lifting millions of citizens out of
poverty into the middle income group and reducing unemployment.
·
Examine South African development finance institutions and
processes against the benchmarks set in Brazil, an emerging economy with many
challenges similar to those faced by South Africa but in many respects has made
headway in this regard.
The tour was necessitated by the fact that at the beginning of the year
the President identified SMMEs as a crucial driver of job creation and made a
call to restructure the Development Finance Institutions (DFIs) that report to
the Committee, in order to raise the level of assistance that they offer to
SMMEs.
The Committee visited the
following institutions in Brazil:
8.1 Banco
Nacional Do Desenvolvimento/Brazilian Development Bank (BNDES)
BNDES is a
state owned bank which is the main provider of long-term finance in
Brazil and a key instrument for the implementation of governments industrial
and infrastructure policies.
8.2 Banco
Do Nordeste (BNB)
BNB
is the largest regional development bank in Latin America. Its goal is to
promote integrated and sustainable development through microfinance. The bank
operates in nine states and its clients are SMMEs, Co-operatives, and
subsistence farmers.
8.3 Conselho
Administrativo De Defesa Economica (CADE)
In
Brazil three agencies are in charge of competition policy. These are; the
Secretariat for Economic Monitoring and the Secretariat for Economic Law.
Economic Monitoring falls under the Finance
Ministry. This agency takes instructions and prepares cases on mergers.
8.4 Ministry of
Social Development and the Brazil without Extreme Poverty Plan
Brazil
established a special secretariat for
the eradication of extreme poverty. The decision-making body of the
secretariat has representatives from the Department of Social Development, the
Finance Ministry, and the Presidency. Other ministries which are involved
include Education, Cities, Labour, Health, Rural and Agricultural Development,
National Integration and the Secretary General in the Presidency. The 8 Ministries
are responsible for the implementation of the Brazil Without Extreme Poverty
Plan.
8.5 The Economic and Social Development Council CDES
The
CDES was created in 2003 by President Lula to promote dialogue and
concentration towards Brazilian development, identifying high inequality rates
and low economic growth rates as the main problems facing the country. CDES is
equivalent to NEDLAC in South Africa.
8.6 The
Brazilian Micro and Small Business Support Service -
SEBRAE
In
1972
SEBRAE was created by the Department of Planning of the Presidency of the
Republic of Brazil. However, in 1990 it was made into a
non-profit, public interest private institution
by a Federal law.
The companys mission is t
o promote
competitiveness and sustainable development among micro and small businesses
and to foster entrepreneurship in the country.
SEBRAE develops
initiatives in support of SMEs. The initiatives include
courses, information and consultancy, publications, event promotion
,
awards
in areas like access to
markets, entrepreneurial education, access to technology, support to
innovation, access to financial services, among others.
8.7 Price Waterhouse and Coopers (PWC)
PWC made an enlightening
presentation on the Brazilian tax system and its impact on the small business
environment. The presenters stated that the
Brazilian tax system is a complex net of taxes,
contributions and social charges.
8.8 Itau-Unibanco
Itaú-Unibanco
is a private bank with headquarters in São Paulo,
Brazil. The bank is listed at Brazils Stock Exchange in São Paulo and NYSE in
New York. It is the second biggest Brazilian bank by assets, after Banco do
Brasil. The Bank made a presentation which summarises the history and the
status quo of the economy in Brazil.
Having had an opportunity
to engage with the Brazilian institutions and agencies, the committee made the
following observations:
·
It would be critical for the South African
government to have policies that are similar to the Brazilian Bolsa Familia
programme of providing assistance with an emphasis on improving access to
education.
·
There is a need to strike a balance when providing
financial assistance, for example, too much financial assistance may lead to
overdependence while too little may defeat the purpose of providing assistance.
·
South Africa still has a long way o go in as far as
stimulating entrepreneurial culture within its citizens
·
For most of the developmental initiatives to
succeed, government, business sector and civic society must work together
·
There is a need for South Africa and Brazil to use
various partnership platforms already created to enable institutions of both
countries to share knowledge and experiences.
·
Partnership between SEBRAE of Brazil and SEDA of
South African has a potential to unlock many barriers which face South Africa
through exchange of information.
·
There is an urgent need to regularise informal
entrepreneurs by bringing them into the main economy and offering them support
to be sustainable.
·
The Brazilian method of capturing data and progress
tracking mechanisms could be something South African can replicate for most of
its developmental projects.
·
Access to funding is still a challenge in South
Africa. Most developing entrepreneurs in Brazil have easy access to funding
compared to their South African counterparts
·
Communication played a key role in reaching out to
SMMEs in Brazil and as a result many were able to realise opportunities that
were at their disposal for their businesses.
The study tour shed light
on the socio-economic challenges confronting Brazil and the solutions
implemented to improve the lives of Brazilians. Furthermore, the Committee
gathered invaluable information on how Brazil has intervened in providing SMEs
with access to credit through its institutions.
9.
