ATC210820: Report of the Select Committee on Trade And Industry, Economic Development, Small Business Development, Tourism, Employment and Labour jointly with the Portfolio Committee on Small Business Development, Following a fact finding Visit to Kwazulu-Natal and Gauteng provinces, Dated 19 August 2021
REPORT OF THE SELECT COMMITTEE ON TRADE AND INDUSTRY, ECONOMIC DEVELOPMENT, SMALL BUSINESS DEVELOPMENT, TOURISM, EMPLOYMENT AND LABOURJOINTLY WITH THE PORTFOLIO COMMITTEEON SMALL BUSINESS DEVELOPMENT, FOLLOWING A FACT FINDING VISIT TO KWAZULU-NATALAND GAUTENGPROVINCES, DATED 19 AUGUST 2021
The Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour (the Committee) conducted a two-legged fact finding visit to the provinces of KwaZulu-Natal (KZN) and Gauteng on 03 - 06 August 2021. The visit was prompted mainly by the recent unrest that saw two provinces gripped by a frenzy of looting, arson and violence. The visit targeted primarily small enterprises and informal businesses directly and/or indirectly impacted by the violent looting. The Committee undertook this visit jointly with the Portfolio Committee on Small Business Development, whereas visits to other locations included the Portfolio Committee on Trade and Industry. The newly merged entity (Small Enterprise Development Agency and Small Enterprise Finance Agency) representatives were also in tow to accompany the Committees in order to shed light on the financial and non-financial package currently being offeredto affected small businesses and informal traders.
Also, the delegation(s)included senior leadership from respective municipalities, development agencies, local chambers as well as provincial departments responsible for economic development. In KZN, the Committees visited King Cetshwayo District Municipality (KCDM), Ilembe District Municipality and eThekwini Metropolitan area. While in Gauteng, Ekurhuleni and City of Joburg were two of the Metros visited over the two-day period. Accordingly, this report provides some qualitative informationobtained through interactions between Members of Parliament and sector representatives, informal traders and business owners affected by the unrest, summary of key findings and observations as well as recommendations.
On 28 June 2021, South Africa was placed under alert level four (4) restrictionas corona virus numbers took an upward surge. This effectively meant that all social, political, religious and other gathering were prohibited. Most regrettably,business operations that had started to pick up, the announcement of level four restriction threw a spanner in the works. Small businesses and informal traders, which had already been ravaged by almost two years of stop and go, were severely affected when volume of people suddenly halted. On an unrelated matter, on 29 June 2021, the Constitutional Court (the ConCourt) handed down judgement declaring the Former President Jacob Zuma to be in contempt of court and sentencing him to a period of 15 months in prison. There is thus a general perspective or concurrencethat the civil unrest, leading to riots, looting and destruction of property, may have been ignited by the incarceration of the former President and exacerbated by Covid-19 related restrictions.
2.1 The Economic and Social Aftermath of the Unrest
The unrest began in the province of KwaZulu-Natal on 09 July 2021 and spread to the province of Gauteng on 11 July 2021. As of 16 August 2021, authorities estimate that 3410 people have been arrested for crimes ranging from stealing to murder, and almost 340 are confirmed dead.The provinces of KZN and Gauteng are two most populous regions and together account for half of South Africa’s output. The country’s Gross Domestic Product (GDP) is heavily dependent on the economic performance of these two provinces and was thus threatened by the developments.Both regions were badly hit by the unrest. The data with respect to economic impacts of riots and looting is still being collated by reputable institutions such as South African Special Risk Insurance Association (SASRIA), South African Property Owners Association (SAPOA) and Statistics South Africa (STATSSA) to mention the few.
However, according to various sources such as Business Leadership South Africa (BLSA), provincial governments of KZNand Gauteng,National Treasury and various other industry players, they are estimating that more than 200 malls were affected, over 1000 stores were looted, more than 100 completely burnt, more than R20 billion in damages, 50 000 informal traders left stranded and 50 000 small businesses affected, and likely more than 150 000 jobs at risk. Several factories and warehouses were looted and torched, big businesses grinded to a halt including two major ports of Durban and Richard Bay, national routes e.g. N2 and N3 had limited operations. The KZN government has ultimately declared a provincial state of disaster owing to the magnitude of the damage caused by the civil unrest.While the calamity has also spurred the national government into taking curative measures to resuscitate struggling economic activity and battered business confidence through economic strengthening interventions announced by the President.
2.2 Relief Package
Rewind few years back, South Africa was already mired in the recession before the Covid-19 struck. The pandemic had by February 2021 stymiedthe country’s economic growth forecasts from 4.3% to 3.8%. These projections have further beenrevised downwards due to the recent unrest and many economists are envisaging a shaving of as much as one percentage point off GDP growth in 2021. For that reason, and in order to moderate adverse impacts of the turmoil, on 26 July 2021, the President announced a range of mitigating measures to support business recovery and provide some social relief to the poor and vulnerable. The South African Special Risks Insurance Association (SASRIA) will form a key part of the intervention to help insured businesses restore their operations. SASRIA has committed to expedite the payment of all valid claims, and is working together with private insurers to ensure that assessments are completed without delay.
It is expected that the package will amount to R38.9 billion of on-budget items. Government will ensure that SASRIA is able to honour all of its obligations and has already ring-fenced R3.9 billion to support SASRIA to keep away from any potential liquidity problems. When announcing these measures, the President noted that some businesses that were victims of the violence may not have been insured, including many small and medium-sized businesses, whether formal or informal. It is acknowledged that many of these businesses have lost everything, like the ones the Committees visited at Isipingo in Durban, and will not be able to rebuild on their own. They will therefore be accommodated under the relief package administered by the Department of Small Business Development, currently projected at R2.3 billion.
According to National Treasury, some of these interventions, include inter alia, restoration of the Social Relief of Distress (SRD) grant of R350 until the end of March 2022, R5 billion in revenue measures, expansion of the Employment Tax Incentive (ETI) for four months, payment deferrals for three months on Pay As You Earn (PAYE) for qualifying industries, as well as deferrals of excise duties on alcohol. Other sector Departments such as Employment and Labour have already gazetted Workplaces Temporary Relief Scheme to help cushion workers who are unemployed during this period of recovery. These measures will be implemented from 1 August 2021 and others 1 September 2021. Further details will be provided by National Treasury and SARS. Parliament is accordingly anticipated to monitor the implementation of these interventions.
