ATC220902: Report of the Portfolio Committee on Trade and Industry on the Department of Trade, Industry and Competition’s Fourth Quarter Financial and Non-Financial Performance for the 2021/22 Financial Year, dated 24 August 2022

Trade, Industry and Competition

Report of the Portfolio Committee on Trade and Industry on the Department of Trade, Industry and Competition’s Fourth Quarter Financial and Non-Financial Performance for the 2021/22 Financial Year, dated 24 August 2022

The Portfolio Committee on Trade and Industry, having assessed the service delivery performance of the Department of Trade, Industry and Competition (DTIC), against its mandate and allocated resources, in particular the financial resources for the period 1 January to 31 March 2022, on 24 May 2022, reports as follows:

1.Introduction

The gross domestic product for the first quarter of 2022 (1 January to 31 March 2022) grew by 1,9 per cent since the fourth quarter of 2021. The manufacturing sector led growth with a 0,6 percent increase quarter on quarter. However, economic growth, while positive, remains slow, given the need to address the unemployment rate, which was 34,5 percent over the same period. Furthermore, the South Africa maintained a trade surplus of R60 billion over this period; however, there was growing demand for imports as more markets were recovering after the COVID-19 pandemic and South Africa eased its lockdown restrictions.

In the fourth quarter of the 2021/22 financial year, the DTIC had achieved 85 percent of its targets and spent 98,3 percent of its total annual allocated budget. The DTIC focused on industrialisation, structural transformation, and trade and regional integration, particularly through the African Continental Free Trade Area (AfCFTA).

1.1.Mandate of the Committee

Section 5 of the Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) requires the National Assembly, through its committees, to annually assess the performance of each national department over an 18-month period. This culminates in a committee submitting a report of this assessment known as a Budget Review and Recommendation (BRR) Report. The overarching purpose of the BRR Report is for the committee to make recommendations on the forward use of resources to address the implementation of policy priorities and services, as the relevant department may require additional, reduced or re-configured resources to achieve these priorities and services. This Act gives effect to Parliament’s constitutional powers to amend the budget in line with the fiscal framework.

The current process forms part of ongoing oversight of the DTIC’s financial and non-financial performance. This will inform the next BRR process. Furthermore, Parliament’s Annual Performance Plan (APP) requires submission of reports on departments’ quarterly performance.

1.2.Purpose of the Report

The purpose of this report is to monitor the financial and non-financial performance of the DTIC against its predetermined objectives and quarterly milestones as part of the Committee’s ongoing budgetary oversight. This report assesses the non-financial and financial performance for the fourth quarter of the 2021/22 financial year, namely from 1 January to 31 March 2022.

1.3.Method

The Committee was briefed by the DTIC on its fourth quarter performance for the 2021/22 financial year on Tuesday, 24 May 2022.

1.4.Outline of the contents of the Report

Section 1 of the report provides an introduction to the report including its purpose, and method. Section 2 outlines the DTIC’s strategic objectives, assesses its financial and non-financial performance against its APP for the 2021/22 financial year from 1 January to 31 March 2022 and Section 3 outlines the key issues raised by the Committee during deliberations. Section 4 provides the Committee’s concluding remarks followed by a note of appreciation in Section 5 and the recommendation in Section 6.

2.DEPARTMENT OF TRADE, INDUSTRY AND COMPETITION

2.1. Strategic Goals

The DTIC’s performance was in line with its strategic objectives, which guided its work and was aligned to its programmes. The strategic goals were as follows[1]:

Promoting structural transformation, towards a dynamic industrial and globally competitive economy;
Providing a predictable, competitive, equitable and socially responsible environment, conducive to investment, trade and enterprise development;
Broadening participation in the economy to strengthen economic development;
Continually improving the skills and capabilities of the department to effectively deliver on its mandate and respond to the needs of South Africa’s economic citizens;
Coordinating the contributions of government departments, state entities and civil society to effect economic development; and
Improving alignment between economic policies, plans of the state, its agencies, government’s political and economic objectives and mandate.

2.2.Overview and assessment of the financial and non-financial performance[2]

This section provides a comparison between the DTIC’s fourth quarter non-financial performance milestones as outlined in its APP against its fourth quarter performance reports for the 2021/22 financial year, and outlines its financial performance for the period under review.

2.2.1.Non-Financial Performance

The DTIC had 45 targets for this quarter, nine of which had not been achieved. This represented an 84 per cent achievement of targets during the quarter. This was an improvement from the 77 per cent achievement of targets in the third quarter.

2.2.1.1.Programme 1: Administration

Programme 1 had six planned targets; of which four had been fully achieved, namely:

The representation of people with disabilities had been 3,9 percent against a target of 3,5 percent.
The representation of women in senior management had been 54 percent against a target of 50 percent.
All creditors had been paid within 30 days (2 355 creditors).
The Implementation Status report of Information and Communications Technology (ICT) Service had been completed.

The following targets had not been achieved:

The Review of the Entities’ Governance Framework had been underway but remained unfinished due to the lack of human resources.
The Internal Capacity Building Plan had been implemented by 6,5 percent against a target of 13 percent.

2.2.1.2.Programme 2: Trade Policy, Negotiations, and Cooperation

Under this programme, all the targets had been achieved. These were reports setting out:

Progress on trade in services negotiations in priority sectors under the AfCFTA.
Progress on AfCFTA protocols on investment, competition, Intellectual Property Rights and e-commerce.
Interceptions at the border and other actions taken to reduce illegal imports jointly with South African Revenue Service and the International Trade and Administration Commission of South Africa.

2.2.1.3.Programme 3: Spatial Industrial Development and Economic Transformation

Seven targets had been planned under this programme of which six had been fully achieved, namely:

An annual progress report on Special Economic Zones (SEZs) had been produced.
A report on Integrated SEZs, Industrial Parks and District Development Model had been produced.
Five Industrials Parks had been in construction, one in close-out, three had been completed, and two had been in the designing phase.
An annual progress report on Industrial Parks and Digital Hubs had been produced.
National support unit for SEZs established at Industrial Development Corporation (IDC) to improve SEZs performance.
Report in the form of spreadsheet on ownership schemes and participation by workers produced.

The following target had not been achieved:

The target was not achieved because of misalignment between the quarterly achievement and annual target on the APP. However, the annual target was met.

2.2.1.4.Programme 4: Industrial Competitiveness and Growth

Six of the seven targets under this programme had been achieved. The outputs were:

Bi-annual detailed reports on the compliance with the existing designations had been prepared for the Ministry.
An annual report on inputs, and stakeholder consultation, including the National Economic Development and Labour Council (NEDLAC), into the Procurement Bill to ensure a localisation eco-system had been supported and embedded in the proposed provisions submitted to Ministry.
One detailed report of new products and/or amendments for designation under Preferential Procurement Policy Framework Act (Act No. 5 of 2000) prepared and submitted to the Minister and proposals for designation from the broader economic cluster reviewed.
One Progress report on the implementation, monitoring and reviewing the impact of the Furniture Master Plan.
One Progress report on the implementation, monitoring and reviewing the impact of the Steel and Metal Fabrication Master Plan.
One Progress report on the implementation, monitoring and reviewing the impact of the Sugar Master Plan.

