ATC200610: Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment And Labour on Vote 39: Trade, Industry and Competition, and on Strategic Plan and the 2020/21 and Annual Performance Plan of the Department of trade, Industry and Competition, Dated 9 June 2020

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

REPORT OF THE SELECT COMMITTEE ON TRADE AND INDUSTRY, ECONOMIC DEVELOPMENT, SMALL BUSINESS DEVELOPMENT, TOURISM, EMPLOYMENT AND LABOUR ONVOTE 39: TRADE, INDUSTRY AND COMPETITION, AND ON STRATEGIC PLAN AND THE 2020/21AND ANNUAL PERFORMANCE PLAN OF THE DEPARTMENT OFTRADE, INDUSTRY AND COMPETITION, DATED9 JUNE 2020

 

1. Background

 

The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism and Employment and Labour (the Select Committee), having considered Vote 39: Trade, Industry and Competition, and the Strategic Plan and the 2020/21 Annual Performance Plan of the Department of Trade, Industry and Competition tabled by the Minister of Trade, Industry and Competition (the Minister), and in terms of the Public Finance Management Act of 1999 (PFMA), as well as the Money Bills Amendment Procedure and Related Matters Act, 2009, reports as follows:

 

 

1. Introduction

 

The Select Committee considered the 2020/21-2024/25 Strategic Plan, and the 2020/21 Annual Performance Plan of the Department of Trade, Industry and Competition (DTIC) on the 11 May 2020. The Select Committee has also further considered the adequacy of financial resources for the implementation of these plans and interrogated the allocation received by the Department. The Department submitted that the current strategic plans, and annual performance plan are aligned to the Medium Term Strategic Framework (MTSF).

 

It was further submitted that the strategic plans were crafted pre-COVID-19 outbreak in South Africa. The resultant negative impact of the pandemic on the economyto the fiscus necessitated reprioritisation of the spending plans to accommodate policy responses to COVID-19. It was reported that the impact of the COVID-19 to the economy is expected to be much greater than the impact of the Great depression to world and national economies.South Africa economic growth is anticipated to decline by 6.6 to 7 per cent in 2020, and the significant decline of the national economy is supported by the International Monetary Fund, Reserve Bank and the Organisation for Economic Cooperation and Development. Further, the Department indicted that the pandemic has caused supply-chain disruptions augur declining exports. The damage to the travel and tourism sectors was reported to be more pronounced.Retail (excluding food), automotive, hotels and restaurants, airlines, travel operators, arts and entertainment, and personal services like hairdressing, firms and workers were mostly affected including manufacturing.

 

It was noted that South Africa entered the COVID-19 phased already faced with weak fiscal position.  Gross government debt has continued to rise as a result of weak economic growth, high levels of expenditure and repeated funding support to state owned companies. It was further reported that rating downgrades and currency weakness since the pandemic began would further increased the cost of government borrowing.

 

Rising unemployment remains a challenge, further declining real GDP per capita, and low business sentiment are some of the risks that need to be addressed. Depressed household finances would likely affect livelihoods. Unskilled, and semi-skilled workers are projected to be hit hard by the COVID-19 pandemic.

 

It was noted that Covid-19 pandemic would have significant implications for business with people being displaced, the movement of goods restricted or suspended, and supply chains disrupted.South Africa trade connection with other economies is not much deeper compared to other emerging economies. However, South Africa in terms of trade is much depended to the major economies such as China, Germany, UK and USA.

 

However despite the impact of COVID-19 on the economy, to the firms and households, and jobs, the re-iterated government commitment to ensure that basic machinery of government would continue to drive overall policy goals to facilitate job creation and build a larger productive economy which services both the urban and rural areas. Further, the Department emphasised that the COVID-19 pandemic present new opportunities, with more focus on repositioning industries, and further pushing hard to ensure that economy it does just grow but become more responsive to sustainable growth objectives.