2.3 Objective of the Fact Finding Visit
The aim of the visit was to evaluate the extent of damage to property, supply chain disruptions and degree of business interruptionsspecificallyfor small enterprise and informal trading sector. It is also important for the Parliament’s Portfolio and Select Committees to understand what other spheres of government and organs of state were doing towards helping the sector recuperate. In line with its constitutional mandate, the interest of the Portfolio Committee on Small Business Development was more on -
- Obtaining first-hand knowledge and assess the gravity of the impact of the looting and violence on the small enterprise, co-operatives, informal trading sector, issuance or renewal of permits and support measures by respective municipalities during this period of crisis;
- To assess the state of small enterprises and informal traders, interact with businesses and business communities that fell victim to the looting and violent protests;
- To provide the Department of Small Business Development and entities, other various organs of state, an opportunity to showcase their product and service offerings, disseminate useful information on financial and non-financial supportto those affected by looting and arson;
- Enhance cooperation and coordination between all spheres of government in developing a common or standardized approach and response to the sector and to enable the affected groups to speak for themselves;
- To compile and present a report with recommendations that could form part of any parliamentary intervention on the matter;
- To lay a basis for ongoing work by Parliamentary Committees in terms of their oversight role.
2.4 Composition of the Delegation
The delegation included members of the Portfolio Committee on Small Business Development, Select Committee on Trade and Industry, Economic Development, Small Businesses, Tourism, Employment and Labour along with members of the Portfolio Committee on Trade and Industry, Parliamentary stuff, officials from the Department of Small Business Development and entities, officials from districts and local municipalities, development agencies, local chambersand officials from corresponding departments of economic development.
2.4.1 Members of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour and Portfolio Committees on Small Business Development andPortfolio Committee on Trade and Industry.
Members of the Select Committee on Trade and Industry; Economic Development, Small Business Development; Tourism; Employment and Labour:
Mr MI Rayi, MP (ANC) Chairperson Eastern Cape
Mr K Mmoiemang, MP (ANC) Northern Cape
Mr M Dangor, MP (ANC) Gauteng
Ms HS Boshoff, MP (DA) Mpumalanga
Mr T Brauteseth, MP (DA) KwaZulu-Natal
Members of the Portfolio Committee on Small Business Development
Ms VS Siwela, MP (ANC) Chairperson
Mr F Jacobs, MP (ANC)
Mr HG April, MP (ANC)
Ms KB Tlhomelang, MP (ANC)
Mr HCC Kruger, MP (DA)
Mr J de Villiers, MP (DA)
Ms B Mathulelwa, MP (EFF)
Mr V Zungula, MP (ATM)
Mr HE Hendricks, MP (Al Jama-Ah)
Members of the Portfolio Committee on Trade and Industry
Mr D Nkosi, MP (ANC) Chairperson
Ms J Hermans, MP (ANC)
Ms RM Moatshe, MP (ANC)
Mr SH Mbuyane, MP (ANC)
Ms NE Motaung, MP (ANC)
Mr Z BurnsNcamashe, MP (ANC)
Mr MJ Cuthbert, MP (DA)
Mr DW Macpherson, MP (DA)
Ms YN Yako, MP (EFF)
Mr FJ Mulder, MP (FF Plus)
Mr WM Thring, MP (ACDP)
2.4.2 Parliamentary Officials
Mr NK Kunene Committee Secretary
Mr S Gumede Content Advisor
Ms N Zixesha Executive Secretary to the Chairperson
Mr M Dodo Committee Assistance
Mr Z Ngxishe Committee Researcher
Mr T Madima Committee Secretary
Ms Z Madalane Committee Researcher
Ms Y Manakaza Committee Assistant
2.4.3 Departments & Municipalities’ Representation
Department of Small Business Development
Small Enterprise Development Agency
KwaZulu-Natal & Gauteng Departments of Economic Development
King Cetshwayo District municipality
UMhlathuze Local Municipality
iLembe District Municipality
KwaDukuza Local Municipality
iLembe Economic Development Agency
EThekwini Metropolitan Municipality
Ekurhuleni Metropolitan Municipality
City of Joburg Metropolitan Municipality
3. FACT FINDING VISIT TO KWAZULU NATAL
3.1 King Cetshwayo District Municipality
The King Cetshwayo District Municipality is one of the 11 district municipalities in the province of KwaZulu Natal. It stretches from the uMfolozi River in the north, to Gingindlovu in the south, and inland to Nkandla. The district is constituted by five local municipalities, namely, Mthonjaneni, uMlalazi, Nkandla, uMhlathuze, and uMfolozi.The first segment of the Committee’s programme on day one was devoted to visiting affected small businesses and informal traders at KCDM. The chaos and destruction that spread throughout the province of KwaZulu Natal had a shattering impact on municipalities under KCDM. All five of them experienced extensive looting, damage to property and infrastructure, emergency and municipal services were interrupted. The N2 highway, one of the targeted and severely affected routes during the unrest, added to the burden of supply chain disruptions. The N2 route connects the region to other major economic centres, such as KwaDukuza, Durban and Port Shepstone to the South and also provides a direct route to eSwatini and Mozambique to the North.
3.1.1 Reception by District Leadership
Upon arrival in Richards Bay, the Parliament’s delegation was warmly received by respective mayors of KCDM and uMhlathuze LM CouncillorsLindokuhle Phungula and Mduduzi Mhlongo. Also in attendance, were senior leadership e.g. Deputy Mayors, Speakers and Municipal Managers from both the district and local municipalities. Following introductions, leaders of the delegation for that leg, Ms Violet Siwela, Messrs Mandla Rayi and Duma Nkosi, made brief remarks outlining the objective of the fact finding visit, brief summary concerning the nature or projected role to be extended by various Department(s) and entities to the affected small enterprises, co-operatives and informal traders in the corresponding local municipalities, expected roles of provincial, district and local spheres of government including role of Parliament during the recovery process.
