Hansard: NCOP: Unrevised hansard

House: National Council of Provinces

Date of Meeting: 27 Nov 2019


No summary available.








The Council met at 14:04.



The Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.






(Draft Resolution)



The Chief Whip of the Council moved: That, notwithstanding Rule 247(1), which provides that a sitting of the Council will be dedicated for oral questions, the Council considers the motion below and Division of Revenue Amendment Bill.



Question put: That the motion be agreed to.



In favour: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.



Motion accordingly agreed to in accordance with section 65 of the Constitution.






(Draft Resolution)



The Chief Whip of the Council moved: That the Council resolves that Rule 239(1), which provides inter alia that the consideration of a Bill may not commence before at least three working days have lapsed since the committee’s report was tabled, be suspended for the purposes of consideration of the Division of Revenue Amendment Bill.



Question put: That the motion be agreed to.



In favour: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West, Western Cape.



Motion accordingly agreed to in accordance with section 65 of the Constitution.






Ms D G MAHLANGU: Hon Chairperson, that was very kind of you. Hon Chairperson, hon Deputy Chairperson, hon Minister of Finance, the hon Tito Mboweni, hon members, [Bantu bekhethu beSewula Afrika, lotjhani.] fellow South Africans, I greet you. I would like to take this opportunity to table the report of the Select Committee on Appropriations on the Division of Revenue Amendment Bill 2019-20 financial year.



We have as per the prescripts, the legislation as the select committee go to our different provinces that is all nine provinces were visited. We have held meetings with all nine provinces and mandates therefore have been given to permanent delegates.



Hon Chairperson, allow me to make some important remarks. The committee feels very strong that going forward, Parliament must ensure that between the tabling of the Medium-Term Budget Policy Statement, MTBPS, by the Minister of Finance and Parliament rising, there is a need for enough time to be allowed for Parliament and provincial legislatures to process as per section 12(19) of the Money Bill and Related Matters Act 9 of 2009. This has been a



complain, hon members. Remember when we had a workshop with members from the provincial legislatures and SA Local Government Association, Salga, that we are not giving them enough time. The same complain has been received from the members that enough time is not received for us to process and apply our mind correctly in as far as this is concerned.



Hon Minister, we have understood the situation that you find yourself to present the MTBPS at the time that you did this year. However, going forward we humbly request that it must be done in time so that we can apply our mind and proper consultation can be done. To give an example, like it has happened in my province, on the 21st, that was last week that was the day on which I consulted the province and soon after that the committee had to have public consultations.



We have to make sure that every decision that we are taking as Parliament and as government is mandated and it is people centred. Public participation is the core of this government. This is the government of the people by the people for the people.



Hon members, I am going to go straight with your permission hon Chairperson of this House, to highlight issues, I mean to talk to



the recommendations. I am not going to talk about the issues that we have emphasized and highlighted because the report has been printed in the Announcements, Tablings and Committee Reports.



The Select Committee on Appropriations recommends that the Minister of Finance must ensure that the National Treasury Gazzette corrections to the Conditional Grant Framework as well as the new Conditional Grant Framework as set out in annexure two and three of the Bill, in accordance with section 16(4) of the Division of Revenue Act 2009 as soon as possible for all the affected conditional grants as set out in the reports.



While hon Chairperson, the committee notes the technical issues behind the School Infrastructure Backlog Grant adjustment and adjustments to infrastructure grants as a whole, the committee recommends that all procedural and technical issues needs to be swiftly and effectively dealt with to ensure that the financial support to the removal of these backlogs is given and that government does everything in its power to ensure the speedy completion of these projects. Very important to us and very deep in our heart and it has been emphasised as we went to the committees to say there is nothing that will make us or convince us as lawmakers or as oversight bodies for the grants to be used for something else



because the conditional grants come with specific conditions. Therefore we do not expect anything else to be done, unless specific procedures are followed or permission is given by Treasury. That is not going to be accepted by all of us.



Hon Minister and hon Chairperson, we have committed that the Sixth Parliament is going to be a dog with sharp teeth, we are not going just to buck, we are going to bite.



Chairperson and hon members, in order to prevent fiscal dumping and fruitless and wasteful expenditure, the Minister of Finance together with the Minister of Agriculture, Land Reform and Rural Development, the Minister of Health and the Minister of Basic Education and the affected Provincial Treasuries, should ensure that concrete steps are taken to build and demonstrate capacity to spend. Capacity is needed because we want to do away with this fruitless and wasteful expenditure, including developing clear plans to monitor expenditure for proposed additional allocations and ensure that all the proposed additional allocations are effectively and efficiently spent according to the approved plans before the end of this financial year.



What we want to avoid hon Chair and hon members is that year in and year out the Auditor-General has the same findings on the same departments and there are no mitigation plans. We have made it clear to the provinces and the relevant stakeholders to say mitigation plans are needed. They need to be developed and presented to the committees and we are going to make sure that they are not repeated and we are not only going to attend to them at the end of the financial year or at the end of the year. We will make sure that on quarterly basis where there are interventions needed, we do intervene.



The Minister of Finance should ensure that the Minister of Finance should ensure that the National Treasury approve the roll-overs contained in the Bill for all projects contained for all projects near completion timeously for the receiving municipalities. With regard to this we are talking about for an example the Regional Bulk Infrastructure to be used for emergency Vaal River pollution remediation and provinces. We are talking about provinces like Limpopo in terms of hospitals.



The committee appeals to the National Treasury, the Department of Co-operative Governance and Traditional Affairs and Salga to continue to support municipalities until the Eskom and the water



board debt issues are resolved. And to ensure that issues around provincial and municipal finances are attended to. To further ensure that municipalities create credible credit control measures, debt management policies and effective revenue collection strategies. We know we have heard about strategic plans, the intervention, the turnaround strategies and all those things and we are saying, enough is enough. We have looked at ourselves as the oversight body to say, if there were turnaround strategies and those oversight strategies have not worked, what have we done and what was our role? We took the blame to certain extent and we are ready to correct that.



The committee noted the issue of the prolonged drought raised by various provinces and the National Treasury’s response was that funding is available, but it is not being spent. Provincial departments who have been allocated drought funding should urgently develop a clear strategy to ensure that drought relief funds reach the appropriate beneficiaries and further identify possible management and deal with the relevant officials accordingly.



Furthermore Chairperson, the Minister of Finance, the hon Tito Mboweni and the Minister of Transport should report progress to Parliament, to both Houses, within three months after the adoption of this report on what has been done since the pronouncement of the



Moloto Rail Corridor by the former President Jacob Zuma, in September 2017.



The CHAIRPERSON OF THE NCOP: Hon Mahlangu, your time has expired.



Ms D G MAHLANGU: The Moloto Rail development is a matter of importance to us people living in that area. Thank you very much. [Applause.]



Declaration of vote:


Ms C LABUSCHAGNE: Hon Chairperson, the Western Cape province has considered the Division of Revenue Amendment Bill 2019, and while it is acknowledged that there is little scope for manoeuvre in this incredibly difficult financial time, we cannot forget that we got to this point as a result of years of ANC sponsored corruption, mismanagement and self-serving wastage.



The reality is that there are grave needs that should have been addressed by this budget, such as the appalling drought conditions experienced in the Western Cape, the Northern and Eastern Cape and other provinces. The absence of any assistance in this adjustment budget is sending the wrong message to struggling farmers in an already hostile environment.



The national government furthermore has an obligation to support safety and security programmes being driven in the provinces.

Considering the President’s commitment to fight the scourge of gender-based violence and the deployment of the SANDF to ganglands, it was expected that Premier Winde’s recent launch of the provincial safety plan would have received some financial support. Nothing is forthcoming.



The provincial and local equitable shares are based on outdated information which does not reflect the massive in-migration and urbanisation, which is placing health and education services under increased pressure. It has been generally agreed since 2016 that equitable share needs to be reviewed. This must now be prioritised.



The lack of consequence management for financial irregularities, mismanagement and fiscal imprudence has become a point of consternation for many South Africans and yet, the ever growing Public Sector Wage Bill seems to reward individuals and departments for poor choices. Serious penalties are demanded together with a right sizing of the wage bill.



We do note the incredibly tough balancing act that must be achieved to ensure South Africa’s financial viability. However, the continued



support of failing state-owned enterprises at the expense of life- changing services for real, average South Africans is unconscionable and as a result the Western Cape cannot in good conscience support this Bill. [Applause.]



Question put: That the Bill be agreed to.



IN FAVOUR: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape and North West.


AGAINST: Western Cape.




Bill agreed to in accordance with section 65 of the Constitution.



The CHAIRPERSON OF THE NCOP:      ... [Inaudible.] Thank you very much. I was saying that the majority of the provinces having voted in favour of the Bill, I therefore declared the Bill agreed to in terms of section 65 of the Constitution. [Applause.] We will now hon members move on to Questions. But before I proceed, I would like to take the opportunity to welcome the special delegates as well as the Ministers present. Further, I would like to make the following remarks just to remind members of what is expected of them:



The time for reply to a question by the Minister is five minutes maximum. Only four supplementary questions are allowed per question. A member who has asked the initial question would be the first to be allowed an opportunity to ask a supplementary question. The time for asking a supplementary question is maximum two minutes. The time to reply to supplementary question is four minutes and supplementary question must emanate from the initial question. I now call on the Minister to respond to the question. If you look at your Question Paper, hon members you will see that the first question is from hon T B Matibe and the question is Question 240 on Financial Misconduct in Local Government. This question is directed to the Minister of Finance. [Applause.]








Question 240:


The MINISTER OF FINANCE: Thank you very much Chairperson. [Interjections.]



Ms M O MOKAUSE: Chair, on a point of order. This podium here is made for Ministers and their Deputy to come and debate and answer questions. Can we have you here Minister?



The CHAIRPERSON OF THE NCOP: [Laughter.] Mokause, of course, you can’t order the Minister but your reminder is useful. Therefore I will request the Minister to come forward, to the podium. [Interjections.]



The MINISTER OF FINANCE: Chairperson, the question from the hon T B Mathibe is as follows: What is the role of the National Treasury in dealing with financial misconduct in the local government sphere?

And, what measures are in place to improve financial transparency and governance processes at the local government level? The answer to the question is as follows: Firstly, hon members would know that the legal framework is the Constitution of the Republic of South Africa which provides that accountability for municipal functions, service delivery and its finances rests with the municipal council.



This responsibility is discharged by the Mayor, local councillors and municipal manager who is appointed as head of the administration. It is only after a municipality has failed to discharge its responsibility or to investigate an allegation of



financial misconduct or offence that the National Treasury or the relevant provincial Treasury made direct that the allegations be investigated. Therefore, the first line of responsibility is the municipal council and the council must therefore take its full responsibility.



The National Treasury has a general monitoring and supporting role when it comes to the implementation of the Municipal Finance Management Act, as well as the financial misconduct regulations. The National Treasury has firstly supported municipalities and provincial Treasury by providing on going training to officials, councillors and members of the disciplinary boards to support the implementation of the regulations. Support was also provided through the Municipal Finance Management Act help desk established to assist municipal officials and councillors. I thank you.



Mr T B MATIBE: Hon Chairperson, thanks to the Minister for the response. I really appreciate the response that you have given. I think the main challenge we are facing is that from the point of view of government, from local level to national level, where I stand, I see us being more reactive than being more preventative in our approach to the issue of misconduct. We deal with it when it has occurred and I think more of our time and resources must be spent of



preventative measures to try and prevent whatever misconduct and malfeasance that might have happened at local government level. Any form of financial misconduct is a serious subversion on the resources that should be used to deliver services to our people. And as government, I think we should put more effort. That is my view Chairperson, on preventative. Thank you very much.



The MINISTER OF FINANCE: I agree fully that preventative measures must be taken to avoid all this, I think you called it malfeasance, whatever that means, it is a big word. But, the first lines of defence are the political organisations which governs the councils

... [Interjections.] Oh! Sorry.



Chairperson, the first line of defence in this situations are the political parties that governs the councils which then are in a position to provide the political leadership at the council. Then the council, once properly constituted, has a responsibility to implement its work programme in a manner that supports the development objectives of our country.



Now, sometimes the council sits and passes a resolution to remove a very competent municipal manager who refuses to be involved in corrupt and by so doing, removing a competent person from office.



So, I put back the responsibility, not the National Treasury, but the political parties in charge of the municipalities. And the rest are administrative and technical issues that we can deal with. Thank you.



Ms M O MOKAUSE: Chairperson, we all know that the political parties running the majority of the municipalities in the country are from the ruling party. And the National Treasury, in the majority of the cases that are seen and reported, are not reported to law enforcement agencies. Minister, that kind of act is questionable.

You ask yourself if these kind of actions are there to protect those who are running the municipalities only because they come from the ruling party or why those actions?



We all know that the urgency of such cases to the ruling party, are not really urgent. They are not really reported like it’s a matter of urgency. The money that was supposed to be allocated to the developments has been misused but the ruling remains reluctant. Can you tell us, which municipalities are those where such maladministration were reported and prosecuted? Thank you.



The MINISTER OF FINANCE: I will come back about the detailed municipalities, maybe in a written form. But during my young days I



was also a political teacher, so one of the things that I should pass on to you is that political parties don’t rule, they govern. Only royalties, kings and queen rule. Nevertheless I assume ... [Interjections.]



Ms M O MOKAUSE: On a point of order. Chairperson, the Minister is here to answer questions; he is not here to give me a lecture. [Interjections.] If you want to teach, go to school and get allocated English to teach. You are here to answer questions Minister. Whether I said rule or govern, it doesn’t matter. Answer the question.



The CHAIRPERSON OF THE NCOP: That is not a point of order. [Interjections.] Dodovu!



Mr T S C DODOVU: Hon Chairperson, this is a frivolous point of order that attempts to distract the Minister. [Interjections.] Can the Minister be allowed to focus on what he is supposed to focus on?

This is just petty and out of order. We are a governing party and not the ruling party. [Interjections.]



The CHAIRPERSON OF THE NCOP: Hon members let us not finish up our time. I will ask the Minister to please proceed to answer the question. Please sit down hon Zandamela.



The MINISTER OF FINANCE: So as political parties govern, they have to make sure that they govern appropriately and we leave the matter of royalty to the royals. So, the Nelson Mandela Bay Metropolitan council is dysfunctional. It hasn’t met and as a result a number of services which are supposed to be provided to the citizens are not being provided. A couple of days ago I had to take away a grant that was meant for the council because it is dysfunctional.



To the best of my recollection, that metro wasn’t governed by the ANC. There are major problems that still need to be investigated at Tshwane Municipality and to the best of my recollection; the ANC was not governing that municipality. That being said, where we found maladministration, together with the provincial administration, we have wanted to take action. As it is, I want the Eastern Cape provincial government to take action at the Nelson Mandela Bay Metro situation, to correct that which is wrong. So, actions like that can be taken at a time to make sure that we do what is correct in the struggle to make sure that development does take place in our communities. Thank you very much. [Applause.]



Mr T S C DODOVU: Hon Minister, the Auditor-General paints a bleak picture about the state of finances of municipalities. And, five top contributors to the irregular expenditure of R71 billion are Nelson Mandela Bay, Johannesburg, Matlosana and others. And you are right when you say it is not the governing party in those municipalities.



But the problem is, these municipalities do as they wish, they act as they want, they act with impunity because there are no consequence management. What is it that the department is doing to put up systems and structures in place for consequence management, because that is fundamentally important? Thank you.



The MINISTER OF FINANCE: I very much appreciate the concern that member have about the need to enforce law and order and procedures. So under normal circumstances, what happens is that Minister Dlamini Zuma, myself and the relevant provincial government, we will then co-ordinate our considered effort to try and assist at a municipality; where the political systems seem to be breaking down. As I have mentioned that very soon we need to take action at the Nelson Mandela Metro. But the Constitution enjoins us to work together, to consult in a manner that will produce a positive

outcome because any unilateral action on the part of all of us might produce unintended negative consequences.



But, where there is sufficient public information, that somebody has stolen money from the public purse, I don’t think the law enforcement agencies should wait to be reminded about their job.

They should move and act because information is available in the public domain. So there has to be all of us working together to resolve issues.



I mean, for example, people know how much it costs to retar a street, so many metres x amount of money. But in a situation where you find that to tar a street, suddenly instead of the amount being x times five, it becomes x times 100. Now, within the council structures and officials, they know the problem. So the whistle blower becomes very important so that the law enforcement agencies can follow up. But as you are aware, our law enforcement agencies seem to be back in action. So I am sure there will be lots of visitations. Thank you very much.



Mr D R RYDER: Chair, Minister, I can just see you behind the podium so I can see you haven’t run away yet. Thank you for your answers. Minister you pointing to the first line of defence being the councils and the local government but those have failed quite clearly; otherwise you wouldn’t be getting these reports that we keep on getting. I would like to draw your attention; you spoke



about the Constitution, and let’s look at section 216(2) of the Constitution that says;



“The National Treasury must enforce compliance with the measures established by subsection 1”



It generally talks about recognising the accounting practices, uniform expenditure classification, etc. So, you have constitutional obligations to enforce these things. I understand that you need the law enforcement agencies to assist you on that but ultimately, you Minister and your department, are tasked in terms of the Constitution with giving effect to that.



Now the Auditor-General has recently been empowered through enhanced legislation, specifically the Public Audit Amendment Act that was passed last year, to take action when irregularities have been discovered through the audit processes.



Now my question to you Minister is that, you are a responsible Minister and it is a new Act, and I understand that you won’t give me the exact figure but to the nearest 10 or so, can you tell us if there has been any arrest or dismissal as a result of the Auditor- General’s improved powers?



The MINISTER OF FINANCE: I am not yet aware of the number of actions which might have been taken as a result of the Act. I am sure we can find that information and make it available to you. It is correct that the Constitution does provide for the Minister and the National Treasury to act, but I would to insist that the first line of defence is the council itself and its political leadership; that is number one.



Number two, we have the Public Finance Management Act and the Municipal Finance Management Act to which I made mention of. Therefore, non-adherence to these two laws in particular, should mean that indeed there should be what our colleague here has referred to as consequences. And I am happy that he pronounced it properly, he didn’t say /kwens? kwens? s/



So, the matter is correct. I think the Auditor-General will be following through all of this. But what I am trying to guard against is the “oog klappe” [eye-catching] approach. An “oog klappe” [eye- catching] approach which says, the Constitution empowers me after all, therefore I am going to go to the issue and ignore the other component of the Constitution which says we should work together, consult together with a common purpose.



What I have learnt in post 1994 government is that, if you take unilateral actions, no matter how empowered you think you are; the consequences might be negative. Therefore working together with the three spheres, we should be able to find solutions. I am afraid that yesterday I was informed that out of the difficulty that we had a couple of weeks ago with 100 municipalities, the figures jumped now to 127.



So we have more work that we have to do to fix the municipalities. But I think we have an opportunity as well because very soon we will be going to local government elections. These presents an opportunity for political parties to make sure that their selection of candidates is of such a nature that they give us the best that they can - the most reliable non corrupt people. It is an opportunity to start again. Thank you. [Applause.]



Question 222:


The MINISTER OF FINANCE: Thank you very much. Indeed, the question is being asked by Mr DR Ryder, Gauteng DA. It says whether, with regard to the state of the economy and the contraction of the fiscus, the national health insurance could be launched without taking further budget from other departments; if not, what is the position in this regard; if so, what are the relevant details?



Ms B T MATHEVULA: On a point of order, Chair.





Ndzi kombela leswaku Holobye va nga ha kali va hlaya swivutiso kambe a va ngheni eka nhlamulo hi ku kongoma hikuva swivutiso hi na swona eka maphepha ya hina ya swivutiso. Ndza khensa.





The CHAIRPERSON OF THE NCOP: I think I do understand the issue that is being raised. You are alleging that the Minister is not answering the question.



Ms B T MATHEVULA: I’m not saying that he is not answering the question, but I am saying he should not repeat it.



The CHAIRPERSON OF THE NCOP: I think it is a question of style, really. Let’s just leave the Minister. Please, hon Minister proceed. I know what you are saying.



The MINISTER OF FINANCE: It is not just a question of style. You must understand that we are also talking to people at home and they don’t have the questions in front of them. So we have to inform them what the question is. They don’t have the questions at home.



Ms B T MATHEVULA: You must also remind the Minister that he has limited time. It means that we are going to start putting the clock to see that he doesn’t exceed the time.



The CHAIRPERSON OF THE NCOP: It is not a point of order really, but it’s an argument. Please proceed hon Minister.



The MINISTER OF FINANCE: The national health insurance will be implemented at a pace that is affordable to South Africa. Given our current macroeconomic outlook and constraints fiscal environment, full implementation is likely to take longer than initially anticipated. The National Treasury has prepared a National Health Insurance Financing Paper which lays out various scenarios for financing potential shortfalls for the national health insurance.

However, there is still a lot that is being discussed between the Minister of Health and myself in order to make sure that we live up to the expiations. We are all committed to the national health insurance and the functioning of our national health system and therefore we should do all that we can to support the pace and timeframes for the implementation of the national health insurance, NHI. Thank you very much.



Mr D R RYDER: Thank you, Chairperson. Thank you, Minister for your brief answer within your time limit. I also do appreciate your style of introducing a question. We are not prescriptive to Ministers in this House. Mr Minister, I note your answer and I appreciate it; thank you very much. But I have seen a leaked report on the pilot phase of NHI which indicates that more than R5 billion has been lost just in the pilot phase alone. You have spoken about introducing it at a pace that is affordable to South Africa. Will it also be done at a pace that is affordable to South Africans? What I am asking is that will you be funding NHI through any additional taxes, increasing existing taxes or even increasing VAT?        Thank you, Minister.



The MINISTER OF FINANCE: I am sure this House wouldn’t want me to discuss leaked reports because ...





... andazi nto kuba bendingekho. Andazi nto tuu ngengxelo ethe yathutyeleziswa yaphumela ngaphandle. Andiyazi ukuba ithutyeleziswe ngubani, phi, eyenzela ntoni loo nto, bendingekho mna.






So, I won’t discuss a leaked report. I don’t know it. What I can say is that we must be careful not to confuse two things. The first one is an ideological opposition to NHI which is prevalent amongst certain sections of our population particularly those who feel that NHI is meant to disrupt their current health system – that’s an ideological position. And there is this real practical need amongst the majority of the people for access to good quality health care.

Therefore, NHI idea is to fast-track the process through which the majority of the people can have good health care as well. This does not mean that. The confusion which is normally in the people’s minds that we have to wait for the implementation of NHI before we can fix our hospitals is not true. We have to continue the best that we can with the means at our disposal to make sure that our people have good health care facilities. And they are there. So we have to make sure that there are doctors in the hospitals, there are nurses, the cleaning staff is there to clean the wards on time, there is rubbish collection, gardens are well looked after, there is medication in the pharmacy, there is proper food for the patients, ambulance system works, and so on. We don’t have to wait for NHI to do that.



I visited Letaba Hospital the other week. I was impressed by what the management of the hospital together with the medical staff are doing there. They are beginning to attract young medical doctors to



come and work at the hospital. The hospital is clean, presentable and it is doing the right thing. Imagine, Letaba Hospital is a provincial hospital and is quite a large hospital. But the mistake that we are making is that we are not providing sufficient education to our people to say that Letaba Hospital is a referral hospital. As a result, the medical staff there ends up handling things which should have been handled at the clinic or at another hospital, but they end up at a provincial hospital. It is part of the system that we must fix as we move towards the national health insurance. We don’t have to wait for that time. We can do things today. Thank you very much.



Mr A B CLOETE: Thank you, Chairperson. I was actually hoping that the Minister will bring his plant so that we can see if it is actually a real plant. South Africa is to a large extent kept in the dark about the funding of NHI. Research done by economists already suggests that NHI will not only make South Africa poor whilst taxes would increase. Minister, you know very well that increased taxes do not necessary bring more fun. It is understandable that there exist a strong scepticism regarding NHI and I think that is not only ideological like you stated. Yes, universal health care is something that we should aim towards. My question Minister is two fold. What will NHI cost and how will it be funded?



The MINISTER OF FINANCE: I am sure that the hon member knows that I cannot discuss tax matters all the time. I will discuss tax matters in February. From now and then I am not allowed to talk about tax matters or to speculate about tax matters. I might end up with consequences which I am sure we don’t want for now.



I can’t give you an exact figure which would be the cost of NHI. I would be very dishonest because if I say it’s going to be R2,00 and tomorrow it is R1,00 you are going to burn me at the stake. So I can’t do that. I think we should follow the process as we move along. But as I said earlier we should avoid the appearance publicly. Actually, there are some amongst us who are just opposed to the idea of NHI. I think we should avoid that. All I am saying is we are all in favour of the universal health coverage correct and therefore NHI initiative is part of an attempt to attain the universal health coverage. And it is doable.



There are many other countries which have done that. Japan, for example, achieved universal health coverage even during the time where they were much poorer. By attaining the universal health coverage they were able to improve the health of their population, they became more productive and their economy became more successful. So there is actually a dialectical relationship between



universal health care and better economic performance. I think we should embrace the issues like that. I’m sure we will get to learn more about the cost structure and we will deal with issues accordingly. That’s why I say I can’t speculate on any tax measures that might be introduced in future. Let me say, I don’t know if there will be any tax measures introduced.