 

 

1. Overview of the Legislative and Policy Mandate of the Department

 

The aim of the department is to foster a dynamic industrial, globally competitive South African economy, characterised by meaningful economic transformation, inclusive growth and development, decent employment and equity, built on the full potential of all citizens. Apart from the Constitution of the Republic, the legislative framework which informs the work of the department constituted by the following legislative Acts:

• Companies Act (2008) 
• Manufacturing Development Act (1993) 
• Broad‐Based Black Economic Empowerment Act (2003) 
• Consumer Protection Act (2008) 
• Industrial Development Corporation Act (1940) 
• Competition Act (1998), as amended 
• International Trade Administration Act (2002).

 

The Department reported that the R500 billion COVID intervention bill is an attempt by government to insulate the impact of the pandemic to the public health, and the economy. Further to preserve jobs and restore livelihoods. Further, the Department will accelerate implementation of the automotive sector plans, including Master Plans for poultry industry and retail clothing, textiles, leatherand footwear industries. Over the medium term, the Department will develop other sector plans covering critical industries, and new industries in the economy.

 

The implementation of the Integrated Resource Plan 2019 is expected to open the way for

considerable investments in renewable energy generation (particularly wind power) and related

components manufacturing. Further, the focus will be on implementation of investment projects announced at the second Investment Conference in2018 and 2019.

 

Over the medium term, the Department and its entities will focus on the following policy mission:

 

• Promote structural transformation, towards a dynamic industrial and globally competitive economy;
• Provide a predictable, competitive, equitable and socially responsible environment, conducive to investment, trade and enterprise development;
• Broaden participation in the economy to strengthen economic development;
• Continually improve the skills and capabilities of the Department to effectively deliver on its mandate and respond to the needs of South Africa’s economic requirements;
• Co-ordinate the contributions of government departments, state entities and civil society to effect economic development; and
• Improve alignment between economic policies, plans of the state, its agencies with the overall government’s political and economic objectives.

 

The Committee noted the critical policy strategy plans that informed the formulation of the current strategic plans, and other spending plans. Further the Committee recognised the effect of the COVID-19 to the Medium-Term Strategic Frameworkincluding theNational Development Plan 2030. Further, the COVID-19 will affect global trade and political engagements. The international multilateral governance structure will have to be repurposed to respond to the new emerging global economic and financial developments, whilst responding to the old challenges facing international community.

 

 

1. Budget Policy Area

 

The Department reported that over the medium term it will continue to implement the National Development Plan. The 2020 medium term policy mission is expressed specifically to respond Policy Priority 1: economic transformation and job creation, and Policy Priority 7: a better Africa and world as articulated in the 2019-2024 Medium Strategic Framework. The work of the Department is directly aligned to these priorities and the industrial trade strategy titled Reimagined Industrial Strategy frames the departmental policy function. The Department emphasised that resources will be allocated to fulfil the following spending priorities:

 

• Providing industrial finance
• Developing industrial infrastructure
• Strengthening export capabilities
• Enhancing competition regulation

 

Further, the Department reported that it will also redirect resources to take advantage of opportunities brought about by the coming into effect of the AfricanContinental Free Trade Area (AfCFTA) Agreement. Apart from the AfCFTA, the Department will position the country to exploit opportunities presented by various international trade agreements such as the SADC European Union (EU) Economic Partnership Agreement(EPA), SACU Mozambique EPA with the UnitedKingdom (UK) and African Growth and Opportunity Act, 2000(AGOA). South Africa role in G20 and BRICS will be enhanced to benefit the country and the rest of the African region.

 

It will also concentrate to paying attention on the implementation of the public sector’s localisation. Value addition to South Africa exports would be prioritised, and thus improving enforcement ofproduct designations in an effort to boost domestic manufacturing production remains critical.