The target to develop the Plastic Master Plan had not been achieved because consultations took longer than anticipated.

2.2.1.5.Programme 5: Consumer and Corporate Regulation

In the quarter, the following two targets had been planned and achieved:

A report on the finalisation of the National Credit Amendment Act (Act No. 7 of 2019 implementation plan; and
A progress report on the review of the Liquor Amendment Bill and proposed changes produced for the Minister’s approval.

2.2.1.6.Programme 6: Industrial Financing

For the quarter, the following targets had been achieved:

Investment of R6,5 billion had been leveraged against a target of R7 billion for the quarter. This target had not been achieved, as a result of fewer applications with low investment values being received due to the economic downturn and the COVID-19 pandemic.
A report on investment in local production of films and documentaries telling South African stories had been submitted.
A monitoring report on the implementation of the Economic Recovery Programme had been produced.
A report on the rollout of the Distressed Facility Programme had been submitted.
A bi-annual report on the roll-out of the Distressed Facility Programme had been submitted.

2.2.1.7.Programme 7: Export Development, Promotion and Outward Investments

Under this programme, six targets had been planned and four had been achieved. These were:

253 individuals had benefited from export training and capacity building initiatives against a target of 150.
36 new companies had been assisted in export promotion activities against a target of 25 companies.
Impact Assessment Report on export promotion and development initiatives was produced.
Women incubation programme for supporting gender equity to leverage opportunities in the African market was developed.

2.2.1.8.Programme 8: Inward Investment Attraction, Facilitation, and Aftercare

In this programme, there had been six planned targets and all had been achieved. The outputs were as follows:

Approximately R124,4 billion in investment had been facilitated against a target of R25 billion for the quarter.
Six investor issues had been unblocked against a target of six.
A statistical report on company registration had been produced.
The Ease of Doing Business (EODB) website had been updated and maintained.
A report on support provided for the annual investment conference and on the implementation of pledges made by investors had been produced.
Eleven engagements with other departments/agencies on their work in contributing to the overall EODB had been conducted against a target of six engagements.

2.2.1.9.Programme 9: Competition Policy and Economic Planning

In this programme, there had been seven planned targets for the quarter, all of which had been achieved. The targets were for the following:

Action minutes on monitoring of mergers in the fourth quarter had been produced.
A report on the impact of the implementation of public interest conditions, from merger orders had been produced.
The reports on the analysis include:
- The Quarterly Reports of 2021/22 of the Competition Commission and Competition Tribunal; and the quarterly competition oversight meeting between the DTIC and the competition authorities.
- The quarterly Competition Oversight meeting between the DTIC and the competition authorities, and tabling of the entities’ APPs for the 2022/23 financial year.

One Report of the Measurement of Concentration and participation in the South African Economy: Levels and Trends. A portfolio of possible market inquiry for the period ending 31 March 2022.
One Action minute on the initiation and progress of the Online Intermediation Platforms Market Inquiry for the period 1 April 2021 to 31 March 2022.
One Report of the Implementation of one completed market Inquiry, a Focus on Grocery Retail Market Inquiry implementation of the code of conduct recommendations under the facilitated programme with property owners and fast-moving consumer goods suppliers for the period ending 31 March 2022.
One Action minute on implementation of a Social and Solidarity Economy Policy Framework.

2.2.1.10.Programme 10: Economic Research and Coordination

In this programme, there had been four planned targets; two had not been achieved. The targets related to:

A policy brief on Internalising the Commercial Forestry Industry’s externalities in South Africa.
A factsheet on the localisation potential in the tyre industry.
A research report to identify future growth areas, this had not been completed, but would be rolled over to the following financial year District Economic Briefs was not produced in quarter 4. However, it was done earlier in the financial year.

2.2.2.Financial Performance

The DTIC’s budget had been adjusted in the last quarter of the financial year from R9,7 billion to R11,8 billion. Expenditure progressively increased over the four quarters hence the consistent reduction in under-expenditure. By the end of the fourth quarter, the DTIC had spent R11,6 billion of its R11,8 billion adjusted budget. This translated to an expenditure of 98,3 percent for the financial year.

Overall under-expenditure had therefore been R197,9 million (1,7 percent) of the total budget. As shown in Table 1 below, under-expenditure had mainly been in the following programmes:

Programme 1: Administration (R65,9 million or 8,4 percent),
Programme 3: Spatial Industrial Development and Economic Transformation (R36,6 million or 23,0 percent),
Programme 6: Industrial Financing (R29 million or 0,45 percent),
Programme 10: Economic Research and Coordination (R27 million or 41,6 percent), and
Programme 7: Export Development, Promotion and Outward Investments (R16,1 million or 3,9 percent).

Table 1: Fourth Quarter Expenditure by Programme as at 31 March 2022

Programme (R’000)	Budget 2021/22	Year-to-date
Programme (R’000)	Budget 2021/22	Actual Expenditure	Variance	% Variance
1: Administration	787 258	721 265	65 993	8,38
2: Trade Policy, Negotiations and Cooperation	218 786	217 790	996	0,46
3: Spatial Industrial Development and Economic Transformation	159 008	122 403	36 605	23,02
4: Industrial Competitive and Growth	1 638 387	1 638 077	310	0,02
5: Consumer and Corporate Regulation Division	324 629	323 386	1 243	0,38
6: Industrial Financing	6 494 979	6 465 947	29 032	0,45
7: Export Development, Promotion and Outward Investments	415 155	399 015	16 140	3,89
8: Inward Investment Attraction, Facilitation and After-care	65 653	53 712	11 941	18,19
9: Competition Policy and Economic Planning	1 643 136	1 634 535	8 601	0,52
10: Economic Research and Coordination	65 014	37 965	27 049	41,6
Total	11 812 005	11 614 095	197 910	1,68

Source: DTIC (2022)

This section below, outlines spending by programme for each of the ten programmes.

2.2.2.1.Programme 1: Administration

Under this programme, the DTIC underspent by R65,9 million or 8,4 percent of the Administration programme’s budget. Underspending had been mainly in the procurement of goods and services, and the compensation of employees. This underspending had been attributed to COVID-19 regulations, which slowed down business activities. This impacted spending on travel as meetings had been taking place virtually; and compensation of employees due to lower than budgeted “cost of living salary adjustments”.