The Committees learnt quite a few things from the brief presentation done by the District Mayor, areas that were highly affected in the district, number of malls and shops looted, vandalised and burnt, number of arrests made and deaths, state of local municipalities and what each municipality has done or intends to do to cushion vulnerable communities, role of local economic development and collaborative efforts with other provincial government departments such KwaZulu-Natal Cooperative Governance and Traditional Affairs (KZNCOGTA), KwaZulu-Natal Economic Development, Tourism and Environmental Affairs (KZNEDTEA). In towns like Eshowe (uMlalazi LM) and Empangeni (uMhlathuze LM), it was projected that almost half of the retailers and offices, were gutted. Whereas, small agricultural town of Gingindlovu (uMlalazi), the R66 Mall, the town’s only Mall, was saved by the community which stood up and defended it, a reaction that appears to have worked in many areas that ended up being least affected. The visit of the Portfolio Committee was thus welcomed as signalling the start of a concrete programme to assistthe affected local municipalities and trigger to economic recovery process.
3.1.2 Site Visits to Affected Areas
The visit to the district was localised within the City of uMhlathuze due to its strategic importance to the national economy e.g. home to Port of Richards Bay and concentration of small businesses and informal traders in the area. On a round trip that included stopovers at Nseleni, Ngwelezane and Esikhaleni townships, the consequences of destruction were clearly visible.The Parliament Committees was escorted to affected areas by members of the South African Police Service (SAPS) and City of uMhlathuze traffic police.
- Nseleni Township
Members observed first-hand the level of vandalism and destruction at Nseleni Shopping Mall, just outside Richards Bay. Hailed by City of uMhlathuze Mayor Cllr Mduduzi Mhlongo in 2016 during the sod turning ceremony as “symbolising a direct response to addressing the issue of unemployment which is rife in the area”, the mall was in a state of absolute ruins and completely cleaned out.The Centre Manager, Ms Nomkhosi Shange,told Members of Parliament that the shopping complex was fully black woman owned. Some of the mall tenants included, among others, Boxer, Pep, Tekkie Town, small business concerns such as internet cafes and various Automated Teller Machines (ATM) which were all looted, vandalised or set alight. Cllr Mhlongo was at pains to point out that reviving efforts at torched malls may be a long hard slog due to structural damages which might force some of these facilities to be demolished completely. The assessment of the shopping mall including the structures to ascertain the extent and nature of damage were ongoing.
Members of Parliament took turn to ask questions of clarity or add inputs, alsointeracted with small entrepreneurs, who not so long ago, were tenants at the mall. Ms Boni Marwa, ownerof Slay Queen Hair Salon, briefed members that her business was operating profitably. It was regrettably vandalised and torched, all of her equipment valued at more than R80K was stolen. Outside the mall, were few informal traders and street vendors whom their businesses were evidently hurt by abrupt swing in consumer volumes frequenting the mall. Members conveyed their distress at the economic impact of the looting and observed that, in many cases, the looting was accompanied by extremely high levels of property destruction. Business owners and employees present, were encouragedto remain strong during the recovery process.
- Ngwelezane Township
The next stop-off was Ngwelezane township on the outskirts of Empangeni. Like all other townships in the vicinity of uMhlathuze LM, Ngwelezane was not spared. Incidents of overnight protests, road blockages and attacks targeting transport vehicle, including ambulances to one of the largest hospitals in the region, Ngwelezane Hospital, were reported. Clashes between demonstrators and police intensified as protestors refused to disperse. As a result, some of the shops were pillaged, vandalised and torched e.g. Engen garage, OK grocery supermarket, Debonairs Pizza and other shops owned by small entrepreneurs such as hair salons and food eateries
Members of the delegation networked with shop owners, street vendors selling food items, hawkers and informal traders providing small quantities of goods and much needed services as some of the big shops remained closed. Traders were also briefed and counselled to access non-financial support services and recently announced financial package administered by Small Enterprise Finance Agency (Sefa) and Small Enterprise Development Agency (Seda). The City of uMhlathuze also announced that it was in the process of finalising financial package to assist all affected small business owners and informal traders within the local municipality, while the KCDM has its own scheme earmarked for the entire district municipality. It was also announced that other sector departments i.e. Tourism, Agriculture, Employment and Labour as well as Trade, Industry and Competition were all in the process of finalising various schemes dealing with each category, stream or sector affected by the unrest.
The last visit by Members of Parliament in the district was to Esikhaleni Mall. The Mall is an important business hub and landmark shopping complex that is conveniently situated in the heart of Esikhaleni Township. It is located about20 kilometres from Empangeni and 25 kilometresfrom Richards Bay. The shopping centre has more than 30 stores, secure parking and is open seven days a week from 9h00 am to 18h00 pm. The Plaza boasts a typical profile tenant of Shoprite, Mr Price, Dunns, Webber, Spar, Spur, commercial banks and automated teller machines, Ackermans, Pep etc all of whom were ransacked.
The Mall services a population of just over 120 000 including those living in the adjacent tribal authority. Upon arrival at Esikhaleni, the delegation was received by the Centre Manager Mr Khumbulani Cele, and later shown around. Sections of the Plaza had been badly vandalised and other units set alight. The mop-up operations, removal of the debris and clearing up of the rubble had already begun. According to the City of Umhlathuze estimates there were more than 2500 employees affected and financial loss of more than R220 million.
Outside the Plaza, most trading stalls stood empty, a confirmation that informal trading has become an economic alternative for some community members.The affirmation that the fortunes of the informal economy possibly rest on the fortunes of the formal economy rang true. Similar to what the delegation observed at Nseleni Shopping Centre, informal trading sector at Esikhaleni Plaza is very much reliant on customers visiting the mall, and probably employees too. For members of Parliament, other critical observation was that, one may only stimulate the informal trading sector if there is a formal economy hooked into it. According to the Centre Manager, the mall has a liability insurance. Of great concern to him though was whether key or anchor tenants would still have appetite to come back, and uncertainty over the resilience of the low profile tenants, who in all likelihood, their businesses or equipment had no insurance cover.
3.2 Ilembe District Municipality
Following a successful conclusion of the first segment of the visit to KCDM, Parliamentary Committees left for Ilembe District Municipality. The District Municipality (DM) is located on the east coast of KwaZulu-Natal. The N2 highway traverses the DM to the South in Durban and to the North in Richards Bay. It is the tiniest of the province's 11 district municipalities, making up merely 3% of its geographical area. The DM is made up of four local municipalities located between Durban and Richards Bay, namely, Mandeni, KwaDukuza, Maphumulo and Ndwedwe.
