The Portfolio Committee on Trade and Industry met on a virtual platform for a briefing by the Department of Trade, Industry and Competition on the Master Plans to support industrialisation in South Africa in line with the government’s Economic Recovery Plan.
The Deputy Minister of Trade, Industry and Competition informed Members that four Master Plans were in operation and two Master Plans were nearing completion. A presentation by the Department of Trade, Industry and Competition revealed that the Master Plan was a tool supported by government but there was a central role for the private sector and trade unions. Master Plans were based on a social compact. Currently there were four Master Plans in operation: Retail-Clothing, Textile, Leather and Footwear Master Plan, Poultry Master Plan, Sugar Master Plan and the Automotive Master Plan. The two new Master Plans which would be introduced in the few weeks would be in the Steel industry and in the Furniture industry. The Department was engaged in negotiations with the relevant role players.
In general, the Master Plans were working well. There had been particular successes in clothing, textile, leather and footwear, especially the latter where there had been significant growth. Sugar and Poultry were doing very well and millions more chickens were being produced, leading to a cutting down on the number of imported chickens. He reminded Members of the R10 billion investment by the auto manufacturer, Mercedes-Benz, noting that the President of SA would shortly be opening the new C-Class factory. Ford Motors had also committed R16 billion.
Members were looking forward to an increase in the number of Master Plans across the sector that would drive the industrial base. They asked what progress had the Department made in terms of recognising Small, Medium and Micro Enterprises (SMMEs) as part of the industrial landscape in SA, what moves were there towards utilising the untapped mineral resources in the country for the benefit of ordinary South Africans, was a social compact the best methodology for Master Plans, should the methodology for Master Plans not be about inclusive growth, job creation, competitiveness, lowering the cost to consumers, what did the increased cost of locally produced goods do to the consumer and to headline inflation, what modelling had been done regarding price increases for consumers and why was the rebate system in the Clothing, Textile, Leather and Footwear Master Plan so extremely complicated?
Members were concerned about the lack of competitiveness of big business that accepted incentives but did not become competitive. They asked what had the Department done to increase poultry exports, especially of white meat, did the Department not agree that the dysfunctionality of ANC-run municipalities where the poultry farms were situated hampered development, what was the thinking behind the Automotive Master Plans as major markets, such as the United Kingdom, legislated against selling fuel-consuming vehicle, how would the stakeholder ensure compliance with localisation and why did South Africa not enter into a free trade agreement with China and other BRICS partners.
The Chairperson welcomed everyone to the meeting, noting that all Members appeared to be in attendance.
The Committee Secretary called the roll and noted that Prince Zolile Burns-Ncamashe (ANC) was the replacement Committee Member for the late Ms P Mantashe (ANC) but that his name would not appear on the Committee register until his deployment to the Committee was formalised in Parliament.
The Chairperson welcomed Prince Zolile Burns-Ncamashe to the Committee. He noted that the Minister of Trade and Industry, Minister Ebrahim Patel, was unable to attend but he welcomed Deputy Minister Fikile Majola and Deputy Minister Nomalungelo Gina. He invited Deputy Minister Majola to introduce the day’s presentation.
Remarks by the Deputy Minister of Trade & Industry
Deputy Minister Majola noted that dtic would present an update of the Master Plans since the presentation made by the Minister of Trade and Industry on 27 October 2020. Four Master Plans were in operation and two Master Plans were nearing completion.
The Deputy Minister invited the Director-General of dtic, Mr Lionel October, to make the presentation.
Presentation by the Department of Trade, Industry and Competition
Introduction by the DG
Mr October explained that the Master Plans were a tool to support industrialisation in Asia. In SA, the Master Plan was a tool supported by government but there was a central role for the private sector and trade unions, so it was a social compact. Currently there were four Master Plans in operation: Retail-Clothing Textile Leather and Footwear Master Plan, Poultry Master Plan, Sugar Master Plan and the Automotive Master Plan. The two new Master Plans which would be introduced in the few weeks would be in the Steel industry and in the Furniture industry. The Department was engaged in negotiations with the role players.
In general, the Master Plans were working well. There had been particular successes in clothing, textile and footwear, especially the latter where there had been significant growth. Sugar and Poultry were doing very well and millions more chickens were being produced, leading to a cutting down on the number of imported chickens. He reminded Members of the R10 billion investment by the auto manufacturer, Mercedes-Benz, noting that the President of SA would shortly be opening the new C-Class factory. Ford Motors had also committed R16 billion.