 

Over the medium term the Department reported it will accelerate implementation of the Special Economic Zones (SEZs) and the Revitalisation of Industrial Parks, and continue to implementing the Black Industrialist Programme. The Committee noted the role of sub-national government in the development of economic development programmes. The Committee felt this is the area that need to be prioritised to ensure that provincial and local government including private sector are better engaged to ensure successful implementation of the programme.  

 

4.1 Overview of Departmental Spending

 

It was reported that the Department is anticipated to spend R 11 billion for the 2020/21 financial year, of which 61 per cent or R 6,8 billion is expected to be transferred to public corporations and private enterprises for incentives programmes. Further, R2,1 billion will be transferred to the departmental entities to respond to their legislative and policy mandates.Allocations to the Industrial Financing programme account for the bulk of the Department’s expenditure. Spending in the programme is expected to decrease at an average annual rate of 4 per cent from R6 billion in 2019/20 to R5.3 billion in 2022/23.Further, the Committee noted that the operational expenditure, which comprises mainly of compensation of employees, and goods and services is expected to spend R2 billion of the total spending. Further it was noted that spending for the Department is anticipated to decrease from R11 billion in 2019/20 to R10.5 billion in 2022/23.

 

Table 1 indicates how the Department is expected to spend over the 2020 medium term. It should be noted that in response to the COVID-19 pandemic, allocated resources as well as programme priorities will be reprioritised by the Department.It is anticipated that the Minister of Finance when tabling the special adjustment budget the changes will be reflected in the Special Adjustment Budget.The Department has organised its expenditure into ten functional policy programmes, which comprise of Administration; Programme 2: Trade, Policy, Negotiations and Cooperation, Programme 3: Spatial Industrial Development and Economic Transformation; Programme 4: Industrial Competitiveness and Growth; Programme 5: Consumer and Corporate Regulation; Programme 6: Industrial Financing; Programme 7: Export Development, Promotion and Outward Investments; Programme 8: Inward Investment Attraction, Facilitation and Aftercare; Programme 9: Competition Policy and Economic Planning and Programme 10: Economic Research and Coordination.

 

It was noted by the Committee that the Department would need to focus to addressing challenges to its own operations brought on by Covid-19. Further the Committee recognised that the national budget is strained, and that would have an effect to the departmental budget, and thus affects spending priorities. As a result, other policy priorities might be scaled-back.

 

The Department indicated that the policy priorities and budgets will certainly be reviewed. Currently, the department was exploring of scaling back activities covered in the Export, Marketing and Investment Assistance (EMIA), SupportProgramme for Industrial Innovation (and Technology and Human Resources for IndustryProgramme THRIP). The aim is to redirect resources for the measures announced to mitigate the economic effects of CVID 19. Further additional funding may be required to assist affected sectors in the economy and stimulateinvestment by easing the cost of doing business while sustaining existing jobs. The Department indicate that the measures could take theform of a combination of grant and loan funding towards working capital, machinery andequipment, targeting manufacturing and its related sectors. The role of National Treasury in assisting in designing and funding, and financing the support measures was emphasised by the Department.

 

Table 1: Summary of the Departmental Spending for the 2020 Medium Term Expenditure Framework

Source: Estimates of National Expenditure, National Treasury

 

 

In terms of the Industrial Financing programme, the Department aims to increase access to industrial finance measures to support investment in priority sectors in line with approved Master Plans. The activities covered in the programme includethe Manufacturing Incentives Programme, Automotive Incentive Scheme, the Black Industrialist Scheme, the Agro-processing Support Scheme and the Aqua-culture Development Enhancement Programme. Infrastructure investment support is expected to spend approximately R1,5 billion in 2020 financial year, and the Manufacturing incentives programme is anticipated to spend approximately R3,8 billion. Other planned activities for the Industrial Financing over the medium term include development and implementation of various master plans to stimulate various sectors of the economy including: chemicals and plastics; clothing and textiles; steel and metals fabrication, furniture, sugar production and poultry.