All local municipalities major trading hubs were under intense attack during the unrest. Ilembe is bordered by the Districts of uMgungundlovu, King Cetshwayo, uMzinyathi as well as the eThekwini Metro. The seat of the district municipality is KwaDukuza (previously known as Stanger). The KwaDukuza Local Municipality in particular has rich cultural and historical heritage having been the host and resting place of the Zulu founder King Shaka ka Senzangakhona and Africa’s first Nobel Peace Laurent iNkosi Albert Luthuli.
3.2.1 Reception by District Municipality Leadership
The delegation converged at KwaDukuza Local Municipality Council Chamber for introductions and briefings. The District and Local Mayors Cllrs Siduduzo Gumede and Dolly Govender made welcoming remarks to Members of Parliament. Supporting the DM and LM leadership were Deputy Mayor of the district Cllr Lucky Makhathini, respective Municipal Managers of the DM and LM Messrs Nhlakanipho Khumalo and Nhlanhla Mdakane, the Chief Executive of Ilembe Chamber of Commerce Mr Cobus Oelofse and Acting Chief Executive for the eNterprise iLembe Ms Cheryl Peters who also presented on behalf of the district municipality.
Co-Chairpersons and leaders of the delegation made preliminarycommentswith reference to the fact finding visit and areas where the national, provincial and local governments, supported by their respective entities e.g. Seda, Sefa, eNterprise iLembe and local chambers, can work collaboratively in the spirit of the District Development Model (DDM) to shieldthesector from deleterious effects of looting and destruction.
3.2.2 Site Visits to Affected Areas
In accordance to the Parliamentary programme the delegation was due to visit informal traders in and around the Central Business District (CBD) of KwaDukuza to assess the extent of damage to property linked to small businesses in areas of Shakaskraal enroute back to the hotel in Durban, interact with informal with informal traders community members affected by the unrest -
- KwaDukuza CBD and Shakaskraal
The KwaDukuza CBD, Shakaskraal, Etete, Groutville and Stanger Manor were some of the hardest hit areas within the local municipality. Numerous stores in the area were looted and attempted burning of property in various parts of the CBD. Regarding the impact on the local economy, the businesses within the CBD of KwaDukuza, the KwaDukuza Mall, Shakaskraal and outerlying township areas were the targets of the looters. Several shops were either completely damaged by fire or vandalism, and others partially and almost all were looted. In Shakaskraal, USave, Pep, and Shoprite were all looted, with Shoprite later set on fire. At the height of the unrest, the rioters closed both the N2 at Chaka’s Rock and the road joining the N2 and R102 at Shaka’s Head. As observed with other least affected areas in KCDM, affluent economic hubs like Ballito, were not affected due to preventative measures by community members.
A total of 234 businesses (including shops, office buildings, ultra-city petrol port, ATMs) across the local municipality were directly affected. Over 45 informal traders’ stalls were damaged, causing a displacement of informal traders. According to the district municipality preliminary estimates over the eight (8) day period across all four local municipalities the economic loss is in the region of R240 million and more 1500 jobs risk being wiped out entirely.A common ploy across all affected areas by protestors was the road blockages, effectively taming police response while shops were being looted and vandalized, also throwing of stones at passing traffic in order to cause traffic obstructions. Members of Parliament were told during the brief that KwaDukuza SAPS members worked extremely hard through under difficult situations and circumstances, and made number of arrests for crimes ranging from public violence to possession of suspected stolen property.
3.3 Visit to eThekwini Metropolitan Municipality
The eThekwini Metro is one of the most affected areas in the province of KZN. The metropolitan area, commonly referred to as Durban, is the largest City and remains the only metro in the province of KZN, andthird largest in the country. It is known as the home of Africa's busiest port and is also a major centre of tourism because of the city's warm subtropical climate and extensive beaches. During the unrest, the City of Durban and surrounding townships, malls, shopping centres, factories, warehouses and various other critical operations and infrastructure, emergency and municipal services delivery points grinded to a complete halt.
While the Port of Durban was forced to suspend its operations indefinitely and declared force majeure to its customers. The Port of Durban and Richards Bay are some of the vital economic spinners for the province and key trading gateway tothe rest of the world.Major routes that connectthe City to the South, West and North, N2 and N3, were on a complete standstill during the rioting period, throwing supply chain operations into a complete disarray. TheN3 is a national route that linksJohannesburg and Durban, respectively South Africa's largest and third-largest cities. The highway was one of the most targeted route during the strife, leading to its total closure in parts of Free State, KwaZulu-Natal and Gauteng.
- Estimates of Economic Impact
According to the Mayor of eThekwini Municipality Clllr Mxolisi Kaunda, approximately forty thousand formal businesses and 55 000 informal traders were impacted by the violence, looting and arson. He posited that the City expected the impact of the loss of GDP to rise to over R20 billion in the region while at least 129 000 jobs are on the line. Research conducted by the City’s Economic Development and Planning Committee (ECOD) reveals that for every hour that the N3 highway in KwaZulu-Natal is closed, at least R1 million is lost to the economy. This means that the impact of this closure over the last civil unrest over a five-day period is estimated at R120 million.
There were more than 37 trucks that had been torched in various parts of the province (28 were torched in Mooi River; 6 on the N2 in the northern region; 1 in Umgababa; 1 in Lidgetton; and 1 on the R603). While the unrest and riots have resulted to damage of property and infrastructure, it has also contributed to the weakening of the Rand. The local currency dropped as much as 2% against the dollar in the wake of these riots. The impact on fuel and transportation of goods also has a major impact. Exacerbating the situation is the impact this has on food security. Initial statistic gathered and released by the eThekwini reveal the following impact to the municipality -
- More than R1.5 billion loss of stock;
- More than R15 billion of damage to property and equipment;
- More than 50 000 Informal Traders affected;
- More than 40 000 businesses affected, a significant percentage of this are at a risk on not coming back post the riots;
- More than 150 000 jobs at risk to be lost;
- Close to 1.5m are at home with no income due to this unrest;
- The total impact to eThekwini GDP in the last 5 days estimated at more than R20 billion.