2.2.2.2.Programme 2: Trade Policy, Negotiations and Cooperation

There had been very little underspending under this programme, 0,5 percent of the programme’s budget. Underspending had been as a result of a slowdown in business activities (mainly travelling) due to the COVID-19 restrictions and regulations.

2.2.2.3.Programme 3: Spatial Industrial Development and Economic Transformation

This programme had the second largest under-expenditure in rand value after the Administration programme with under-expenditure of R36,6 million or 23 percent of the programme’s budget. The underspending was mainly attributed to the procurement of goods and services and the appointment of consultants for projects. Both the procurement of goods and services, and the appointment of consultants had been affected by the COVID-19 regulations, in particular, the slowing down of business activities as employees had been required to work remotely.

2.2.2.4.Programme 4: Industrial Competitiveness and Growth

This had been the third largest programme with a budget allocation of R1,63 billion. Of that budget, underspending had been merely 0,02 percent (R310 000). Lower than budgeted expenditure on the compensation of employees had been the result of the underspending.

2.2.2.5.Programme 5: Consumer and Corporate Regulation

Underspending in this programme was also relatively small at 0,2 percent of the programme’s budget (R1,2 million). Similarly, underspending was a result of a lower than budgeted expenditure on compensation of employees because of lower cost of living salary adjustments than budgeted.

2.2.2.6.Programme 6: Industrial Financing

The DTIC under this programme underspent by R29 million. While this is only 0,45 percent of the programme’s budget, it should be noted that this is the third-largest programme under expenditure by rand value. Industrial Financing accounted for approximately 56 percent of the Department’s total budget and it captures one of the core mandates of the DTIC.

2.2.2.7.Programme 7: Export Development, Promotion and Outward Investment

Similar to other programmes, underspending under this programme was due to underspending in the compensation of employees. Under-expenditure had been R16,1 million which is 3,89 percent of the programme’s budget.

2.2.2.8.Programme 8: Inward Investment, Facilitation and Aftercare

Transfers and subsidies to One-Stop Shop disbursement were lower than budgeted. Compliance related issues were the main contributor to underspending in this programme. As a result, underspending was approximately R11,9 million which translates to 18,2 percent of the budget.

2.2.2.9.Programme 9: Competition and Economic Planning

The programme underspent R8,6 million, of which R5 million was due to delays in the disbursement to the IDC Tirisano Construction Fund, as there had been delayed payments from construction companies to the Fund. Compensation of employees also contributed to underspending.

2.2.2.10.Programme 10: Economic Research and Coordination

Underspending of R27 million was incurred in this programme. The underspending was significantly large at approximately 41,6 percent of the budget. This underspending is said to be the result of lower than budgeted expenditure on compensation of employees and COVID-19 regulations.

2.2.3.Fourth Quarter Expenditure by Economic Classification

In terms of economic classification, the largest under-expenditure item had been the procurement of goods and services with an underspending of 15,5 percent (R90,7 million). The DTIC has been underspending on goods and services throughout the four quarters of the financial year. The compensation of employees also incurred an underspending of R46 million.

Table 2: Fourth Quarter Expenditure by Economic Classification as at 31 March 2021

Description	Budget 2021/22 (R’000)	Year-to-date
Description	Budget 2021/22 (R’000)	Actual Expenditure (R’000)	Variance (R’000)	% Variance
Current payments	1 650 191	1 513 350	136 841	8,29
Compensation of employees	1 064 551	1 018 507	46 044	4,33
Goods and services	585 640	494 843	90 797	15,50
Transfers and subsidies	10 140 376	10 096 844	43 532	0,43
Incentive Payments	6 343 232	6 314 231	29 001	0,46
Department Entities	2 067 276	2 067 276	0	0,00
External Programmes	1 538 822	1 524 633	14 189	0,92
Non-Profit Organisations (Partnerships with business associations, NEDLAC)	153 334	153 333	1	0,00
Membership Fees (International Organisations)	30 656	30 327	329	1,07
Households	7 056	7 043	13	0,18
Payments for capital assets	20 321	2 786	17 535	86,29
Payments for financial assets	1 117	1 116	1	0,09
Total	11 812 005	11 614 096	197 909	1,68

Source: DTIC (2022)

On incentive payments, there had been an under-expenditure of R29 million. However, this was relatively small in comparison to the total budget of R6,34 billion.

3.Issues raised during the deliberations

The following issues relating to the performance of the DTIC were raised during the Committee’s deliberations:

Implementation of the Master Plans: The DTIC had been responsible for developing and implementing a number of Master Plans. These are developed as a social compact between government, business and labour to ensure deeper industrialisation, localisation and transformation in these sectors. The Committee enquired what the timeframes for the implementation of the Master Plans are. The DTIC explained that the Master Plans were introduced in 2019 when President Ramaphosa established his new administration. There are about 20 Master Plans among the national government departments. These are developed using a similar methodology to create a social compact between government, organised business and organised labour by identifying ways to stimulate the development of these sectors and secure commitments from these parties in this regard. Therefore, the Master Plans are a means for government, working with the key role players in the economy namely organised labour and business, to unlock investments, increase exports, and to transform these sectors of the South African economy.

The DTIC has seven Master Plans covering the sugar; poultry; automotive; retail clothing, textiles, leather and footwear; furniture; steel and metal fabrication; and global business services sectors. In the automotive case, there had been significant investments in the pipeline but there had also been a few issues that needed to be addressed in terms of labour stability, the transition to electric vehicles, support for manufacturers to transport products to the ports; and the transformation of the sector. Therefore, the Automotive Master Plan brought stakeholders together under the leadership of Minister E Patel to reach some agreements on these issues. The Master Plan is expected to result in much higher levels of investment in the sector, stability in employment, growth in jobs, and eventually to the establishment of a very substantial transformation fund of about R6 billion.

Outside of the DTIC, there were about 10 Master Plans being developed in other government departments. These include Master Plans on forestry, which had been approved by Cabinet last year; on the digital economy; and on agriculture and agro-processing, which had been launched by the Minister of Agriculture, Land Reform and Development in May 2022. These Master Plans were also progressing at pace.

The DTIC’s view was that the success of the Master Plans approved thus far was visible in relation to job retention, and new investment in these sectors. For sectors, like sugar and poultry, that were under threat from imports and a lack of competitiveness in certain aspects, there have been positive developments. This included new investment in the sectors, jobs being retained, and new entrants in the sectors. An example was in the poultry sector where a number of black contract farmers are now supplying the big abattoirs.

Industrial policy and structural transformation: The Committee enquired whether South Africa’s industrial policy had been able to effect structural transformation and inclusive growth, and what had been the impediments to this. The DTIC indicated that the current Industrial Policy iteration is the Re-imagined Industrial Strategy (RIS) endorsed by Cabinet in 2019. The RIS emphasises the importance of structural transformation through industrialisation. Government has an important role to play through supporting improved industrial performance, dynamism and competitiveness. The RIS identifies five areas that will drive growth in the economy and these engines of growth include (i) industrialisation, (ii) investment and infrastructure, (iii) innovation, (iv) integration, and (v) inclusion.