Presentation by DDG, Thandi Phele
Ms Thandi Phele. Deputy-Director-General: Industrial Development Division, dtic, indicated that she was supported by many representatives of the private sector who were in attendance online. She explained that several of the slides recapped what the Minister had presented in October 2020. She would only briefly refer to those slides but the majority of the presentation provided new implementation and achievements made since reporting.
It was a shift away from a state-centric developmental approach to a partnership model. It was meant to harness a broad range of expertise to promote sustainable production capabilities to stimulate economic growth and job creation.
The four completed dtic Master Plans covered more than 500 000 direct workers. Two Master Plans dealt with food security and rural development, i.e., Sugar and Poultry; one Master Plans dealt with a labour-intensive sector with predominantly women workers and entrepreneurs and that was the Retail-Clothing, Textile, Leather and Footwear (CTLF) sector; one dealt with major earners of foreign exchange for South Africa and created a platform for advanced manufacturing, i.e., vehicle manufacturing. Retailers had launched a summer 2020 ‘Buy Local Campaign’ and had provided specific support for local brands in-store. There had been media releases and media coverage had been more prominent in localisation efforts.
Ms Phele noted that the COVID-19 pandemic had demonstrated the fragility of global supply chains through unprecedented disruptions. While those disruptions had imposed immediate costs on the economy, they had also provided a stronger rationale for the localisation efforts. The dtic would sharpen its non-financial support and focus efforts on addressing illicit trade, including through the use of trade measures to support the domestic industry. The stabilisation of industries remained key to the efforts of the dtic to protect jobs. In the next two months, before the end of the 2020/21 Financial Year, dtic intended to finalise the Steel Master Plan and the Furniture Master Plan, both of which were at the final stages of stakeholder consultation and negotiations.
She pointed to the fact that the implementation and monitoring of progress with Retail-CTLF, the Automotive, Sugar and Poultry industry Master Plans would deepen localisation efforts across all Master Plans and dtic would make adjustments to take account of Covid-19 as well as the Economic Reconstruction and Recovery Plan.
The DDG noted that reciprocal commitments for all stakeholders were critical for successful implementation of Master Plans, including focus on localisation, development of SMEs and the informal economy.
The Chairperson thanked the presenter and invited questions and comments.
Mr W Thring (ACDP) appreciated the Master Plans. He was looking forward to an increase in the number of Master Plans across the sector that would drive the industrial base. It was understandable that SMMEs were the backbone of industrial development, so what progress had the Department made in terms of recognising the SMMEs as part of the industrial landscape in SA?
He stated that the ACDP had spoken to localisation and beneficiation. He saw positive development in localisation, particularly in the clothing, textile, leather and footwear industry which was positive because there was lots of development there, but what about the other sectors? One of the challenges was to mining and intergovernmental relationships. SA had US$3 to US$5 trillion of untapped mineral resources. There was the African landscape which SA was looking at moving into in terms of the African Continental Free Trade Agreement (AfCFTA). So what moves were there to utilising the resources in the country for the benefit of ordinary South Africans?
Mr D Macpherson (DA) began with the first line in the DDG’s presentation that concerned him: she had said that the Master Plans were based on social compacts. He would have thought that the methodology for Master Plans would have been about inclusive growth, job creation, competitiveness, lowering the cost to consumers, etc. He would have thought that there would be many more important things that would be the cornerstone of Master Plans rather than social compacting. He asked for a clarification of that point. Had the presenter perhaps omitted to mention all those things?
Social compacting benefited one group of people only and that was big business as they were the only people at the table that government spoke to. It was only for people who belonged to bargaining councils. Government spoke to those in NEDLAC, etc. It had been proven to date that small business and SMMEs had no place in the social compact. The ideological framework of the Master Plans needed to be clarified.
Mr Macpherson noted that the presenter had spoken as if Master Plans were the silver bullet, the panacea, for industrialisation through localisation, but what about the cost increase through localisation? Local goods were more expensive due to a lack of competition, due to import costs, cost of electricity, etc. What did that do to the consumer and to headline inflation? What modelling had been done regarding price increases for consumers?