3.3.2 Visit to the Affected Sites
The second and last day of the visit in the province of KwaZulu-Natal was a visitation of informal traders’ storage facility at Isipingo, KwaMashu Station Trading Stalls, petrol service stations and Community Shopping Centre’s all in the township of KwaMashu. The Parliament delegation converged at the Durban City Hall and soon thereafter headed to Isipingo, South of Durban. The delegation was in the company of the Deputy Mayor Elect Cllr Diana Hoorzuk, Head of Business Support, Tourism and MarketingMr Thulani Nzama and other staff members from eThekwini, Senior Manager Mr Boyce Mntambo represented KZNEDTEA while Seda and Sefa was represented by Provincial Heads Messrs Thula Mkhwanazi and Cedric Mnguni.
The delegation visited Isipingo Informal Traders Storage situated at Inwabi Road where most of the trading activities had been localised. The once-bustling market street fell silent as its traders were trying to pick up the pieces. The storage facility was completely gutted down by fire. The facility was an initiative by the City to help informal traders keep their stock safely from potential theft and securely keep the daily earnings as many hardly find time to go bank the money. Most informal traders find it cumbersome, expensive and risky to transport their goods from their place to their market place sites. Hence, when members interacted with informal traders, not only did they discover a completely burnt out storage facility with stock inside, they witnessed cash and documents of people that had been burnt almost beyond recognition.
During networking with traders, members were keen to know if the City had made any contact with the leadership, status of the relationship between them and the City, if Seda had made contact with any of the individuals or association(s)with a view to proposingand initiating necessary assistance within its portfolio of products and services. From this visit, it emerged that little or nothing was being done to assist the affected individuals or informal traders.Members were concerned that it seemed, non from the City, Seda or KZNEDTEA, had instituted or assumed any meaningful efforts to find out what were the urgent necessities of the people affected by the unrest.
Members acknowledged that some interventions or assistance may take long. Nevertheless, by the time Parliament got on the ground, some of the City’s emergency services was supposed to have been triggered and Seda, which even before the unrest ensued had offerings tailor-made for informal traders, should have been in the process of identifying and helping informal traders with applications. The visit to Isipingo concluded by the City, Seda and Sefa making commitment to work cooperatively to fast-track the process of disseminating helpful information, partnering and supporting informal traders to resuscitate their businesses.
In KwaMashu, Members of Parliament visited few sites that were looted, vandalised and torched. The Emahawini SMME Business Hub was the first point of call where they mingled with small business owners of, among others, Emmanual Vision Capital, Mahawini Tavern, eKasiFibre, Q-Tech Internet and Solutions, Swanky Hair Salon, KwaSaladi Trading, BeJay Funeral Directors, Three Fingers and Happy Den Trading. Other trading concerns such as Icebolethu Funerals, one of South Africa’s trusted funeral service providers, remained closed.
Adjacent Emahawini Trading Hub is KwaMashu Station Traders Market. At the height of the unrest, stock, machinery and equipment belonging to the informal traders was looted. Coincidentally, it was the former Deputy Minister of Small Business Development (DSBD) Nokuzola Capa who had, on 21October 2021, distributed the equipment valued at R600 000, including tools, hairdressing, clothing, baking, construction, catering, retail and the services sector to the informal traders. Few other issues of concern raised by informal traders were mostly service delivery related matters directed to the City. For instance, a concern was raised that the majority of trading facilities are without proper toilet facilities or running water, which forces the traders to work in unhygienic conditions without anywhere to relieve themselves.
Within the neighbourhood, there are BP and Shell Garages that were looted to the bone whilst Shell was set alight. Mr SiboneloMbatha, the owner of BP garage told members that nine other filling stations of his, and shops at Dube Village Mall, were also looted and burglarised. While he was comforted at the fact that most of his businesses have insurance cover, he was worried that recovery process might take longer, income lost may never be recouped and most of his employees were sitting at home. At Nyala Centre, members also interacted with Mr Siyanda Khamanga of Khamanga Pharmacy whom his pharmacy was also burgled. Enroute to King Shaka International Airport (KSIA), Parliament delegation stopped off at Spar Express at Shell KwaMashu to observe the degree of damage to the property which had also been gutted by the blaze.
4. FACT FINDING VISIT TO GAUTENG
The second leg of the Parliament’s programme was dedicated to visiting affected small businesses and informal traders at Ekurhuleni and City of Joburg Metros. The civil unrest that began in the province of KwaZulu-Natal on 9 July, quickly snowballed and spread to the province of Gauteng on 11 July 2021. All three metros of Ekurhuleni, City of Joburg and Tshwane were affected. As of 16 July, 212 people had died in the unrest and 2554 had been arrested. The riots and looting resulted in food shortages, fuel shortages and medical supply shortages while municipal services were also disrupted. While there were reported incidents of looting and destruction of property in Matsulu in Mpumalanga, Galeshewe in Northern Cape and Gqeberha in Eastern Cape, the civil unrest was more prevalent in KZN and Gauteng. Furthermore, when the delegation hit the ground, it was observed that compared to KZN, Gauteng had limited incidents of arson and torching of property which is likely to make recovery process rapider.
4.1 Site Visits to Ekurhuleni Metropolitan
On 5 August 2021 Parliament’s delegation converged at Kempton Park Civic Centre, headquarters of Ekurhuleni Metropolitan Council for a meet and greet session. The delegation was welcomed by Member of Mayoral Council (MMC) Cllr Nkosingiphile Xhakaza and metro council staff. The Director General of the Department of Small Busines Development Mr Lindokuhle Mkhumane as well as DSBD and Seda, Gauteng Economic Development staff were also in attendance. Leaders and Co-Chairpersons of the Parliaments’ Committee made introductory remarks, reason for the fact finding visit and expected outcomes. The MMC did a high level presentation touching particularly on areas that were heavily impacted in the metro. He also provided a breakdown of the day’s programme and areas to be visited in Tembisa, Daveyton and Kathorus.
- Cambridge Centre/Esangweni Taxi/Tembisa Plaza
The first contact point in Tembisa was Cambridge Centre which was still not operational at the time of the Parliament’s visit. Outside the centre, there is informal trader’s precinct, Esangweni. There were few small business concerns and informal businesses i.e. Tembisa Internet Café, OBC butchery, Nail and Hair salons etc opened. As was observed during this phase of the visit, while informal businesses and traders may have suffered during the unrest e.g. their stock looted and equipment stolen or damaged, attacks and aftermath was double-whammy for all the traders as foot traffic e.g. mall customers, employees and taxi operators, was at an all-time low.