Key challenges
The following challenges emerged during the
term:
a)
Lack of a monitoring or resolution tracking mechanism:
The Committee tends
to have a number of presentations from the Department and Entities within a
short space of time, thus creating a challenge in ensuring that there is follow
up on all resolutions taken during the meetings. The Committee was still in the
process of devising an appropriate resolution tracking mechanism.
b)
Lack of control over the Parliamentary Programme
: Changes in
Parliamentary Programme resulting in changes in the Committee Programme always
meant some meetings had to be postponed or cancelled.
c)
Inconsistency in Membership
: Constant change of
Committee Members by the respective Political Parties also affected the
consistency of discussions.
d)
Delayed availability of minutes and reports:
Lack of timeous
availability of reports and minutes for adoption meant that some minutes would
go un-adopted for longer periods and often this would result in loss of track
on the key issues.
e)
Technical Capacity:
The work of the regulatory
entities, more especially ITAC, requires enhanced understanding of the
technical work and this created a challenge in the initial establishment of the
Committee. However, as the Committee continuously engaged with ITAC and had
workshops to ensure understanding of the instruments, there was improved
understanding.
f)
Insufficient time to deal with all matters
: Time was always of
essence and was often not enough to be able to deal with the content of
reports, especially that of entities.
10.
Key achievements
Despite the Committee being new, it made notable achievements over the 5
years of its term.
In terms of its oversight function, the
following were identified as key achievements for the Committee:
a)
The
Committee was quite instrumental in the establishment of the
Small Enterprise Finance Agency (SEFA). This
was a merger to bring coherence to small business financing, merging Khula
Enterprise, South African Micro Apex Fund (samaf) and the Industrial
Development Corporation.
b)
In
relation to the Competition Law Amendment Act No. 1 of 2009, the Department
facilitated the promulgation by the President of Section 6 of the Competition
Law Amendment Act, which came into effect on the 1 April 2013. The section
deals with market enquiries to be conducted by the Competition Commission if it
has reason to believe that any feature or features of a market for any goods or
services prevents, distorts or restricts competition within that market.
c)
In October 2010, Cabinet adopted the New Growth
Path which was developed by the Department as a strategy to promote decent work
and inclusive growth in the country.
The
NGP sets a jobs target of 5 million new jobs by 2020 and directs that economic
policy should actively pursue jobs goals.
The NGP and Outcome 4 of the
Service Delivery
Agreement became the Committees reference documents for guiding the oversight
and strategic work of the Committee and for evaluating the performance of the
Department and the five entities.
The
Committee in its engagement with the Department and the entities and during
oversight visits ensured that strategies and programmes to advance attainment
of the NGP targets were being implemented. Thus reports to the Committee always
addressed job creation.
d)
Through its
interactions with EDD, the Portfolio Committee has been able to give greater
political/policy direction.
The
communication with EDD improved with time, with the Committee being proactive
and actively engaging with EDD. This enabled the Committee to oversee the work
of the department, and enquire and make recommendations about the department;
e)
The
Committee ensured increased awareness about Competition and Unfair trade
issues, to an extent of intervening in the intervention in Massmart and WalMart
merger.
f)
The
Committee played a strategic role in ensuring successful development and buy in
with regards to the conclusion of four key Social Accords namely the Skills
Development, Basic Education, Local Procurement, Green Economy and the Youth
Employment Accord by the Department.
g)
The Committee
brought to the attention of the Department information that helped to improve
the functioning of EDD.
Through their
interactions with EDD and other Departments, the Committee has brought out
socio-economic challenges faced by South Africa citizens for consideration to
decision makers within the department;
h)
On a number of occasions, the Committee
had the opportunity to engage with the public on economic issues in all the
provinces. At these meetings the Committee engaged with key stakeholders who
included SMMEs and co-operatives. This feedback mechanism provided even greater
insight into the challenges faced by the populace when dealing with the
department and its entities;
i)
The
Committee conducted Provincial visits, which helped in understanding the core
needs of the communities, SMMEs and Co-operatives.
This also ensured that the voices of the
people are heard and their needs taken into account when exercising oversight
over the Department and the entities.
j)
The Committee was able to proactively influence the work of
the EDD and its entities in ensuring that its work has broader impact on the
lives of people.
k)
The Committee focused on the
development and financing of SMMEs and Co-operatives ensuring that support for
enterprise development was enhanced and effective. Thus the Committee had
successful round-table discussions on SMMEs and co-operatives support, and
access to finance. These discussions increased the effectiveness of the
Committee in contributing to plans and projects of the finance entities and
ensuring that there was more targeted support for the needs of enterprises
development, more especially by SEFA.
l)
During 2012/13, the EDD drafted the Infrastructure
Development Bill and submitted the draft to Cabinet. The objects of the Bill
are to provide facilitation and coordination of infrastructure development
which is of significant economic or social importance and to ensure the
prioritisation of infrastructure development in all state planning. The
Committee published the Bill for public comment, held public hearings and
ensured timeous finalization of the Bill which was passed by the National
Assembly on 25 February 2014.
m)
Towards the end of 2010, the Committee decided to
conduct hearings on the SMME and micro-finance sector. A key objective of
conducting the hearings was to highlight the challenges faced by role players
and to formulate a way forward that is intended to begin a process of
addressing the structural constraints faced by the sector within a context of
economic development, job creation and poverty alleviation, particularly after
the industry was hit hard by the 2008/09 global financial crisis.
n)
The Committee had also attended training on
international trade agreements facilitated by the Trade Law Centre (TRALAC)
from 05-07 September 2012. The training included coverage of the South Africas
current trade negotiations agenda, including the Southern African Customs Union
(SACU), the Southern African Development Community (SADC), Tripartite free
trade area (T-FTA), the Economic Partnership Agreement (EPA) negotiations with
the European Union and SACU-India negotiations.