Mr M E NCHABELENG: Thanks, hon Chair. Comrade Minister, has the Treasury [Interjections.] No, he is my comrade. He is not your comrade. I just want to know, has the Treasury finalised preparations for the financing paper on NHI which is intended to give details on how much the scheme will cost and how will it be funded; if not, when can we expect this Treasury financing paper on the financing of NHI?



The MINISTER OF FINANCE: Obviously, I am sure by now you are all familiar on how the National Treasury is structured. Most components of the government are analysed regularly by specific units within the National Treasury. For example, there is a unit that focuses on Health. That unit has developed a draft paper which has not been published. I have learnt one or two things these days about publishing papers. The paper has not been published. It still requires a lot of internal conversation within the National Treasury



and also conversation with the Department of Health. When that is concluded I’ve learnt that I need to take that paper to a Cabinet committee. After which I’ll go to Cabinet and simultaneously there needs to be a public participation process. So I have learnt my lessons there. That’s what is going to happen and that document will be made available. But sometimes it is good to publish when people are not prepared so that I can get a good conversation going. Thank you.



Mr S F DU TOIT: Thank you, hon Chair. Hon Minister, it’s public knowledge that South Africa’s economy is on the verge of a fiscal cliff. We can’t afford to pay any more bailout to the state-owned enterprises, SOEs, or failing government initiatives. Our private sector is overtaxed as it is and it is estimated that about 20% of the medical professionals of South Africa are currently looking at other career options in the light of the proposed NHI. My question is that, did government budget for the replacement of these medical professionals that are skilled, that are currently employed in the country and they are looking at other options? Thank you, Minister.



The MINISTER OF FINANCE: I share your concern about any anxiety that might be there among South African medical professionals and that they might be tempted to want to leave the country which is not a



solution. I think if members of this House do not show enthusiasm for something which is supposed to be solidarity in the health’s sphere, and are seen as providing negative vibes to our society, that is not going to help the professionals to stay in the country. We as members of this House must be very enthusiastic about this and therefore enthuse the rest of our society.



I just imagine, for example, some of the medical professionals saying that they are going to leave South Africa and go to the UK. They are going to meet the same thing there. In the UK it is called the National Health Service. Let’s assume they go to Japan, they are going to meet the same thing. In Japan it is called universal health coverage. It is better to stay and make things better here at home – working together. Maybe we just need to improve our communications.



The team of doctors I met at Letaba Hospital were most enthusiastic about NHI. They went to the same medical schools and they are very enthusiastic to help the communities. In fact, a few of them used to be in the private sector schemes. One of them is a gynaecologist here in Cape Town. He is leaving private and he is going to Letaba Hospital to work there. And he is very enthusiastic about NHI. I think we must be very careful.



Also, let’s not present a picture which seeks to suggest that medical health practitioners are white and that the patients are black. That will be distorting our view of the nonracial society that we are trying to create. Solidarity must be seen to be amongst blacks and whites, amongst rich and poor with the common purpose of building a successful country. I think that’s what we should do.

Whoever we hear wanting to leave the country let us encourage them to stay. Thank you.



Question 232:


The MINISTER OF FINANCE: Do I read the question or not?



The CHAIRPERSON OF THE NCOP: It is optional.



The MINISTER OF FINANCE: Whether he will increase the allocation of funds from the Division of Revenue to municipalities to equal that of provinces and the national government so that they will be able to appoint qualified officials and deliver services, details furnished, if not, why not; if so, what are the relevant details?



The answer is: The allocation of funds between national, provincial and local government in the Division of Revenue, which we have just



gone through, is informed primarily by the functions performed by each sphere of government.



The national and provincial spheres receive larger allocations because they deliver more costly functions, and unlike municipalities they do not collect significant revenues that offset the costs of their services.



National government services include, for example, policing, defence, social security and higher education which is now free for students from low-income houses. Provinces spend the majority of their budgets on providing health care and basic education, which is also free to most learners. On the other hand, the largest services provided by municipalities are electricity reticulation, water, sanitation, and refuse removal.



All of these are services that all business and nonpoor households should be paying for. This is part of the reason I always emphasise the importance of all of us to pay for services we use.



In addition, municipalities also collect property rates, which is an important wealth tax paid by property owners, which amounts to over



R60 billion per year and is retained by municipalities and not shared with national government.



It is within that context that calls for greater allocation to municipalities against provincial and national government might not be well thought through. Thank you very much. [Applause.]



Mr M S MOLETSANE: Chairperson, to the Minister, the problem with the current Division of Revenue formula as it stands is that it makes three key assumptions which in the last 20 years have proven to be fatal for municipalities. This, of course, was made worse by fraud, corruption and maladministration.



There is a higher number of citizens who need municipal services but are unemployed. Provinces are not playing a crucial role to lessen the burden on municipalities in terms of sharing responsibilities to deliver services. The prices of services have increased past inflation and wages for many of workers to afford them. In fact, municipal services have been commercialised.



Is the continuation of the current Division of Revenue formula, as explained by you, hon Minister, not perpetuating apartheid



allocation of redistribution that fails to take into account redistribution and redress? Thank you.



The MINISTER OF FINANCE: Well, there are many things that we still have to do to remove the structural rigidities of the apartheid system. For example, the majority of working people still live very far from work. That is the consequence of the apartheid system and we still have to do something about that.



The transportation network that is supposed to assist people to arrive at work on time is not working the way it is supposed to. The apartheid spatial planning has left us with a huge legacy of separation of our people from each other. So, it will take us a lot of hard to bring about the integration of our society, and you can’t just do it by diktat, by the way.



One of the lessons learned over the past 25 years — it is quite unfortunate actually — is that, for example, as black parents bring their kids to what were formerly white schools the white parents take their children out — which is not helpful.



So, coming closer to your point; if you look carefully at the allocations through the Division of Revenue Act, you notice that the



Division of Revenue Act is also a redistributive instrument. You will notice that some of the smaller towns actually receive more. If you check carefully you will find that, for example, rural communities and small towns tend to receive more per capita than the others.



So, within the context of the Constitution where we are being enjoined to work together and help each other, the Division of Revenue Act tries as much as possible to do that. You ask the hon Deputy Chairperson here — he knows this very well — how he led the process towards the improvement of the streets of Soweto deliberately by specifically deciding that we are going to tar the streets of Soweto and we are going to make utilisation of the neighbourhood improvement grant, I think that is what it was called, to improve the situation.



Now we say Soweto is one of the most developed townships. Yes, but because of deliberate action and this can be done almost in each and every township if we use for example the neighbourhood improvement grant for the purpose that it is meant, and on the other hand if we use the national electrification grant properly we can actually electrify our country easily.



So, I think let us focus more on the better and strategic utilisation of what is in the grant system and the allocation system and avoid a situation where in October or November the Minister of Finance has to take back allocated funds from the municipalities because they have not utilised them. And by this time I am kind of in some panic mood if people have not utilised their allocation for almost the whole year because there might be a stampede which might not use the funds strategically but just for the sake of spending it. So, that is why I begin to take back the money now.



I think the point you made now maybe you had wanted to make it before the adoption of this report because I should have come to answer the questions the previous week when I was away. But I take the point and I think we can still continue to discuss it.



The issue is redistributive formula in an attempt to make sure that we try and drive the country’s development in the same direction.

Thank you.



Mr A B GOYIYA: Hon Chairperson, to the Minister, I think you would concur with me when I say that giving more money to the municipalities might not be a solution to the problem but it might be aggravating the problem. When we were analysing the audit



reports, there are four depressing concerns that the Auditor General’s report keeps on hammering on in the municipalities; wasteful expenditure, unauthorised, irregular and fruitless expenditure.



That is more related in many instances to the lack of capacity and the lack of skills in the municipalities. Recently the School of Public Leadership in the University of Stellenbosch issued a paper that spoke to exactly that to say that there is skills erosion in local government. So, I think that it is important that we recognise that there is lack of human resource capacity in the municipalities.



The question is: Have you been able to look at the possibilities of establishing a skills fund that is specifically focusing on municipal employees so that we do not have a problem of skills in municipalise? Maybe the improvement of the skills there will be better financial management. That is the question in terms of the skills fund that will be focusing on building capacity in local government. Thanks, Chair.



The MINISTER OF FINANCE: There is a related question that is coming later which relates to what you say. Maybe we could kill two birds with one stone.



I agree completely with the issue of skills. But, hon member, you can have the best skills available, if the council is dysfunctional it is not going to work. You can have the best skills available but if council meets and passes a resolution to expel a very competent municipal manager it is not going to help.



The way in which we have organised a skills development process in the country, and the Minister of Employment is here and will deal with it maybe, is that there is actually a skills development capacity for local government. There is a Local Government Sector Education and Training Authority, LGSETA, which benefits from the skills fund. That is their job together with the South African Local Government Association, Salga, to identify the training needs so that people who work in the local government sphere knows exactly what they need to do.



More often than not, that is not the nature of the problem; the nature of the problem is political. Therefore, that is why I urged earlier on that we should get our political houses in order in order to solve this problem. It is very important that we do that because we can bring as many chartered accountants, as possible but if they are in a dysfunctional council they will not function at all.



Let me give an example with a problem I now have: The two provinces, whom I won’t mention for now, where we allocated funds for the Expanded Public Works Programme and the money has been dispatched and has been spent but not for the purpose intended. So, this might be one of the first people that the Auditor General is going to have to deal with. Money dispatched, money spent, purpose not achieved.

Therefore, the people in that Expanded Public Works Programme — which is designed as a kind of a support mechanism in a high unemployment situation ...





... bona bayidlile nje imali.





It is gone. There is another thing I will deal with later.



Mr D R RYDER: Chairperson, to the Minister, I’m reeling a little bit from that comment but perhaps we need to name shame those two municipalities. Nonetheless, my follow up question is somewhat different. I think we are all in agreement and certainly the hon gentleman from the Northern Cape was making some of the points that I want to highlight.



Municipalities are constantly in the spotlight for the mismanagement of funds, and at the same there are also many other municipalities that are performing extremely well; they are using the resources made available to them appropriately and responsibly and within the prescripts of the Public Finance Management Act.



We spoke earlier on about the councils being the ones that are supposed to wield the stick and I am wondering if Treasury couldn’t put some form of incentive in place in terms of that. It seems logical that municipalities with a good track record of spending money where it should be spent — spending people’s money on the people — should be rewarded with a greater share of the Division of Revenue allocation.



So, would Treasury consider merit based allocation system? If so, when can we expect to see something like that?



The MINISTER OF FINANCE: The question is loaded. [laughter.] I can see it from a distance, it is loaded. But nevertheless, loaded as it might be, I think there are instances where I recall taking funds away from one municipality and transferring them to another. It has happened. One of the municipalities which has benefitted from that transfer has been the one about your loaded question.



We knew that if we give well performing municipalities an additional allocation the funds will be properly spent. We have done that. So, we have rewarded well performing municipalities.



But then there is a question that Minister Dlamini-Zuma and the president of Salga always bring to my attention. The failure of a municipality to spend does not necessarily remove the people who were supposed to benefit from the service. So the people are stuck there. So, you are taking money away from the people because of a non-functioning municipal council. That is something again at the political level that needs to be dealt with. The people are there, they haven’t moved, they need their streets to be tarred, they need services to be provided and they need their neighbourhood to be improved. So, then the council must deal with this issue.



You will also bear with me that I have a responsibility in terms of public finance management that where I can see funds are not being spent I have to secure them before they disappear because that is my responsibility. Some official will blow a whistle one day and say we warned the Minister of Finance that those people were not going to spend the money, it was going to disappear and he didn’t do anything about it and then the consequences then will come to me, as you



said. But I am fully aware that we must be very mindful of what we do.



Chair, if you can allow me to connect this particular question to the previous question about the attraction of skills. Let me indicate to you that the general discourse is that we are not able to attract chief financial officers or municipal managers to the municipalities because they would rather stay with provincial or national government.



Let me indicate to you that, for example, the municipal manager in Johannesburg is paid at R2,8 million and the chief financial officer at R2,4 million; in Laingsburg, the smallest population size of any municipality in South Africa, the municipal manager is at

R1,1 million and the chief financial officer at R1,4 million; the municipal manager at O R Tambo municipality is at R1,7 million and the chief financial officer at R1,4 million; in King Sabata Dalindyebo the municipal manager is at R1,6 million and the chief financial officer is at R1,5 million; in Port St Johns the municipal manager is R1,1 million and the chief financial officer is at R824 000; and in Maluti-a-Phofung, a municipality under frequent interventions, the municipal manager is at R1,8 million and the chief financial officer is at R1,6 million.



So, it is not true that there are no funds available for municipalities. It is not true that we are unable to attract skills because we do not pay better at municipalities. The municipal manager at the city of Johannesburg earns more than the director general of the National Treasury. It is a reality. So, I thought to bring a bit of perspective.



The CHAIRPERSON OF THE NCOP: I allowed the Minister to go beyond his allocated time because I thought the information could be of use to hon members. [Applause.] Thank you very much. We now move on to hon Njadu.



Mr E J NJANDU: Chair, to the hon Minister, to what extent does the equitable share of Revenue seek to address the socioeconomic disparities that are facing the various provinces including addressing the imbalances in their skills base but also their potential to attract qualified personnel? Thank you.



The MINISTER OF FINANCE: As I tried to indicate, you will find that in the bigger picture of things, the smaller towns and the rural municipalities per capita tend to get better allocations and that was an attempt to assist the situation.



When we discuss the issue of general allocation in the budget with the budget council which includes MECs of finance but also in the budget forums which is the Ministry, National Treasury, MECs, president of Salga, Financial and Fiscal Commission and somebody else, we try and follow the population movements in the country.



Unfortunately this brings about some distortions. For example, you can see a larger number of people moving from KwaZulu-Natal to Gauteng. But those who are moving and increasing the population of Gauteng might be the younger and the middle aged people — it doesn’t mean the older people are going to leave the village in KwaZulu- Natal.



Therefore, in the allocation system you have to bear in mind that although the population is increasingly being urbanised with about 62% of South Africans now living in cities, towns and peri-urban areas, that tends to attract the flow of funding in the budget because it must follow people. That is where people live but it doesn’t remove the granny who is left in uMhlabuyalingana and so on. So, you have to balance that out and that’s why some of the rural communities per capita still receive significant amounts of funding.



I think as members of the NCOP we should also insist that each and every town and village where you are allocated has a development plan. For example, what is the development plan at Modimolle? Where is it? Where is the map that says “in five years time this is what our town should look like”. That gives us a better idea about how we start allocating funding.



In some instances the plan must also integrate with, say for instance, the Transnet railway system. Why do I say that? You might have a very nice plan and we allocate funds to municipality only to find that people are already building shacks on top of the railway line, or they have taken away the fence and there are many accidents with trains knocking people down because the development plan does not sufficiently integrate all the required elements for development. Or just like outside Mankweng in Limpopo where people are building houses in a flood place. Come floods and all those nice houses are flooded and the government would be to blame.



So, I am saying that as members of the Council you need to demand a very clear sense and sometimes you might have to be very firm on your own people and not give them permission to build houses where there will be flooding. But we don’t do that because we are nice and being nice will result in negative consequences later.



So, we need to have a comprehensive plan so that funds can follow the plan in a sustainable manner. Also, I hope none of you is involved in this as members of the Council — because of the poor demarcation of what constitutes an urban area and a rural area, most people move out of the Polokwane town because it is designated as a city and therefore they must pay municipal services and so on, and go and build a similar house at “nobody” which is not zoned as such yet at the same time they expect refuse collection, electrification and water services. So, we also move with speed in the demarcation process to make sure that we can also capture revenue which is necessary for the provision of these services. Thank you very much.



Question 241:


The MINISTER OF FINANCE: Ok, I won’t the question this time. By the end of the second quarter 2019-20, 12 industrial parks had been revitalised and R511 million worth of investment has been attracted into these industrial parks. During the construction phase of the industrial parks, a total of 166 short term job opportunities were created. These were made up of five persons with disability, 662 youth males and females, 303 male adults and 186 females. All these are localised jobs within the respective regions, where the industrial parks are located. The industrial parks revitalisation programme also ensure that 65 000 cumulative job opportunities were



retained in rural and township areas, as businesses in the parks expressed confidence to retain their operations in the parks.



The industrial parks management agencies also report that since the implementation of phase one, cases of theft and vandalism have decrease. Can I just say something about these industrial parks, the industrial parks problem is part of the legacy of apartheid but also part of the legacy us not being favourable disposed towards the smaller towns and the rural villages. What did we do? We found most of these industrial parks in place, Dimbaza, Mogwase, Babelege, Nkowankowa, Seshego, Eshowe and so on. We didn’t like for one reason or the other and we removed the tax benefits, which accrued to companies located in those areas. The consequence of which was that most companies pulled out and create a very bad situation for us.



In the similar way in which we have approached the issue of casino licenses, so you take away a casino licenses from Mpekweni in the Pedi area and take the license to East London, it doesn’t make sense. You immediately negatively affect the economic activity in that area or take the casino licence let’s say from Morula Sun to Pretoria East, it does make sense. So, the same type of thing happens with industrial parks, now we have sort to revitalised them and I can tell you that there are quite a number of them now. As I



mentioned, they are beginning to come life at Seshego, as I say Mogwase, Babelege, Nkowankowa and others, they are coming back.



The duty of hon members of this House is working together with the provincial government and the mayors, to attract more and more investment into the industrial parks. So we are all actively participating and not being far away observers. Thank you.



Ms D G MAHLANGU: Hon House Chair, thank you hon Minister for a comprehensive response, with the examples that you have given. My interest is more on the industrial parks that are benefiting the townships. Like you said the legacy that has been left by the apartheid, you were talking about the other areas that you have given examples. Me, coming from Thembisile Hani Local Municipality in Mpumalanga, we are talking about Siyabuswa Industrial Park or talking about Kwaggafontein Industrial Park, but now I am specifically want to draw your attention to Kangala District Municipality industrial parks, where last month, there were protest and as a result of those protests, a road which is hardly six months was burned, it’s in a bad state, it’s hardly six months because people as per your pronouncement on behalf of government, we have promised people that we are going to revitalised these industrial parks. Those industrial parks are very important because they bring



economic activities nearer to the people. People don’t have to move to Johannesburg, to travel with Public Utility Transport Corporation, PUTCO, at that killer road at Moloto, to go and look for job, so it’s very important that we do that, that is my question...



Ms M O MOKAUSE: [Inaudible.]



MS D G MAHLANGU: ...and you are not ministers for that matter. [Laughter.] Wait for your time. So hon Minister, my issue is that, I want to draw your attention to that area and further request that maybe if you can during your time in the office, I am requesting that, per province as you say that you have already started moving, categorise as to how many, which ones in this province you have revitalised, so that we can account to our people. Thank you very much.



The MINISTER OF FINANCE: Yes, I see this one Ekandustria, it must be the one that’s been attended to. Usually when we say we are revitalising this, what we mean is, we put security infrastructure, which is fencing, lightning, critical top structures and electrical requirements, that’s the first phase that we do. That tends to bring in some you know, few jobs as people do this. Phase two obviously is



about compliance with regulatory requirements and then in some instances we have to develop vacant land and introduce industrial clusters. Then, for example Vulindlela and Babelege were completed and launched towards the end of last year. Phutaditshaba and Ekandustria, Garankuwa, Mogwase and Nkowankowa were also completed during the course of this year. Dimbaza is still under phase one, so Dimbaza was still starting, but Botshabelo in the Free State is complete.



So, what I am learning and I am sure we are learning together, is that it’s very easy for the National Treasury to allocate the funding but we are not the implementing agencies, so that is why I call upon you to make sure that the implementing agencies do their work, but also that you are active with the people. Let me give an example, the mayor and the Member of Executive Council, MEC, of the Department Economic Affairs in any province, in any locality where these industrial parks are, needs to be in constant conversation with the Local Chamber of Commerce and Industries, so they know each one of the business people, they know which business person wants to go and open a factory where and they can then show them the incentive structure at the industrial park, then they can take them there. This has to be an activist combination of people, we can’t just say we have revitalised industrial parks and go and sit at home



and expert things to work, no, and we have to keep on working at the system until we get these parks happening.



We make lots of mistakes some times, which we must learn from. One of my colleagues says we must not be afraid to make mistakes; I agree but let’s try and make as few mistakes as possible, so that it’s not a litany of mistakes. So, in one instance for example we decide to designate a special economic zone, which would attract the type of industries which will require a lot of water, nobody actually did an environment assessment study, which would have shown that location of that special economic zone is wrong because there is no water there. So, the integrated planning system is very key also for these industrial parks. This initiative of the industrial parks, I think is very important we should support it, work together with provincial leadership and the mayors nearer the parks, so that we can get the show on the road. Thank you.



Mr M I RAYI: Hon Chairperson, Minister my question is; how do guard against a competition between the spatial economics zones and the industrial parks. The example I would like to make is also that of Buffalo City Metropolitan Municipality, where you have an industrial park in the township, Dimdaza but few kilometre away, you have a special economic zone which is called East London Special Economic



Zone, where both would compete on a particular sector the agro processing. I mean, that will definitely kill the one that is in the township, because the one that is nearer to the airport, to the port has got the entire infrastructure and therefore it’s not a competition between it and the industrial park in Dimbaza. So what is government doing with regards to guard against such a competition amongst the industrial park and also the spatial economic zones?

Thank you.



The MINISTER OF FINANCE: Hon Chair, now I understand when they say you sing for your supper, now I understand it. I have been singing for my supper for a while, so the integratedness of our work is very important and within provinces, the leadership for the development programme, in this instant is going to be the premier, the MEC of Department of Economic Development, MEC of Department of Finance and then the mayor. They must work together, but if they work in silos, you end up with this kind of situation. As I say in the say way as I don’t understand what we were trying to do when you remove the gambling license from Empekweni and take it to East London, it does not make sense. Are you ok?



Mr J J LONDT: [Inaudible.] [Laughter.]



The MINISTER OF FINANCE: So, our development agenda needs to be integrated and at times, we have to make deliberate steps, to encourage a particular form of development as against another. In this instance, I think conversations need to be heard with the provincial government and the city government in the Eastern Cape to resolve this matter. It did come to my attention, that particular issue and I am very concern about it, we have to work at it, in coordinated manner and not compete with one another, but work together. Avoid a situation where because the decision might have been by different premier, when a new premier comes to the office they do a different thing, we should try and avoid that.



We are all should have a seamless political system, that seeks to benefit from previous work done and proceed. In most instances these are people from same party, so we should continue the work of the party and the government without, you know, creating unnecessary opposition to each other. Thank you.



Mr S ZANDAMELA: Chairperson, I won’t be saying a lot of speeches. [Laughter.] Thanks Minister you have covered some of things that I wanted to ask, but I am a bit concerned because those revitalised industrial parks, you mentioned a lot in Limpopo Province and part of Mpumalanga Province. So, you didn’t mention the parts of



Bushbuckridge, your Nkomazi those areas, neh and how much is allocated if there is any in those areas and how much is allocated per industrial park? You also mention the issue of the implementing agencies and that one of the things that the MECs are not doing is to make sure that they monitor all the processes, so are you saying maybe that there is problem with the whole co-ordination, especially in the province? [Laughter.]



The MINISTER OF FINANCE: What I mentioned, was that there were 12 industrial parks that have been revitalised, I am sure further ones would be identified and where work needs to be done, it will be done, but the critical thing again is what I said earlier about avoiding unnecessary duplications and so on. I know there is one special economic zone, SEZs, that we approved for that part of the country probably is in the Mbombela area, something like that...in Nkomazi. There is a special economic zone that we have approved for that area, you should know hon member, where it is.



The other thing is that we are unlikely to have an industrial park next to every locality, so there is also to be a sharing of resources. The other thing is that, the conversation between me and the Minister of the Department of Trade and Industry also needs to rationalise the relationship between industrial parks and the SEZs,



so that we don’t end up creating confusion in our society. Of course the further element that we would need good conversation is particularly what’s happening in Gauteng; please don’t tell the premier there, because he is going to be unhappy. In Gauteng, we can’t be creating SEZs around certain companies which might result in a situation where they move away from Ekurhuleni where they are and go to the SEZ and do the same business. So, if they want to come to the special economic zone, they must not be by substituting what they are doing in Ekurhuleni. We really have to be very careful about this, because the SEZs then have got special incentives, which might not be there at Jet Park or somewhere else. So, will be very careful that we don’t distort our pattern as well of industrial development, in such a way that, that which was meant for a good purpose, it might end up with a negative outcome.



I take the point that we should try and spread our wings in this instance, as much as we can but we must not lose sight of the broader economic agenda, transformation of our economy, and entrance into economy by many black men and women entrepreneurs, the focus on agriculture, agro processing and tourism. So we shouldn’t forget all of that. We should continue to push for the broader economic development of our society. Thank you very much.





Mnu I M SILEKU: Enkosi Sihlalo. Mphathiswa, kukho indawo apha ekuthiwa yiGrabouw ekumgama oli-120 km ukusuka apha. Xa uqwalasela inani labantu abahlala phaya liye laphindaphindeka kathathu kule minya ili-10 idlulileyo. Into eyenzekayo xa kusiziwa kwiinkqubo zikarhulumente... uxolo bendicinga ukuba uyasiva isiXhosa.