A key pillar of the RIS is the development of sector Masterplans where each social partner commits to implement concrete interventions to transform and build the economy. The Master Plans are key drivers to attract investment, build competitive local industries and create jobs. Implementation of these Masterplans cannot happen without strong financial support from a range of the DTIC’s Development Finance Institutions (DFIs) such as the IDC and the National Empowerment Fund (NEF), and various incentive schemes offered by the DTIC. Other policy measures that the DTIC has in place includes trade policy; export and investment promotion; competition policy and business regulation.

The Economic Reconstruction and Recovery Plan (ERRP) launched by the President in 2020, reinforces industrialisation and thus seeks to place the South African economy on a new path through supporting a massive growth in local production and making South African exports much more competitive. Various structural and policy measures are required to support industrialisation including investment in renewable energy, rail and ports.

Benefits of allocations to support localisation: Programme 6, Industrial Financing, had allocated and disbursed resources to support localisation. The Committee enquired what spin-offs had been realised due to this financial support in terms of structural transformation and decentralisation of the economy, and whether this assisted in addressing high levels of poverty, unemployment and inequality. The DTIC advised that it has various incentive programmes with specified objectives and targets. These programmes allow the DTIC to partner and share costs with businesses to achieve the objectives of job creation, transformation, localisation and inclusive growth. Incentives include SPII and THRIP that enhance skills development and innovative capacity of the manufacturing sector; and other incentive programmes such as the Automotive Investment Support Programme that supports the procurement of productive assets to improve productivity, create jobs and also attempts to balance the automation of production processes and job creation. All incentive programmes also target structural transformation and inclusive growth by implementing Broad-based Black Economic Empowerment (B-BBEE) compliance level as a mandatory condition. In addition, companies are required to retain jobs for their incentive period.

Impact of the lockdowns on the Black Industrialist Programme: Given the economic impact of the Covid-19 lockdowns on businesses in South Africa, the Committee enquired what the survival rate was for the black industrialists that had been supported by the DTIC, and how many black industrialists had closed as a result of the lockdown. In addition, it enquired what the status of acquisitions of companies had been, and support given in this regard by the IDC and NEF. Furthermore, whether the DTIC was measuring whether the Black Industrialist Programme was realising structural transformation. The DTIC responded that the cancellation rate of projects participating under its incentive programmes range between 15 to 20 percent for various reasons for cancellation, such as the non-compliance to the incentive criteria per the incentive guidelines, not being able to reach financial closure, not submitting relevant information to support the project, anticipated investment not realising due to delays in construction or delivery of machinery and equipment. The survival rate of black industrialists had been positive. The lockdown had definitely affected all businesses including the black industrialists, and had resulted in such projects reducing the cost of their anticipated investments, delaying the start of production, and reducing the number of jobs to be created to cushion themselves from the impact of the lockdown.

The Black Industrialist Scheme (BIS) provides support for specialised technical training with the assistance of the DFIs. Mentorship guidance is also supported for financial management, operations and production planning, business continuity services etc. The BIS incentivises Business Development Costs covering a spectrum of areas.

Other support measures include the Support Programme for Industrial Innovation (SPII) and the Technology and Human Resources for Industry Programme (THRIP). Incentive programmes have specified objectives and targets where the DTIC partners or cost shares with business to achieve objectives of job creation, transformation, localisation, inclusive growth. SPII and THRIP enhance skills development and the innovative capacity of the manufacturing sector. The BIS supports productive assets to improve productivity and create jobs. The implementation of B-BBEE compliance levels as a mandatory condition also contributes to transforming the economy. Supported companies are required to retain jobs for the incentive period.

Rationale for not achieving the investment target: The DTIC had not met its target of leveraging R7 billion worth of investment during the fourth quarter. The Committee requested the DTIC to clarify whether this was attributable to the COVID-19 pandemic, or whether it had been an unrealistic target. The DTIC informed the Committee that the target was realistic, as it had a pipeline of investments at any given time to the value of R10 billion. However, the DTIC only disburses the incentives once the investor has realised its investment. Therefore, it works closely with investors to ensure that they meet the set timeframes and to manage its cash flow in terms of disbursements.

Withdrawal of local content designation for a product: Under Programme 4, Industrial Competitiveness and Growth, the target to develop a report on one designated product had not been achieved, as the designations had been withdrawn to broaden public consultation before publication. The Committee enquired what the reason had been for the DTIC to broaden public consultation in the middle of the project. The DTIC reported that it monitors tenders to ensure that local content designations are complied with for designated products. In this instance, local content designations had not been considered and, therefore, the tender had to be re-advertised with an amended terms of reference. Following the Constitutional Court judgement, the DTIC had been engaging a number of government departments and entities to ensure that local content and local procurement become part of their supply chain policies. This was important as this remained a critical policy instrument in terms of industrialisation. Furthermore, it was engaging National Treasury in respect of the new Public Procurement Bill to see that localisation was addressed.

Support for the production of local stories: One of the DTIC’s targets for the 2021/22 financial year had involved the promotion and support of the local production of films and documentaries telling South African stories to promote the drive for local content in the film and television (TV) industry. The Committee enquired what investment support had been provided to local productions of films and documentaries telling South African stories. The DTIC responded that South Africa has been a favoured destination for foreign and local film makers, as it has a pool of competent local companies and local technicians in the areas of cameras, tracking equipment, lighting, sound and post-production facilities, which are able to meet the technical requirements of foreign film makers. In addition, South Africa offers a wide range of actors and extras for lead and smaller roles. This is the basis on which the Film and TV Production Incentive has attracted both international and local film makers, and has promoted the development of the local industry. The Incentive caters for foreign film and TV production and post-production; South African film and TV production and co-production; and South African emerging black film makers. The DTIC had supported seven projects amounting to R44 million worth of approvals for South African and local films and the emerging black film makers in the fourth quarter of the 2021/22 financial year. The incentive had supported 329 jobs, of which 179 had been through the local film industry, including emerging black film makers. The balance had been created by foreign films, which tend to have larger budgets and employ more people.