The next stop over at Tembisa Mall, Members were greeted with the same scenes. As feeders to informal businesses perhaps the most fortunate part is that both malls were not gutted by fire and that is likely to speed up the recovery process. The delegation noted, nonetheless, that there is still a disconnect between community members/informal and the Malls. Some feel the proliferation of malls in townships have changed how communities shop and how informal food traders and spazas do business and make a living. Most often, Shoprite Hungry Lion concept is often cited as one primary example where supermarkets are directly rerouting away customers from typical informal traders, including sourcing of products e.g. fruits and vegetables. The recovery process without taking these matters into consideration is not likely to yield any concrete and sustainable long-term solution.
- Mayfield Square/Daveyton Square
In Daveyton, east of Johannesburg, scores of residents protested and barricaded roads, in what started as a protest against the incarceration of the Former President but quickly morphed into outright looting and damage to property. It is estimated that more than 100 people, including women, children and older citizens were arrested for theft from shops inside the Mayfair Square Mall. The mall remains closed until further notice. The Parliament’s delegation visited the area with a view to engaging informal traders operating outside the Mall. Unlike informal traders visited at Isipingo or KwaMashu in Durban, informal traders there were operating in an open field without shelters or ablution facilities. Hence most of their grievances were directed to the City of Ekurhuleni.
However, as was regularised throughout the visits, officials from Seda were present to provide details of Seda/Sefa offerings prior and post unrest period. The agency undertook to compile a list of all informal traders and assist them with applications for grant funding. The Centre Manager also addressed members of Parliament that the Centre Management had long proposed partnership with the City of Ekhurhuleni to modernise trading stalls as part of building relationship with the community of Daveyton. Due to the closure of the Mall, many people were redirected to the nearby Daveyton Square. Parliament networked with informal traders, and once again, more complaints were directed to the City for failing to improve conditions for informal traders. Most informal traders were affected and many lost their stock at the beginning of the unrest. Soon thereafter the delegation left for Enoch Sontonga Mall in Katlehong.
- Sontonga Mall
Sontonga Mall, located at the heart of Katlehong, is one of the largest Malls in the area. Sontonga Mall is anchored by Shoprite and Cashbuild. Other tenants include, Power Fashion Factory, Webbers, Beaver Canoe, Rage, Pep, Pep Cell, Ackermans, Absa Bank, FNB ATM, Capitec Bank, Nedbank ATM, Standard Bank ATM, Hollard Insurance, Chicken Licken and KFC, all plundered during the unrest. The same modus operandi applied elsewhere, blocking of roads to ensure that no police vehicle gets closer to the Mall, was applied when the shops were looted. Nearby in Mngadi Section is Sam Ntuli Mall which was also raided until there was nothing to loot. Similar fate suffered by informal traders in other looted areas operating adjacent the Malls were also felt by traders in Katlehong. Fortunately, there was no malicious damage to property or arson. Hopefully that will fast-track the reopening of the Malls as high pedestrian footfall into these nodes presents a dilemma for informal traders.
4.1 Site Visits to the City of Joburg
On Friday 06 August 2021 the delegation was scheduled to do site visits in and around the City of Joburg. On arrival atthe City of Joburg headquarters in Bramfontein, Johannesburg, Parliament delegation was cordially received by Cllr Tefo Raphadu and team from the City. Following welcome and introductory remarks by Cllr Raphadu, the Co-Chairpesons gave abrief background behind Parliament’s visit to the City, indicating among others that, as the country was reeling from a week of deadly riots and looting, the picture was beginning to show that small business sector and their value chains had suffered the greatest losses. Also, a story that was beginning to take form based on the three-day assessment in KZN and Gauteng was that lack of strategic coordination between sector departments, provincial and local governments were likely to lead to unintended consequences such as double dipping or quick depletion of scarce resources. Hence, in the true spirit of DDM, an emphasis was made that all spheres of government must share notes, quantify and synchronise their resources in order to make meaningful impact to the sector.
- Jules Street, Malvern
The procession left the city centre to drive past Malvern, Johannesburg. The intention was not necessarily to evaluate the scope of damage but to drive through and witness the destruction. Indeed, the area resembled a war zone. Cars were torched at used car dealers, offices and property looted and destroyed. According to City’s officials, Jules Street was the point of origin of the unrest that went on to engulf major parts of Gauteng.
- Pan Africa Mall, Alexandra
Alexandra township, commonly referred to as Alex or Gomora, witnessed its fair share of violent unrest. The township lies some 15 kilometres North-east of Johannesburg. It covers an area of 800 hectares with population in extent of 700 thousand. Less than a kilometre away, across M1 highway, is Sandton area, home to wealthiest square mile in the continent, Sandton Central Business District. The township is home to Pan Africa Mall, opened in 2009 by Former President Jacob Zuma as part of the Alexandra renewal initiative, it was looted, vandalised and torched. In Alex, it is alleged that protesting residents took to the streets to call on foreigners to leave, blaming them for drug dealing in the area. As the crowds amplified, the protests soon mutated into looting.
On arrival at Alex, the Mall was still closed, clean-up operations were underway. Outside the Mall, were pockets of informal traders selling various items. They were invited for interactive discussions with members of Parliament. Speaking on behalf of Pan Africa Traders, Secretary and informal trader Ms Sylvia Nyadzani briefed members concerning their operational challenges pre and prior unrest period.
Members learnt for instance that there appeared to be a long standing grievance with the City of Joburg as regards the lack of basic amenities, a negation of the constitutional obligation for local government to provide for the rights of all citizens. For some time, informal traders within the borders of the Mall had relied on the mall facilities to relieve themselves. There was also a strong criticism as relayed by Ms Martha Paswana that even before the unrest, metro police would often harass them to demand trading permits and licenses, while, as alleged by Mr Amos Sadiki, it was an apparent that people carrying passports were either trading illegally or issued permits by the City.
- Jabulani Mall, Soweto
Jabulani Mall, situated at the heart of Soweto, shuts its doors following four days of looting. The Protea Glen and Jabulani Mall bore the brunt of the looting spree. Both malls were vandalised and now stand empty. According to Dr Mike Nkuna, Executive Chairman and Chief Executive of Masingita Group, whom Parliament’s delegation engaged in its visit to the Mall, he projected that between 8000 to 12 000 people’s employment at both Malls have been affected by the unrest. That included Hawkersand informal traders that plied their trade outside the establishments.