Ndiyaxolisa Mphathiswa, bendisatsho ukuba apha eGrabouw inani labantu abahlala phaya liphindaphindeke kathathu lule minyaka ili-10 idlulileyo. Kusemaphandleni, abantu abaninzi phaya basebenza ezifama kodwa xakusiziwa kwiinkqubo zikarhulumente ufumanisa ukuba ezi nkqubo zenzeka koomaspala abambaxa nakwiidolophu ezinkulu, thina bantu basemaphandleni siyalityalwa.



Umbuzo wam uthi: Ingaba uMphathiswa anganalo kusini na ixesha lokuba ahambele eGrabouw, ajonge ukuba angancedisana njani na nabahlali baphaya, ukuze nabo bakwazi ukuxhamla kwezi nkqubo zikarhulumente?




The MINISTER OF FINANCE: Let me try this one ...






Ndzi swi twile swinene leswi mi nga swi vula. Ndzi tlhela ndzi khensa swinene xikombelo xa n’wina. Leswi mina na wena hi twanaka kahle, ndzi kombela ku mi byela leswaku na mina ndzi ta ya va endzela kwale Grabouw. Leswi swi ta ndzi pfuna ku vona leswaku va tshamise ku yini. [Va hleka.]



Question 225:


The MINISTER OF FINANCE: I would not repeat the question because the EFF doesn’t want me to do that. So, the government aims to be developmental state instead of being a welfare state. Spending on social grants is a key part of the social safety net. It is fairly stable, at around 3,3% of GDP, and the long-term modelling suggests little risk of unsustainability by far. The largest grants are for retirement and children. We have effected savings on the SA Social Security Agency, Sassa, administration costs - about R1,5 billion saved in the Budget 2019 is partly linked to a greater use of the national payment system. We will further make savings in Budget 2020.



Academic evidence shows that our social transfers are very much well targeted and have an incredibly important role to play in reducing poverty in South Africa. Given our low levels of employment and the



legacy of the apartheid system, this spending is critical, although we must watch it very carefully. Thank you.



Ms D C CHRISTIANS: Thank you Minister ofr your response. Furthermore, with regard to the original question is the fact that farm attacks are a serious threat to food security, and in turn, food security is a serious threat to our economy. Will Treasury consider conditional appropriations to the SA Police Service, SAPS, to ensure that they spend appropriate amounts on enhancing rural policing strategy, and in doing so, ensuring the safety of our farmers?



The MINISTER OF FINANCE: Hon Deputy Chair, the question was, “Considering the many social problems the country is encountering, what action is National Treasury taking to ensure that the country does not become a welfare state that relies on handouts for survival?” I am not quite sure what the follow-up question is.



Ms D C CHRISTIANS: Hon Minister ...



The CHAIRPERSON OF THE NCOP: I am just giving you an opportunity because you are ... [Inaudible.]



Ms D C CHRISTIANS: Yes, I am trying to explain.



The CHAIRPERSON OF THE NCOP: I feel that justice has not been done with regard to your question or something like that. Yes ... please be very brief. Yes, I am giving you the opportunity.



Ms D C CHRISTIANS: Thank you Chairperson. Hon Minister, the details were furnished to you, and in those details we made mention of farm attacks and the threat that it serves to our economy. Thank you.



The MINISTER OF FINANCE: I can answer the question, but it is not a supplementary question. [Interjections.] The supplementary question should have been about the welfare state, not about farm attacks, but it is okay - since I am also a small-scale farmer, I am interested in this. You can write another question which I will supply an answer to. In my role as the Minister of Finance, I regularly interact with all the Ministers, including the Minister of Police, General Cele. We talk about all these things all the time, and whenever I am aware of any farm attacks that happened, I have brought it to his attention. I know for certain that in some instances, the police have acted very swiftly when reacting to any violent crimes in particular parts of the country.



The budget for the Police is negotiated every year within the budget process. The management of the police always bring to the budgeting process the requirements which they need, going forward. Depending on what they are reading of the security situation in the country, they will make certain proposals. I can assure you that we will continue to respond to their requests as and when they come because the safety and security of all South Africans is what is paramount to the security services of our country - and to the extent that we can help, we can always help.



Ms M L MAMAREGANE: Thank you, hon Chairperson. Hon Minister, reducing poverty and equality is the overriding concern of South Africa’s development policies and programmes. From the onset of our democracy – from 1994 - in the Reconstruction and Development Programme to the current National Development Plan Vision 2030, the guiding principles, as captured in the NDP is that no political democracy can survive and flourish if the mass of our people remain in poverty, without land, without tangible prospects for a better life, and attacking poverty and deprivation must therefore be the first priority of the democratic government. What is the role of National Treasury in ensuring that government departments respond adequately in addressing the social challenges facing our country,



especially the triple challenge of poverty, inequality and unemployment?



The MINISTER OF FINANCE: Thank you very much, hon member. The National Treasury derives its fundamental powers from the Public Finance Management Act. Within that law, Treasury is enjoined to perform certain functions, leading the budget process, amongst other things, and making sure that public funds are being properly spent, and so on and so forth. In the process of doing that, more often than not, we pick up a number of weaknesses in the government system. To that extent, we have now created an institution called Gtech, which assists in the training programmes and sensitisation of government departments and so on. Gtech is an important instrument in our arsenal. But National Treasury is quite a large institution.



There is also what I call the internal police force - it is called the Specialised Audit Services. We are just kind of semiautonomous within Treasury. There are people that we sent to do forensic investigations where we think that things are going wrong. Our primary function is really not to arrest people, but to assist in capacity building and ensuring that we have a capable state – something which we forget from time to time.



The Treasury’s approach is less of a hammer, first it is persuasion and when that doesn’t work, then maybe the hammer can be used later to try and get things going. We have to be collegial in the way we work. As I said earlier, if one is not collegial, one is unlikely to achieve much in our society. So, National Treasury then performs those functions within the Public Finance Management Act but also within other laws - but the fundamental one is the Public Finance Management Act.



Mr A ARNOLDS: Minister, we need to safeguard the economic, social wellbeing of children, the elderly, pensioners and also people with disabilities. The Pietermaritzburg Pensioners Forum has relentlessly mobilised and made submissions to Parliament - to the President, for an increase in the social grants for pensioners. Looking at the challenges of unemployment and poverty, are you going to increase the social grants for pensioners as per the submissions made by the Pietermaritzburg Pensioners Forum? Thank you.



The MINISTER OF FINANCE: Thank you very much, hon Chair. I have no doubt the hon member must have been a negotiator before. He is negotiating on behalf of the Pietermaritzburg Pensioners Forum. I am promising him that I remain available for any negotiations.

Unfortunately, it is difficult for me to negotiate in a legal



Chamber like this because I will just be tying myself in knots. But I am willing to pursue this matter outside the Chamber.



You see, if I can say that we are going to adjust the pension by a certain amount and it turns out that by February we do not have the revenue, someone will consult Hansard and remind me that on 27 November I said that I am going to increase the social grant amount

- or I promised that I am definitely going to increase it - and if I am unable to do so, I am going to be burned at the stake.



All I can say is that I am extremely sensitive to the plight of our pensioners, and we must at all times seek to look after our old-age pensioners and seek to make sure that our sense of solidarity in our society continues. It is not only the Pietermaritzburg Pensioners Forum that has approached us, there are many others who have also made submissions - maybe not to you who are here, but directly to the Ministry of Finance.



There are also legacy issues that we are dealing with - for example, the Venda pensioners whom we have to attend to their issues. There are military veterans, some of whom have not received their pensions which were due, and so on. The whole system needs to be carefully worked on to make sure that we do not leave anybody not taken care



of within a highly constrained fiscal environment. That is all what I can say for now, but I am quite certain that as usual, in February, we will be able to say something - which I don’t what that is, but I am sure we will say something in February.



Mr Y I CARRIM: Minister, I think one would suggest that we should avoid obviously becoming a nanny state, especially given the severe economic growth challenges we have. Would you agree that if we didn’t offer social grants to the poorest of the poor, we would reduce them to a subhuman existence and we would essentially be an uncivilised society? Related to that, what is your response to the view that the question itself is inherently contradictory? On the one hand it speaks about the social problems, and then concludes by saying – therefore, we should have a welfare state. Is that not internally contradictory, because a welfare state partly seeks to attend to social problems and reduces them? And related to that, what is your response to the view? There is nothing wrong with the modest temperate welfare state that is related to our economic growth capacity. Social democracy has after all survived for a very long time. We need to adapt to our circumstances, and have our South African version social democracy. What is wrong with the welfare state in those circumstances?



The MINISTER OF FINANCE: The support for the indigents and so on, is supposed to continue. It is in our nature our value system as well. In fact, in most of our communities, even without the social grants system, communities themselves support each other. It is in our nature to do that. Therefore, we have to continue to support each other. There are conceptual differences here but that does not really matter, the issue is that we should continue to support those who need support.



In fact, I am surprised that the hon Carrim has not asked me what my view is about the basic income grant. [Laughter.] I thought he was going to ask me about that. I am going to leave this House so disappointed and will reconsider very strongly whether I should return the next time. He should ask me that question, so that I can have the opportunity to answer it, conceptually, intellectually and in detail. [Interjections.] [Laughter.]



Question 242:


The MINISTER OF FINANCE: To the disappointment of the hon member from the EFF, the question reads as follows: What are the successes achieved by the National Treasury in upgrading economic planning and co-ordinating capacity of the state by working with other government



departments and international agencies in producing high quality evidence-based policy research?



The answer is as follows: Hon members, in the Medium-Term Budget Policy Statement, MTBPS, Speech of 2018, I indicated that we are upgrading the economic planning and co-ordinating capacity of the state. Our programme entitled Southern Africa - Towards Inclusive Economic Development, SA-TIED, is a collaboration with various government departments and international research agencies to produce high quality evidence-based policy research and build the economic capacity of the state.



We are pleased to report immense progress in this regard. The SA- TIED programme covers the following thematic areas: firstly, enterprise development and job creation; secondly, public revenue; thirdly, macroeconomic modelling; fourthly, inequality; fifthly, climate change and energy transitions; and lastly, regional growth.



With regard to our research, we have published 78 research papers across these thematic areas since the start of our programme. These papers are all available on the SA-TIED website. Included in this number are 19 papers which are coauthored by South African government officials as well as 22 papers by young scholars – the



future economists and policy-makers of this country. We believe that robust empirical research is crucial to enhance the economic planning capacity of the South African state.



This work has already provided us with unique insights and galvanised our efforts towards transforming our economy. With regard to capacity-building and policy bridging, I can report to this House that we have undertaken various initiatives to strengthen the economic planning and co-ordination capacity. We have provided 14 government officials with the opportunity to obtain their PhDs in economics and related fields.



I must say I am sure if anyone of you applied to do a PhD in economics, we will give it due consideration. That is what you must aim for. We must aim to have the largest number of PhDs in our society, particularly in economics so that when we have an economics conversation, we really substantively have an economics conversation.



We are also in the process of providing secondments to up to 12 government officials to spend time at a national and international research institute to learn from academics and policy-makers across the world. The head of the economics unit at National Treasury now,



Dr Duncan Pieterse, has been seconded to Harvard University to go and interact with other academics and learn etc.



We have held 14 training courses in areas such as public economics and microsimulation modelling. We also instituted regular research seminars and a series of policy workshops and colloquium including a policy dialogue in August on South Africa’s energy transition.



The well-discussed paper towards an economic strategy for South Africa ... that cost a lot of air ... they got attacked and called all kinds of names ... that paper came out of this programme. It is a research-based paper. It is not a gut feeling. That’s the answer to the question.



Mr Y I CARRIM: Thank you, to what extent is all this work, which sounds very good and commendable being effected at provincial and local government spheres, state-owned entities, SOEs, and other relevant public entities? What are some of the challenges you have in that regard and how are you addressing them as the National Treasury?



The MINISTER OF FINANCE: Of course one of the critical things in this regard is that when we have involved a whole range of



government departments at national level, we would by false logical extension think that they’ll cascade that information to their colleagues and counterparts at local level; maybe a wrong logical extension but not unreasonable.



The other thing that we would do is to ... as I said ... involve as many academics as possible drawn from the universities around the country, who should also ... I hope ... have conversations with their students and their research assistance to try and get this intellectual conversation going and build on some of the well-tested modelling capacity around the world so that there should be some modelling capacity even at provincial and local level, for example, municipalities needs to be able to model very well the future revenue growth; model very well the potential local economic development by doing research and making assumptions and feeding them into the model and get some results. So, when they plan for the economic development of their municipality, they are also informed by research and also by technical modelling. I think that is how you get the system going.



There is a bit of a weakness in the South African academic institutions, which I think we have to pay attention to. The Human Sciences Research Council, HSRC, the Foundation for Research and



Development, FRD, the Council for Scientific and Industrial Research, CSIR, the National Treasury, the SA Reserve Bank, Statistics SA and so on, we will really have to put a lot of focus on the academic development at our universities.



If I want to interact with a professor of economics at the University of Limpopo, I should be able to do that - but who is it? So, we must focus on that.



We say that agriculture is going to be critical for us going forward and so is tourism. Do we have a sufficient focus at our universities on agriculture and research? We have the Agricultural Research Council, ARC. What about the universities? Are we galvanising all the research work? This is what we hope to come out of this programme so that we can really build up the intellectual capacity.



By the way, one of the things hon member that I am hoping we can put together by mid-year, next year ... if it doesn’t happen, don’t burn me at the stake ... it is the creation of a national bureau of economic research, which will bring together all these research institutes. Academics will be compensated as per their peer-reviewed paper, which hopefully will contribute further to the number of papers that we can put together.



I can assure you hon member that there are many research papers on our website, the website of Department of Trade and Industry, the website of the SA Reserve Bank and the website of Statistics SA. I think the effort is good and we should continue to interact with that effort.





Nk S A LUTHULI: Ngiyabonga Sihlalo, njengoba ngikhuluma Ngqongqoshe bangaphezulu kwezigidi ezilishumi abantu abangawutholi umsebenzi.

Bangaphezu kwezigidi ezingamashumi amathathu abantu abahlwempu. Ulusha lwethu lugcwele emajele ngenxa yokuthi umsebenzi aliwutholi nanokuthi isimo somnotho asisihle kahle kubona. Awukuboni njengobufakazi obanele ukugxila kwakho ezimakethe zamahhala ukuthi umnotho awukwazi ukuxazulula izinkinga eNingizimu Afrika ebhekene nazo ngokushoda kwemisebenzi. Ngiyabonga.



The MINISTER OF FINANCE: Thank you very much hon member, I think you are probably pointing at the need to do further research to try and answer these difficult questions of youth unemployment and so on. As part of these research programmes, we do look into that and ... one of the immediate issues that we have to confront is that there is a major structural change in our economy with a larger chunk of gross domestic product, GDP, now being in the tertiary sector of the



economy, banking and finance; health services; community services; government services; wholesale trade; retail trade, auditing and other services. The tertiary sector probably accounts for over 60% of GDP whilst mining and quarrying accounts for probably another 5- 6%. Manufacturing ... I must be careful in the presence of the Minister of the Department of Trade and Industry ... let me be generous enough to say about 18%. When you define it narrow, you can broaden it. If you broaden it with his Special Economic Zones, SEZs, I am sure it expands a bit. But ... and this is where we might be failing our youth. Because of the major structural changes in the economy, our education and training system has not kept up with the changes. The result is structural unemployment. That is why we are now trying to make these interventions with the Expanded Public Works Programme, EPWP, and other things. I know that the Minister of Basic Education, the Minister of Higher Education and the Minister of Employment and Labour are probably discussing this changed nature of the structure of our economy and how to respond to it.



We can’t wait forever. That is why we have these temporary intervention methods but we should be looking at the medium and long-term interventions. We should be training more of our youth for the tertiary sector, including tourism by the way, and not forgetting that no matter how well the services sector is doing, we



still have to eat – agriculture and agroprocessing – we still have to support manufacturing, we still have to make sure that we continue to mine whatever minerals that we still have which ...

South Africa still have quite large deposits of other minerals, so we can’t neglect that.



The manner in which we position our training and system, we have to make sure that we achieve those medium to long-term goals.





Mufambisi wa ntirho, ndzi khensa swinene eka siku ra namuntlha loko ndzi kotile ku ta haleno ka NCOP, leswaku mi kota ku ndzi tsundzuxa ku vulavula hi ririmi ra hina ra Xitsonga. Ndza khensa swinene.





Mr D R RYDER: Thank you hon Chairperson, hon Minister, just to remind you that the original question was about upgrading economic planning. With regard to your economic planning, it didn’t warn us of the current debt crisis in which we find ourselves. The economic planning didn’t deliver that situation to us in spite of the fact that government ... by that I mean your department ... has allowed the debt to spiral beyond the country’s ability to service its obligations. That happened over time. So, planning should have



happened. Why Treasury was seemingly caught unaware in their planning for this or was Treasury also captured during the Zuma years?



The MINISTER OF FINANCE: You see, I left the government in 1998.





Bengingekho mina. [Uhleko.]





If you have followed carefully the presentations to the relevant committees by the National Treasury officials, you’ll have seen over a number of years that they provided you with a graph which showed the different scenarios which will materialise if certain things were not done or if certain contingent liabilities were to materialise. They have done that. It was very clear.



I must indicate to you that there is nothing like a precise number in economics. If you are talking about, for example, forecasting; if we forecast that economic growth is likely going to be 1,8% for 2019 and it comes out at 2,8%, you can’t slaughter the forecaster for that. Why, because forecasting is based on the Ceteris Paribus Principle - all things remaining the same.



As of now, we would know what the oil price is today, which we will factor into the model but also look into what the other forecasters think is likely to happen and see what the possible outcome is. Now, if a war breaks out somewhere and the oil price spikes, the outcomes which you thought you were forecasting will be totally different or if the weather forecast gets it wrong and you suddenly end up with a huge drought like we experienced in certain parts of the country, the outcomes are going to be different.



Don’t blame the officials at National Treasury. They aren’t witchdoctors as such but they try to look a bit into the future based on the information at their disposal but they also benchmark with other colleagues in the other agencies. So, we knew, for example, that if Eskom is unable to carry its debt, part of which is a contingent liability, the outcomes will be a spike in the debt.



We knew that if SA Airways, SAA, doesn’t come round properly and still relies on the support from the state; that will put pressure on the debt. We knew that with the immediate introduction of free higher education, some unbudgeted R57 billion immediately, that will immediately put pressure on the debt and so on.



The planning capacity is there, in fact, the Public Finance Management Act, PFMA, empowers the Minister of Finance to do macroeconomic co-ordination within the state and that’s what we try to do to the best of our abilities. [Applause.] Thank you.



The CHAIRPERSON OF THE NCOP: At this point, I think what we should do is to thank the Minister and a special appreciation for his attendance and time he has taken to answer our questions in the NCOP. So, for 10 seconds we will suspend the proceeding for people to stretch. We will once again proceed in 10 seconds. Thank you very much. [Applause.]



Question 192:


The MINISTER OF EMPLOYMENT AND LABOUR: Deputy Chairperson, I’m answering question 192 by hon Ncitha. This morning, hon Ncitha and members, I was in the Cabinet committee meeting tabling the integrated and the comprehensive youth employment strategy.



You see, Chairperson, one of the challenges that we’re battling against is also or is the silo operation that you find in the public service. Spheres of government, departments, entities, have fenced themselves in their territories in such a manner that even ... that defeats the whole objectives that they want to achieve. And I think



we are lucky to have President Ramaphosa who is working with us; who is working with all of us breaking these walls that are detrimental to the effective service delivery.



And you would remember in his June 2019 state of the nation address, the President outlined clear deliverables including an integrated and a comprehensive youth employment strategy. In particular, he emphasised the implementation of the comprehensive plan that would be driven and co-ordinated from the presidency to ensure we strengthen partnership, co-ordination and co-operation across government, even with the private sector.



What I was tabling this morning in the Cabinet committee was a document on how we see what the President stated in the state of the nation address unfolding in an impactful manner.



So, we Employment and Labour Department as the co-ordinating department for all the interventions of employment across all the departments and sectors. We believe that we must, at the centre of building a national pathway management network for young workers to view and access available learning and work opportunities and receive a range of support services; and of course work readiness



training to help them navigate into the employment and the economic opportunities.



We are rolling our sleeves in revitalizing the national youth services in order to create opportunities for the young people, to visibly and meaningfully contribute to the community, develop critical skills required to participate effectively in the economy, build confidence and expand their network and social capital.



We have, however, taken note of the amount of existing information and contribution of the various stakeholders on addressing the youth employment. There are a number of initiatives; hence we are saying the issue of co-ordination is central.



As a department we have further started a review process of all our training programmes and we need to ensure that any training programmes are able to ensure that beneficiaries are more competitive in the labour matter. We raising this matter of reviewing training programmes because there are people who just apply to the sector education and training authorities, Setas, or wherever there’s money; get millions, come up with a training programme, three months after that those poor kids are left in the



ledge, they have nothing to show, nothing to offer after that particular training.



We must talk about qualitative programmes. We are working to connect the young people with employment opportunities through amongst others, free work seeker recruitment and placement through the public employment services youth centres and private employment services careers, the career counselling, employment scheme for work readiness, promotion programmes and providing young people with the experience through the learnerships, and we are also doing promotion of the youth entrepreneurship, youth cooperatives and the Small, Medium and Micro-sized Enterprises, SMMEs, collaborate effort between the public and the private sector to expand the intake of the young people through the initiatives such as the Yes Programme, the Harambee, Tshepo 1 Million, employer tax initiative and other inventions funded under the Jobs Fund and the Unemployment Insurance Fund, UIF, and even the Compensation Fund.



But as I’m saying, we want to emphasise this time around that, these are qualitative programmes.



Ms Z V NCITHA: Chair, let me thank the Minister for such a comprehensive response, in terms of the question, and I’m happy that



you have also touched on the issue of all sectors are involved in ensuring that there is this programme that you have referred to, Integrated Youth Development Programme.



But what I would like to ask, Chair, is the participation of young persons themselves? Because I wouldn’t like to see a situation where we are sitting in one corner deciding about programmes that will affect young people without them having an input. Thank you very much.



The MINISTER OF EMPLOYMENT AND LABOUR: Chairperson, this morning, one of the issues which was emphasised was to say “we’re not going to drive this initiative solo as the Department of Employment and Labour”. The emphasis was departments like women, youth and disabilities who are directly dealing with those issues need to be part of this partnership and the small businesses must also be part where a lot of youth entrepreneurs also want to be party to that.



Rural development with the various initiatives ... remember we’ve been talking about programmes like Extended Public Works Programme, EPWP, the National Rural Youth Services Corps, Narysec Programmes, we’ve been talking about the youth brigades in green and fire and environmental for career pathing and for sustainable livelihood that



all the agencies which are dealing with that and interacting with the young people. But in particular, the emphasis of the National Youth Development Agency, NYDA, which is looking into the issues of the young people, they must be on point. But also to say: every programme in every department in every province, we must make sure that it speaks to this national programme.



Mr A ARNOLDS: Minister, the structure of the South African economy does not allow young people to participate meaningfully in the economy. At the centre of South Africa’s unemployment crisis, it is the young people who should be entering the job market in their transition to adulthood. All youth from different backgrounds, particularly women, are affected by the crisis of unemployment. The latest unemployment figures from StatsSA exposes the new dawn for what it is. It is the same confused ruling party that are outsourcing its thinking to overrated new liberal institutions and does not know what should be done with our high levels of unemployment.



Can the Minister take the country’s citizens, especially the youth, in his confidence and admit that the government has failed the unemployed youth of South Africa? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: Chairperson, I thought that the previous Minister who was standing here was able to articulate that the sidelining of the black people in this country is historical, it is historical and it was systemic by the previous regime. And part of that, the tool which was used to disempower our people was the issue of education and skills. When we talking about the structural nature of our economy is that most of our young people do not have the skills that matter. But thanks through the ruling party, to our government, that today we starting to put thousands if not millions of our young people into the colleges into the universities in order to acquire the skills which are necessary. But what we need to interrogate, are these the skills that matter, that are critical? Day in day out you hear the employers complaining about what they call the critical skills in the economy; which I think we have not been emphasising. So, to do that it’s going to be a process because even ... to be where we are was as a result of a particular long process and I think there are terms which we are saying today are trying to deal with the structural nature of the issues we are talking about.



Leave the other noise, leave the other noise about this particular government is responsible for the ... but what we are saying is



there is a very clear programme to deal with all these structural issues which we are talking about today.



Ms H S BOSHOFF: Chair, but before we start I don’t know if I can ask the Minister any questions because I’m frozen to death.



Good afternoon, Minister. Just recently you said government would defeat the unemployment but you couldn’t do this on your own, that you had to partner with various people to be able to reach this goal and change the approach from mere compliance enforcement to facilitating job creation.



Minister, this is profoundly ironic as you are now pledging harsher punitive measures to be imposed. This will not only add to the burden of employing people but create a sense that government sees business and employers as its opponents.