 

The Department reported that it has planned to inject R75 billion through private sectorinvestment leveraging efforts. The efforts are in recognition of the need to accelerate growth in the manufacturing and internationally traded services. In this regard, over the medium term, activities in the Industrial Financing Programme are aimed at leveraging more than R45 billion in investments from the private sector providing financial support to an estimated 1950 enterprises or projects that will create approximately 56 500 jobs over the medium term.

 

With regard to the developing investment infrastructure, the Department is set to providegrants for three industrial initiatives: Industrial Infrastructure Initiatives; Special Economic Zones, Industrial Parks and Critical Infrastructure Programme. These initiatives are aimed at enhancing the development of industrial infrastructure that has the potential to increase investments and exports. Allocations for the special economic zones in the Infrastructure Investment Support sub-programme are expected to increase at an average annual rate of 13 per cent from R1.1 billion in 2019/20 to R1.6 billion in 2022/23. Financial support to industrial parks is estimated to increase at an average annual rate of 2.8 per cent from R122.9 million in 2019/20 to R133.4 million in 2022/23, to support the refurbishment of 27 industrial parks across South Africa.

 

Further the Department reported that it will continue implementing the Integrated National Export Strategy in line with its ongoing effort to build capacity for increasing export in South African goods and services. Over the medium term it is set to assist more than 2000 South African companies to participate at organised national pavilions, trade missions and other export promoting initiatives. These initiatives will also incorporate historically disadvantaged enterprises and individuals, over the medium term R75 million is expected to be spent to support Export Marketing and Investment Assistance Scheme of the Industrial Financing Programme.

 

Over the medium term the Department planned to accelerate investment initiative, both from the domestic and foreign investment. Government has set the target over the medium term to attract R500 billion investment in various industries in the economy. There plans under way to implement measures to Ease of Doing Business in South Africa, and also establish theBizPortalthat will form a single integrated company registration platform integration of the Unemployment Insurance Fund (UIF) and Compensation Fund, and to BizPortal with allBanks. The aim is to ensure that that South Africa ranking in terms ofEase of DoingBusiness is significantly improved.

 

The competition and consumer regulatory bodies will play a critical role to contribute to an efficient, competitive economicenvironment, balancing the interests of workers, owners and consumers and focused on economicdevelopment. The Competition Amendment Act (2018) expanded the mandates of the competition authorities to include the initiation of market inquiries, a number of which have already commenced in key economic sectors. Over the medium term, the Department plans to oversee the implementation of these expanded mandates. For this purpose, an additional R65 million is expected to be spent over the medium term to the Competition Commission and the Competition Tribunal to enhance their capacity to investigate cartels, and elements of dominance and collusion in the identified sectors.

 

Over the medium term the Department will also focus on enhancing the operational capacity to changing business environment, and further effecting changes to the management structure to increase representation of women and people living with physical disabilities. Further to extend internship duration to two years.

 

Public procurement will further be enhanced, as suppliers will be paid within 30 days. Further, consumer and corporate regulation activities will be scaled-up to increase public education and advocacy programmes. The aim of the Department is to improveregulatory environment to be conducive for consumers and companiesas well as to providing accessto redress for affected parties.

 

 

5. Issues Arising From Engagement

 