As a temporary solution, the Shoprite Group had sent two trucks with mobile stores to help residents purchase essentials while the shop was being fixed. When the Parliament visited the Centre, Shoprite had already started operating. Dr Nkuna was confident that in three months, Jabulani Mall should be fully operational. Once again, a similar invitation was issued to the City of Joburg to partner with the group to erect trading stalls adjacent the mall as traders were exposed to harsh weather conditions. Indeed, the recurrent motif throughout Parliament’s visit was the acknowledgement that little infrastructure is available to informal traders. Without infrastructure informal traders have to re-create a place to conduct business daily, an onerous and costly routine.
- Kliptown, Soweto
In Kliptown, the Parliament delegation was driven through Walter Sisulu Square to assess the damage done to business and infrastructure. At the height of the unrest most streets in and around Kliptown had been blocked with rocks, and burning tyres while shops were being looted. Former Orlando Pirates star Lucky Lekgwathi’s kota restaurant, Grootman, was just five months old when it was vandalised, its equipment trashed beyond repair. In the nearby Kliptown Driver’s Learner Testing Centre (DLTC) all computers were looted. Most shops remained closed while the clean-up operation was underway.
- Eyethu Orange Farm Mall and Palm Springs Mall, Orange Farm
The last visit by Parliament delegation was to the South of the province, Orange Farm. The township is roughly 40 kilometres away from the Johannesburg City Centre. The area is still challenged by magnitude of needs, such as housing, infrastructure and economic stimulation. The township is home to Eyethu Orange Farm Mall and Palm Springs Mall, both malls were plundered during the unrest but fortunately survived arson. When the delegation visited the area, the mopping up operations were drawing to a close and both malls gearing up to resume trading. Informal traders had been clearly displaced and small business ventures ability to promptly recommence trading when the mall reopensremain very much in doubt. As the fact finding mission drawing to a close, it was evident that the magnitude of devastation and business disruption required immediate response from the government and cocktail of reforms to avert any future recurrence.
- CONCLUDING REMARKS
That being the last site visit, Co-Chairperson Honourable Mandla Rayi thanked all Members of Parliament and Parliamentary staff for working zealously and cooperatively with all visited municipalities towards facilitating the programme. He expressed gratitude to Cllr Raphadu and his team. He remarked that in their capacities asmembers of Parliament, have ended four-day visit to KZN and Gauteng much wiser and well informed, having experienced first-hand the magnitude of damage to property, extent of business disruptions, what affected communities and informal traders have to say. He concluded by outlining Parliamentary processes which entails compilation of the fact finding report, consideration and adoption of the same report and special debate in the National Assembly on 24 August 2021.
6. BRIEFING BY SASRIA
On 12 August 2021 the Portfolio on Small Business Development and Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour, Portfolio Committee on Trade and Industry invited South African Special Risk Insurance Association (SASRIA) to brief Committees on its products and services, mandate, what qualifies for cover and under what conditions. SASRIA is a public enterprise listed under schedule 3B of the Public Finance Management Act (PFMA). The agency covers the following perils (among others) -
- Any act directed to overthrow the Government (local, provincial, national or tribal authority) by means of fear, violence or terrorism;
- Any act directed to bring about damage in order to achieve political, social or economic change, or in protest against any Government or for the purpose of inspiring fear in the public;
- Any riot, strike or public disorder (includes civil commotion, labour disturbances or lockouts.
The economic and financial loss resulting from destruction to property and business disruptions across KwaZulu-Natal and Gauteng has been touted as being in excess of R20 billion. Most of the rioting and damage to property that occurred during the period of unrest are therefore covered under SASRIA. Members were thus concerned that SASRIA balance sheet might not be adequate to cover all claims. They also shared small business fears for a bleak future seeing that most are without business covers and interrogated SASRIA to establish the size or percentage of the small business sector covered by the agency.
During the briefing with members of Parliament, the Managing Director Mr Cedric Masondo assured members that SASRIA has a strong balance sheet, well capitalised, and also backed by a strong reinsurance programme. The National Treasury has also ring-fenced R3.9 billion to make sure that the agency does not run into liquidity problems. He told members that in line with normal policy conditions claimants are encouraged to report incidents within 30 days, that makes cut-off date likely to be 19 August 2021. So far, incidents to the tune of R12 billion have been reported. In terms of the agency’s estimates, assuming worst case scenario, total and final claims are likely to be in the region of R15 billion but would not exceed R20 billion.
To improve the turnaround time, all claims below R1 million are settled instantly without SASRIA approval. The agency was considering expanding this threshold to R5 million. The agency further projects that more than 60 percent of cases are likely to be smaller claims that will be settled speedily. Unfortunately, as the agency declared in the meeting, many of the small business ventures are not covered by SASRIA. However, through the Department of Small Business Development the sector has been allocated R2.3 billion stimuli to counteract economic damage caused by the violent protest.