Minister, considering this, can you ensure to put the minds of employers and potential employers at ease by assuring them that this is not the case? And that government will look at ways to incentivise employers to curb continuous unemployment rate, especially under our youth. Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: Chairperson, the harsher measures. You see if we talking fundamentals, we talk about fundamentals for government, there must be fundamentals for everybody. We can’t put laws in this country, labour relations laws, giving people the right to freedom of association, the right to organise unions of their own choice, the right to bargain salaries to improve their conditions of service, but you sit with the employers who are still treating people like slaves; it cannot be accepted. If you go into some of the farms, some of the factories who are neglecting, if you listen about some of the workers who were injured at work and being dumped by the employers, we come and say we are talking harsher measures.



You can’t, in this particular country where the majority is the black people, you look at the management of some of the private sector companies, they are still lily white and male, and then we say we talking harsher measures. So, the issue of employment equity is nonnegotiable. We are going to come with even more measures to enforce people to ... people cannot just want to benefit from this government but do not want to transform.



Mr C F B SMIT: Chairperson, there is a concern athat many young people in this country have a limited understanding of what drives



the employer’s hiring preferences and this impacts on their career choices.



Further education preferences with many young people preferring universities compared to technical education.



Has the government looked at the development of an effective intermediary system that provides adequate information to young people about skills needs, training options and employment opportunities as well as reliable information alerts to employers about young people’s training? They also need education in how to draw up a curriculum vitae, CV, in a proper manner. Thank you sir.



The MINISTER OF EMPLOYMENT AND LABOUR: Chairperson, I think this is the conversation we must have nationally as a country. First deal with the myth that for our young people to be employable they must go to university; because there is that myth that we must pump all our young people to university, which is not the case.



The key to skills development is going to be the Technical and Vocational Education and Training, Tvet, system with proper quality vocational education. The issue of the skills, and I think that’s what we need to emphasise in terms of career guidance and that



career guidance should not just be career guidance for the sake of, it must help the young people to be able to choose, to look into their potential, to look into their interest and so on and so on.



But it must not only talk about the technical world, there’s a lot which the social world can offer. Take for instance the issue of sport. I don’t think we have done enough in terms of sport in this country and I’m talking in my background as a teacher. If we were to have sports coaches, sports clubs and so on, other people were able to make a living out of sport. There are thousands of people who could be employed into that. Some of our sports heroes and heroines today, unfortunately, when they emerge and they are identified they are taken into former Model C schools, and that’s where they blossom because there are coaches there employed and so on.



So, I’m trying to say when we deal with this particular issue of the careers, some of the kids are not interested in the technical side of education, they are interested in the social side of education, they are interested in art, you can mention all of them. We need to invest even on that particular side of it.



But also what we have done as the department is to put what we call the Labour Centres. And 126 Labour Centres have been put in the



country where we are giving the information, we are also guiding them in terms of the qualifications they have, where they have to improve their skills, including the issues of what higher education is doing, where should they apply if they want to further their studies and so on. But also link them with potential employers. And I think it must be again a co-ordinated effort and we must not undermine this. I’ve learnt it even with some of my own kids. Some pass with distinctions in maths and science but they come and tell you that “no, no, I’m not interested in that” because we tend to force them into what they do not want, what they do not enjoy, it’s very, very important that career guidance is able to do that, and the parents are also on board.



Question 178:


The MINISTER OF EMPLOYMENT AND LABOUR: Hon Chair, we take the discussion document that the Minister of Finance referred to on economic transformation, inclusive growth and competitiveness towards an economic strategy for South Africa. It is a working document for all the South Africans to make their own contributions to it. I must emphasize this, different stakeholders, different sectors have different views. The issue is to contribute to the discussion so that we are able to fine-tune on the areas where we – on the areas where we agree it is going to be easy to start



implementing, on the areas where we disagree, it means there must be engagement. At some stage we are going to be able to agree on those particular areas.



Having said that, to the hon member who have asked the question, kindly be informed that since the inception of the employment equity years ago, employers that employ 50 or more employees and those employ between 0-49 employees, but their annual turnover threshold is equal or above the prescribed one in Schedule 4 of the Employment Equity Act, always had regulated powers to self regulate, underline that. They were always allowed to self regulate their employee equity targets and the Employment Equity Plan numerical goals, in their plans in relation what they wish to implement in terms of affirmative action in their work places.



The Labour Relations Act is also premised on the regulated flexibility. There is nothing like labour inflexibility in South Africa or labour rigidity, it is a lie. The bargaining council formation is a voluntary system which is decided upon by parties for their specific sector. They determine the conditions of employment and wages which are appropriate to their sector without any government intervention. The Labour Relations Act requires before bargaining councils could require the Minister, to extend their



collective agreements to non-parties within their sector. They should be sufficiently representative in that sector.



There is no collective agreement that can be extended by the Minister of Employment and Labour does not take into consideration the affairs of the small business within the sector. This is stipulated in our labour laws. Non-parties can apply to the council to be exempted from the collective agreement and if not happy about the decision of the bargaining council. They must motivate, they must not think that just by applying they are going to be exempted.



They can appeal to the Exemption Independent Appeals Body. Hon Chair, all what it is trying to say, is to demonstrate without exhausting the list is that what is contained in the Proposed Economic Recovery Plan of the Minister of Finance in relation to the employment and labour is mostly already found in the current labour laws, regulations and even policies. Not only that, it is practised reviewed, amended as and when the need for that arises.



In relation to the support we give to trade unions, we get guidance from the Labour Relations Act as it calls upon us on Chapter 1 and Section 1 to advance economic development, social justice, labour peace and democratisation of the workplace. The issue is, people



must not seek shortcuts, they must implement the current labour legislation, and it is flexible enough.



The DEPUTY CHAIRPERSON OF THE NCOP: Thank you hon Minister, there was a complaint that the air conditioner is a bit cold. Can we please get some relief there?



Ms H S BOSHOFF: Hon Deputy Chair, Minister I am pleased to hear that it is a working document and that discussions are on the way with different stakeholders and different sectors, etc. I would like to therefore to know, what discussions have you had with unions to ensure that the credible plan as suggested by the Minister of Finance is accepted and implemented, to enable this country to curb the continuous unemployment rate and the possible downgrading by Moody’s, and to further ensure that not one South African is held to ransom by the SACP or Cosatu? I thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: I do not know what the last part means. I am... “ja”, I do know what it means, maybe again it is the “rooi gevaar”, because you talk communist party, people see a danger like they were brainwashed by the apartheid system. That is what the apartheid system inculcated to other people that, once you talk communist you are talking something else.



What we must accept in South Africa is, there is diversity of views and you must appreciate that. That diversity is what makes us rich. On any document that is put, people are not just going to rubberstamp it. They have different ideological positions and different views. Those debates are going mediate so that as and when you implement whatever you implement, it is mediated and everybody agrees to it. That is what we must appreciate with those we are differing with.



As we speak now, we have put a number of programmes for a debate at the level of National Economic Development and Labour Council, Nedlac, including the decisions of the job summit because some of the issues which are in that particular document are also decisions of the job summit of last year. As we are dealing with the implementation of that and putting all those plans, we are putting plans with labour, business and the civil society. We are breaking those job summit agreements into smaller details so that we can be able to implement each and every thing. Whenever there are problems on those issues, we sit, look at them, debate them, so that we reach consensus. It is better to reach consensus than to impose. That is very important. That is the value of a debate and diversified views. Thank you.



Mr M DANGOR: Hon Minister is the department developing mechanisms out of the recently published paper of economic transformation, inclusive growth and competitiveness and its implications and propose contained in the paper on the labour laws of the country. Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: I thought that I have already hinted on that. We are dealing with those areas. In areas where there is a need or motivation for us to review, we will do that, but we must be convinced that there is a need to review that according to – you see the problem here is, when people want us to review certain areas without a proper motivation, one of the fundamental issues. People want us to review the labour laws even before they start implementing them. As I am saying, a number of workers have never enjoyed any of the basic labour rights, but already people are calling for review. What we are saying is that, where there is a need for us to review, we will do so. It must be properly motivated, we put it to the social partners; we debate it and come to a decision. I am talking about areas which are relating to the labour laws, as you are saying.



Thus far we have not been able. In fact we even want to tighten the labour laws. For instance on employment equity and if you look at



what is going on in a number of private companies, we think that self regulation has not worked. What we have to do now is to put the targets and we think that in some of the areas we are going to tighten those labour – in fact I am trying to even influence government, Minister Patel is here from Department of Trade and Industry, that those that do not comply with the laws but want tenders form government and be suppliers to government, we should look at their equity certificates and even do not give them anything because they do not want to comply with the law. We must just be hard now, 20 years after those labour legislations, we must just be hard. We are not going to talk about transformation indefinitely when there is no transformation; people want to defend the old inherited apartheid privileges.



Mr A ARNOLDS: Hon Deputy Chair, the Minister of Finance’s new liberal economic transformation, inclusive growth and competitiveness towards economic strategy in South Africa is a plan in favour of white monopoly capital, drafted and contributions made by consultants that will not create jobs, a plan that will put South Africa, like in gear, in reverse gear. Will you oppose the proposals for the sale of state-owned enterprises proposed by the Minister of Finance? If he succeeds, what impact will the wholesale privatisation have on jobs? Thank you.



The DEPUTY CHAIRPRSON OF THE NCOP: Hon Minister, if the issue is not in the document, it is a new question. It is in your discretion whether you want to respond or not.



The MINISTER OF EMPLOYMENT AND LABOUR: Well it sounds related to the main question. Hon Chair and hon members, populist political rhetoric and revolutionary sounding phrases are not going to help us. Indeed there are liberals in this country, there are also nationalists, there are also right-wingers but there are also ultra lefties. What is important that is going to take us forward is to take a debate on these issues and ultimately come up with what is pragmatic for the country.



These nice sounding phrases which are not offering any solution are not going to help us. Whatever we term and call that document – but the issue – now let us respond to the issues which it raises.

Unfortunately it has been put there by the Treasury of the governing party. Let us respond to it because it is going to inform the programme and the plan of this particular country. Insulting it and whatever all the nice words are not going to help. Come, put the alternatives, and let us debate those alternatives.



Mr K M MMOIEMANG: Hon Deputy Chair, let me also appreciate the manner in which the Minister has articulated the position of the department on the document by government. My angle hon Minister is more on the concern for vulnerable workers, particularly exploitation of workers given the fact that in the document, there is a commitment to reduce red tape. Amongst the two issues raised as you have correctly pointed out is this matter of exempting small business. What even concerns me is the sense that one gets that there is going to be a revival of the Red Tape Amendment Bill which obviously pushes both the departments and agencies to reduce red tape by 25%. Has a department seriously made a reflection on this on those vulnerable workers given the concern that it is even categorised as red tape? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: I am lucky on this follow up question because Minister Patel will be coming here. Maybe one of the questions posed to him about these issues of the red tape might help. What I can say, I do not think reviewing that area means we must compromise the workers in those small industries, no. Remember that fundamentally the workers right are in the Constitution and therefore they cannot be compromised, all you need is a balancing act.



There are a number of issues when you are talking about red tape, where Minister might be able to make an example if there is a related question which we think that they are bureaucracy they are frustrating the development which we want in the country. They are frustrating the implementation of some of our decision and I think it talks to that, not necessarily tampering with the fundamental rights of the vulnerable workers.



Question 183:


The MINISTER OF EMPLOYMENT AND LABOUR: Yes, hon Mathevula, there are studies that we have undertaken that cover farmworkers. The Department of Employment and Labour has conducted various researches on the working conditions of the farmworkers in the country. The levels of compliance and non-compliance with occupational health and safety regulation by companies in the iron and steel construction and agricultural – well, the study aimed to investigate those levels of compliance with occupational health and safety by the companies in these sectors I have just mentioned.



The study aimed to come up with possible policy legislative organisational and resourcing models of interventions that can assist the government and unions to more effectively organise the farmworkers, and again, investigation into the agricultural work in



rural areas and the decent work approach. This study in 2018 is aimed to share insights on the status of the work in the agricultural sector whilst also assessing the working conditions in the agricultural sector against the international labour organisation principles of decent work.



On the issue of the bitter haves migrant workers in the commercial agricultural sector in South Africa, the aim of the study was to conduct a comprehensive policy review both state and nonstate of existing policies, arrangements and practices relating to the procurement retention and regulation of the low wage migrant farmworkers in South Africa to undertake an updated analysis of the relationship between transformation of the South African economy and its structural, a need for low wage migrant farm labour and to document the actual practises relating to the management of the migrant farm labour including the working conditions on the ground through an examination of the role of the labour inspectorate and the unions.



Lastly, Chairperson, whilst studies conducted identified some deficiencies in the basic rights of the farmworkers; the Basic Conditions of Employment Act, 1997, regulate access to this basic right. So, the Act applies to all employees and employers with the



exception of the members of the state security agency and unpaid volunteers working for an organisation with a charitable purpose.



So, the Department of Labour has indeed paid attention to this group of workers and through its compliance, monitoring and enforcement services, the department ensures that employers and employees comply with the labour legislation through regular inspections and reviews of the minimum wage within the sector. But lets be honest, it’s a tough struggle for a number of employers to comply, especially for these vulnerable workers.



The DEPUTY CHAIRPERSON OF THE NCOP: Thank you, hon Minister. Hon Mathevula?



Ms B T MATHEVULA: No, I thought maybe you give me a chance, Deputy Chair. [Laughter.] Thank you very much, Deputy Chairperson.

Minister, we cannot talk about basic rights of farmworkers in this country while we have farms such as Carrel Booysen Art in Mopani in Letsitele, in Limpopo, where he dismissed 186 workers, which some are injured without compensation since 2009.



The other one is Venter van Zyl Botha where a farm owner kicked a pregnant woman and she has a miscarriage. Since today, the farm



owner is not arrested. Letaba Citrus, who dismissed workers without paying them, CP Minnaar En Seun, all mention is happening under your department. Please, Minister, even in the previous administration, I have asked that your department must visit these farms. I am repeating it for the second time. We have problems in these farms.

Can you promise me today that you are going to visit those farms and assist those people who are suffering? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: Deputy Chairperson, the hon member also need to understand that we have more than 1,8 million registered employers with the Unemployment Insurance Fund, UIF. We also try and use the SA Revenue Service, Sars, register to check and some have not registered. We have been trying, for instance, in our budget we have only increase the inspectors by 300 only plus another

200. Even if we were to increase them by 1 000, we are not going to be able to reach every work place. We are not going to be able to do that. But we rely, firstly, on the good will of some of the employers. We rely on the shopstewards and their trade unions to give us the information.



Yes, our inspectors can visit particular areas, but they are not going to be able to detect each and every problem in a particular area. That’s why also; we must rely on you as hon members as you are



doing. Sometimes we don’t even have to wait for the questions to the Minister. You have just to write down and say Minister; we are having this particular incident in this particular area and so on, please attend to it.



I think now there is nothing which has come to me from hon members and I am saying ... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Can we ... Please order, hon Mathevula. Order! You have requested your question so nicely and we appreciate that. But now you are messing it up yourself. Don’t do that. [Laughter.]



The MINISTER OF EMPLOYMENT AND LABOUR: No, don’t worry, Deputy Chairperson, my relationship with hon Mokause blows on and off. [Laughter] [Applause.] No, no, sometimes she is very angry at me, sometimes she talks nicely, I don’t know why. But the issue is, hon members, I think this is what we must preach even in churches, that’s what we must preach everywhere and say whenever there is such information of abuse, lets deal with it. And from now I am also going to take those details and send the inspectors to deal with that.



But remember, this is just a drop in the ocean. There are many other areas where we would not be able to reach them and this also talks to the weakness of the labour movement, especially in those areas where people are vulnerable. The labour movement is very weak in the farm sector. I think that’s a challenge, a challenge to all of us and even the department on how we help to strengthen also the labour movement there. Thank you.



Mr M E NCHABELENG: Thanks, Deputy Chairperson. Hon Minister, in South Africa farmworkers constitute one of the most exploited and neglected categories of the working poor. One of the concerns has been the inability of the Commission for Conciliation, Mediation and Arbitration, CCMA, to offer adequate protection for farmworkers mainly because they are not members of trade unions. Has the department looked at addressing reforms within the CCMA, including capacity and geographical in accessibility and inadequate operational policies to protect farmworkers? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: You are correct, hon member. One of the things we are doing, we are now in the process of trying to review the operations of the CCMA and looked at the strength and the weaknesses. But you won’t believe that the Department of Justice once asked to deal with some of the cases because they see CCMA



relatively performing well. But we know about these weaknesses, especially when workers are not belonging to any of the unions, for that matter they are victimised, threatened and so on.



One of the areas which we have been told, in some farms they are denied even their basic rights to vote and even on that voting day, which is supposed to be not a working holiday, they are made to work. So, these are the issues which we are looking at. But I think we need a very co-ordinated strategy, not just by the department, which is also going to involve the police, Social Development and a number of the departments to deal with the way farmworkers are being victimised. By the way, not all farmers, there are farmers who are co-operating. We are trying to meet with the associations of the farmers to deal about this issue of the abuse of the farmworkers.

So, it’s in the pipeline to look into this question very seriously. I think as you are saying, hon members, you supposed to be our eyes and ears also. You supposed to be playing a mobilising role. Thank you.



Ms M L MOSHODI: Thanks very much, hon Deputy Chair. Hon Minister, it is a well known fact that many farmworkers are not allowed to take leave, including sick leave or maternity leave as prescribed in the labour law of this country. In many instance, farmers do not even



pay UIF. Hon Minister, I just want to check, does the department undertake inspection of farms to look at compliance with the labour laws of this country? And what is the level of compliance of farmworkers with the labour law of this country? Thank you, hon Deputy Chair.



The MINISTER OF EMPLOYMENT AND LABOUR: We do, Deputy Chair. We do, hon member. But I can tell you very interesting experiences, we find problems. In some farms, if we just come without a notice, people report us for trespassing. Yes, they do that. We have to give a notice. If we have given a notice, we find the farm locked, the owner is not there or the manager is not there. We could see that it is done deliberately. These are the types of the problems which we are getting.



But of late, if they happen to co-operate, you find that they do not want you to have an interaction with the workers. They want to give you only one story from one side. They sit there with a team of lawyers or some organisations which are representing them, a team of lawyers who would put lots of questions which you can see that these are obstacles. [Interjections.] That’s why. [Interjections.] I have said there are some organisations. That’s why we have requested



meetings with some of the associations to sit with them and tell them that they can’t be obstacles on these issues of compliance.



What I am trying to say is that in some instances, they do comply. Some of them do comply but in some instances, you can see that they do not want to comply. I think that’s where we have to be hard. I have set my strategy simple, pick up one, two or three and be very harsh to send a message. If it means you have to close them, you must do it. You hear, their supporters are already screaming because they enjoy the exploitation of the black people. [Interjections.] They enjoy it. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Order! [Interjections.] Order, members.



Question 195:


The MINISTER OF EMPLOYMENT AND LABOUR: Hon Rayi, the Labour Relations Act, sections 4, 5, 6 and 7 provide for the management of the relationship between the employer and the employee. With regard to farm evictions the Department of Agriculture, Land Reform and Rural Development has the Land Tenure Act as a tool to manage this relationship. We are keenly aware that even though we have these pieces of legislation to ensure that evictions do not occur, there



are still farmers who still perform this bad practice. These practises are not going to stop when some of these farmers who are treating our people like slaves, are still having supporters in Parliament within the legislatures.






Furthermore, we do have inspectors to ensure that they enforce our laws. The challenge of not collaborating of partnering our efforts to change our country for the better, we have to deal with that in order to defeat all what we are talking about.



I am positioning the Department of Employment and Labour in such a way that it works with other departments in implementing many of these obligations. For instance, approach to inspectors now is that we do them in collaborations with the departments, amongst others is the Department of Home Affairs, the Department of Trade and Industry, the Department of Agriculture, Land Reform and Rural Development and with some agencies like SA Revenue Service, Sars, and others, so that we look at whether the people are able to meet their obligations once we bring Sars there and so that we are able to say - because people enjoy using illegal desperate immigrants at the expense of the people who are legal. Hon Deputy Chairperson and



I repeat it, I do not know which lawmakers are still supporting and defending these acts and why? Thank you.



Mr M I RAYI: Hon Deputy Chair and hon Minister for the response. I just want to find out whether it will not make sense if these particular law of the Land Tenure Security Act that it be administered by the Department of Employment and Labour, given that farm dwellers are mainly farm workers and the department that is responsible for regulating employer and employee relations is the Department of Employment and Labour and also it has mechanisms such as the inspectorate to ensure and follow up on the noncompliance by the employers. Thank you very much, hon Deputy Chair.



The MINISTER OF EMPLOYMENT AND LABOUR: I cannot be able to pronounce now on that matter. However, I always said regardless of where the agency or the legislation is driven, but all we need is the co- operation of the different agencies in the implementation of that particular legislation, because some of the issues are beyond the employment, the security of tenure in the main, not just security of employment. Some of the people even grandchildren who are working there, but the grandmothers and the grandfathers are still in that farm. They know no other place, but they are taken out like dogs.

So, it becomes the issue of where do they go. So, it goes beyond the



Department of Employment and Labour. I think a number of departments are affected by that.



To me as to where is located or who is administering that legislation might not be the issue is, but how do these different departments co-operate. However I have not been able to think about it properly. Thank you.



Mr K M MMOIEMANG: Hon Deputy Chair and hon Minister, I just want to bring to the attention to the hon Minister to the hotspots that excel in the eviction of workers that is the Drakenstein Municipality where more than 20 000 people are currently threatened by eviction orders. In edition to that a caseload of 1 127, will the Minister consider sending a special team just to make sure that this matter is under arrest because it cannot continue unabated? Thank you, hon Minister.



The MINISTER OF EMPLOYMENT AND LABOUR: Definitely, if we get all this information. I will also speak to my colleagues, especially the Minister of Agriculture, Land Reform and Rural Development; because I think it might need a joint visit. However, regardless of the numbers, there are a number of hotspots where our people are seriously under threat in relation to this issue. Thank you.



Ms H S BOSHOFF: Hon Deputy Chair and hon Minister, I have listened to your responses and I wish to state that if you were serious about the plight of the so-called evictions, you would follow the plan of the DA for land reform which includes such measures as awarding ownership of communal land to those who live on it, handing out of title deeds and encouraging an environment where farm workers will be able to own shares of the farms they work in it. It is very easy. Such policies have been successful in the Western Cape and have empowered South Africans to reach their full potential. You can clap your hands from my left side, I am watching you. [Laughter.]



Minister what I would like to know from you is: Can you give this House the assurance that you will at least look into these suggestions and possible implementation to eradicate these farm evictions?



The MINISTER OF EMPLOYMENT AND LABOUR: Well, South Africa is a very great country. We listen to everybody and anybody, but we evaluate whether it make sense. We will evaluate it.



Ms H S BOSHOFF: Same as you.



The MINISTER OF EMPLOYMENT AND LABOUR: Yes, same as me and unfortunately the Employee Share Scheme was introduced by Minister Nkwinti from that department. So, do not claim it. [Laughter.]






Now ... You see once you start - we are not talking ...






The MINISTER OF EMPLOYMENT AND LABOUR: ... about title deeds here. If we are talking about title deeds, we must talk about people being given title deeds to have the right in those particular farms, because that is where they were born and that is where their parents were born. So we must not be selective here.



That is why this issue of the land we must be sober when we debate it. We must not be emotional and say South Africa belongs to all who live in it. We must be sober when we deal with this matter. Thank you. [Applause.]



Ms M O MOKAUSE: Hon Deputy Chairperson and hon Minister, the lawmakers that you are saying are protecting the racists



organisations who are forever ill-treating our people on farms cannot include the EFF. The EFF is very vocal about the protection of the rights of farm workers including farm dwellers. So, that excludes the EFF.



Farmers live under inhumane conditions. Farm workers work under inhumane treatments; they are not even treated properly. They are not even compensated properly. They work about dangerous products in the grape farms in the Upington area. They die and are sent home with absolutely nothing.



What is the plan of your department in making sure that these farmers are monitored and these farm workers are recorded and if something happens they are compensated properly and are sent home with dignity? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: I think you must be very clear and when I was talking about those lawmakers, I was referring to the people who were shouting at me when I was talking facts here. For there were people who were not happy about the facts, when we are exposing the brutalities in the farms, they are on denial, when we know that it is happening. However that we have been talking about is part of the plan. I think the time has now come that we be



hard and punish the people who are brutalising other people. However we are going to need the police to work with us. That is why when we visit some of them we must do it together with the other agencies, so that we are able to deal with these issues properly.



Again, again, when we talk about some of them being sent home once they die, some have no homes. Their home is where they were born. That is why I was saying, we must try and speak sense to everybody about this question of the land reform. It is a very sensitive subject. The sooner all of us in our conversations are on board and we deal with it and transform this issue the better. It will bring peace into our country. As long as it is not properly dealt with, there is not going to be peace and stability in the country. I thank you.



Question 173:




relation to the uFiling system, I am told that Unemployment Insurance Fund, UIF, participated in a SA Revenue Service, SARS, contract, in other words, UIF pick it back on SARS contract within Interlife. The uFiling system is the product of Interfile. The maintenance and support of uFiling system was made by the UIF to be the responsibility of Interfile contractually. The Interfile



contract is running for three years, and the contractual period will come to an end on 31 March 2020.