He added that, in the Clothing, Textile, Leather and Footwear Master Plan, the biggest headache was the rebate system. One needed a PhD to understand the rebate system due to its extreme complexity. The dtic could not say that was not its problem but a South African revenue Service problem because it was the Department’s problem. What was the Department doing around complexity of the rebate system? What was the Department doing about the continuous flood of illegal imports into the country? Customs continued to sit on its hands and do very little. In the previous year, he had raised the tremendous opportunity that had existed around hospital linen, but had warned that, unless something was done, foreign goods would flow into the country and decimate local production. Unfortunately, that realisation had come true.
Mr Macpherson continued with reference to the Poultry Master Plan. What mechanism did the dtic have in place to deal with the poultry producers who were all big multi-million Rand Johannesburg Stock Exchange-listed profit-making machines? What was dtic doing to improve their competitiveness? That was the bottom line as to why local poultry producers were not able to compete with international markets. What was dtic doing about that? Instead of producing poultry at a lower cost, all the profits went to shareholders because that was what big business did. That was the reason that those poultry producers could not compete. What had the dtic done to increase export, especially of white meat? He had had that conversation with the DG many times before but nothing was done in the export of white meat to Europe where SA could obtain twice the price for white meat that it obtained in SA.
He added that the other thing was the dysfunctionality of ANC-run municipalities where the poultry farms were situated. The water was non-existent, the electricity did not work, roads had potholes in the potholes and nothing was ever done about the ANC-run municipalities. Over and over again, poultry producers raised the problem of the dysfunctionality of the municipalities. Nothing was done and the Committee was told that the problem lay with the Department of Cooperative Governance and Traditional Affairs, and not with dtic.
Lastly, Mr Macpherson turned to the Automotive Master Plans. The UK would stop selling fuel-consuming vehicles in, he thought, 2024. As a large number of the vehicles produced in the country went to the right-hand market in the UK, what was the thinking behind that Master Plans as it could be losing one of its major markets? The Master Plans could lose one of its most beneficial supporters.
Ms Y Yako (EFF) stated that Mr Macpherson had covered a lot of the questions. What deadlines was the dtic giving the Committee for seeing results from the Master Plans. The Committee had heard so much about the Master Plans since the commencement of the Sixth Parliament but when would the Committee start seeing results? It had not seen much increase in the industries and the excuse was always Covid-19. The DG had stated, in the last meeting, that there would be an improvement in the economy of SA, but if there was to be an improvement, there had to be an improvement in the areas spoken about in the meeting.
Mr M Cuthbert (DA) asked a question relating to the discussion that he had had with the DG in the Committee meeting the previous week where the DG had outright rejected the idea of a free trade agreement with China, particularly citing the fact that it would decimate the textile industry and the manufacturing industry, but the current arrangement had done nothing to stop illegal imports. A free trade agreement would, at least, allow for a dispute mechanism and some quid pro quo agreements and some concessions, particularly by a big trading partner like China. The evidence did not make sense of the points raised by the DG. It did not make sense to him either and so he wanted to know whether the Department had investigated potential treaties that the country could have in those industries and whether it did not make more sense to take it from that point of view, considering that the dtic would then have more clout, especially if China did not play according to the rules.
Ms R Moatshe (ANC) welcomed Mr Burns-Ncamashe to the Committee. The challenge for localisation was compounded by the lack of capacity to enforce it. How would the stakeholder ensure compliance with localisation?
Mr S Mbuyane (ANC) believed that the presentation had been very informative. He had identified three issues: the reimagined industrial strategy, the economic recovery and the development of the Master Plans. Were all three aligned to the strategies of government?
He noted four Master Plans. Financial resources had been allocated to each one, but the struggling one, which was the Sugar Master Plan, had only been allocated R1 billion. Why was that? It was a serious challenge. Another challenge was the under-pricing of invoices on imports. How was that going to be corrected and how did that connect to the duty rebate? He was particularly concerned about the clothing and textile industry in that regard.
Mr Mbuyane asked, in connection with the Automotive industry, whether the proposed agreement had been signed by with Transnet and, if so, whether it covered the entire SA. He welcomed the Toyota hybrid model, but he was not sure how it was going to work as it used electricity and petrol and, in SA, load shedding was a reality and the power points for the charging of hybrid models were not yet in place.