1. It was noted that both domestic and global economic growth will register negative growth due to the COVID-19 pandemic impact. The International Monetary Fund, have reduced South Africa’s GDP growth prospects for 2020 to negative 5,8 per cent and to 4 per cent in 2021. The South African Reserve Bank according to the Monetary Policy Statement released in April 2020 also revised its growth projections down to negative 6,1 per cent in 2020, and anticipating 2,2 per cent economic growth in 2021. Whilst National Treasury suggest the economic growth will contract between 6 and 7 per cent in 2020.
2. The Department indicated that the Re-Imagined Industrial Strategy is aligned to the objectives of preceding policies such as IPAP and NGP and further places greater emphasis on collaboration and partnerships with the private sector and labour in developing and implementing programmes to reposition the sectors.
3. The Department acknowledged the trade deficit it has with BRICS member countries, but further emphasised that the industrial strategy adopted by government seeks to address some of the challenges that the country is experiencing. Hence it is important for South Africa to diversify the export basket to include greater share of higher value added manufactured products. Further, South Africa would pursue the global trade transactions guided by international trade and investment regime.
4. Committee noted the importance of the Industrial Parks Revitalisation Programme in stimulating rural and township economies. Further, the Committee was concerned with inadequate funding that the programme is receiving. The Department indicated that discussions are under way with National Treasury for a possible increase of the current funding support for industrial parks to stimulate investment in rural and township areas.
5. Further, the Department submitted that it has also engaged other partners including other departments such as the Department of Cooperative Governance and Traditional Affairs; the Provincial Government; and the Municipalities, to participate andcontribute towards the Industrial Parks RevitalisationProgramme.
6. The Committee expressed a need to invoke section 11 of the National Credit Act, 2005 (Act No. 34 of 2005) (‘the NCA’), which deals with public interest credit agreements during the COVID-19 pandemic. The Department submitted that the proposal to invoke section 11 the National Credit Act, 2005.
7. Further the Committee emphasisedconsistency should be applied in implementing transformative legislation such as the Broad-Based Black Economic Empowerment (B-BBEE) Codes when providing relief to distressed businesses, a reference a case was the tourism industry where the Minister of Tourism was involved in the court case instituted by the AfriForum and the trade union movement, Solidarity. The Department reported that it will ensure compliance to the B-BBEE Act and its Codes of Good Practice during the COVID-19 pandemic. It has established measures to strengthen compliance and redirect resources to where the greatest needs are.
8. Other Members of the Committee stressed that the BBBEE criterial is a fundamental policy requirement that is needed to address the legacy of economic exclusion. However, the world is dealing with an exceptional crisis-COVID-19, and interventions would in most instances shift to the normal legal and policy practices.Hence there is a need to accommodate moral policy consideration in applying relief funds. In the main is to support as many businesses, and protect jobs.
9. It was reported that that 150 black industrialists have been supported through the Black Industrialist Programme, and Industrial Development Corporation has given substantial supportto the National Empowerment Fund to support black owned businesses.
10.  The Department further reported that it is working very strongly with provinces in the allocation of budgets dedicated to local SMME’s with priority given to enterprises owned by vulnerable groups such as women, youth and persons with disability.
11. The Committee was concerned with the decline of the number of enterprises that would be supported with financial support across all incentives offered by the Department. The Committee was stressed what was the rationale to discontinue application of the 12i tax allowance designed to support Greenfield investments and whether there are other alternative financial support measures that would be considered.
12. The Department submitted that the 12i tax allowance programme is legislated under Section 12i of the Income Tax Act, 1962 (Act No. 58 of 1962), which incorporates the termination date of the 12i tax allowance programme. This is based on a budget allocation which is aligned to the termination date. An amendment of the termination date is not allowed unless supported by an allocated budget in order to allow for the receipt and the processing of applications. Alternative support measures may be considered via a Generic Manufacturing Support Programme should additional budget be allocated.
13. Further the Committee noted the decline of the incentive allocation to public corporations and private enterprises would decline by more than R1.2 billion from the 2020/21 financial year to the 2021/22 financial year. The Department acknowledged the fiscal constraints as a result the allocation to the economic competitiveness support package was discontinued.
14. The Department noted the need to scale-up relief support to companies in distress in the productive sector of the economy to sustain existing jobs and productive capacity. Further, the Department propose that support that would be provided will be based on companies having abusiness case or turnaround strategy that demonstratethat theentity can prove it can be viable with support and lead to future sustainability within a period of 18-24 months. Further, specific conditionalities would be considered with regards to support given, such as the safe-guarding of employment. The package will be implemented once funds are allocated by the National Treasury, and thereafter appropriated by Parliament.
15. The Department reported that the Competition Commission and Consumer Commission have started to address incidences where service providers were alleged to be in contravention with the law. It was reported that the Competition Commission has received approximately 1354 complaints of price gouging on essential items such as face masks, hand sanitizers etc. One of the key cases before the Competition Commission and the Consumer Commission is the case of Dischem Pharmacies Pty, Ltd which stands accused of over pricing its face masks between 43 per cent and 261 per cent. At the time of the briefings the matter was reported to be before the Competition Tribunal.
16. The Department reported that one of the key priorities of is to reduce administrative burden on business and improve the Ease of Doing Business to create an enabling environment for investment and improve global competitiveness. Government is embarking on implementing several efficiency measures to improve functioning of the ports, including improving transparency of information at Deeds office including digitalisation of construction permits management in various municipalities.