The monthly support and maintenance cost is R1,480 253. The contract includes a bouquet of services which include inter alia, the following: Call centre services, hosting services which are made up of four subdivisions or subservices, operational support, database management, maintenance infrastructure, infrastructure management and maintenance, and reporting. The other subservices are uFiling hardware, software infrastructure and hosting services. The other one is connectivity services and the other sector is payment, gateway infrastructure and hosting. For the support and the maintenance contract from 2017 to date, an amount totalling R42,8634 have been paid for a three year support and maintenance contracts since April 2017.



By support and maintenance we mean, maintenance services which is made up of four subdivisions I also referred to, the uFiling application software maintenance and support, the virtual office application, software maintenance and support, technical account management, online application, maintenance and support. In anticipation of the contract ending in March next year, UIF has gone out on tender, which is currently on the evaluation process.



Mr J J LONDT: You see, it’s much more difficult when you have to talk facts and you cannot throw slogans around, hon Minister.

Millions have been wasted by the ministry with this contract. In total, that contract will be more than R50 million, and it is not giving the support to small businesses the way it should be. In theory, the online system should have made it easier for small businesses, but in practise, it has become a cumbersome process, adding more red tape to small businesses.



The owners have to spend precious hours and resources trying to sort out this mess that has been dragging for months and months, and the service provider is still being paid. Now, there is even anecdotal evidence that in a town called Colesberg, the officials from your department that’s supposed to deal with it say listen, we don’t even know how to handle this system, we didn’t get the necessary training. Small business owners must now pay outside experts to help deal with this red tape that has been put in front of them. This is costing them thousands of rands every single month. In fact, this is costing job opportunities, hon Minister.



What recourse are there for that small businesses that have to spend thousands of rands or millions if you had to add it out across the country, to fix the system or get around the system that you should



have made sure it’s in place, yet a service provider that is not providing a proper service gets paid every single month? It’s the same thing that small businesses are not being taken seriously by this government.



The MINISTER OF EMPLOYMENT AND LABOUR: Yesterday we were talking to Scopa about the nature of some of our contracts. Indeed, I share your concerns. That is not rhetoric here, I share your concerns. We are relooking at all these issues and deeply looking at these contracts. You see, part of the problem is that, if you go out in government in a tender process and get those quotations, they give you quotations which are a thousand times more than what you can get from the shop, thus, you have complied.



That’s the problem, because you can’t walk and get something which you see as cheap. You have to follow this particular process, and there’s a lot of collusion in these things, and people put the prices high. If it has gone through, regardless of what the prise is, you have complied with the process. I think these are the issues that the government is trying to deal with from the level of also the Treasury and the government as a whole.



Therefore, I agree with you that we are trying to relook on some of these contracts in order for us to cut that red tape. Indeed, they are putting a number of people at a disadvantage.



Mr K M MMOIEMANG: Through you Deputy Chair, thank you hon Minister for outlining the intervention that the department has done in terms of modernising the UIF, and given the importance of the UIF to provide short-term relieve to workers when they become unemployed or unable to work because of various number of issues. Where there are challenges, what plans are in place for the department at various regional offices’ level or centres to mitigate instances where the system might be offline? Thank you, hon Minister.



The MINISTER OF EMPLOYMENT AND LABOUR: We think that one of the motivations for us to put these labour centres was meant also to deal with that. But we have now started coming up with the concept of the mobile centres and we do what we call Ilima where for instance, we were saying in Lephalale day before yesterday that, mobilise a number of inspectors, mobilise a number of people who are processing the UIF, the compensation grant and put them there for a week or two to process these issues manually and bring back every claim with the documentation into an office which is electronically, we must therefore be able to keep on visiting these particular



centres which are in the outskirts or where there are very small offices. For instance, we are under pressure in Lephalale.



There’s also a huge office which is based in, what is it? It’s about


100 kilometers from Lephalale, but the office that is in Lephalale is unable to process that. So, we have realised that the only way to deal with that, before we could open the offices, is to approach that in big mass like Ilima, to be able to operate for that particular time and make announcement on radio that on this particular period, staring from a particular day to that day, we will be in this particular area.



All those who are having queries and so on, must be able to attend. So, we are in fact developing such approaches which will be able to help us.



Mr S ZANDAMELA: Through you Deputy Chairperson, Minister, in your response to the question, you mentioned that there is a company that is doing maintenance to your website, it’s Interfile, if I’m correct. Do you know any company that is also providing support by the name of Data Centric and Ultimax in your department, and what are they doing, and how much were they paid if they did receive contracts to provide support? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: I will take the details of that company from you, hon member, and investigate it. You remember that I’m not at an operational level. But I will take it to investigate what it does and then be able to answer you in a written form... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Yes, for sure. Members, let us continue because we still have two sets of questions for the Minister that are outstanding. So, we will allow the Minister to respond to Question 196 which is the Question from Ms M L Moshodi.



Question 196:


The MINISTER OF EMPLOYMENT AND LABOUR: Well in relation to this question Deputy Chairperson, the Small to Medium-seized Enterprise department and our own department and various social partners are in the process to develop a national strategy for informal economy.

This in relation to us in particular, because we are dealing with the labour issues.



This will be premised on the provision of the International Labour Organisation’s recommendation 204 on the transition from informal to the formal economy which was adopted by the member states in 2015.



This is under the auspices of National Economic Development and Labour, Nedlac, Decent Work Steering Committee to serve as the vehicle for this particular purpose. To date various consultative engagements have been held throughout the country that facilitated the development of the road map towards the attainment of this strategy.



The road map is characterised by five pillars which will also serve as the bases for our national strategy on the formalisation of the informal economy and these are a building of enabling regulator and policy environment for supporting transition from the informal to the formal economy.



The focus has been on the creation of enabling policy and regulatory framework. Maybe I must say the development or review of local government policies that provide for adequate infrastructure creation of awareness on policies the bi-laws and programmes on informal economy and developing the gender sensitive policies programmes in support of the formalisation efforts.



This process will in addition strengthen the capacity of the local government to support the formalistic efforts, so there is the lot which will have to do to concertize the people and the different



structures on these responsibilities. The second one is the strengthening of the participation of workers and economic units in the transition from informal to formal economy by building the capacity of the workers in the economic units to participate in efforts to facilitate that transition and the third areas is to strengthening the capacity of the national, provincial and local government to adequately provide mechanisms for compliance measures with incentives by building the capacity of local government and informal business organisation and Economic units to enforce the laws and facilitate the compliance and excess to the incentives and I think this point is very important because if you look at the informal sector very few people that are complying with the laws.

Talk minimum wage, talk the UIF, talk registering the workers, talk whatever a lot of things. The working hours, so there is a lot which will have to educate our people in the informal economy, including the area of the other vulnerable workers and the domestic.



Fourthly measuring informality development integrated gender sensitive monitoring and the evaluation system to track those formalisation effects and also the coordination of the implementation and the monitoring of the transition which we must increase visibility of engagement that support formalisation effects ensure effective coordination and the formalisation efforts at the



local level. It is a very, very complex task which needs a lot of education not just from the side of the employees but also from the employers.



Ms M L MOSHODI: Thanks for the response hon Minister. The importance of the informal sector as the source of survival and economic activities for our people especially in light of the level of unemployment can never be over emphasised hon Minister. It is unmistakable, remarkable however the biggest challenge remains the lack of support from government and the private sector. Hon Minister I just want to know has the government look at ways of streamlining the support services that are offered by government to add more value to the grow of our business initiative in the informal sector to ensure that they become form of business ventures. Thank you hon Deputy Chairperson.



The MINISTER OF EMPLOYMENT AND LABOUR:          Thank you hon member without running away from this question, the SMEs that is that department and I think even trade and industry are harder work in dealing with this particular question of the informal economy, with us is on the side what we call the labour relations side of it but I think there is a lot which is still going to come from the SMEs and trade industry in terms of the pronouncement on the way forward in



relation to this, but remember this also a very complex matter sometime is even very difficult to quantify what is happening in that particular world of the informal economy. But I think there are various strategies which are being discussed at that particular level of the two departments.



Mr S ZANDAMELA: No, thank you Deputy Chairperson I am covered, I think the Minister has just answered what I wanted to ask.



Mr J J LONDT: Chairperson I want to check if someone stands up and say they are covered does that count as the question asked or not because I remember we had this situation in the previous question session as well so I just want to confirm and if does not count then hon [18:01:23] will take the first one and I would love to take the second one, thank you.



The DEPUTY CHAIRPERSON OF THE NCOP:    Hon Londt I am chairing this meeting and according to me there was four (4) people that asks questions even he says he is covered my process have been ... so if you have not taken your cut I will give it to Boshoff and then I still have someone else that must ask the question.



Ms H S BOSHOFF: Minister if you want the informal sector to be buffer of absorption during the economic crises you have to prove to this country that you are serious about carving the high rate of unemployment. Have you discussed any measures for implementation with the Minister of Cooperative Governance and Traditional Affairs (Cogta) such as redrafting regulations like the municipal bi-laws which often criminalise work in the informal sector and looking at the reducing of the red tape and investing in basic infrastructure and have you had any discussions or engagements with Nedlac for assistance in this regard if not why not and when do you intended doing so? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: Like I have indicated discussion are going on, on the issue of the informal economy at both at departmental levels or interdepartmental levels led by the ministry of the small businesses and I have said Department of Trade and Industry will comment but also at interdepartmental level because as you are saying South African Local Government Association (Salga) is going to be very important here there are also various initiatives by the different provinces but I think the important issue is going to be this coordination, collaboration by ...and remember that this issue of us tackling the informal economy and trying to formalise it has not been with us for too long is just a



new idea but others are already starting like Gauteng are already do some implementation but I think is taking off now. The discussions are starting to be fruitful and so on. Thank you.



Mr M I RAYI: Minister with the increase in informal economy as the result of high employment rate and the retrenchments particularly in the private sector. What is the department doing in terms of extending the rights that are enjoyed by workers in the formal employment to workers in the informal economy? Thank you.



The MINISTER OF EMPLOYMENT AND LABOUR: Complex as is, that is the debate which we are having, that the debate we are having to say what is going to be the basic minimum right we want, we want every employer to be able to respect and remember there we are talking about the different working hours which are very funny and so on and even the nature of employment but we will have to find a way of regulating it without putting a string hold on those initiative because some of the initiatives in that particular area are self initiative by the different individuals some of them its families who are in that particular business. The people who are employed apart of the family and part of shareholding and so on. So it is a very complex area but it is a matter which we have to look at it



especially when we are talking about the rights of people but in the main the issues of health and safety are very, very important.



So I am not going to be able to answer this question comprehensively because I think this is the matter which needs to be fully investigated the implications and every thing. Thank you.



The DEPUTY CHAIRPERSON OF THE NCOP: Hon Members there was a request that the Minister of Trade and Industry want to be accommodate earlier which was granted by the table staff so will just now have a comfort break of three minutes, we will come back and we will continue with the Minister of Trade and Industry. Thank you very much to the Minister of Employment and Labour, my brother now you can go and get a rest.



Question 169:


The MINISTER OF TRADE AND INDUSTRY: Thank you very much, Deputy Chairperson of the NCOP and also to the hon members. Hon Rayi’s question relate to something called the Equity Equivalent Investment Programme of government. Parliament passed the Broad-Based Black Economic Empowerment Act in 2013, and it has the objective of promoting empowerment. The components of empowerment - as hon members may know - include matters like participation in the



ownership of companies through equity or share arrangements. Typically, it means that a company will look to including black South Africans as shareholders. The reason why we have that provision in our Act is so that we can broaden ownership in our own economy and give South Africans who were excluded in large numbers in the past an opportunity to be owners in the economy.



However, there are some foreign-owned companies, what we might call multinational corporations – companies that operates in a number of different legal jurisdictions it would be a company that would not be based only in one country. Some of them have no specific local ownership. They would only be a global entity, perhaps listed on the New York Stock Exchange or it may even be a family-owned business but it has no direct equity partnership arrangements. In a case like that they don’t comply with our black economic empowerment, BEE, codes.



What we have done as government; we have said in those instances where it can be proven that those companies have no equity partnership arrangements in any other country – in other words, it is a global position of the company – the codes can make provision for recognising other things that the company does that is equivalent to equity in the company. Such contributions, which we



refer to as equity equivalent contributions, would be things like the additional money that the company spends on enterprise or supplier development in promoting a black-owned company that is a supplier to the multinational corporation or critical skills development; the development of, say, black South Africans in skills areas are in great shortage and where it would ordinarily not be done, or in research and development boosting the innovation base of our economy, or in the black industrialist programme actively supporting companies run and owned by black South Africans in the productive sectors of the economy.



So, that is the alternative to the equity provision. It would normally entail a verification process to see whether the company actually complies and the staff of the department would then put a request to the Ministry that the Minister must approve a transaction to give an equity equivalent. Then, there will be a negotiation between that company and the officials of the department and they will put together an agreement. The agreement will typically say how much the company would put up financially in cash or kind. The value is normally measured against 25% of the value of the multinational corporations’ business in South Africa or 4% of the total turnover from the South African operations.



A number of companies have such approved participation arrangements. They include companies like International Business Machines, IBM, Dell, Caterpillar, Microsoft, Hewlett Packard and others. I have been advised that in the work done to date, it has been quantified at about 3000 jobs in various sectors of the economy has been created through this programme. The programme, of course, seeks to advance the objectives of the National Development Plan in that it seeks to address the historic imbalances and the discrimination of the past and broaden economic access.



Mr M I RAYI: Thank you hon Deputy Chairperson and thank you hon Minister. The Equity Equivalent Investment Programme, EEIP, provides funding in part for enterprise development. In many ways this is similar to funds committed by large firms during mergers and acquisitions and those administered by the Industrial Development Corporation. How has the hon Minister found the efficacy of these funds and what opportunities are there for co-ordination between different agencies in the Department of Trade and Industry, DTI? I thank you.



The MINISTER OF TRADE AND INDUSTRY: Thank you, hon Rayi. I think it is actually very interesting to the connection that you are making to different kinds of arrangements entered into by government with



the private sector that is of unlocking the additional resources, for example, when we did the competition agreement with Coca-Cola, they had to set aside R800 million to develop businesses of black South Africans, farming activities and so on. When we did the transaction with Abbe inbirth they agreed to support a number of small scale black farmers including through the creation of about 2600 additional jobs. What we have not been able to do yet is to create good connections between these. However, I think there is an enormous scope to do so. Think about it.



If we want South Africa, let’s say, the Eastern Cape, to be a centre of agroprocessing and we can bring the combined resources of companies covered by competition policies, employment - in this case

- Equity Equivalent Investment Programmes and the International Development Corporation, IDC, together we can unlock that opportunity. So, in the period ahead in 2020, I do intend to focus a lot more on evaluating the impact of Equity Equivalent Investment Programme. In fact, hon Rayi, I would welcome if the relevant committees of Parliament including of the NCOP were to do the necessary oversight work because that provides us with the additional set of feedback from the people’s representatives sitting here and whether we are achieving the objectives that we set out for this programme.



Ms M O MOKAUSE: Thank you, Deputy Chairperson. Minister, our experience in the past two decades has shown that those with close proximity to politicians have always benefited from the black economic empowerment, BEE, programmes. This includes the President himself, Mr Tokyo Sexwale and Matthew Phosa, just to mention a few. This has left a lot of millions of South Africans without opportunities and without knowing where to go and which door to knock on. How will this Equity Equivalent Investment Programme help in this regard?



The MINISTER OF TRADE AND INDUSTRY: Thank you, hon member. I would like to make two points that could perhaps assist. The first is; whether one does a transformation programme through equity or through equity equivalence they both have the same risks that you can in fact have politically connected individuals benefiting disproportionately – by the way politically connected individuals from all political parties and I will not mention names now but those names are in the public domain.



Our job is to be vigilant about it. It doesn’t mean that a politically exposed individual has no right to business opportunities, but it does mean that you cannot get an unfair advantage that an ordinary South African cannot get. That is where



we need to focus on. What I want to do is to encourage greater transparency and openness about these things, for example, with the Industrial Development Corporation for many years its financial transactions were not public. It is sadly because it is a bank.

Banks always have confidential arrangements with their client, fair enough, but this is also public money. So, I gave a directive that all future transactions have to be public. They must be publicised on the website. Transparency and vigilance is our best guarantee.



I want to conclude with this one issue though; many of our programmes are helping ordinary South Africans. Black South Africans with energy in enterprise – and we should make sure that we deal with any wrong doing, but we don’t use a broad brush to say that every programme is contaminated. Many success stories come from the good work that is being done by black entrepreneurs and black industrialists in building our economy.



Mr J J LONDT: Thank you, hon Minister. One of the things that ... [Interjections.] ... sorry, through you, Deputy Chair, we cannot miss you and we cannot ignore you. Hon Minister, the recent reports about this multibillion Automotive Industry Transformation Fund, it’s welcomed and it is good. However, one of the factors that promotes or hinders investments is policy certainty. One of the



questions that always come up is that the BEE ratings of these companies – if the funders are only there for 10 or 15 years - will they lose those rating points or what is the stance thereof?



The MINISTER OF TRADE AND INDUSTRY: Thank you very much. Through you, Deputy Chairperson ...



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): ... hon Minister, he stood up and he said; hon Minister. There is no way that he can ignore the presiding officer.



The MINISTER OF TRADE AND INDUSTRY: ... [Laughter.] ... I should be invited more regularly to the NCOP. I can see you have lots of fun here. However, on a serious note I think, hon member, we seek to promote policy certainty by always indicating the period for which a rating applies so that companies know that over that period they would know that they have complied with the rules of the fund.



In a case of this particular fund that has been agreed by the auto sector, they have put a value to it of some R6 billion. It is a combination of cash that would be made available to companies that want to manufacture components so that we deepen the localisation levels in the economy, we don’t import all of our components. It



would include technical assistance to companies in kind support and it will also include procurement where these big companies; Volkswagen or Mercedes Benz, etc, buy from black-owned companies. It was part of an agreement that we have reached to have the new SA Auto master plan.



In that case, what we have indicated to the companies – the terms that will indicate the period that we have the auto master plan and the period that they would get effectively the benefits – the benefits are less to do with BEE as specifically – it has to do with participation in the auto skill through which government provides a range of incentives. In return, companies are expected to invest heavily to employ people and to expand our GDP through the industrial output. Thank you.



Question 174:


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, the question relates to a forensic audit report. Hon Londt, the forensic investigation is currently in progress and is expected to be completed shortly.



The investigation arose from transactions that were flagged by the Auditor-General during the past audit and raised by National



Treasury. It covers two kinds of transactions. The first covers supply-chain issues, while the second covers overspending against budget.



On the supply-chain issues, it appears as if the commission did not follow all the prescribed processes in the appointment of lawyers and forensic experts. When this was brought to their attention, the commission stated that they needed to find specialist skills in those areas but that it was not always possible to do so in the prescribed way. The Auditor-General said, well, in that case you needed to have a proper deviation.



The noncompliance resulted in transactional expenditure that was regarded as irregular amounting to some R51 million in the financial year 2017-18. There was also budgetary overspending of some

R34 million.



So, what the forensic investigation is now looking at is the extent of the problem. Why did it take place? Are the explanations adequate? What loss was suffered? All of those issues are part of the investigation.



Of course, I can’t speak on the merits of this because it is an investigation that is currently underway. I do want to note though that, while the forensic investigation is underway, the commission has taken steps to reduce its operating expenses. This is evident in the latest annual financial report, during which period the commission recorded a surplus of R23 million. So they have begun to reduce their accumulated deficit.



This goes particularly to the issue of the cost of the private health care market enquiry. The conclusion of that market enquiry dramatically reduced the cost base of the commission. Thank you.





Mr J J LONDT: Agb Ondervoorsitter, ek werk nou deur u.





The Competition Commission should be a watchdog – a safety mechanism protecting consumers from exploitation, from having to pay too much, and ensuring that there is a fair playing field.



My concern is that, by not having effective oversight over this department for a period of time, we are effectively not looking at the interests of South Africans as the end-of-line consumers. It is



not just the cost of irregular expenditure or hiring the wrong people; it is the end-of-line consumers that have been fielding these impossible prices and the unfair playing field for a period of time.



What steps and systems are you going to put in place to ensure that this is not going to happen again? Also, what can be learnt from this that can be rolled out across other departments and entities so that we are proactively addressing this and ensuring that the end- of-line consumers are looked after?



The MINISTER OF TRADE AND INDUSTRY: I would prefer not to anticipate the outcome of the forensics. I am not going to deal with the merits of it, but there are some valuable lessons that can be learnt from this. One of the lessons that we have looked at is ensuring that, on the larger commissions, the commissioner plays the role of providing the broad, strategic direction, and that we have something akin to what would be called a chief operating officer to deal with matters of procurement, human resources and so on.



In a government department, that separation is clear. The Minister is there for strategy and policy, but does not deal with individual procurement issues. Because we have not replicated that as a whole



across the state for a number of different reasons, there are some challenges and weaknesses. We have identified these. In fact, I asked the person who is undertaking the forensic investigation to look at how we can strengthen the commission itself in preparation for the much bigger mandate that Parliament has given it in terms of the Competition Amendment Act.



So the point is certainly, when we see challenges, we have to go there boots and all and make sure that we sort those out, and that we learn the appropriate lessons.



Mr M I RAYI: Hon Minister, we welcome the forensic examination and also note that the commission’s work has not stopped but is continuing. We are impressed that there is a report that has been released this week with regard to the grocery market retail enquiry. We welcome that.



But I would like to know, Minister, what are some of the recommendations that come from the report, and how will government respond to the report itself? Thank you.



The MINISTER OF TRADE AND INDUSTRY: Hon Rayi, the report was an investigation of the grocery retail market. It looked at two broad



areas. The one is the shopping malls, and the other is township shops – spaza shops, and so on. It tried to look at whether there are fair competition practices in both of those areas.



In the case of the shopping malls, there were a number of findings reached by the commission. It found, for example, that there are more than 2 000 shopping malls in South Africa, and that about half of the groceries bought in the country are bought via these shopping malls. It found that, in 70% of the shopping malls, they had exclusive lease agreements.



An exclusive lease agreement works like this. You set up a shopping mall. You get one of the big grocery supermarkets to be your anchor tenant. The anchor tenant then puts into the agreement that no other grocery store is allowed to operate in that mall. Now that’s an exclusive lease. It is typically for 10 years. It often has clauses to roll it over for a further 10 years. They found examples of even

40 years.



Now, we regard that as deeply unfair. It limits competition. It leaves new entrants out of the market. Given the importance of shopping malls, it’s something that we, from a competition point of view, cannot countenance.



The second finding was on trading conditions. They found that, in a number of cases, the larger players were able to impose unfair trading conditions on smaller players.



Regarding township enterprises, they examined very carefully why it is that many South African spaza shop owners don’t perform so well, and why we find that a growing number of spaza shops are replaced either by foreign-born nationals, or alternatively by the big retailers – who are now increasingly coming into township, either with their own stores, or through franchise arrangements.



Time won’t permit me to go into all the findings, but it is a comprehensive set of findings with lots of recommendations. I will be tabling the report in Parliament in due course, and we are now

... I’m going to appoint a facilitator to look at those recommendations. The report suggests a six-month window period for a voluntary agreement and, if there’s not satisfactory voluntary agreement on the issues, we should use regulatory means to open up that market.



Ms M L MAMAREGANE: Hon Minister, mine is just a question. Will the Minister act swiftly against all those who are found to be on the



wrong side of the law by the report? If there are any — even if they are senior executives of the commissions ...



The MINISTER OF TRADE AND INDUSTRY: Hon member, thank you very much. The answer is an absolute yes. Our policies are very clear. We will take action, wherever it is. Absolutely.



Mr J J LONDT: Hon Deputy Chairperson, I just want to check: That was the third follow-up question, is that correct? Now, when there are no follow-up questions from four different political parties, what prevents political parties from taking a second follow-up question to cover the four follow-up questions that are provided for in the Rules?



The DEPUTY CHAIRPERSON OF THE NCOP: We don’t have a problem but that person should have indicated and no one has indicated. So, if there was an indication, we would have allowed them. You can ask the EFF, just now there was such a situation and they asked me. I said they should speak to hon Moletsane and then combine your questions. But, with you there was no indication and that is the reason why we are continuing. It shouldn’t be a problem. However, I looked around here, there was no indication, so we are continuing.



Mr J J LONDT: That is very valid point, Deputy Chairperson. The thing is that I don’t know what the list that is next to you is. I don’t know how many people you have acknowledged and that is ... [Interjections.] Sorry, I am busy. So, ... And, then ... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Hon Londt, can I call you to order? [Interjections.]



Mr J J LONDT: You can call me but I am still busy speaking. [Interjections.] You can! I will wait?



The DEPUTY CHAIRPERSON OF THE NCOP: Can I call you to order because if at all anyone indicates, I usually tell them no or I say it is fine. That is why we are looking around. It is not because it is nice for us to look around. We are looking around to make sure that we cover the procedure.



In this instance, there was no fourth person. So, if there was an indication, we would have just continued. There won’t be problem. There cannot be a problem because four follow-ups are allowed, but now I have already said we are continuing and we are going to



Question 170. Just make sure that you indicate so that we can tell you if you can or you cannot. That is all.