The Chairperson noted that it was important that four Master Plans were ready for implementation. The Portfolio Committee would have to find the best way to undertake oversight of Master Plans. There would be an issue of industrialisation. The term that he had heard was “industrialisation through localisation”. There would have to be more work relating to localisation. Dtic would have to look at the development of SMMEs as that sector of the economy would sustain growth and sustainability. When the Master Plans were carried out, would they contribute to the informal economy of the country? It would not be about what the dtic did, but how it linked with other departments, e.g., working with National Treasury for the designation of products for local procurement, so that production could be grown in the areas where there was to be procurement.
He reiterated that because the Master Plans were ready, it was the Portfolio Committee’s job to see that they were implemented. He requested the DG to focus on that point. He noted that some Master Plans were still outstanding.
Response by dtic
Mr October explained that oversight and monitoring was built into the Plans. There was an executive oversight committee chaired by the Minister that would meet at a minimum of once a quarter to ensure oversight. He agreed that the Department would have to be laser-focussed on implementation.
He noted that some penetrating questions and some complex issues raised by Members would become ongoing debates. He would only just touch on the responses because it appeared that there was a need for intensive debates in which the Members would have to assist with their views.
Replying to Mr Thring, the DG agreed that SMMEs were the backbone of an economy and the second issue was beneficiation. Except for textile, the Clothing Master Plan was dominated by SMMEs. In the auto sector, the assemblers were the OEMs but they only employed about 30 000 people and the big part in that sector was the component manufacturers. SMMEs made the tens of thousands of small parts that went into a motor vehicle. Localisation was tied to the downstream where one built the SMMEs. That was why there was a requirement of 65% local content in auto manufacturing. That developed more labour intensity and more SMMEs. That was a point that the Department made as a condition in the Auto Master Plan, i.e. components for the auto industry.
The DG explained that the Department was working hard on platinum beneficiation as that was the premium mineral and the economy had to move from being a gold economy to a position where the dominant mineral was platinum. Extensive work was being done by the dtic, together with the Department of Science and Innovation. A weakness of the economy was that it had been exclusively focussed on the mining endowment and the export of raw materials. That was the basis of the colonisation of South Africa and the basis of the apartheid government. The manufacturing sector was neglected. Beneficiation was really just another word for industrialisation.
He appreciated Mr Macpherson’s comments and he always learnt a lot from him. He had raised very complex issues that would not be resolved there and then. However, in the social compact, one needed to distinguish between means and ends. The end goal was, as stated by Mr Macpherson, greater employment, more value-added and more competitive and lower-priced goods. The means was through the social compact. One could have a top-down approach as in East Asia where governments decided what the plan was and imposed it on the private sector and the trade unions, and so on. As a democratic society, SA had decided that there could not be a top-down approach and hence the social compact approach. As in Germany, the SA government worked towards an inclusive approach that involved the private sector and trade unions as they were the ones who would have to implement the plan. The end goals were fully aligned to those identified by Mr Macpherson.
The DG agreed that the racially-based economy in SA was dominated by big business but the purpose of industrialisation was to expand the secondary industry and to bring in SMMEs and black players. He agreed that a sector could not be dominated by big business. Big business wanted to import all requirements and were against localisation and SMMEs, especially black SMMEs. That was why there was a collective process and smaller players were involved in the Master Plans process, as were the small growers in the Sugar Master Plans.
Regarding the possibility of price increases for consumers and other negative effects. There were big trade-offs. To protect producers, government needed to raise tariffs but if the tariffs were raised too high, prices rose. So, industrial policy was about finding the correct balance between the interests of the producer and the interest of the consumer and also between the upstream capital-intensive industry and the downstream labour-intensive players. One had to find the happy medium.
In terms of export markets, the DG explained that SA had had a breakthrough in the United Arab Emirates (UAE) and, for the first time ever, SA was exporting poultry into a big market. Europe was very protectionist and it put in place many trade barriers but SA was working on breaking down the trade barriers so that white meat could get to Europe.
He agreed that with Mr Macpherson about the problems associated with dysfunctionality in municipals. The country could not afford a weak state or weak local government. There had to be a mixed economy as that was essential for a strong market. He noted the point regarding the end of the fuel-based auto industry. Already Toyota was planning to produce hybrid vehicles and the Master Plans did include an electric vehicle strategy. The dtic would be tabling an electric vehicle strategy in Cabinet with the Department of Transport.