17. The Committee noted the important role played by the automotive industry to the broader economy and job creation. The industry is one of the industries that have been hit hard by the COVID-19 pandemic. The Department indicated that it is in the process to reviewing the Automotive Production Development Programme (APDP) with the purpose of accommodating the industry following COVID-19. Some of the issues under consideration include relaxation of production volume requirements and extending submission timelines for Automotive Investment Scheme (AIS) applications and claims. Further, the Department is in constant engagement with the industry in efforts to understand the COVID-19 impact to the industry in order to be able to develop appropriate responses.
18. COVID-19 pandemic has also affected operations of the SEZs, including companies that are operation in SEZs. Various measures have been undertaken to offer relief to companies operating in SEZs. Construction works in the SEZs have also been affected by the implementation of the lockdown regulations. Various tenants operating in the SEZs are also involved in high impact projects directed to alleviate strain caused by the pandemic in surrounding communities.
19. The Committee questioned the rational of South Africa for not pledging support to the efforts announced by some of the Members of the World Trade Organisation to secure and ensure the continued flow of medical supplies and other essential goods and services including maintaining the agricultural supply chain and securing food security during the pandemic. Some of the Member countries which signed a pledged to continue to provide trade stability during the COVID-19 are South Africa main trading partners.
20. Further, the Committee wanted to understand the impact of the COVID-19 pandemic would be on the implementation of the African Continental Free Trade Agreement and on the out-of-cycle review of South Africa’s continued participation in the United States’ African Growth and Opportunity Act (AGOA). The Department submitted that the economic impact of COVID-19 has been devastating. Large parts of South Africa economy were closed, exports have ceased, and the country has witnessed capital flight and currency depreciation. Further Intra-African trade has been hit hard too with border closures and other lockdown measures being implemented across the continent. COVID-19 would severe damage African economies. As much trade initiative should be supported, it will be dependent on a broader agenda for financial support and debt relief across Africa. Further, the COVID-19 has disrupted vital meetings set to accelerate implementation of the AfCFTA. Including the postponement of the AU Extra-Ordinary Summit.
21. With regard to the out-of-cycle review of South Africa’s continued participation in the United States’ African Growth and Opportunity Act (AGOA), the Department reported that South Africa remains eligible for tariff preferences under AGOA. The out-of-cycle provision allows any USlawmaker, at any time, to raise concerns on whether South Africa meets AGOA eligibility requirements. The Department indicate that at this stage no such concerns have been raised. Further, the Department submitted that on 13 May 2020 the US Government initiated an overall review of sub-Saharan African countries’ eligibility for AGOA preferences.
22. Further, the Department reported that US and South Africa has been severely impaired by the border measures taken by both side to address the health crisis brought on by COVID-19. These measures include lockdown in many sectors of the economy, restrictions on logistics and transport and border closures. It is anticipated that that trade will re-start as production and transport restart and as border measures and closures are scaled back.
23. According to the Department, South Africa has been part of a US country review process under the US Generalised System of Preferences (GSP) since October 2019. The review was initiated by a petition from US stakeholders in respect to concerns they have with South Africa’s pending Copyright Amendment and the Performers Protection Amendment Bills. The Department indicated that government has participated in the review process and is in ongoing discussions with the United States Trade Representative (USTR) on the matter. According to the Department the review is mistimed and misdirected as these Bills arenot law in South Africa. The President is assessing theconstitutionality of the Bills and has not yet made the determination.
24. The Department submitted that the Joint Statement was signed by 21 Members of the WTO, and the WTO comprises 165 Members. The Joint Statement was referring to measures that have already been put in place on exports of medical supplies and other essential goods and services. It was making a pledge to lift the measures as soon as possible. According to the Department the Joint Statement also contains a commitment “Not to impose agriculture export restrictions and refrain from implementing unjustified trade barriers on agriculture and agri-food products and key agricultural production inputs.” The Department further indicated that it is noteworthy that 141 countries have implemented trade measures. In addition, twelve of the sponsors of the Statement implemented export restrictions on medical products; and two of them implemented export restrictions on agricultural products. It should also be noted that trade, in general, has been interrupted in many countries not by trade measures per se but by lockdowns, disruption to logistics and transport, and by border closures all of which are the result of measures to address the COVID-19 pandemic.
25. According to the Department, South Africa, along with most other Members, did not sponsor the Joint Statement as it is an undertaking that is inconsistent with existing WTO rules. Article XI of the General Agreement on Tariffs and Trade (GATT) on ‘Export Restrictions’ provides for the application of export prohibitions to prevent or relieve critical shortages of foodstuffs or other products essential. The Department indicated that proposal contained in the Joint Statement is the latest of ongoing efforts by many of the same WTO Members to completely prohibit export restrictions even for developmental objectives. Many of the same Members, which signed the Joint Statement to continue to distort agricultural trade in more significant ways through the provision of massive domestic support that undermines prospects for agricultural development in many developing countries, including in Africa. The Department submitted that it is important to leave open the possibility of resorting to export restrictions to promote food security or manage shortages of foodstuffs and other essential products.