Job creation against the unemployment levels: In the first quarter of 2022, the official unemployment rate was 34,5 percent and the expanded definition of unemployment was 46,2 percent, which translates into millions of unemployed people. While the DTIC has reported that it has facilitated the creation of about 3 000 jobs and has saved over 5 000 jobs during the fourth quarter of the 2021/22 financial year, this is insignificant compared to the number of jobs required. The Committee enquired whether there was a plan to ramp up the creation of jobs to address the high level of unemployment. Furthermore, it enquired what interventions the DTIC was implementing or considering to assist unemployable citizens to develop the necessary skills to enter the marketplace. The DTIC indicated that the ministries in the Economic Cluster and in the Social Cluster were collectively responsible for employment creation. Over the last two to three years, the Presidential Stimulus Package has been a significant intervention to support job creation. It has a budget of about R24 billion and has supported over 560 000 job opportunities in the last financial year. Furthermore, there are a range of other interventions that fit within the ERRP. For example, the ERRP includes infrastructure investment, the rejuvenation of the tourism sector, and significant commitments by business on local procurement. The combination of all of these interventions should have an impact on employment and assist in lowering the unemployment rate.

The DTIC further expounded that its role was on the industrial side. While this was an important role, it was a relatively modest role in terms of employment creation in comparison to all of the other players in the Economic Cluster. For example, National Treasury implements the Employment Tax Incentive.

One of the DTIC’s initiatives, in partnership with business, is the Youth Employment Service programme. This Programme aims to give young people exposure to the work environment and to develop their skills. In some cases, the DTIC has found that some young people are not adequately skilled to start work once they leave secondary or tertiary education. Therefore, this Programme aims to assist them in this regard. Other DTIC programmes that dealt with skills development included the Intsimbi Programme, which trains young graduates in tool-making. Similarly, it works with the National Skills Fund on the Itukise Programme and another one programme in which young graduates are trained and provided with work experience through a very rigorous training to prepare them to enter the job market.

In terms of the reported 385 jobs that had been created in the construction of a R1,1 billion oil plant in the Richards Bay Industrial Development Zone. This translated into a cost of R2,8 million per job. The Committee enquired, what had been the DTIC’s contribution to the funding of the investment, what had been the cost per job, and had there been any value for money in terms of job creation. The DTIC indicated that the R1,1 billion was a private investment by Wilmar Processing SA. In this regard, the DTIC had only funded the top structure for the facility as part of its SEZ Programme, and the project had been approved for the 12i tax allowance previously.

Jobs at Gelvenor Africa: The DTIC had supported Gelvenor Africa with funding of R12,5 million through the Clothing, Textiles, Footwear and Leather Growth Programme (CTFLGP) to address re-employment of 329 jobs and localisation of niche industrial textile material. The Committee enquired what the status of the funding was, whether the jobs were permanent or temporary, and what had been the reason for the loss of these jobs initially. The DTIC responded that Gelvenor Africa is being resurrected by its new shareholders, National African Federated Chamber of Commerce and Industry, from the liquidation of “Gelvenor Consolidated Fabrics”. Gelvenor Africa had been established in 1965 as a weaver, dyer and finisher of synthetic and manmade continuous filament yarn fabrics. Gelvenor Consolidated Fabrics was a globally recognized manufacturer of technologically engineered and validated textile solutions. It had been the largest producer of woven synthetic fabrics in the country, which include textiles for aeronautical, industrial, protective workwear, technical and high-performance outdoor applications for both local and global markets. It had been owned by South African private equity firm, Jacobs Capital, which had ceased operating on 7 March 2021 with 162 employees.

The DTIC had approved Gelvenor Africa with funding of R12,5 million on 10 February 2022 through the CTFLGP administered by the IDC and the legal agreement was signed between IDC and Gelvenor Africa. Gelvenor Africa intends to employ 230 permanent jobs and the supply of primary textiles (fabrics) was expected to create large downstream employment. Gelvenor Africa intends to be operational within the next three months’ subject to the disbursement of funds.

Economic benefits of beneficiation: The DTIC had reported that South Africa has achieved a positive trade balance; however, there had still been significant exports of raw materials and the continued importation of finished products. The Committee enquired whether a clear pursuit of the policy of beneficiation targeted at these areas could not further improve the trade balance while addressing the negative unemployment rate. The DTIC agreed with the sentiment expressed around the benefits of beneficiation in terms of improving the trade balance and creating job opportunities. It indicated that it has supported a number of projects over the last few years to ensure that primary minerals are beneficiated. In the recent Mining Indaba, there had been a number of projects which the Minister had provided examples of. The projects included traditional beneficiation projects, as well as a number of minerals of the future, particularly in the electric vehicle (EV), and EV storage and battery market. These projects were mainly funded by the IDC, which was also a strategic partner in them, and were expected to come online in the next 12 to 24 months. Examples of the projects included Bushveld, a primary vanadium producer, for vanadium-based renewable energy storage technologies; Lonix/Thakadu Battery Materials for EV storage; Gigamesh for the processing of cobalt, nickel and copper for EV and EV storage markets; and Vanadium Redox flow Battery, South Africa’s first vanadium-redox flow battery manufacturing plant implementation. The idea behind beneficiation is to ensure that there is value-added in the products South Africa produces and exports.

Exports of raw materials: The DTIC highlighted that exports remained largely driven by precious metals, among others. However, the exporting of raw materials had a negative impact on job creation opportunities, as it did not cultivate the development of downstream industries that would increase the domestic multiplier effect of the mining and primary agricultural sectors. The Committee enquired why this continued to happen and what was being done to curb this. The DTIC informed the Committee that it has five types of interventions to assist in growing exports by supporting businesses to transact abroad, to become more competitive and to access certain markets to promote higher value-added exports. These are:

Trade negotiations to establish a predictable rules-based trading environment for South African businesses abroad, and as far as possible to carve out special concessions for businesses.
Exporter development to grow new and existing companies, including larger companies, to be able to export and operate in global markets. The Global Exporters Passport Programme is a dedicated programme where the DTIC capacitates and trains enterprises that have not yet accessed the export market. It also has other exporter training interventions in this regard.
Export promotion to assist enterprises to access new markets, as well as optimise current markets that they are in. The Export Marketing and Investment Assistance Scheme supports businesses to go abroad in as part of trade exhibitions and trade missions, among others. The Scheme can reimburse companies for these expenses of pay the total cost for the company dependent on certain criteria, such as the size of the company.
The Export Credit Insurance Corporation, a DTIC agency, provides export credit insurance cover for South African companies that want to export and invest in capital projects abroad.
Diplomatic capital in terms of government-to-government interactions where the Ministerial or Presidential Office can be requested to raise particular issues or bottlenecks that companies are facing abroad or to highlight opportunities that companies want to pursue abroad through Bi-national Commission of Cooperation. These are strategic platforms where South Africa can raise and carve out opportunities for its companies abroad and use government-to-government interactions to facilitate this.

In addition, the DTIC offers overarching support through its economic research and analysis capability. This includes offering research support to companies about the countries and markets they intend to access, as well as on the ground market intelligence through its foreign economic representatives abroad. It emphasised that leveraging export markets was critical to achieve the level of economic growth, which the country targeted, as the South African economy was too small to achieve the necessary economies of scale for global competitiveness.