7. COMMITTEE OBSERVATIONS
Having conducted site visits to the provinces of KwaZulu-Natal and Gauteng, the Committees herewith register the following observations –
7.1 It was evident, based on the magnitude of damage to property and business disruption that economic and financial costs of the unrest will run into billions of rands. The Committees welcome the government’s economic relief support to offset adversarialimpacts of the unrest. Equally, they note that that a large portion of the financial aid will be by way of insurance claims through SASRIA, approximately R20 billion;
7.2 Small businesses not covered by SASRIA will be allocated R2.3 billion which when juxtaposed to the level destruction and number of displaced small business concerns, may fall short to kick-start the economy that has suffered double-whammy of the pandemic and civil unrest. The allocation will be sourced via reprioritisation and reallocation of existing baselines. Committees also note and welcome the Department of Trade, Industry and Competition (the “dtic”) relief package of R4 billion (R2 billion from dtic, R1.5 billion from Industrial Development Corporation and R250 from National Empowerment Fund) with R100 million matching grant facility to support affected small and informal businesses in townships, rural areas and small towns impacted by the unrest;
7.3 The Committees notedthat the Department, through its agencies, has initiated the process to consider applications with closing date being set for 20 August 2021. But what the Committees detected, throughout the site visits, Sefa and Seda were not present on the ground, Parliament Committees would coincidentally be first on the scene. The agencies are barely known and their products and services are almost not known nor accessible especially by informal traders. On interrogating the Business Recovery Support application form, Members have reservations that it is not only strenuous and complex but some of the information or required documentation, may not be attainable within a short space of time considering that the country is still under level 3 lockdown, and therefore, many employees still work remotely;
7.4 When the Committees hit the ground in Durban, for example, neither Sefa nor Seda had initiated any effort to assist the victims of looting, and some of the trader’s properties and documents, as witnessed at Isipingo, had been burnt almost beyond recognition. Owing to thenature of their trade, most informal traders are most likely to miss the deadline;
7.5 One of the noticeable trend observed by Committees in KwaZulu-Natal were incidents of arson that were much more prevalent than Gauteng. Consequently, recovery period in KwaZulu-Natal is likely to take longer than Gauteng. From the Committees point of view, this may necessitatedifferential but not blanket approaches in terms of application deadlines;
7.6 Parliament’s Committees engaged extensively with informal traders and learned of antithetic yet interdependent relationship between traders and malls. In all the sites visited, Committee observed that informal traders use services such as water, shelter, sanitation and sometimes storage facilities provided by the malls. Moreover, street traders benefit from the foot traffic generated by the malls. Nonetheless, the general perspective that retail nodes destroy and hinder business opportunities for informal traders in complementary and contradictory ways remain. Some supermarkets are accused of consciously displacing informal traders through direct competition;
7.7 In other areas, shopping malls are suspected of deliberately alienating informal traders from participating in the retail opportunity, with the traders having to occupy sites on the periphery of these developments in conditions that are not ideal for conducting business. Thus, sentiment of ownership of the mall by informal traders or a feeling of being part of the shopping mall ecosystem is either limited or does not exist;
7.8 In terms of the trading spaces that traders occupy e.g. outside Mayfield Square in Daveyton, Committees learned that informal traders are considered illegal since the spaces have not been set aside for trade by Ekhurhuleni Municipality These spaces have no cover or shelters, no ablution or sanitation facilities, no storage, no refuse removal by the municipalities, no lights which ideally would enableinformal traders to trade until late. The trading of commodities such as fruits, vegetables and clothes are negatively affected by unpleasant environmental conditions, resulting in loss of earnings to the traders;
7.9 Furthermore, informal traders are subject to many challenges which can be addressed through collective efforts from a variety of sectors such as the government and formal businesses. In Soweto, Jabulani Mall, such invitation was extended by Dr Nkuna for the City of Joburg to consider Public-public partnership (PPP) with mall developers and owners;
7.10 In conclusion, street vendors and informal traders have been noted to be perhaps the most regulated and the least protected, who trade unlawfully due to a lack of recognition and licenses. The Committees heard of challenges facing traders outside Pan Africa Mall, including serious allegations that foreigners are also permit holders yet it takes in excess of 12 months for South Africans to obtain trading permits. In most cases vendors are not issued with any identification showing that they have a legitimate right to sell their goods in urban streets, which further exposes them to harassment, including the confiscation of goods, assault and demands for bribes as Members of Parliament heard in Alexandra and other sites visited in Durban, Daveyton and Katlehong.
8. COMMITTEE RECOMMENDATIONS
The recent events that happened in KwaZulu-Natal and Gauteng provinces have no doubt affected businesses and livelihoods in the affected areas. They had a great potential to undermine government’s Economic Reconstruction and Recovery Plan. The Committee makes the following recommendations to the Minister of Small Business Development, and the Minister of Trade, Industry and Competition:
- The Minister of Trade, Industry and Competition and the Minister of Small Business Development through their development agencies such Seda, Sefa, and NEF should work in a coordinated manner with SASRIA to intensify financial literacy and empowerment campaigns targetingsmall businesses and informal traders. Such programmes should find expression in the expenditure plans of the respective departments and development agencies including expenditure plans of SASRIA. The financial literacy and empowerment initiative should get the necessary support from the National Treasury.
- The Committee further recommends that provincial and local government departments responsible for growth and development of SMMEs should support and promote the financial literacy and empowerment initiative. Across the spheres of government, development agencies responsible for the growth and expansion of SMMEs should promote and support small enterprises to uptake SASRIA insurance.
- Further, over the 2021 medium term SASRIA should accelerate the rollout of insurance products that would service underserviced communities.
- Based on the evidence or information Committees gathered on the ground, magnitude of destruction to property, scope of business disruption and number of displaced informal traders, the allocation of R2.3 billion is welcomed but not adequate. There is a need for the Ministers of Trade, Industry and Competition and Small Business Development to engage the Minister of Finance to provide within the fiscal framework additional funding to support affected SMMEs and small traders or to find alternative financing and funding to assist the affected SMMEs (particular the uninsured enterprises).
- Working with provincial and local government, both the Minister of Trade, Industry and Competition and the Minister of Small Business Development should accelerate and streamline payment processes.
- Over the 2021 medium term, all spheres of government should tackle regulatory constraints that are hindering the operations and expansion of small traders.
- The Minister of Small Business Development working closer with other spheres of government should concretise and lead measures to improve relationships between the shopping centres, supermarkets and informal traders. Large-scale supermarkets have sought to make inroads into the township economy to capture a share of the food market which was historically served by micro-enterprises and informal street traders. The district development model provides a useful framework for such relationships to be forged, while the use of Public-Private Partnership (PPP) may also be considered. Shopping malls must be seen to be adding value to the communities in which they operate not just in terms of employment but also in terms of access to market and reduced market competition.
- Further, the Minister of Small Business Development through the Department should give a serious consideration to the reinstatement of the SharedEconomic Infrastructure Facility (SEIF) which may address a number of infrastructurerelated complaints by informal traders e.g. ablution facilities, restrooms and storagefacilities.
- In addition, the Committee encourages the Department of Small Business Development to work in a collaborative manner with the Department of Public Works and Infrastructure to rollout working assets for small enterprises and informal enterprises.
- The Minister of Small Business Development shouldaccelerate the process of reviewing the Small Business Act (1991). Over the 2021 medium term, the Minister of Small Business Developmentthrough the Department should introduce a new bill to Parliament that would address the regulatory impediments affecting small enterprises.
- The Minister of Small Business Development and the Minister of Trade, Industry and Competition should convene a meeting with the Chamber of Businesses and informal trader associations at the City of Ekurhuleni (CoE) to deal with contentious issues obstructing business growth, and sustainability. Both Ministers should submit the report detailing the outcomes of the meeting to the relevant Parliamentary Committees.
Report to be considered.
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