 

6. Recommendations

 

Following the engagements with the Department, the Committee proposed the following recommendations to the Minister:

1. Over the medium term the Department working closer with subnational governments including the development agencies should develop action plan that outlines trade and investment opportunities presented by various International Trade Agreements. The action plan should be presented by the end of the 2020/21 financial year.
2. Given the vital role of provinces, local government and private sector in small enterprise development, industrial development and innovation, it is critical that an effective multilevel governance in supporting growth and development of businesses (Big or Small) need to be promoted and enhanced. It is recommended that the Department should engage National Treasury to provide additional allocation to scale-up COVID-19  Relief Funding.
3. Further, over the medium term the Department should engage National Treasury to offer funding to enhance the Manufacturing Competitiveness Enhancement Programme.
4. Over the medium term the Department should accelerate the implementation of the Industrial Parks Revitalisation Programme. Working in partnership with other departments such as Small Business Development, and sub-national governments the Department need to provide incubation and business development support in the Parks, which include market linkage facilitation so that the industrial parks can attract, support and sustain new firms.Firms located in the Parks should be exposed to various government incentives schemes. The Department has several incentives schemes such as the manufacturing investment schemes, competitive investment scheme, service investment, industrial innovation investment cluster competitive investment, and infrastructure investment schemes.Coordination across levels of government is crucial, in order to allocate scarce resources better and provide support to businesses. Local government capacity and capability would need to be geared-up.What is vital is to have Parks that are aligned with growth opportunities within the region and its linkages to other regions.
5. South Africa has high number of unemployment, and with surplus of unskilled labour. There is a growing concern that the Special Economic Zones should also priorities labour intensive sector. The Department should consider that some of the SEZ to focus on labour intensive firms.

 

Report to be considered.