He indicated that Ms Yako was perfectly correct that the proof of the pudding was in the eating. He was already seeing green shoots: an additional 10 000 jobs in the auto industry, increased exports of poultry, increased production of sugar and massive exports of personal protective equipment. The country had not seen such a trade surplus for a long time, so there were green shoots.
The DG stated that he had given his current views on the matter of trade agreements, but he informed Mr Cuthbert that the Department was open for discussion and debate on the matter. He noted that even the US was moving away from the bilateral free trade agreements. The US had burnt its fingers with the early free trade agreements with Mexico and the North American Free Trade Agreement (NAFTA) and South Korea as those agreements had wiped out sectors of the US economy. He urged caution but the dtic was open to discussion on the matter. He would request Ambassador Carim and others to make a presentation to the Committee on the matter.
Mr October agreed with Ms Moatshe about the lack of compliance and that some people were importing and not localising as per the designations, but dtic had a mechanism in place for addressing the matter. There was also a hotline and the Department acted swiftly when it was made aware of any breaches. He asked that Members inform the dtic if they were aware of any such breaches of the localisation designations.
He informed Mr Mbuyane that the Master Plans were aligned to government’s Economic Recovery Plan as one component of the Recovery Plan was localisation and industrialisation. That was where alignment took place. Ms Phele worked with the new CEO of Transnet on a daily. Portia Derby was a former colleague who understood industrial policy very well.
Ms Phele responded to Mr Mbuyane’s question about the link between the Master Plans and the Recovery Plan. She explained that at the core of the Master Plans strategy was the need to industrialise, to increase growth, to increase job opportunities and to increase competitiveness. The Economic Recovery Plan had a number of strategies, one of which was the Master Plans strategy. She assured Mr Macpherson that the Master Plans was not seen as a silver bullet but, when working in collaboration with business and labour, the objectives just mentioned could be attained. All Master Plans had clear objectives and the negotiations addressed the means and methodology of actualising the process.
Under-invoicing, as previously indicated, was being addressed by an inter-governmental agency led by SARS to look at under-invoicing across the economy. A lot of work had been done in the clothing and textile industry as a test case. There would be a heightened focus on under-invoicing. The point made in the presentation on evaluation methods in customs was that globally, there were about seven steps for goods to go through customs but SA had only one to two steps. Part of the process was learning and tweaking instruments to respond to specific issues that were being raised. Customs did not have the capacity to evaluate all the products and correctly classify the products and so SARS was working towards a partnership between industry and customs. There was a strong commitment from business to collaborate with SARS in the matter and to develop the capability.
Compliance and local content had been addressed in the Committee on many occasions. One element that the DDG believed could assist was the Public Finance Management Act (PFMA) which allowed for remedies around misrepresentations by bidders, and bidders who were found not to be meeting the local requirements. As a democratic economy, bidders could make representation around issues where they believed that they could not support the local economy. The forthcoming Procurement Bill, which would soon be introduced into Parliament, would state explicitly, not only the regulation of local content, but will also stipulate sanctions against those who do not comply. To industrialise and grow will require the demand, from both the private sector and the public sector.
Ms Phele requested the Director: Policy Implementation, Mr Mahendra Shunmoogam, to respond to the concerns about the rebate system in the Clothing, Textile, Leather and Footwear sector as it was quite a technical matter.
Mr Shunmoogam explained that the rebate systems had been a joint submission from the industry and labour to the International Trade and Administration Commission (ITAC). In that submission, the complexities were created as the rebates impacted the fiscus quite heavily. The rebates applied only to the signatories to the Master Plans. One had to sign up to the Master Plan and commit to the requirements of the Master Plans, such as localisation, ensuring compliance in the industry, etc. The complexity was necessary so that the industry did not just take advantage of the rebate system. He added that there was a dedicated team that liaised with new members who signed up to the Master Plans and unpacked the complexities of the rebates for them.