Mr J J LONDT: Deputy Chairperson, that is a valid point but if I use the example that happened just in the previous question session, where one of the people didn’t ask a question, I don’t know ... [Interjections.] Sorry, I kept quiet when you were speaking. I would expect the same ... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: But the problem is that we are now having a conversation. You didn’t call order. In that instant, you didn’t call order. Can I just ... You may sit, hon Mmoiemang. In that instance, I requested the Table staff to check what we do in such an instance. I asked the lady that was sitting here: If it is like that, what do we do?



I am not going to take a decision here on my feet. I want them to advise me; hence I asked them what do we do in an instance where someone now decline to ask further, can we then say there was only four questions or what? I have already attended to that one. In this one it was clear, there was no other indication. So, can we proceed? Hon Minister, back to you: Question 170.



HON MEMBER: Point of order!



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Is there a point of order? Minister, you may take a seat, please.



Ms C LABUSCHAGNE: Deputy Chairperson, as I get it now, I should say it now. There were three questions. You looked around and you didn’t see a fourth person. Hon Londt raised on that issue. He wanted another question to be asked. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): He didn’t say that; he was asking what happened. He didn’t ... [Interjections.]



Ms C LABUSCHAGNE: He wouldn’t have asked if he didn’t have a question. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): The problem is that when you are an advocate, ... [Interjections.] ... You might misrepresent the other person.



Ms C LABUSCHAGNE: Chairperson, on a point of order.



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): He would have asked if he didn’t have a question. Otherwise, there wouldn’t have been an issue. I took it that the hon Londt raised it because there was an issue just now with hon Zandamela. So, there is why he asked clarity. In that instance, the hon Londt has not indicated; he just stood up and he started asking a question. He had not indicated and the opportunity of that question is now past. We are going to the next question. Hon Labuschagne, can you allow me. May I ask you to please sit down?



Ms C LABUSCHAGNE: On a point of order, please?



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): What is your point of order?



Ms C LABUSCHAGNE: Chairperson, only three follow-up questions were asked. Can we ask a fourth follow-up question, please?



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Unfortunately, the time has passed! [Interjections.]



Ms C LABUSCHAGNE: To the Rules!



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): We will do it in the future, but now we have already called on the Minister to respond to the next question. Hon Minister.



Question 170:


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, the question is from hon Landsman and it relates to issues of fronting. So, let me start perhaps just with indicating that fronting is when a company or a person misrepresents ownership or control in a company or in a contracting agent. They do so in instances where you are seeking to measure the level of black economic ownership of a company.



It normally done where the law requires that you have a certain minimum ownership. The code may require that or alternatively where there is commercial advantage. So, that is what we would normally describe as fronting. It can also include instances where the conduct of a company hides the true nature of the contracting party

– who really the contracting party is; or it seeks to frustrate the achievement of the law. So, that is what fronting is about.



The question asked: What are the programmes to deal with this? At least three sets of measures that seek to ensure that a contractor



or a company is who they say they are. The first is that we use BEE- verification agencies that are required to evaluate the claims of a company and issue a certificate. Those verification agencies in turn are accredited by a government agency. So, they are private agencies but there is a government agency that checks that they maintain the proper standards.



The second thing is that the Broad-Based Black Economic Empowerment Commission can receive complaints from the public or it can investigate on its own initiative when it believes that there may be fronting taking place. Thirdly, the courts have a role to play in this matter in that the courts can and in fact have in the past taken action on this matter. There are very severe penalties that apply when you are found guilty of fronting. So, we have both the institutions and we have an active deterrent in place.



As we expand our black economic empowerment, BEE, programmes, we are going to have to make sure that we put more time and energy to ensuring that the claims that companies and individuals make are in fact proper, honest and are claims that stand up to scrutiny. Thank you.



THE DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Thank you very much. Hon Rayi, it has been indicated by the Chief Whip that you will ask a supplementary question.



Mr M I RAYI: The department of Trade and Industry is keeping records of database of all the companies that are found to be engaged in fronting. Minister, what are the possibilities of the said companies re-registering in new names or individuals involved in establishing new companies just to continue with the fronting?



The MINISTER OF TRADE AND INDUSTRY: Hon Rayi, let me start by saying that whatever kind of penalties ... So, if you are found guilty, the penalty is not only that you may lose that contract; it also could include imprisonment, a fine of up to 10% of a company’s turnover, been banned from state contracts for up to 10 years and be entered into a register of tender defaulters maintained by National Treasury. The fine, I should indicate, can be a fine against the company and a fine against the individual. So, that is the first area.



It is, of course, possible that you may find individuals who seek to reinvent themselves in new corporate guises. As we strengthen our systems, I hope we will in future be able to increasingly track



individuals like that. So, our call would be onto the public. The eyes and ears of a democracy are the people. Where our people see instances of fronting, including where it may include someone who has been involved in a practice like that previously, they should please come forward.



Eventually, what will really stamp fronting out is if we are able to successfully prosecute and people are taken to jail for fronting, which is fraudulent misrepresentation. The reason the legislation is so tough is because fronting damages a legitimate business. You would have two companies: One that is fronting; and the other one a genuine black-owned company. The fronting company damages the genuine company economically.



The other thing is that fronting undermines the very purpose of public policy. It illegitimately bypasses the laws passed by this Parliament. So, we have to be tough on it. Here, I am not talking about instances where there may be a dispute of fact or where a party acts in good faith. We are not talking about that. We are talking of egregious examples where companies misrepresent in order to obtain a BEE score.



There is perhaps a good example that I can cite: There was a court case in 2017 involving Prasa – the government train agency – and Swifambo Rail Leasing, which was a company that procured trains that have become big issues. The court in that instance found that Swifambo was really acting as a front for a Spanish company called Vossloh.



It was a token participant that Vossloh – the Spanish company – maintained control of the operations, the appointment of managers and Swifambo’s role was limited to minor administrative activities. It went on and on and it codified for us what fronting represents. So, there is an example of us actually ensuring that the law takes its course and that more than anything else, good information systems will stamp out these kinds of practices. Thank you.



Mr A ARNOLDS: Deputy Chairperson, Minister, fronting is also contributing to the slow pace of economic transformation and defeating the objectives of economic empowerment. Fronting is more that an unethical matter; it is a criminal matter as you have mentioned.



Many company schemes front workers through trust and are not compliant with the required legislation. We know there is a B-BBEE



Commission, there are courts and the public’s involvement also, but can you just give us details in terms of your department: What are they doing to curb registration of trust fronting practices?



The MINISTER OF TRADE AND INDUSTRY: Of course, we have to accept in good faith when a trust is registered. It is the activities of that trust that can form the proper basis of legal scrutiny. So, what the B-BBEE Commissioner has done is more actively pursue cases of alleged wrongdoing of fronting and there are a number of instances where in fact I think she reports that a vast majority of complaints that she receives of contraventions of the Broad-Based Black Economic Empowerment Act constitutes instances of fronting.



We will make sure that as we implement more and more of this different programmes, that we put appropriate monitoring systems in place. But, of course, we can’t do this for every tender that takes place. So, the centralisation of tenders through the development of the procurement office in National Treasury could be very helpful in giving us the tools to identify instances of fronting.



Fronting does not only take place for public procurement as hon member knows, it also takes place in instances where companies seek to take advantage of sector codes. But, it is in proper



investigation, it is in tying the detail down and it is taking people to court, it is letting the law take its course and it is that more than anything else that will dry up the supply of fronting arrangements in our economy.



So, I am really pleased that the matter received the focus it did today and I assure members that the commission tells me that they are very busy investigating fronting allegations.



Having said that, there are instances where we may need to tweak either the codes or the law itself to deal with two issues. The first area is legitimate arrangements, like these Broad-Based Black Economic Empowerment vehicles. The Kagiso Trust is an example of that, where they use the proceeds that they get out of the participation they have from the economy, to provide bursaries and support to schools in townships to lift up the teaching of maths and science. Those are good things.



They have pointed out that is has been said that they don’t comply fully with the technical reading of some of the codes because the beneficiaries are not named. It is not so and so; it is an entire school with all the kids. The kids don’t have identity numbers and so on. So we are going to look to see how we need to tighten the



regulations and any policy directive that I may need to issue to the B-BBEE Commission.



The second one is going to hon Rayi’s question earlier that I have responded to, which is the information systems to track habitual fronters – individual who make a ... They have been called tenderpreneurs – people who don’t have a legitimate business. They capture a title or a rating and they bargain with that. They go to you and say: You are a clothing manufacturer. I have got a BEE certificate. Let us do business. I will put forward the tender documentation in my name. You supply me and you cut me in.



What was very interesting is that in the Swifambo Rail Leasing (Pty) Limited v Passenger Rail Agency of South Africa court judgement, the court found that the fact that a black South African benefited, doesn’t mean it is not fronting. This is because, if you get a consideration, you get a sum of money to compensate you, you are simply an agent in the fronting process. So, I think that this is a good judgement and we will heed it. Thank you very much.



Mr J J LONDT: Chairperson – Deputy Chairperson - I almost gave you a promotion there. [Laughter.] Deputy Chairperson, I just want to double check: Is there now one or two questions acknowledged from



this side before ... [Interjections.] It is valid question. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Hon members, let me not respond to hon Londt; let me rather explain: When we sit here, all of the parties that are in this House want to be heard on issues that they are asking. When you preside, what you are trying to do is to make sure that it happens. That is why, particularly in the instance of the EFF, I always advise them that when two members raise their hands and they have been complying all the time – because sometimes they raise hands together – I will show them that both of them are raising hands.



So, if there is a slide, we will give to them. If there is no slide, then we will ask them to join the question ... I have asked hon Boshoff and hon Londt earlier: Why do you, hon Boshoff, give your question to hon Londt so that hon Londt could ask the question. They don’t want to. That is where the problem is coming from. They don’t want to. I don’t know why when it is the same party.



In the instance of the ANC, usually the one that asked the question asks the supplementary question. Then we just give one other member to ask a question, if they indicate. So, if they don’t indicate, we



can give to anyone. But, as we are speaking now, there is an indication from hon Mmoiemang that he also wants to ask a question. There is an indication from hon Londt and hon Labuschagne.



I asked them: Can you take the question and one of you should ask the questions. I don’t know what is unreasonable in that one. I must really mention the EFF. We have been doing it for the past weeks that there have been questions. We have been doing it. It is just when it comes to the DA. I don’t know. Then all of a sudden the Presiding Officer is the one that has a mistake. [Interjections.] I am just explaining what we have been doing here.



So, hon Londt, that is why I asked you: Who of you will ask the question? Because, hon Mmoiemang had also indicated that he want to ask a question and at that stage it was already also hon Arnolds. I don’t know why we are having a debate around this issue.



Mr J J LONDT: I honestly don’t know. I asked a straightforward question. You would have been answered with a one or a two, Chairperson. You are complicating this unnecessarily. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): No, you asked the question but I am explaining to the members because you are casting aspersions on my presiding. That is why am explaining to the members what I did.



Mr J J LONDT: But, you did preside incorrectly on the previous one, Chairperson. [Interjections.]





explaining to the members what I have been doing, because you are casting aspersion on me as a presiding officer. [Interjections.]



Mr J J LONDT: you are doing it yourself, Chairperson!



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): You are the one that said three weeks ago that I am onbeskof [rude]. That is why I am trying to explain. Can all sit whilst I am speaking? Can all of you sit? Minister, even yourself, we have given you a chair. Can all of you sit? Whilst the DA is sorting themselves out, hon Mmoiemang, ask your question. [Interjections.]






Mnr J J LONDT: Jy is onbeskof! Jy is onbekwaamd! Jy is onbeskof. Jy is incompetent. Dit is hoekom jy gefire is as premier. Jy is gefire as premier omdat jy nie... [Onhoorbaar.]



Die ADJUNKVOORSITTER VAN DIE NRVP (Me S E Lucas): Soos jy, het ek my termyn klaar gemaak. Jy het nog nie vir ons gewys wat jy kan doen nie.





Hon [Inaudible.], can you sit down? You will speak after hon Mmoiemang has asked his question. Can you sit down?



Mr K M MMOIEMANG: Hon Deputy Chairperson, can we wish hon Londt a happy birthday so that he can cool down. It is his birthday today. Thank you, hon Deputy Chair, for allowing me an opportunity. Also let me appreciate the manner in which the Minister has correctly outlined the dangers of fronting, because it subverts our progress to advance our agenda of black economic empowerment.



Hon Minister, in the previous administration, the department indicated that it surveyed 109 companies for fronting. Out of that 109, 70 companies were found to be fronting. What I want to check, given the provisions that are made to deal with fronting - either in



terms of imprisonment or deregistering the entity: Has the department done anything in terms of what is allowed with regards to the code? Thank you.



The MINISTER OF TRADE AND INDUSTRY: Thank you very must for the question, hon member. I think what I would emphasise in response to the question is that there are two types of contravention that we are seeing in the market. The first kind of contraventions is where companies were unfamiliar with the codes and don’t comply with the letter of the law, but there is no intention to mislead. The other example is where a company seeks ruthlessly to exploit the law by misrepresenting what it is seeking to do and by undermining the objectives of the law.



Those are two different categories. The first category requires better education; more clarity by the policy makers – that is government; and vigilance about practices. The second kind of problem requires the book to be thrown, so to speak, at the guilty parties. In other words: Full investigation; prosecution for breach of the law; and for the penalties that the law sets out to be invoked.



Where there are examples of people actively seeking to subvert the law, imprisonment is an option that the courts have. I suspect that as the practice has settled, the courts will increasingly say companies ought to know by now what the acceptable practices are.



I will look also in future, hon member, whether there is some simplification that is needed, so that there is no misunderstanding in the market about what is required. This, we are talking of course of the BEE legislation.



However, let me use an analogy: In the Competition Law, for a number of years, we had what was called a yellow card. A yellow card was where a company was found guilty of abusive dominance – certain kinds of abusive dominance. Then, it would get a warning and thereafter it would be fined heavily if it did the same thing a second time. We have now recently removed the yellow card.



So, now if you are found guilty, the penalty kicks in immediately. We have done so because we believe there is much greater knowledge in the market. Companies now know what an acceptable behaviour is. We have a rich jurisprudence.



In other words, the courts have found what kind of behaviour is acceptable and what is not acceptable. With the greater policy clarity and a greater clarity that the courts have given, they have codified the behaviour that is not acceptable and behaviour that is acceptable, we can be tougher with companies. I think we are going to enter a similar approach with the BEE legislation to what we had with the competition legislation. Thank you.





Die ADJUNKVOORSITTER VAN DIE NRVP (Me S E Lucas): ...[Onhoorbaar.]


... julle sien hoe abuse Londt vir my hierso, en julle maak niks nie. Hon Londt! [Interjections.]





He abused me!





Hulle is gewoond by die huis, hulle abuse ...



Mr J J LONDT: Chairperson, you know, the first thing, when you sit in that Chair, you can either determine that the sitting goes smoothly or it goes badly. At the moment, you are ensuring that this



sitting is not running as smoothly as it should be, but that is your choice. It is a reflection on you, hon Deputy Chairperson.



The DEPUTY CHAIRPERSON OF THE NCOP: It’s a reflection on you when you begin to shout at me. When you begin to shout at me, it’s a reflection on you.





Julle is gewoond julle se vrouens mishandel!





Mr J J LONDT: You are truly out of order and you are doing yourself no favours in how you are chairing these meetings. [Interjections.] I am really sorry that you are embarrassing yourself in front of everybody.



Ms M O MOKAUSE: On a point of order, Chair!



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Yes, hon Mokause!



Ms C LABUSCHAGNE: Chairperson, on a point of order!



Ms M O MOKAUSE: Deputy Chairperson, we cannot sit here and observe the DA wanting to degenerate this House and abuse the Chairperson. The point that you made and the point that you ruled on is a legitimate point. The DA is not special in the House to want to speak twice. The rules are there. Parliament allocated funds for them to attend training and they did so. They went there, they ate food, drank water and ate peanuts the whole three days but today they come here and want to degenerate this House. We can’t be allowing such behaviour. [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Thank you. Even if you want to defend the Chairperson, but thank you, it is not a point of order. [Laughter.] [Applause.]



Ms C LABUSCHAGNE: Chairperson, on a point of order. Cheers to the EFF! Chairperson, I really understand and accept that the person presiding determines the rules, but I would really request you, as the Chairperson, not to make these remarks from the Chair. Please, as a Presiding Officer, you are also a role model in the House.

Don’t open yourself up for that and don’t do personal things from the Chair, please. That is also not ... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Accepted, hon Labuschagne. Thank you, you can sit down. I will not be abused because I am the Presiding Officer. Hon Londt!



Mr J J LONDT: Chairperson, we respect you when you apply the Rules. And, when you apply the Rules, this House runs smoothly. So, all that we are requesting is that the Rules be applied ... [Interjections.]



The DEPUTY CHAIRPERSON OF THE NCOP: Hon Londt, can you ask the question?



Mr J J LONDT: After two minutes!






Mr J J LONDT: After two minutes! So, ... [Interjections.]



Mr K M MMOIEMANG: Hon Chairperson, on a point of order.



The DEPUTY CHAIRPERSON OF THE NCOP: Hon Mmoiemang! Sit down, hon Londt.



Mr K M MMOIEMANG: It is important that we rise and raise a point of order in terms of Rule 35, where the Presiding Officer’s ruling takes precedence. And, it is unparliamentary for a member to continue to abuse you when you give him platform to raise questions to the hon Minister.



The DEPUTY CHAIRPERSON OF THE NCOP: I will give hon Londt time to raise his question. He has got one minute and seventeen seconds, he can raise his question.



Mr J J LONDT: Hon Chair, the fourth question to this, as the Rules allow is as follows: There were investigations into the alleged fake Broad-Based Black Economic Empowerment certificates issued to the Gupta-linked companies - Tegeta Resources and Exploration, Optimum Coal Mining and the Trillian Consulting. They then had very lucrative contracts with Eskom.



Are those investigations completed? If it is, what are the outcomes that can be shared; and has criminal charges been laid? And, if is it not completed, what is the expected timeline where we can see that there are also consequences for those who participated in this practice of fronting?



The MINISTER OF TRADE AND INDUSTRY: Deputy Chair, I would suggest if the hon member can direct that question in writing to me; I will replying in writing. I will get the details and forward the details to the member.



The DEPUTY CHAIRPERSON OF THE NCOP: Thank you, hon Minister. You are within your rights. Next question is 185 from the hon Lehihi.



Question 185:


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, hon members, the question is about the impact of the African Continental Free- Trade Area, particularly focused on manufacturing. I want to start by saying that the African Continental Free-Trade Area is really potentially the big storyline for the African continent. It will open up export markets for our South African firms, Nigerian firms, Ethiopian firms, Zambian firms and scale up production. This has been the continent that has not industrialised to the level that our people need.



South Africa is already a significant exporter of manufactured products to the rest of the continent. In fact, some 250 000 South African jobs are dependent on what we sell to the rest of the continent. We sell a number of different products. In fact, I have



looked at the list recently and hon members may be interested if I share with you the top-10 list of products that we sell to the rest of the continent.



In the number-one category is trucks and bakkies, followed by cars, industrial machinery like cranes, iron and steel structures, fuel pumps for cars, parts and accessories for tractors and trucks, mining machinery, medicines, loaders and construction vehicles and tires.



In fact, if we look at the export profile of the continent, you will see that South African goods constitute a very significant part of it. About 23% of all the trade that African countries have with each other originates from South Africa. We either import or we export.

So, we are a key driver of Africa’s manufacturing profile.



In the period of concluding the African Continental Free-Trade Area, we have worked very, very strongly on the second part of the question, which is how to make sure that the goods are in fact goods that are made on the African continent. There are two ways in which we do it. The first is, what we call, the rules of origin. So, if I take this suit that I am wearing, what gives us the right to say that it is made in South Africa? If it is not made in South Africa



... Let us say, it is made in China, it cannot benefit from the African Continental Free-Trade Agreement. So, it only benefits if it is certified made in South Africa. If this suit is sent to South Africa without the buttons and the buttons are sewn on, does it make it, made in South Africa? If it is sewn in South Africa, but all the material has been made elsewhere in the world, like the buttons, the fabric, the lining and so on, is it made in South Africa?



Rules of origin look at that. We have reached agreement on rules of origin for most products except clothing and textiles, sugar, the auto sector - auto parts - and one or two other smaller products. We are now focussed on getting that resolved and we hope by February next year, to have a full agreement on all the products and their definition under the rules of origin.



Secondly, we have customs administration. It is when companies put forward an invoice that says that something has been made in factory X in country Y. We need the customs capabilities to be able to check that invoice and documentation and ensure that it is legitimate and that there is not false invoicing or underinvoicing.



So, a big part of our work with the South African Revenue Service recently has been to see how we can support efforts by Sars, to



scale up its capacity in anticipation of this free-trade agreement. So, to summarise the big drive of the African Continental Free-Trade Area is in fact to help industrialise the African continent. The challenge or the risk that we face is that there can be significant customs fraud that will undermine our efforts. So, we made that a big focus of our work on the African Continental Free-Trade Area Agreement. Thank you.





Mnu S ZANDAMELA: Ngiyabonga Sekela Sihlalo, Ngqongqoshe siyakwamukela ukuthi uhwebo lwamahhala eAfrika luyenzeka. Ukweseka lokho besifuna ukwazi Ngqongqoshe ...





The DEPUTY CHAIRPERSON OF THE NCOP: Just one moment. Let us make sure that the Minister gets the ...





Mnu S ZANDAMELA: Hhayi, uyeza uNgqongqoshe. Besifuna ukwazi ukuthi njengoba lohwebo lwamamakhethe amahhala lwenzeka. Ngabe zikhona izinhlelo namasu akhona enziwe afana nemizila yezitimela ukuthwala imithwalo ukuxhumana namanye amazwe azungeze i-Afrika? Uzokwenza kanjani ukuqinisekisa ukuthi uma lohwebo lwamamakhethe amahhala



lwenzeka kuphela e-Afrika kungangeni amanye amazwe ngoba angeke sikwazi ukuqhudelana nawo? Uzokwenza kanjani ukuvikela loluhwebo lwamamakhethe amahhala lapha e-Afrika?



The MINISTER OF TRADE AND INDUSTRY: Hon Chair, hon member, the question allows me to share with hon members what the ingredients of a successful free-trade agreement are. This first ingredient is that you must have a tariff schedule that states that you must not put taxes or heavy taxes against each others goods. And that is what the free-trade agreement is about, in part. Once you have done that, the second part is that you must have railway lines, roads, border posts, ports and so on that facilitate the movement of goods.



So, if you have that in place, it is not enough yet. You also need an industrialisation strategy. At the moment, Africa does not trade with itself. As indicated in the budget speech here, it is often said about Africa that we do not consume what we produce and we do not produce what we consume.



So, an industrial policy is about changing that reality. President Ramaphosa, in the state of the nation address in June, said that we must have a reimagined industrial strategy with master plans in different sectors. So, South Africa is working on this.



We now need to support what can be done elsewhere. I am working at the moment with the auto industry to find opportunities for car assembly in other African countries, where South Africa does a lot of what is called the auto-kit production and we then ship those kits to countries like, for example, Ghana and Ethiopia and they assemble it there. They do the final assembly there, so that we are, in fact, able to create integrated supply chains.



If you look at the success of the European Union, you will find that the reason why Europe has been able to unlock a lot of economic value is because they have created these value chains across borders. So, our challenge on the African continent is to do that.

It requires a tripartite set of things: free trade, infrastructure, as the hon member has mentioned, and an industrialisation strategy.



The risks, as I have indicated, are that, if only South Africa was to produce in large quantities, we the industrial giant of the continent, will not be able to trade much with each other. Countries trade when they have complementary products. That is why we are putting this effort in to the auto sector, as an example.



The second risk is that goods may be made elsewhere in the world such as Asia, Latin America, Europe or North America and they are



imported into one African country, falsely relabelled and sent to all other countries. So, that would be another challenge to industrialisation. On that, I have replied in my previous reply on the steps we are taking.



The third risk is that even if we have free-trade rules, we may find that there are blockages at the border posts, either because Beitbridge, for example, is just too busy, the infrastructure is not big enough or because in one or the other country, someone wants a bribe before they will allow the trucks through.



So, I have no doubt that we will hit all these problems, but we must patiently work through them and fix all those problems. Europe took

40 years to develop its single market. We are not building a single market yet; this is a free-trade agreement. It is a conceptually different thing. So, we will have to work hard over the next number of years. Every time there is a problem, we must fix that problem and in that way, unlock the opportunity. Why are we doing it? [Inaudible.]



Mr M I RAYI: Hon Deputy Chair, hon Minister, in addition to the African Continental Free–trade Area Agreement, government has also signed a Sacum-UK Economic Partnership Agreement, alongside five of



our neighbouring countries. What opportunities for South African manufacturing and regional integration come from this new economic partnership agreement? Thank you.



The MINISTER OF TRADE AND INDUSTRY: Hon Deputy Chair, to connect hon Rayi’s question to the previous one, we do these things because, when you have scale, and when you are able to produce for a large market, you can bring your cost of production down and you can increase levels of investment.



So, what we have done with the UK is to enter into an agreement that is similar to the agreement we have with the European Union. It will help to industrialise South Africa by ... I can illustrate it with a product that hon Rayi will know from his province and that is the auto sector.