DTIC business incentives: The DTIC reported that it had spent 38,3 percent of its budget on business incentives. The Committee requested that the DTIC clarifies what these business incentives were, and how many new industries had been opened and were creating jobs as a result of these incentives. Furthermore, what measures the DTIC implemented to ensure that the statistics in relation to the incentives were accurate. The DTIC explained that it had a number of different incentives including the Export Market and Investment Assistance Scheme, Support Programme for Industrial Innovation, Film and TV Production Incentive, Global Business Services, Manufacturing Competitiveness Enhancement Programme, Technology and Human Resources for Industry Programme, and Industrial Financing via the IDC.

The DTIC informed the Committee that annually it underwent a rigorous audit process to verify the numbers which it reports. In addition, it provides and Annual Incentive Report, which provides a detailed list of beneficiaries supported by the incentives. The IDC also undergoes a similar process and discloses the list of beneficiaries. These reports are publicly available.

Reports of company failure in spite of financial support offered: While the DTIC has reported increased investment commitments by Aspen Pharmacare and Biovac to rollout the local manufacture of vaccines, recent media reports have inferred that some of these facilities would be closing down due to low uptake of the vaccines. Furthermore, there have been other reports of companies that were established in response to the localisation drive that have subsequently closed down, such as an electronic company and a condom factory in the Eastern Cape. The Committee requested the DTIC to provide a list of companies that it and the DFIs had funded, including statistics about their geographical location, how many of these had closed down and the reasons for their closure. The DTIC advised that the Aspen Pharmacare plant in Gqeberha had not closed. Its Gqeberha site had five different manufacturing units, one of which it was a dedicated sterile facility. Two of the production lines in the sterile facility had been repurposed from anaesthetic production to vaccine manufacturing. This was in response to the pandemic and the discriminatory distribution of vaccines in favour of the developed world. The pharmaceutical company had been indicating to all relevant actors that there was a lack of support and a lack of orders for its vaccines, as none of the 2,1 billion doses procured and distributed by Covax, one of the international procurement agencies, had been procured from Aspen or any other African manufacturer in spite of a global call to support Africa’s efforts in developing its vaccine manufacturing capabilities.

Biovac has faced similar challenges to Aspen, in spite of support from the African Union and the South African government for the distribution of locally produced vaccines in Africa. The DTIC agreed that this was a significant challenge and was sympathetic to the companies, as there was a need for the local manufacturing of vaccines given the relatively low levels of vaccination on the African continent as compared to other parts of the world, as well as a need for continued advocacy of the continental vaccination drive. Furthermore, Biovac required national support for the manufacturing of PCV13 and Hexaxim vaccines through local procurement for the Expanded Programme on Immunisation.This production capability had been facilitated through technology transfer agreements with Pfizer and Sanofi Pasteur, respectively.

In terms of the condom facility in the Eastern Cape, the DTIC informed the Committee that the production facility had never been in operation and was in the process of liquidation well before the pandemic had reached South Africa.

Scrap metal: The export of scrap metal has allegedly encouraged the theft of copper cable and metal causing serious damage to public infrastructure and having a negative impact on the economy. The Committee enquired whether the DTIC had considered banning the export of scrap metal, and if not, what was there rationale for not considering this. The DTIC acknowledged the damage being done to public infrastructure by the conduct of criminals stealing cables and supplying these to scrapyards. At present, these sales were governed by the Second-Hand Goods Act (Act No. 6 of 2009). As this legislation falls within the ambit of the Minister of Police, actions to enforce this legislation resides with the South African Police Service. Given the negative impact such theft imposes on the economy; additional measures are necessary.

Government was considering a comprehensive package of additional measures to discourage scrapyard owners from purchasing stolen cables. These measures would be taken to Cabinet and communicated once Cabinet has considered the matter.

Engagements on trade relations and negotiations: Under Programme 2, Trade Negotiations and Cooperation, the DTIC had held engagements with a number of countries and groupings, such as the AfCFTA, Brazil, Russia, India, China and South Africa (BRICS), the G20 and Taiwan. The Committee enquired what benefits were expected to emanate from these engagements, and how these would assist South Africa to meet its national priorities of job creation and poverty reduction. The DTIC responded that the intention of the trade engagements was to broaden the market access for South African producers, so that these companies can increase their local production. This has a direct impact on job creation, and should thus indirectly impact on poverty alleviation. The AfCFTA was a good example of this, as it opens the African market of over a billion people to South African companies and has the potential to advance South Africa’s position in terms of exports and creating local jobs in the South African economy.

Bilateral engagements with various trade partners regularly take place using formal structures such as Bi-national Commissions, Joint Economic Commissions, joint working groups, etc. Usually, the agenda covered an overall assessment of trade and investment relations and flows between the parties; interventions to increase flows; other areas of economic cooperation; and relevant policy, technical or legal matters that affect trade and investment.

The bilateral engagements seek to facilitate or remove trade and investment barriers to increase South African exports, particularly of higher value-added products, and to increase inward investment to South Africa. Some examples of such recent efforts included:

China: Removal of a “re-listing” barrier to South African exports of oysters, after one year of not being able to export to the Chinese market.
China: Fruits originating from China were packaged in boxes marked with South African trademarks and exported to the Middle East. An agreement had been reached with China to act against the illegal use of South African trademarks.
Taiwan: Taiwan undertook to encourage more Taiwanese companies to invest in South Africa in the clothing, textile, leather and footwear; automotive; ICT; and Business Process Outsourcing sectors, most of which were labour-intensive, and provide employment for women and youth.
Taiwan: Taiwan agreed to provide capacity building programs on SEZs and the Textile, Clothing, Leather and Footwear sector. The DTIC was currently working with the Taipei Liaison Office and other stakeholders to ensure full implementation of this outcome.
France: South Africa signed a Memorandum of Understanding on Export and Investment Promotion. France is an important investment partner for South Africa with investment in, amongst others, renewable energy, pharmaceutical, financial services, capital equipment, and consumer products. On this basis, more than 20 French companies made investment commitments of R50 billion at the Presidential Investment Conference in 2022.
India: Engagement with India for in-transit cold treatment for South African exports of apples and pears to India was at an advanced stage. This would save costs and reduce shipping times for South African exporters.

Investment opportunities as a result of the AfCFTA: The establishment of the AfCFTA is purported to create market access across Africa with opportunities for investment, manufacturing and increased intra-African trade. The Committee enquired what opportunities had been created by the AfCFTA for South Africans in the region and the broader continent, in particular in terms of the investment footprint by South African companies, especially in terms of black industrialists. The DTIC responded that the full implementation of the AfCFTA would unlock business and consumer spending by 2030 in a range of sectors supporting exports and the investment footprint by South African companies. According to the World Economic Forum, opportunities flowing from the AfCFTA include agriculture and agro-processing; manufacturing; construction, utilities and transportation; wholesale and retail trade; banking and insurance; as well as ICT.