Mr October concluded with a response to Mr Macpherson regarding the UK cessation of fuel-based vehicles after 2030. The matter was in hand and there was a working group which included the OEMs and component manufacturers around an electrical vehicle strategy. The former patriot from Pretoria, Elon Musk, had revolutionised the industry. All industry was moving towards electric vehicles but he believed that the gateway would, firstly, a move to hybrid vehicles until the electrical plug points were installed across the landscape. Toyota, Ford and other OEMs were geared to hybrid vehicles and had plans to go fully electric in the next phase. 300 000 vehicles were for local use and 300 000 were for export, 70% of which went to the UK. SA had to develop its own infrastructure so that, as the price fell, more SAs would be purchasing electric vehicles. Currently, the price was prohibitive.
Mr Cuthbert said that DG October had referred to the primary steel-making component as a core tenant of Mr Trump’s localisation policy in the United States. In this meeting, the Committee was hearing about the US strategy in negotiating trade deals. It was fine and well to look to leading economies but SA should chart its own path, taking its own interests into account. That was not an adequate position and he asked that Ambassador Carim be invited to address the Committee on research done on enhancing trade relations with BRICs partners as the last presentation in October had been very scant, particularly in respect of BRICs. He wished to propose that as a way forward.
The Chairperson noted that the Master Plan on Steel would be presented shortly.
Mr F Mulder (FF+) said that he had asked Minister Patel about localisation a couple of months previously. The FF+ valued localisation and the self-determination of SA and also the self-sustainability of regions. Minister Patel had stated that SA was a unitary state and the only way of encouraging local economies would be via districts, municipalities and metros. He asked if the DG did not believe that the policy was underestimating the value and the contributions that regions could make towards job creation. An example was the chain stores which had shelves filled with products from big industry and even imported products whereas there could be a local supply of many of those products. Could a space not be made in the Master Plans to accommodate regional economies and enhance job creation?
Mr Macpherson noted the DG’s correction that the UK would only be phasing out fuel-powered vehicles by 2030 but he noted that it took at least six years for a new model to be produced. Unless vehicle manufacturers such as Mercedes Benz and BMW that produced single variant vehicles were taking the discussion right at the moment, they would not be ready. They could not wait until 2027. Was that discussion currently underway? If it was not, such discussion had to begin sooner rather than later.
He stated that when it came to Master Plans, he wanted local manufacturers to do well, but there had to be a balance between the protection that government offered against the unwillingness of big business to be competitive. He shared the same sentiments as the DG regarding the attitude of big business towards small business. He noted that the Master Plans hinged on the protection of industries. Big business had always had a cosy relationship with government, to the detriment of small business. If the tariff protection measures continued to protect the uncompetitive industries, there would always be losers at the other end of the scale. The losers in steel were the downstream industries where there were half a million jobs; the losers in Poultry were the small-scale farmers and the consumers who had to pay R29 per kg more for poultry than they should if those businesses were more competitive. However, the industry did not have to be competitive because there was an 80% duty on chicken.
Mr Macpherson pointed out that there were always trade-offs. There had to be an understanding of cost trade-offs for the economy in terms of costs for consumers and towards inflation. He could assure the DG that as steel prices would increase because of the protection afforded to ArcelorMittal and food prices would increase because of JSE-listed billionaire companies that put up the price of chicken as they wished. However, it needed to be understood that that such pricing would have a negative impact on the economy. He did not expect such research within a week, but such cost trade-offs had to be attached to each Master Plans going forward.
Response by dtic
Ms Phele took the point regarding trade-offs. The dtic continued to have those debates about appropriate measures for the industry while taking into account the impact on the economy. The rebate system in the Clothing, Textile, Leather and Footwear sector allowed the dtic to look at where the reduction in tariffs in the sector made sense in the short to medium term to balance the interests of industry and consumers and to support the greater goal of localisation and competitiveness. She requested that dtic be permitted to make a presentation to the Committee on that issue, in greater detail, in the future.
Ms Phele responded to Mr Mbuyane’s question on Transport. There was a task team looking at how to improve the cost of rail, the cost of storage, and so on, to sustain the export competitiveness. She pointed out that the increased number of vehicles produced in the country required an increase in rolling stock. The dtic was working in tandem with Transnet so that they did not find themselves in a situation where cars were being produced inland but were not able to reach the coastal ports because of the logistical shortfall. Discussions also looked at logistics across the economy and where the right investments should be made in order to support the productive capacity and landscape that the Department would like to see going forward. The nuances in the logistics strategy dealt with the requirements that differed from one sector to another and the kind of support that was needed from the side of Transnet. Transnet was playing a major part in the localisation strategy and the conversation was also about the refurbishment of the current fleet, including the new locomotives that were now in the possession of Transnet. The discussions also focussed on Transnet’s preparations for the African Continental Free Trade Area because SA could manufacture and export wagons from Transnet Engineering. The dtic and Transnet needed to determine how Transnet could support the export of rail components, such as wheels and steel plates as there was a lot of value to be extracted from such exports.