So, at the moment, if you take something like the Ford Motor Company, they would bring an engine from Britain. They would do a number of components in South Africa. They will assemble the vehicle in South Africa and they may sell the vehicle in Germany. That is an integrated supply chain. Because of the agreement that we have reached with the UK, we would be able to ensure that supply chain is not interrupted, which will deepen industrialisation.



However, there is another example that I can give and that is because we now have an agreement with the UK, even if and when they leave the European Union, we can sell cars in the case of the Eastern Cape to both the British car-buying public as well as the European car-buying public. So, that makes South Africa a very attractive place for everybody. If Britain and the EU don’t reach an agreement, we will have preferential access to both markets.



It also allows us, as we look for fresh domestic and foreign investment, to say that we have access to a number of markets – the American market via the African Growth and Opportunity Act, to the EU market via the Economic Partnership Agreements, EPA, to the UK market through the special arrangement that we have now put in place, which is called and EPA, to the rest of the African continent through the African Continental Free-trade Agreement.



When you must decide where to put your factory that makes medicines or car parts, you look for which country has attractions, maybe incentives, skilled workers, but you also look who has access to markets across the world. So, in that sense, the British agreement will help us to deepen our levels of industrial activity and to expand some of the things that we do.



However, it cannot be done in isolation. Therefore, what we are also doing is to complement that with activities such as the investment conference, like special economic zones and other activities that will enable South Africans to come into significant market opportunities.



Industrialisation is the heart of a successful growth strategy for South Africa. We cannot shop our way into wealth. It is not how much we spend at the shopping mall; it is the value of the goods that we produce in the productive economy.



So, all of these different measures that I have spoken about speak to that one important area, which is growing the industrial base of South Africa. That is not just manufacturing; it is tourism, mining and beneficiation, agriculture and agro-processing, the digital economy. All of those constitute our industrial base. Thank you.



Mr J J LONDT: Hon Minister, I see you are covering your last question for today so well in this one; you may not even have to do that one. But we will see how many questions you will get on that question. Trade agreements, in general, are a very good thing and this one is an exciting prospect. However, we all don’t just have a responsibility to help drive the economic progression of the African



continent, we also have other obligations. Now, these agreements should also include other binding and enforceable clauses on how labour gets treated, how unions work, social rights and all signatories to this agreement must ratify the agreement and then adhere to that. My concern is: Should trading partners in Africa renege on these agreements and these clauses, should they commit serious human rights issues such as Uganda with the LGBTI clamp down, in Zimbabwe, where they are clamping down on free speech in opposition, how are we going to navigate around that? Are we going to say that we have a moral obligation to fulfil, and how are we going to weigh up that economic advantages versus our moral obligations and that we should be holding our partners on the continent accountable?



The MINISTER OF TRADE AND INDUSTRY: I would start by saying that I have focused mainly today in the reply on tariff liberalisation, bring down the tariff schedule, but in fact, the African Continental Free-Trade Agreement is much wider than that. It also includes liberalisation of services, so, telecoms, tourism, banking, those kinds of things. In the next phase of negotiation, we are going to look at three areas – investment protection, competition and trade- related intellectual property rights.



Once we have concluded those, it may well be that it could be appropriate to look at the social package that should also be included and the social package could deal with issues such as worker rights, no child labour and those kinds of quite fundamental issues, because as South Africans, our job always is to promote our constitutional values. We cannot impose, but those constitutional values must be what we carry out in all of our international work, in our local work because the Constitution is the framework for everything that we do with public policy. It is absolutely fundamental.



So, we don’t currently have what is called a social chapter in the African Continental Free-Trade Agreement. We have involved the trade union movement and business community through Nedlac in discussion about what we liberalise and what we hold back. I have no doubt that the time will come when it would be appropriate to have a social chapter in the trade agreement. Thank you.



Mr M DANGOR: Hon Chair, ... [Inaudible.] ... for a very comprehensive reply to most of the questions. Between 2010 and 2015, fuels represented more than 50% of Africa’s exports to non-African countries. I think South Africans need to be more positive about putting plant and machinery into other African countries. Should we



do it through the AU or should we do it through the Regional Economic Communities, RECs? There are two things that are normally required to do trade. One is a physical road and the other one is a financial road. The financial road, in my experience did not exist, because banks did not have co-operative agreements with banks in other countries to actually take forward the kind of things that you are suggesting. Thank you very much.



The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, hon Dangor, that was actually really a very interesting and deep question. I am going to separate out the different elements of it. The first part of your question, as I understand, is about the fact that we are principally exporters of raw material. Oil is raw material. You have only mentioned oil, but I think you probably mean also the other raw materials. In the case of South Africa, we sell platinum, gold, iron and so on.



The very logic of the African Continental Free-Trade Area is about Africans, our economies, adding value, manufacturing from our raw material, so that we don’t simply become the exporters of the materials for the factories of other continents. The reason for that is very clear.



Firstly, if you are principally exporters of commodities, you are prisoner to what is called commodity cycle. When prices are high, you do well, you can tax the companies that make good profits and you can spend that on social programmes. However, commodity markets turn and when the cycle turns, countries find enormous fiscal squeezes.



There is another reason. In the modern globalised world that we are, value is derived from manufacturing and from research and development, R&D. Simple digging and growing does not give you an enormous return. An example is being given frequently. Let me take a non-South African example just for a minute, so that we are not only looking at South Africa. West Africa is a very significant producer of cocoa for the world, but it does not really manufacture chocolates. So, it sends its raw cocoa to Belgium and to Switzerland and other countries. That cocoa is transformed into chocolates. The value that you derive from a ton of chocolates is many, many times that of a ton of raw cocoa. So, you can develop a sophisticated economy based on manufacturing and the value addition process. So, we have get that part right.



We think scale. The fact that we now have potentially - if everybody ratifies the agreement - 1,3 billion people and a combined GDP of



over $2 trillion, will potentially give us the scale. In the last question, I can elaborate a little bit on that.



The second part of hon Dangor’s question is about finance and there the free-trade agreement has two opportunities for us. The first opportunity is that our finance sector can begin to put packages together for exporters, very much like is done by China in its export drive, but that requires a mindset change. It requires the finance sector to see manufacturers, farmers and others as partners in this big drive in opening up the industrialisation of the continent.



The second part of it is how payments will be made. Europe has the euro. We have 55 countries on the African continent. We have enormous challenges with exchange rate risks. You sell in your local currency. For this or that reason, the currency value changes. By the time the money is remitted to the person who sold the goods, it is at a different value. So, getting payment systems sophisticated and getting simple payment systems that can move money, all of that is the next big leg. I have just come back from a conference now where that was part of the subject of discussion: How can we make the finance systems and infrastructure work on the African continent to support the African Continental Free-Trade drive. Thank you.



Question 175:


The MINISTER OF TRADE AND INDUSTRY: Hon Deputy Chair, the questions asked is: What are the successes of Black Economic Empowerment, BEE, in respect of unemployment and inequality? I will start by saying that BEE contributes to our employment and equity goals in at least four different ways. The first one is, through elements of BEE that drives employment and decreasing inequality like skills development. People often conflate BEE just with ownership. Ownership is there, but it has a number of other elements and skills development is one area that companies have to contribute to in order to get a score in the BEE score card.



It is something that every hon member here will agree on that skills development leads to employment gains and decreasing inequality.

Another example of this enterprise development is that, you get a better BEE score if you support smaller businesses like small, medium and micro-sized enterprises, SMMEs, and that grows the economy, that grows the number of jobs and the number of economic opportunities. The second way in which BEE contributes to our goals is by expanding the pool of enterprise and talent in South Africa. Think about it.



If 20% of the population generates all the managers, technicians and all the engineers, which economy can never grow very fast, but if a pool of 100% of the population begins to contribute to the talent pool, then that economy will grow much faster. So, what BEE does, it helps to promote a more diverse management core in the corporate world, and so you have many talented black South Africans that previously may not have had any opportunity to bring that talent into the economy who today can contribute, and it also expands a number of entrepreneurs in the economy.



The third way in which BEE supports our goals is through promoting social and political stability by the visible transformation of the boardroom and all the other, let’s call it the high points of the economy. When an investor looks at the country, and it wants to do a long-term investment, something that will be a considerable sum of money, and it will take eight or nine years before a real return, they look at whether that economy is capable of being stable, and is it going to have a violent overthrow of the prevailing order?



One of the things that they are influenced by is, whether the population broadly feels that the policies being pursued are inclusive policies. That is why we find now that more and more governments across the world, not just in South Africa, are talking



about inclusive growth. So, by promoting social and political stability, we in fact enhance the growth, dividend, the employment and equality dividend.



The final example I want to give is that, some of our BEE programmes imposes conditionality on companies. I want to give the example of the Competition Act that has a section that puts public interest conditions on certain measures. In the case of Coca-Cola for an example, when Coca-Cola decided to combine three major bottling operations, they had 5800 workers. As part of the conditions that were imposed on them as part of that transaction, they needed to maintain an aggregate number of jobs, 5800 jobs for a number of years. So, it supports employment.



In the case of AB InBev, they had to actually increase employment by supporting small-scale farmers, creating 2600 additional jobs. So, you could see that in some ways as variations of Broader Economic Empowerment Policy, not every intervention works, and that’s why as the state we need to be humble enough to know where the mistake has been made in order to correct it.



Also, we must be bold enough to know that when something works, we need to scale it up by doing more of it and ensure that young people



in particular, can get access on it in large numbers because, bringing young people into the economy, even though it is an empowerment objective, it’s also a critical way of energising the economy. Thank you.



Mr J J LONDT: Hon Minister, I especially like the last part of your answer and I link, I think when you listed point two, that we truly need to get the whole of the country on board to be involved on the economy. The concern that there is, is that Broad-Based Black Economic Empowerment has in fact not reached as wider net and as a wider group of people as it should have. The inequality, and I’m not talking just amongst black South Africans, there is recent studies that shows that, that inequality has in fact increased over the last few years, and that says that there’s a small connected few that continuously get advantage through this over and over again and you actually excluding a much broader group of people like black South Africans that are left behind.



Now, do you agree that it is the case, and if you do, what would be done differently to ensure that what has been done in the past do not perpetuate this and that imbalances increase? Also, what other measures are you looking at to then actually give effect to the original vision of Broad-Based Black Economic Empowerment?



The MINISTER OF TRADE AND INDUSTRY: Through you Chair, let me thank hon Londt very much for the question. I should indicate to hon Londt that the comments he has made sounds very similar to the comments that were made by delegates at the 54th National Conference of a particular political party that is represented here where in fact many delegates said that they want the more broad-based system of empowerment. So, I’m sure there is space with the permission of Deputy Chair for crossover here. [Laughter.]



But on a more serious note, I think we recognise that we must deepen and broaden the empowerment programmes, the programmes where a few people are given the opportunity, is just not good enough. Now, I want to distinguish between two elements of our approach. The one approach is to support black industrialists. That will attend to one or two people in a company, they are the industrialists. They drive that. That’s not the same as our broad programme.



So, our focus now which is the focus that the government has adopted is to promote a much more active broad-based system. Now, how do we do that? One clear way, is to promote worker ownership in companies, and again that political party that I have spoken about in the in the 54th National Conference’s resolution and in their manifesto



they said that we should do more of that. So, I’m really pleased that we’ve got a cross party support for that idea.



Also, I’m sure that even the EFF would strongly support that we build, in fact, examples and opportunities for all South Africans to benefit, for workers and for young people to benefit. So, for me, that’s not an issue that I think we have any hesitation on. We need to do many much more to deepen the impact of our policies. Having said that, I must also make a point that, I have recently looked at the statistics of employment growth between 1996 and today.



I looked at 1996 because it was a first time to conduct census here in the new democracy. So, we had a baseline of data that was available. If you take total job growth in that period, it was 82,6%, and if you take the growth of jobs among the black South Africans which is 101%, it has doubled. We have seen in the democracy a much greater growth of jobs among black South Africans, and of course, I make this point to indicate that, while there are some successes, the point that is made by hon Londt makes is a fair point.



We have even more of those. We need to get more jobs growth, we need to get more empowerment and we need to reduce poverty and inequality



levels in our economy. So, that brings us then to, how? The first area that I have indicated is that we will work in worker empowerment schemes. We have now changed the law in the Competition Law, it now has a specific reference to employee ownership and in public interest conditions.



We’ve also asked the team on the BEE programme of government to see where the examples of successful employee are stock ownership plans, ESOPs, and worker ownership schemes. We are also looking to the organisations like the Industrial Development Corporation, IDC, and others, to further promote efforts to get workers involved in their own companies. There’s an economic dividend and there’s equity dividend. Thank you very much.



Mr M I RAYI: Hon Deputy Chair, we welcome hon Londt here in the ranks of the ANC. Hon Minister, we are very impressed with the entities under your department, the Industrial Development Corporation and the National Empowerment Fund that are playing their role in realising an inclusive and transformed society. Yesterday, as the committee we met with the National Empowerment Fund, NEF, and we are very impressed with the work they are doing with regard to Black Economic Empowerment. Actually, it’s their sole mandate.



As part of our oversight visits, we have also visited some of the projects that are funded by the NEF. Hon Minister, there are lots of applications that the NEF is unable to fund due to the amount of money that it has. My question therefore is, what is the department doing to ensure that the NEF is recapitalised so that it can continue with the work that it is doing? Thank you very much.



The MINISTER OF TRADE AND INDUSTRY: Hon Deputy Chairperson, let me thank hon Rayi for highlighting the work of the NEF, I really appreciate that, and also for acknowledging the work of the Industrial Development Corporation, IDC. In fact, over the last number of years, the IDC has been a significant promoter of the Black Industrialist Programme which has invested well over

R20 billion in expanding the opportunities for black South Africans in the economy.



It has supported a number of youth programmes, and I should say, for black youth and white youth, and it has supported programmes for women. It has helped all of those to create a broader base as we indicated in the earlier reply. The National Empowerment Fund has not been financed with fresh grounds from National Treasury for a number of years now. By the way, similarly, the IDC has not received a cent from Treasury since the start of our democracy. In fact, I



think that the last time the state capitalised the IDC was probably in the 1950s, so thereabout.



So, what the IDC has done is, it uses its balance sheet to generate its income that is used to finance its development mandate. We are now looking at how we can leverage more of a partnership between the NEF and the IDC, because I have a colleague who hon members know very well, because he addressed you in the parliamentary question session earlier today, and when I said that we need more money, he tells me that there is no money.



He is one of those colleagues who is sympathetic towards what we do, but he says that at this stage, finding significant new resources it’s a difficulty. So, our response is to see how we can deepen the partnership between the IDC and the NEF? How we can use these programmes that I have spoken about, the equity equivalent and the competition programmes, hon Rayi, that you so kindly again referred to in your earlier question, and use those as means of unlocking resources that the NEF, the IDC and those companies that themselves can use?



We have also asked the NEF to think of innovative ways of generating resources. For example, it has got capability that it can use to



administer empowerment funds of different government departments, and doing that, it can bring down the cost of that administration for the departments concerned, and get access to fresh capital. In fact, it has done that in the tourism area already, with a tourism empowerment fund arrangement which it does in partnership with the Department of Tourism.



So, in the time where there are fiscal pressures, we’ve got to be more creative and more inventive to find ways in which we can get a lot done with a little bit of resource. So, the combination of these various issues that I have raised will constitute how we will try to work closely to enhance the impact of the NEF. Thank you.





Nk S A LUTHULI: Ngqongqoshe iNingizimu Afrika iyizwe abantu abangalingani kulo. Ukungalingani kuyenyuka kunokuba kwehle, ikakhulukazi eminyakeni eyishumi edlule. Kuyacaca ukuba zonke izinhlelo ozizamile azisisizi.





What radical interventions do you think are needed to bring the economic equality in the country?



The MINISTER OF TRADE AND INDUSTRY: Hon member, let me thank you very much for your question, and I’m glad that the spotlight is on rising inequality, because societies that are characterised by high levels of inequality are not only preventing opportunities for many people, but in the long run, they can’t grow as fast as societies with more equitable opportunities. Today, inequality is a global challenge.



I have come from Brazil from a meeting at Brazil, Russia, India, China and South Africa, BRICS, summit, and in each of the country’s BRICS countries they are discussing the challenges of inequality.

Inequality has got two dimensions to it. The first dimension is inequality between countries growing. So, the wealthiest countries are wealthier today than they were, compared to the poorest countries. Secondly, inequality is growing within countries. This is not a South African phenomenon only; it’s taking place in the United States also.



If you look at the debates in the pre-primary for the presidential elections, you will see that a number of candidates have made an issue of inequality the defining issue of the campaign. It’s a challenge in the European Union. We’ve heard of many measures that Europe is attempting now, but what makes it so important in South



Africa, is that our levels of inequality are at the absolute top end of what you will find on the global scale. So, it’s not just that it is rising, but it is extremely high. So it needs a set of interventions, not just one.



Some of the interventions that I can point to that are required, some of which we are doing now to greater extent is firstly, a job strategy. As long as you are unemployed, your earnings are limited to what you can get from family members or what you can get from a social grant or unemployment insurance grant. This means that objectively, you are not going to be able to narrow the inequality gap. So, employment is a big part of what we need to do.



The second part is skills development. As long as many South Africans, and in our case, the South Africans in rural areas and urban townships, don’t get the best education that is possible, the gap between them and their peers who get great education will grow. The world is now a world in which there is higher premium for skills. You get more of return to your skills than you use to get in the old days. So, our young people must get better education.



That means that, we’ve got to fix basic education, and we’ve got to be able to ensure that the new free fee policy enables many young



people to complete university and college education. The third one is that, we need to improve the interface between education and work. If we do that, if we look at societies like Germany, Japan and countries like that, artisanal training is not only something that people aspire to, but it pays well also. It helps to decrease the gap.



Minimum wage policies where the state intervenes and ensures that nobody earns below a certain level, has often been criticised, but it has one very positive benefit which is, it does reduce levels of inequality in a society. These are just a few examples. Noting the time, I won’t be able to deal with it. Perhaps at a future session we can be able to spell out in a bit more details the other measures to deal with rising income inequality in a society. Thank you.



Mr C F B SMIT: Through you hon Deputy Chair, hon minister, is there a specific role that is played by the transformation of society and the South African economy in the development of economy and employment creation? Thank you, sir.



The MINISTER OF TRADE AND INDUSTRY: Hon member, let me first thank you for the question. The answer is yes, and the way in which we can get society more actively involved is through a few key means. The



first one is, through the process of National Economic Development and Labour Council, Nedlac. Parliament passed the law called the National Economic Development and Labour Council Act, that Act creates a body in which trade unions, business organisations, community bodies that are made up of young people, women and rural organisations all come together, and when we do major jobs policies, we sit down with them.



Recently, the President chaired the meeting at Nedlac, and we looked at what are the steps that government is taking to promote employment creation. We’ve got feedback from our social partners. We also looked at red tape reduction and ways of easing the business environment and protecting the rights of workers in the process. So, that’s one example in which society can contribute to the attainment of our goals and national objectives.



The second one is for the state to recognise that it is a key player, but it is mainly an enabler. It opens up the door. Young people, Energy and Enterprise must drive the development of new industries, bringing women who have experience of running a family, who very often in rural areas are the main economic actors. Bringing them into the economy by removing obstacles is another way in which we can get society to shape the economic agenda.



The third area of course, is one that the hon members will know very well, and that is Parliament itself. Parliament contains the representatives of South Africa’s people. You represent here today our people organised via the provinces and the National Assembly also represents our people. So, through the oversight work that you do, we involve South Africans in it. You have your constituency officers and you get feedback, all of that is an important part of what we do.



Then we have outreach programmes. The President has now pioneered a new Khawuleza programme where we go to different districts like the OR Tambo District in the Eastern Cape, eThekwini Municipality in the Metro and earlier this week we’ve been in Lephalale to interact with people. There’s also a combination of meeting with business people in that district, convening a big imbizo, where the community attends. We also visited factories like the smartphone factory in Durban. That came out of a commitment made at the Investment Conference. Few days ago, the President visited Medupi in Lephalale.



So, these are the examples of involving our people more actively in the economy, both in shaping things, but principally, as the drivers because what is the economy? The economy is all the activities that people make like microphones, they bottle water, they grow food and



make clothing. That’s what an economy is. Opening opportunities for South Africans to play that role, it’s what government must do. It’s the enegy, the passion and the enterprise of our people that can drive the economy. Thank you.



The DEPUTY CHAIRPERSON OF THE NCOP (Ms S E Lucas): Thank you very much, hon Minister. We are going to the last question, part of which you have comprehensively responded to. However, we will give you ... to respond if you think there is anything outstanding on the question of the African Continental Free Trade Agreement, AfCFTA.



Question 171:


The MINISTER OF TRADE AND INDUSTRY: Thank you very much, Deputy Chairperson. I’d like to share a few numbers with the House. I’m going to use four numbers. I’m going to use the numbers 17, 3, 2, and 1. It’s not a Lotto number. It’s not the Lotto.






The MINISTER OF TRADE AND INDUSTRY: I’ll leave the Deputy Chairperson to guide us on that one.



The number 17 speaks to 17% which is the per cent that Africans make up of the global population. If you take all of humanity, we are 17% of the world.



The number 3 speaks to 3% which is what Africa’s economy makes up of the world’s economy.



The number 2 speaks to 2% which is what Africa’s manufacturing output makes up of global manufacturing output.



The number 1 speaks to 1% which is what the continent’s output of steel that is the foundation of industrialisation makes up of global steel production.



To put it differently and as dramatically, the entire manufacturing output of the African continent — all 55 countries, hon Mohai — is about equal to the manufacturing output of Italy.



Now, I raise that to show how significant the challenge is that we must deal with and why the AfCFTA — with all of its challenges and with all of its difficulties that it will no doubt have when we implement something as big as that — has always been called for by the founding mothers and fathers of African unity. When you split



yourself into 55 units you never have an economy big enough to attract massive investment. If I make this microphone system for one country, the cost of the microphone system will be sky-high. If I make the same microphone system for millions and millions of people right across the world or billions of people across the world, my unit cost of production will come down. Anyone who has run a business will know it. It’s called the economies of scale.



So, at the heart of the AfCFTA is this idea that Africa must change its future; its own storyline. It’s not going to come from foreign aid. It’s not going to come from anybody being nice to us. It’s not going to come from allies in any other part of the world, whether it’s East or West or North or wherever. It’s going to come from us as Africans changing our story.



However, that means sacrifices in doing things differently. As long as 55 countries all want to have control over their own decisions and make decisions that only apply to that economy, you are never going to get scale. Therefore, what we seek to unlock and what the question speaks to, is how the AfCFTA can unlock that.



In the question I have also been asked how far the process of implemnting it is. After the agreement was broadly concluded, we



asked countries to sign it and 54 out of the 55 countries signed it. The only country that has not signed it yet is Eritrea. Then we asked countries to ratify it. It had to come to Parliament, and

28 Parliaments or appropriate institutions have ratified the agreement.



Once a significant number have ratified it, it comes into legal force and effect, which it did a few months ago. In July this year, President Ramaphosa led a delegation of Ministers to a city in Niger, and in Niger we switched on the implementation phase of the AfCFTA. Recently I went to Addis Ababa in Ethiopia for the inaugural meeting of the Council of trade Ministers to look at the progress that is being made in getting the technical work done. We will be reporting to the heads of state in February next year.



Finally in December, which is in a few weeks’ time, we will have a council of ministers’ meeting in Ghana to get a further report on progress. [Applause.]



Cllr T B MATIBE: Thank you very much, Deputy Chair and thanks also to the Minister. The question was no different to the first one. I think the Minister has been able to elaborate on the question and I’m satisfied. I was able to get the 17, 2 and I. [Applause.]



The DEPUTY CHAIRPERSON (Ms S E Lucas): Thank you, hon Matibe. [Interjections.] Order, order. Order! Hon Moletsane?



Mr M S MOLETSANE: Thank you, Deputy Chair. Hon Minister, one of our greatest doubts about the AfCFTA is that it will be used as a means of illicitly moving European goods and services across the continent without the necessary tariffs. What measures are being put in place to boost our intracontinental manufacturing and prevent giving European goods free passage on the continent?



The MINISTER OF TRADE AND INDUSTRY: Thank you very much for that question, hon member. Firstly, the answer is, as I indicated earlier, that we are tightening up on the rules of origin to ensure that goods are genuinely transformed on the continent;



Secondly, we are working with customs administrations, starting with the SA Revenue Service, Sars, here in South Africa, to improve our systems;



Thirdly, we are encouraging companies to invest in other African countries because with investment goes the fact that you will have factories there that can actually manufacture these things; and



Fourthly, we are trying to integrate our value chains across countries, and earlier I gave the example of the auto sector.



So, the risks that you point to are real. They must not be underestimated. They are there, and these are the measures that we are taking to address those risks.



Mr J J LONDT: Hon Minister, you are probably one of those Ministers that know the most about import and export, but one of the concerns that I’ve got is our skilled workers in the country. Over the past few years our highly-skilled workers across all races have left our shores and they’ve also taken a lot of their wealth out of the country. We then have ... and it’s a broad generalisation but if you look at the graphs we have a net import of more unskilled workers coming into the country.



How are we then going to reverse that trend? We have the infrastructure to a large extent, if you compare it to other African countries. We have that in place but we have been losing skills.