In addition, Southern African Customs Union through its Export Scoping Engine model have identified targeted opportunities in leather and leather products; fruit and vegetables; meat and meat products; textiles and clothing; as well as essential oils and cosmetics with key markets being Angola, Egypt, Ghana, Malawi, Mauritius, Mozambique, Zambia and Zimbabwe.

Tensions between China and Taiwan: Given the increased tensions between China and Taiwan recently, the Committee requested the DTIC to clarify its trading relationships with the BRICS partners and Taiwan. Furthermore, it enquired what role South Africa was playing, if any, in terms of the relationship between China and Taiwan, whether there were any plans in place in the event that China engaged in a military invasion of Taiwan, and what would the impact of such an event be on South Africa. The DTIC informed the Committee that the policy position on Taiwan is led by the Department of International Relations and Cooperation (DIRCO). South Africa’s position remained that of a “One China” policy. Therefore, the bilateral engagements with Taiwan on trade have been at an official level under the leadership of DIRCO as this is a very sensitive matter.

Dubai Expo: During the Dubai Expo, there had been an emphasis on renewable and clean energy opportunities in South Africa. The Committee requested the DTIC to provide examples of companies or opportunities that had been showcased, particularly in relation to black beneficiaries. Furthermore, for the DTIC to indicate which areas and provinces benefited most from the Expo, and the reasons for this. The DTIC informed the Committee that, during Expo 2020, it had hosted a number of webinars that showcased renewable and clean energy opportunities in collaboration with the Department of Mineral Resources and Energy and their state entities. These webinars had been open to all provinces to participate:
- 7 March 2022: Showcasing South Africa’s most Innovative Talent;
- 9 March 2022: South Africa – Europe Renewable Energy Session;
- 13 March 2022: Future of Battery Minerals in South Africa;
- 14 March 2022: Platinum Valley Program in South Africa;
- 14 March 2022: Hydrogen Economy in South Africa;
- 15 March 2022: South African Upstream Petroleum Investment Potential; and
- 15 March 2022: Oscar Reactor Calculation System.

An example of a black-owned renewable energy company that had physically participated at the South African Pavilion was Wetility. The company had been part of the MultiChoice Small, Medium and Micro Enterprise Accelerator Programme at Expo 2020, and it offered alternative renewable energy solutions for households.

Review of the Lotteries Act: The DTIC had indicated that it had finalised its Regulatory Impact Assessment of the Lotteries Act (Act No. 57 of 1997) and that the recommendations would inform future legislative changes. The Committee enquired whether the legislation would be amended or whether a new legislation would be introduced, as well as what the timeframes for introducing the proposed legislation to Parliament would be. The DTIC responded that the regulatory impact assessment of the Lotteries Act had been completed. Reviews are conducted on an ongoing basis for legislation that is administered by the DTIC. Subsequent to the completion of the review, the plan is to undergo a legislative development process, which includes the development of a policy around the policy concerns and the issues that had been identified and raised as part of the review. Some of the aspects the review considered were the model of the distributing agencies, the structure of the National Lottery operator, some of the definitional constraints that had been identified, and illegal or unlawful lotteries operating in the country. The DTIC indicated that these reports are considered internal documents until the legislative processes have been finalised.

Challenges with the Tirisano Construction Fund: Under Programme 9, Competition Economic Planning, the DTIC had underspending of R8,6 million, of which R5 million was attributed to delays in disbursement from the Tirisano Construction Fund due to challenges with its financing model. The Committee requested the DTIC to clarify what challenges were being experienced with the financing model of the Tirisano Construction Fund, and what mechanisms were being implemented to address this. The DTIC explained that the Tirisano Fund was established a number of years ago as a result of the settlement of a competition investigation in the construction industry. The settlement was between the Competition Commission and a number of construction companies for an annual payment into the Tirisano Fund. Subsequently, some of these construction companies landed in financial difficulties and distress, including business rescue. Hence. the flow of funds into the Tirisano Fund had been delayed. Therefore, the underspending in the Tirisano Fund is predominantly attributable to those delayed payments from the construction companies. The DTIC was working with its legal team, as well as the construction companies, to see how the Fund could be revived.

Reasons for underspending: The DTIC reported underspending of R36,6 million under Programme 3, Spatial Industrial Development and Economic Transformation, and of R27 million under Programme 10, Economic Research and Coordination. The Committee requested the DTIC to clarify in which areas it had underspent in terms of Programme 3, and which studies had not been completed under Programme 10, as well as the progress that had been made in those studies. The DTIC clarified that underspending in Programme 3 was mainly due to the process of listing the B-BBEE Commission as an independent entity, and the appointment of the SEZ Advisory Board not being finalised by the end of March 2022. In terms of the B-BBEE Commission, there was a process underway to try and list the Commission; however, the DTIC had budgeted for the Commission’s establishment including a budget for it to rent office space off-campus. However, given financial constraints, the DTIC indicated that it would be better for the Commission to remain on its campus. In terms of the appointment of the SEZ Advisory Board, the Board had not yet been established at the time. The work that the Board was responsible for had been budgeted for but had not been performed, which contributed to the underspending.

Under Programme 10, the affected research was on the Active Pharmaceutical Ingredients. The project had not been finalised by the end of March 2022, which contributed to the high level of underspending.

Furthermore, the Committee requested the DTIC to clarify how most of the underspending in its programmes was due to lower than expected compensation of its employees from lower cost of living adjustments. The DTIC indicated that there had been a few positions where people were acting and/or were vacant within the DTIC. It was in the process of filling critical positions, namely that of the director-general and the vacant deputy director-general positions. Once these had been filled, it would reassess its budget and then consider other positions required within the DTIC subject to the organisational structure being fit for the purpose of the mandate of the DTIC. The acting positions have significantly contributed to the underspending.

Possible merger with the Department of Small Business Development: In 2009, the Department of Small Business Development and of Economic Development had been split from the former Department of Trade and Industry. Recently, there appeared to be some discussion of the possible merger of the Department of Small Business Development with the DTIC. The Committee enquired whether such a merger was being considered, and what the DTIC’s stance on such a merger was. The DTIC responded that through the Economic Cluster, the DTIC and the Department of Small Business Development work very closely. This had been evident during the coordinated response to the recent floods in KwaZulu-Natal.