Ms Phele made a plea for the Committee Members to assist in marshalling sister departments and other spheres of government to adhere to the localisation policy. She noted that there had been some very good results from the PPE process but, unfortunately, also some very bad results which had taught the dtic several lessons.
The Chairperson noted that the DDG had said that the Master Plans were ready for implementation. He invited the DG to make closing remarks.
Mr October stated that his excellent team leader, Ms Thandi Phele, had made him redundant and he did not need to make any closing remarks. He noted that there was a need for a discussion around the strategic approach of the Department.
Remarks by Deputy Minister Majola of Trade, Industry and Competition
Deputy Minister Majola thanked the DG and DDG for the responses. He thanked the Members for their useful comments and insights which would benefit the ministry.
Regarding the way forward, the next step was to finalise the additional two Master Plans in the next few weeks in order to accelerate implementation of the Master Plans. As Mr Mulder had pointed out, the district model was important and the regions would see the centrality of industrial development. The ministry would meet with the nine provinces and their MECs in the next few weeks and would focus on the new ideas and how they should be incorporated into the provincial plans so that, as Mr Thring had pointed out, there would be alignment between the different spheres of government. Mr Thring had asked about inter-governmental relations: in the State of the Nation debate, Minister Patel had pointed out that the ministry was working with the Minister and the Department of Mineral Resources and Energy on making changes in how business was done in mining with a focus on beneficiation. The two Ministers has met with the Minister of Public Enterprises to address the immediate challenges in industry and, as they moved forward, the focus would be on localisation and beneficiation.
Deputy Minister Majola noted that the DG had responded to Mr Macpherson but, as Deputy Minister, he had to say that he agreed that the issues of localisation and competitiveness were very important as outcomes. He thought that it was necessary to further deepen the approach to social compacting. As Mr Macpherson had said, big business players would work in their own direction if the dtic did not coordinate big business, labour and smaller players in the economy. The different social partners had not worked together sufficiently in the past, hence the need to deepen the social compacting. As DG pointed out, other countries, such as Germany, had built large modern economies on the back of social compacting.
Regarding the dysfunctionalities of Municipalities and the challenges of infrastructure, those had been aggravated by the rainy season. As the President had said, the country was focussing on infrastructure development. It was necessary to build the capacity of municipalities so that they could maintain the infrastructure. Deputy Minister Majola noted that Ms Yako was spot on, and the Chairperson agreed with her, that everyone wanted to see more action and to see results. When the team returned to the Portfolio Committee in three months’ time, the presentation would focus on action taken and progress made. He assured Mr Cuthbert that DG would set in motion a process to ensure that Ambassador Carim made a presentation to the Committee to discuss the matter of trade and take forward the important issues that Mr Cuthbert had raised.
In response to Ms Moatshe’s question, the Deputy Minister noted that the DDG had touched on the lack of compliance. It was a big problem across the economy, not just in the area of the dtic. For that reason, Departments had to work with Parliament to see how compliance could be improved. He informed Mr Mbuyane that Minister Patel had spoken a great deal about under-invoicing. It was a big leakage in the economy and so had to be addressed. The Minister had looked his counterpart in the eye and so the problem had to be addressed both with the team led by SARS and with SA’s trading partners.
The Deputy Minister agreed with the Chairperson that there had to be a focus on implementation. In the following week, he would be visiting Saldanha Park in the Western Cape so that he could ensure that the different tiers of government worked together.
He thanked the Members for their warm and welcome input.
The Chairperson appreciated the Deputy Minister’s input.
The Chairperson requested the Committee Secretary to advise on the meeting of the following day.
The Secretary informed Members that the Committee would engage in the process of shortlisting candidates for the position of Chairperson of the National Lottery Commission. Members had received the CVs of applicants in December 2020. The meeting would start at 09:00 the following morning on the virtual platform.
The Chairperson stated that there was no further business and thanked the Deputy Minister, the Department and Members.
The meeting was adjourned.
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