11.
Strategic Management Issues
The
Committee was not able to hold any Strategic Plan sessions during the first two
years of its formation. A strategic plan session was held in the 2011/2012
financial year, however, no report could be availed by the Consultant who was
the facilitator. Only two Strategic Plan documents could be developed and
reports availed and these were the Strategic Plan for the 2012/13 and 2013/14
financial years.
11.1
Strategic Plan for 2012/13 financial year
During the period under review, the Committee held its
strategic planning workshop in the Arabella Hotel and Spa in Kleinmond from
22-24 March 2012. The workshop was facilitated by Mr Douglas Reeler from the
Community Development Resources Association. The workshop was to plan the work
of the Committee for the 2012/13 financial year.
For the 2012/13 financial year, the Committee identified six focus areas
for its oversight of the Department and these were the following:
·
Infrastructure;
·
Local
procurement;
·
Manufacturing,
agriculture and agricultural processing;
·
Green
Economy;
·
Regional
development and integration; and
·
Coordination.
The detailed
Strategic Plan Report is available from the Committee Secretary.
11.2
Strategic Plan for 2013/2014 financial
year
During the period under review, the Committee held its
strategic planning workshop in the Pepper Club Hotel and Spa in Cape Town,
Western Cape Province from 18-19 April 2013. The workshop was facilitated by
Mr Saul Levin,
Mr Evans Chinembiri and Ms Katleho Bohloa
from the
Trade and Industrial Policy Strategies (TIPS). The workshop was to plan the
work of the Committee for the 2013/14 financial year.
The workshop looked at the performance of the Committee in
the 2012/13 financial year. It was indicated that the
Committee
achieved a number of accomplishments in the 2012/13 financial year. These
achievements were broken down in three categories namely, Personal skills and
capabilities, Effectiveness of the oversight role, and Administration.
The workshop further looked at the performance
of the EDD and its entities.
The performance of the EDD was measured by the
Committee on a number of criteria, which took into account the different
aspects of the work of the department.
For the 2013/14
financial year, the Committee identified the following strategic objectives:
Conducting oversight over the EDD performance: The
EDDs priorities
for the 2013/14 financial year which the Committee identified to oversee were:
·
Continued
technical support as the secretariat for the Presidential Infrastructure Coordinating
Commission;
·
Working
with other departments to increase efforts to encourage growth,
industrialisation and job creation in productive sectors of the economy. This
includes greater local procurement, streamlining regulations, using
infrastructure to attract productive investment;
·
Strengthening
mechanisms and projects to support emerging enterprises and job creation, and
supporting the implementation of the youth employment strategy; and
·
Enhanced
support for economic development and transformation through social dialogue.
·
Conducting
oversight over the EDD entities: The Committee aimed to be more effective in
their oversight role of entities. In the 2012/13 financial year, their focus
was on SEFA and IDC and not much time was devoted to the economic regulatory
entities, namely Competition Commission, Competition Tribunal and ITAC.
The reason could be that the committee had a
key focus on the development of SMMEs and co-operatives, especially in less
privileged communities.
Conducting
roundtable discussions so as to be able to assess the development and financing
of SMMEs and co-operatives.
The detailed
Strategic Plan Report is available from the Committee Secretary.
12.
Issues
for follow-up
The following are recommendations for
consideration during the 5
th
Parliament:
·
A number of oversight visits were undertaken and
the reports compiled on each oversight had recommendations. Implementation of
the Committee recommendations in the oversight reports would be important;
·
Follow up on the work of SEFA, especially on the
impact on SMMEs. Issues of small enterprise development required close
oversight with SEFA and a number of issues around the merger, staff related
matters and redrafting of a strategy for intermediaries will require close
follow up.
·
Ensuring alignment of the work between the
Department, the Provincial and Local Governments
·
There are outstanding Bills which the Department
had indicated would be presented during the term of office of the Committee.
Only the Infrastructure Development Bill was finally presented. Outstanding
Bills as indicated by the Department included the Competition Commission Act
and International Trade Administration Act.
·
Training on the technical aspects of the work of
the Regulatory Entities, especially ITAC. Training was to be coordinated by the
Content Advisor.
In
conclusion, the Committee being a fairly new Committee made notable progress
and achievements. In the strategic plan of the 2012/2013 financial year, the
Committee did an analysis and evaluation of the Committees work. The results
were that despite its work being constrained by lack of resources, especially
at its initial stage, the Committee was able to deliver on its mandate.
Documents
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