Allegations of fraud and misconduct by officials at the DTIC: Two officials of the DTIC had been implicated in allegations of fraud and misconduct. The first, a chief director, had been suspended and was facing disciplinary action for allegations of fraud and an official from the Department of Agriculture, Land Reform and Rural Development was allegedly involved. The second, a deputy director, had allegedly not disclosed a financial interest, which may have had an impact on the awarding of a contract. The Committee requested clarity on what the nature of the allegations was, and the status of disciplinary actions. The DTIC responded that the Human Resources within the Corporate Services Unit manages disciplinary matters. The Department of Public Service and Administration requires that all senior management and personnel working in the finance area must annually disclose their financial interests. Therefore, the matter involving the Deputy Director that had not disclosed their financial interests within the regulated timeframes was a compliance issue. This was an isolated incident, which the Corporate Services Unit was dealing with.

With regard to the suspension of the Chief Director, the matter was still ongoing. The DTIC was in the process of gathering information from witnesses, one of whom was from another Department. Therefore, it could not disclose further information at this stage.

The appointment of a new Director-General: Given that the Director-General plays a critical role in the continuity, stability and strategic direction of the DTIC, the delay in filling the post was not considered conducive to the efficient and effective operation of the DTIC. The Committee enquired what progress had been made in appointing a new Director-General for the DTIC, and what the timeframes was for this process to be concluded. In terms of the process of appointing the Director-General, the DTIC indicated that following the retirement of the former Director-General, Mr L October, the Minister had established a transitional team consisting of the Deputy Directors-General to create some leadership stability within the Department. Subsequently, the recruitment process had been recommenced since the completion of the DTIC’s 2022/23 APP. The process is expected to be completed within the next few months.

The internship programme: The Committee enquired whether the DTIC had capacity to absorb the interns it had employed, and how many interns had been employed permanently after successfully completing the programme. In addition, the Committee requested the DTIC to provide information on what types of skills and in what fields graduates were being targeted for recruitment as interns, and how many interns had been employed over the last two years. The DTIC informed the Committee that it recruited skills in the areas of Public Administration or Management, Business Management or Administration, Law, Social Sciences, Statistics, Economics, Research, Accounting and Cost Management, Administration, Labour Relations, Labour Law, Facilities Management, Quantity Surveying, Property Management, Project Management, Contract Management, Economic Development, Agricultural Economics, Internal Audit, Financial Information Systems, Supply Chain Management, Events Management, Human Resource Management, Financial Management, Public Policy, Information Technology, Policy Development, Development Studies, Econometrics, Political Economy, and International Relations which covers an array of areas within the DTIC where these skills can be utilised.

Of the 54 Interns that had been recruited, 41 had been still in the employ of the DTIC as on 31 March 2022.No interns had been appointed within the DTIC on either a permanent or contractual basis due to budgetary constraints in the Compensation of Employees’ budget as well as the fact that this is not allowed by the Department of Public Service and Administration (DPSA) without a due recruitment and selection process being followed.Thirteen interns had left the services of the DTIC having received employment externally.

The DTIC clarified that it was not a directive from the DPSA to allocate 10 percent of its vacant posts to recruit and retain graduates, but rather this was a recently published guideline going forward. Therefore, the DTIC would provide for this in future based on its available budget and critical skills requirements.

Review of the entities’ Governance Framework: The DTIC had targeted to finalise the review of the entities’ Governance Framework by the end of the 2021/22 financial year; however, this had not been achieved. The Committee enquired what resources were required to complete the review, and what are the timeframes for its completion. The DTIC indicated that it would deal with the Governance Framework decisively in the 2022/23 financial year. The Chief Economist and his unit were engaged to assist in ensuring that the Review was completed timeously. This process would be led by the acting Chief Operating Officer.

4.Conclusions

Based on its deliberations, the Committee drew the following conclusions:

The Committee was of the view that unemployment remains a challenge and welcomed efforts by the DTIC and business to address this.

The Committee supports the implementation of the Master Plans as a tool of government, working with organised labour and business to unlock investments, increase exports, industrialise, and structurally transform the South African economy.

The Committee was concerned about the continuous underspending and the impact it may have on the DTIC’s programmes, as it may hamper the implementation thereof, as well as the development imperatives of government.

The Committee was concerned about the impact of the illegal exportation of scrap metal and its impact on the theft of infrastructure. The Committee encouraged the DTIC, in conjunction with the South African Police Service and other relevant government departments, to expedite the development of additional measures to discourage scrapyard owners from purchasing stolen cables and other public infrastructure, including a possible ban on the export of scrap metal.

The Committee noted that there had been limited uptake of the Film and Television Incentive for the production of local stories. It was of the view that the DTIC should continue promoting the incentive to local producers given the multiplier effect on the upstream and downstream industries.

The Committee was concerned about the impact that the national lockdown has had on black industrialists. It encouraged the DTIC to promote the Black Industrialist Programme to ensure greater uptake and to offer non-financial support to black industrialists to ensure their sustainability. Furthermore, the Committee requested the DTIC to reconsider the formulation of its key performance indicators in respect of its incentives to include clear targets regarding the number of black industrialists to be approved for each financial year.

The Committee welcomed the DTIC’s proactive approach in monitoring the tender advertisements and bid documents to ensure that they specify the local content requirements for designated goods and services, and measures to ensure that government departments and entities implement these requirements.

The Committee acknowledged the DTIC’s efforts to engage the National Treasury on the development of the new Public Procurement Bill in relation to localisation.

The Committee welcomed the DTIC’s efforts to ensure beneficiation and black participation in the renewable and clean energy sector to assist in addressing South Africa’s energy challenges.

The Committee noted the ongoing challenges with the Tirisano Construction Fund resulting in underspending. It encouraged the DTIC to engage the relevant construction companies to find a solution to this matter.

The Committee encouraged the Minister to expedite the finalisation of the appointment process for the Director-General position, which has been vacant for over a year, as well as other senior management positions. It also emphasised that the DTIC’s organisational structure design process should be completed to ensure that the structure is fit for purpose and that the necessary posts can be filled. It was of the view that this was critical to ensure the stability and strategic direction of the DTIC.

Given challenges faced by some of the DTIC’s entities, the Committee was concerned by the slow progress in conducting the review of the entities’ governance framework. It encouraged the DTIC to allocate the necessary resources to ensure that this review could be concluded and that the necessary changes to the governance framework are implemented.

5.Appreciation

The Committee would like to thank the Acting Director-General of the Department of Trade, Industry, and Competition, Mr S Khan, as well as their team, for their cooperation and transparency during this process. The Committee also wishes to thank its support staff, in particular the committee secretaries, Mr A Hermans and Mr T Madima; the researcher, Ms Z Madalane; the content advisor, Ms M Sheldon; the committee assistant, Ms Y Manakaza; and the executive secretary, Ms T Macanda, for their professional support and conscientious commitment and dedication to their work. The Chairperson wishes to thank all Members of the Committee for their active participation during the process of engagement and deliberations and their constructive concluding remarks reflected in this report.

Report for information purposes

[1] DTIC (2021a)

[2] DTIC (2021a) and (2021b)

Documents