Together with what you’re doing now are you also then going and advocating that we’re getting those drivers of large projects back into the country and then also making it easier, not just through your department but other departments, so that these people can then



actually become job creators and drive our economy a lot further, and not just ours, but then we will be the spear taking the rest of the continent forward?



The MINISTER OF TRADE AND INDUSTRY: Thank you very much for that question. There are a number of things that we need to do. I would start by saying I recognise that the level of skills in an economy is absolutely fundamental to our success. So, the first thing we need to do is to hold onto more and more of our young, skilled South Africans, and that is, they stay here when they see greater opportunities, or as the economy grows more people will in fact want to stay here.



The second part of it is that we’ve got to attract back South Africans that are working elsewhere in the world, and as we do our outreach now we are meeting with what we call members of the African Diaspora — South Africans and others who are now living elsewhere in the world — and we are saying to them, come back home. Help to build the economy and help to build the country.



The third thing we are doing is making it easier for skilled immigration; for people from elsewhere to come in with scarce skills that we don’t have in South Africa. An example of that would be if



big multinational corporation makes South Africa its African headquarters and it needs managers with skills across different technologies that we have not been exposed to. We want to make it easier for them to get work visas. The President spoke about that in the investment conference.



However, there’s another part that we should also do, which is to build ... as they say grow our own timber. Increase the number of young people that are given opportunities and experience, because the challenge that many bright young people find is that in order to be experienced they must be given an opportunity to work. To be given an opportunity to work they are often told we need experience. So, we’ve got to break that cycle by doing things like learnerships, apprenticeship arrangements, mentoring arrangements and so on, to boost it.



I want to share with members a visit that I made to the Toyota plant in Durban. It’s a very significant producer of cars on the African continent as they do the Corollas, the Fortuners and the minibus taxis.



As I walked to different parts of the factory, opening up a new part that we had now contributed to, the manager would introduce me to an



engineer. So in the paint shop I would meet the chemical engineer. On the production floor I would meet the mechanical engineer. In the area where they do the electronics of the car I would meet an electrical engineer.



What struck me was that they were all young people and what also struck me was that almost all of them were women. I asked the manager where he got his workforce from. He said they get it from the same place that all the other companies get their workers from. They don’t go to a special effort. They draw from the local community. I took note of it and then he took me to other sections and he said, you see this area here Minister? Globally, we are the second-best performer in the Toyota system. We beat all the other Toyotas. We are the best performer in the world in this one here. We are the fourth best performer in this one.



So I said to him, I often hear a complaint that we are not doing enough with regard to training. How come you have the best products and the best people? He said, Minister, I go and take people from university or college. At university or college they are taught to think. When they come here into this factory I teach them to work. That has transformed that factory into a highly-competitive work environment with ... [Applause.] ... young South Africans, women,



others leading the production. I think that can be the motto for what we do. So, I think it is the package of issues to deal with skills that we need to address. [Applause.]



The DEPUTY CHAIRPERSON (Ms S E Lucas): That deals with the part on Trade and Industry, and we really want to express our appreciation to the Minister. You responded comprehensively but you responded on time. There was no need for us — once or twice — to remind you of the time but it was on time. We appreciate it and we really appreciate the comprehensive responses. We have learnt a lot from you. Thank you very much, hon Minister. [Applause.]



We will now continue by calling the Deputy Minister of Tourism, hon Mahlalela. [Applause.] Thank you, Deputy Minister. You may continue as soon as you have settled. We are allowing ... Although the presiding officer is changing you can continue. Thank you.



Question 191:


The DEPUTY MINISTER OF TOURISM: Deputy Speaker, on behalf of the Minister who is not around and not in the country, I will be answer those questions on her behalf. The first question is 191 and the response that we are giving to the question is that, South Africa



has not developed a blueprint of support in the investment facilitation and trade promotion of small-scale tourism initiatives.



However, the majority of businesses in our country are small businesses. The Department of Tourism has put in place mechanisms to provide support of such businesses in order for them to succeed.

These mechanisms include access to finance, market access support and business incubation.



This is done through various programmes such as the Tourism Incentive Program which provides incentives to enterprises through the Market Access Support Programme, the Tourism Grading Support Programme, the Green Tourism Incentive Programme and the Tourism Transformation Fund.



The department’s enterprise development programmes give support to different small, macro and medium enterprises, SMMEs, across the tourism value chain. The extent of the success of these initiatives will only be ascertained in the medium-to long-term.



Thus far, small, black-owned tourism businesses, some of which are in our rural areas and which ordinarily would not have had an international market access or exposure thereof, have been supported



the Tourism Incentive Programme and have indicated positive outcomes of their engagement with the international trade resulting in securing bookings to South Africa.



Just to illustrate a point, the evaluation of the report on business commitment post-support yields that the return of investment ratio to the market access support ranges from 6:1 to 10:1 since its inception.



Since its inception we have got 432 enterprises across the country that we have been supporting at a cost of a minimum of R82 800 each totalling to about R35,7 million thus the return on investment estimates between R214 million to R357 million. One of the challenges we have set for the department is to ensure that there is an abundance of high-quality products that emerging tour operators can position themselves both globally and in the domestic market.



Our incubation programmes are active in the North West, Mpumalanga, Limpopo and Northern Cape provinces. The department will also be having engagements with the industry on their supplier development role when it comes to small operators. I have no doubt that they will work because we are working together with the Tourism Broad- Based Black Economic Empowerment Charter Council, in this regard.



The Tourism Transformation Fund, run in partnership with the National Empowerment Fund, NEF, has registered some increase in the number of successful applicants for capital project finance. To date, 15 black-owned projects with a total value of about

R170 million of which R43 million is a grant that has been approved and with about R13 million already disbursed and already working on the ground.



These are proof that business projects are mainly thus far located in KwaZulu-Natal, Mpumalanga, Northern Cape, Gauteng and in Limpopo. However, the department is currently in the process of reviewing the various incentives mechanisms to ensure that we maximise on the intended transformation impact. These will not only involve small business initiatives but it will also extend to facilitate them so that they are able to graduate from being small to being big businesses. Thank you very much. [Applause.]



Ms Z V NCITHA: Thank you very much, House Chair, and also thank the Minister and I have noted the fact that there is no blueprint document on the promotion of small-scale tourism initiatives but it is good that there is work that is being done and support that is being given to small-scale tourism businesses or initiatives.



I have noted also, Minister, that the beneficiaries from the funds you have talked about, you have not touched on the Eastern Cape and now my question then would be, the Eastern Cape has pristine and untouched beaches, in addition to that, the province being the birthplace of Tata Mandela, the former President of the country, and other legends that we know of and major sites of resistance and struggle against apartheid, does the government have plans to channel human and financial resources radically towards this province to unleash its full economic potential in this sector?

Thanks, Chair.



The DEPUTY MINISTER OF TOURISM: Yes, in the projects that I have mentioned it does not include the Eastern Cape, but it does not mean that the Eastern Cape is not part of our plan. What we need to understand, hon members, is that tourism by its nature, as you know in the Constitution is a schedule 4 function, which is concurrent with a provincial government and all our plans, when we do planning; we plan in consultation with provinces. We engage provinces and provinces are the ones that are feeding us. We do not go and decide on projects ourselves but they are the feeders to the system.



We are working with the new model at O R Tambo to be in a position to come up with programmes and projects that intervene especially in



the OR Tambo region but we are also working with some municipalities, for example, last week I was in Buffalo City Metropolitan Municipality, they are trying to work with the municipalities because the difficulty that we have is that when you go to analyse the Local Economic Developments, LEDs, and Integrated Development Plans, IDPs, of the municipalities, you hardly find anything that deals with tourism.



And therefore, we are beginning now trying to conscientise all the spheres to make sure they prioritise tourism as one of the key economic industries that has got the potential to deal with the challenges of unemployment and change the lives of our people. We have, for example, the Blue Flag programme where we are training young people we are able to make sure we clean our oceans and then the Eastern Cape is part of that programme and is part of that plan.



As I was in East London, I was also having a graduation of the National Youth Chefs Training Programme where young people were graduating in the Eastern Cape as chefs but also the National Youth Chefs Training Programme Chefs is encouraging them not just to become chefs only but also start their own businesses. We have got young women who are now in senior positions in various hotels



Buffalo City who were trained by the department to be chefs and they are now in charge of those hotels as chefs, managers.



It is a whole range of issues, as I have indicated; we are in the process of finalising our five-year strategic plan which we are working on together with the provinces so they can give us their own priorities. Thank you very much. [Applause.]



Ms H S BOSHOFF: Thank you very much, Chair, and it is nice to have a Deputy Minister that comes all the way from Mpumalanga. Deputy Minister, we all know that your sights should be on the creation of an enabling environment that encourages job creation but at this point in time it appears as if you are looking at minimising job opportunities with the proposed amendment to the Airbnb operations.



In 2018, at the World Travel Awards, Cape Town was named the top events and festival destination in the world where we saw many tourists making reservations at Airbnbs as their prices were much more affordable and much more homely than hotels. My question to you is, will you today undertake to provide this House with statistics and if no statistics are available to conduct research on Airbnb reservations in comparison with hotels and ordinary guesthouses around the country? Thank you.



The DEPUTY MINISTER OF TOURISM: Thank you very much ... though it is a new question but let’s deal with the amendment of the Airbnb is not intended to cut jobs but is intended to regulate the industry.

There is no intention to say by regulation therefore you are impeding on its ability to perform, no. Firstly, we want it to perform but in a manner that is regulated.



Secondly, we don’t have the statistics now at my disposal here but we can provide the statistics that led us to arrive at a decision to say, we need to have regulation, for this to be regulated because it was informed by statistics that is available. So, we can supply that information at a later stage if the House agrees. Thank you very much. [Applause.]



Mr M S MOLETSANE: Chair, hon Deputy Minister, I just want to ... can I ask you this question, does the support of the initiative cover the youth, people living with disability and gender balance?

Secondly, is there any mechanism in place for monitoring? Thank you.



The DEPUTY MINISTER OF TOURISM: Well, all the programmes I have mentioned are focused on the youth between the ages of 18 and 35. If you are above that, no, you do not become part of our programme. All the programmes I have mentioned focus on young people. We have got



programmes that also focus on women; we have got Women in Tourism where we are training women, empowering them, ensuring that they have got access to funding, assisting with whatever they need to be assisted with so they become managers wherever they are working but also encourage them to become entrepreneurs themselves.



We have got a programme, Women in Tourism, that we are working on and tomorrow, for example, I’m supposed to be having dinner with people with a disability who are part of our programme because that is what we are doing. We are dealing with all vulnerable groups, which are your youth, women and people with a disability.



All the programmes that I mentioned focus on that. The only programme that does not focus on the youth only is your transformation because transformation by its nature is the totality of everything. But, for those that want to come into the entry especially young people we have got these programmes we are providing training for.



The issue I was raising about the chefs, all those who are training as chefs are young people. In hospitality we are training young people. With the tourism monitors we are training young people. In the Barista Training Programme we are training ... all those are



young people; it is a requirement and a condition for you to be part of these programmes. We train them, empower them, so they are able also to start their entrepreneurial venture as young people and then channel them through the Tourism Transformation Fund working together with the NEF so we are able to make sure that even young people enter the industry and they are able to create jobs for themselves but also they are able to be absorbed and be employed by the industry. Thanks. [Applause.]



Question 176:


The DEPUTY MINISTER OF TOURISM: Hon House Chair, the e-visa and visa on arrival innovation is addition to visa wavers have proven to be a game changer for tourism worldwide. Tourists are spoilt for choice and convenience is one of the main decision-making factors on where to travel to. For instance, Chinese travel trade indicates that easy of visa facilitation particularly the e-visa and improved turnaround time will favourable convince them to market and sell South African packages.



Furthermore efficient passenger processes for groups such as the dedicated language friendly counters is also seen as a destination friendly measure which will boost travel trade investment decision by the Chinese. It is said that a degree of certainty on visa



facilitation is needed before they will increase or even start investing in promoting and marketing South Africa as the preferred destination. This is what we discovered when the Minister was in China last month.



Our competitors have clear visa regulations. Tourism is a priority of the sixth administration, led by President Cyril Ramaphosa. It therefore goes without saying that yes we will work with the Department of Home Affairs on matters that require the attention for growth of tourism. The understanding is that the pilot for e-visa was launched in Kenya this week, on 26 and 27 November. I trust that this august House will agree with me that the Minister Motsoaledi and the Department of Home Affairs are best, appropriately placed to provide further details in this regard. [Applause.]



The Department of Tourism is constantly in charge and working together with the Department of Home Affairs in the fora that exist with the view to ensure that both departments contributes towards facilitating ease of access to South Africa for tourists in the interest of growing inbound tourism. So, we are working with the Department of Home Affairs and we are prepared to continue working with them, so that we make sure that we facilitate easy access of



tourists to South Africa in order to make sure that we achieve the goals that we want to achieve and set ourselves. Thanks. [Applause.]



Ms H S BOSHOFF: Hon House Chair and hon Minister, did I hear correctly that you said the pilot was launched in Kenya? Alright, because I was led to believe that the pilot was going to be launched with New Zealand. If that is not the case, then fine. Can you indicate to this House with the launching of this pilot programme or project whether there has been an increase of visitors from Kenya, because as you said in the previous question that with the applications made simpler, it is going to ensure that we are going to have more visitors? To which other country are you going to open e-visa application so that we can just keep track of it? Thank you very much.



The DEPUTY MINISTER OF TOURISM: Well, as I have indicated the e-visa pilot started on the 26th and today is the 27th. So, it will be impossible to determine whether there has been an increase as a result of that introduction because it started yesterday. So, we will be monitoring it very closely so that we are able to see whether there is change in the system. The other countries that we are targeting as you might be aware that in order for us to reach the target that we have set ourselves, we have said we are going to



be targeting China as one of the new country, India is one of them and then in Africa is Nigeria, because of the numbers that they have. We think that if we pay special focus and attention on those countries we will be in a position to then have an increase of tourists coming to South Africa. However the challenge that we have is this question of e-visa and the visa process that ark the system currently because somebody must go to one office somewhere which might be 100 or 200 or 500 or 600 kilometers away, then go there and submit the forms and the passport and then go back. Come back after a week or so. So that process becomes so cumbersome that it discourages anybody who wants to travel to begin to think about travelling. So, we are hoping that once the system has been rolled out the e-visa system as a pilot and it becomes successful we will therefore be able to extend it to the countries that we are targeting in particular China, India and Nigeria. Thanks.





Rre K MOTSAMAI: Tona, Lefapha Merero ya Selegae ga le tshepagale lefatshe ka bophara. Lefapha leno le begiwa le tshwenngwa ke bonweenwee. Jaanong go atolosa dikopo tsa visa le dintlha tse dingwe tse di amanang le yona, di tlile go tlhomamisa jang tshireletso ya baeti?





The DEPUTY MINISTER OF TOURISM: Hon member, I am not sure whether I followed you to the fullest, but the issue of - I am not sure whether I understood you properly; however the issue of safety of tourism is the matter that is not relevant to this question because here we are dealing with the e-visas and the visa regime. [Applause.]



There is a question that deals with safety, and when we are in that question we will be able to deal with it. We will be able to deal with that particular question. It is still coming.



Mr M E NCHABELENG: Hon House Chair and hon Deputy Minister, the department announced that it will be finalising the development of a new Biometric Movement Control System to complement the introduction of the e-visa system which was to be piloted at a number of South African airports this year starting with the implementation of e- gates at the Cape Town International Airport.



Can the Minister state whether there is any progress has been made in this regard?



The DEPUTY MINISTER OF TOURISM: Hon member, well that announcement was not made by the Department of Tourism. The announcement was made by the Department of Home Affairs because they are the ones that are responsible for that. So, as I have indicated we are working with the Department of Home Affairs. They did promise us that they are going to be rolling out that programme. And as soon as they roll it out we will be able to therefore to be accordingly report to this House to say what progress has been made, because the system rest with them. It does not rest with us. So, they promised us as well that they are working on the system to roll it out especially here in Cape Town, OR Tambo and King Shaka Airports, but they will start with Cape Town International Airport. So, we are still waiting for them to finalise the bottlenecks and the processes that they are working on. So, as soon as that information is available, we will be able to provide it.



However, hon members can also equally extend that question to that relevant department which is the Department of Home Affairs, because they are the better sources to answer it because they are the ones that are dealing with the migration and the immigration processes.

Thanks. [Applause.]



Question 187:



The DEPUTY MINISTER OF TOURISM: Chair, the department’s initiative seeks to ensure geographical spread of our developmental footprint albeit resources permitting. Our destination development and tourism sector support services programme through instruments such as working for tourism and tourism incentive programme support the department in the development of products attractions and skills.

These initiatives have been and/or being implemented right across the country, in places such as uMkhanyakude, Vhembe, Mopani, OR Tambo, Mahikeng, Sol Plaatjie, Maluti-a-Phofung, Soweto, Mdantsane, Springbok, eHlanzeni, just to mention a few. So we have got a whole range of this programme going on.



The department will continue to ensure the geographical spread of the initiatives and most importantly sustainability thereof. That is where we are. We have got the programme which is spreading all over the country and if members want more details, more information as to where the project is located and all those things, we can be able to supply in due course if members want the details thereof. But these are some of examples that we are just presenting to you that we are not necessarily approaching issues on the basis of a particular province, we look at the totality of the country. Based on that totality of the country, we are then saying, what products must be developed. So that we are able to expand the tourism products for



our tourists in South Africa, as opposed to the current arrangement where tourists are mainly exposed to a few products. We want to expand so that there is as much products available at the disposal of the tourists at the end of the day. Thank you very much.



Mr K M MMOIEMANG: Chairperson, let me also appreciate the response by the Deputy Minister. The concern emanates from the statement that was made by the former Chief Executive Officer the Tourism Business Council, on the competition that our country is facing particularly with regard to competitors in particular the East Africa, because the International Monetary Fund, IMF, says that East Africa is growing at a more rapid rate than the rest of the continent and is becoming an increasingly attractive tourist destination as compared to South Africa.



We want to know if the department has figured out what are the mechanisms and interventions that we can either put in place to maximise opportunities for tourism growth? I am raising this point against the background of the resolution that we took at Nasrec against advancing transformation in the tourism sector which is very important and also to ensure that the popularity of South Africa as a tourist location highlights the need for more streamline support



including alignment of the goal of increasing tourism activity with the security of tourism and the visas of the country.



What is important is how do we ensure that as a country we put in place mechanisms to mitigate the fact that other countries in the continent are beginning to pose a serious contest to us. Thank you.



The DEPUTY MINISTER OF TOURISM: You would know that we did develop a National Tourism Sector Strategy of which key amongst that National Tourism Sector Strategy is to expand tourism products for South Africa so that we are able to offer a multiplicity of products. That is able to enable us to compete globally. Tourism is a competitive industry and taking into consideration that as a country South Africa we are in the tip end of the continent. For example, we are mobilising all our missions all over because they have not been actively engaged to tourism products to sell South Africa. We are also working with Brand SA to make sure that we build the Brand SA. We want to make sure that people have got multiplicity of products that they are able to compete with.



We have got good infrastructure, we need to make sure that we maximise using these infrastructure that other countries like the one that the mission in the East does not have. When you go to Kenya



mainly they will provide you with safari, but we provide beyond. At the same time, it is our view that as a region we must be able to compliment each other as much as practically possible so that we are not seeing as competing amongst ourselves - but be able to integrate and co-operate with the view of maximising these tourists arrivals in the continent.           So that it does not just only become a benefit to one country but it becomes a benefit to the region as a whole by making sure that there is a link that exists. When somebody lands in Addis Ababa, they are able to be linked to OR Tambo International Airport, when somebody lands to OR Tambo they are able to be linked to Nairobi, so that we don’t find ourselves as if we are working in silos as a continent. We want to maximise because if we don’t do that you will attract more tourists coming to the country, and the tourism industry boom more job opportunities, then people will have to flock to South Africa to look for those opportunities. That will then become a crisis. Thank you.



Ms H S BOSHOFF: Deputy Minister, rural or township areas have the potential to play a vital role in the upliftment of people in these areas to boost the economy. However, they need your assistance to ensure there is no duplication of what already exists in the industry. Many of our young people in rural and township areas do not have the opportunity to enter any form of tertiary education but



can be encouraged to attend workshops in their respective areas to share their experiences with you in your department who in turn can assist these people in starting their own businesses. Because the people that have grown up in these areas are more often than not absolutely conversant and completely in touch with the history of their respective areas.



Deputy Minister, can you indicate to this House your department will reach out to them to uplift them and support the rural and township tourism through the implementation of plans that you may have or are planning to bring to the table? Thank you.



The DEPUTY MINISTER OF TOURISM: We have a destination master plan and precinct development focused mainly in the townships. We have projects that are running currently in Khayelitsha, Galeshewe, Mdantsane, Vilakazi Street etc. And then we have a rural tourism strategy that focuses on rural tourism development where we are using the products that are there, because most of the products are in the rural areas. But the challenge is that located in those rural areas there is no beneficiations for the locals and that is where the problem is. We are then coming up with various programmes of which one of them is the tourism incubation and business support.



We currently have five incubation projects that are running and they are located in the rural areas. We have partnered with Sanparks in five National Parks, where we are doing tourism maintenance of facilities in the parks. That tourism maintenance in the parks is done by Small, Medium & Micro Enterprise Businesses, SMMEs, from the surrounding and also involving training of young people to be able to take on that responsibility.



As I have indicated, we have got all the five parks that we have identified and agreed up on like Kruger National Park, Marakele National Park, Addo Elephant National Park ... in Kruger National Park is Manyeleti around Bushbuckridge where this is taking place. Then we have got Pilanesberg which is in the Northern West where this incubation is taking place. Mopani district is part of our plan. So those are some of our projects that are currently running.



All our programme for training are focusing on youth and mainly are located within the tourism products. The sizeable numbers of our tourism products are in the rural areas. Because of that we want to use that opportunity to accommodate them so that we are able to train them in order for them to become part of the projects and the programme that we are dealing with. Thank you.





Rre K MOTSAMAI: Tona, ke dikgaolo tse di ko tlase ka palo tse di bonang dipoelo mo tirisong ya bojanala. Mme go dikgaolo tse dintsi tse di ka tswelwang mosola kgotsa tsa bona dipoelo ka bojanala, jaaka Kapa Botlhaba. Potso ke gore, ke eng se lo se dirang go tokafatsa le go bontsha bojanala mo dikgaolong?



The DEPUTY MINISTER OF TOURISM: As I have indicated, we have got the destination master plan in place which focuses on township tourism. I have mentioned the townships that we are currently dealing with.

Then we have the Green Tourism programme which is an incentive programme which is all over the country. Then we have got the transformation fund which is based on the application that we receive. We then have the programme for Sanparks.



Currently, we are piloting the Barista Training programme which we are encouraging aspirant young people to become coffee business in the industry. We are also training people winery, those that want to serve wine but also want to own wine as a business. We do have one young person who has already established his own business after the training on winery. We also provide financial support for SMMEs to facilitate.



We have got a huge list that we can share with members if they want the list. If you go to Pilanesberg National Park, we are providing accommodation and under accommodation is that goes with bed and breakfast, guest houses, lodges, all these are for young people and black people in particular. Then we have tour operators that we are training and starting their own businesses and supporting them as part of the incubation.



The reason why we decided to incubate them is because research has shown that when somebody starts a business for the first three years it‘s a difficult period. Therefore, we are supporting them for three years so that they are able to sustain after three years and be able to manage these businesses on their own.



When you go to Phalaborwa, it is the same thing. There are a lot of projects that we are running as incubation for accommodation, tour operation arts and crafts, food and beverages. All of these are people from the previously disadvantaged that we are funding and supporting. As I have indicated, we are also introducing a technology incubator so that we are able to make sure that we explore opportunities that Fourth Industrial Revolution brings, so that people are not found wanting at the end of day. We have



introduced that and we are busy training people around the hospitality industry especially young people.



We are also making sure that we teach people simple things, like financial literacy, because if people do not know how to manage their finances they can’t run a business. These are some of the things that we are working around to make sure that there is beneficiation for everybody. Thank you.



Question 186:


The DEPUTY MINISTER OF TOURISM: Chairperson, it goes without saying that industry players like the Tourism Business Council of SA, TBCSA, will have a growth target which includes tourist numbers.

That, as such, will result in better performance of their businesses.



With reference to the 21 million tourist arrivals by 2030 – which is a target that President Ramaphosa announced during the state of the nation address in this sixth administration – we have no doubt that the entire tourism sector from all spheres of government to all industry players in the private sector, whether it is through the TBCSA or any other representative organisation, is working towards the achievement of this aspirational goal or target.



[Inaudible.] ... are geared towards assisting the industry, small and big, to achieve this target. Our efforts going forward include diversified and aggressive marketing, including stronger relations with inbound tourists, trade at a strategic level, an effective and efficient policy environment, including travel facilitation and permitting innovation, and an enhanced visitor experience so that we ensure that it is a safe and secure destination.



In all of these, we will strive for inclusivity and an integrated government approach in growing the tourism industry.



We want to indicate that it is the responsibility of government as a whole to make sure that achieve this target.



Our greatest challenge therefore revolves around the safety of tourists and the perception thereof in our priority markets, be they traditional markets like Europe, or emerging markets like China and India. Our engagement with inbound travel trade in these markets ... it was clear that they know or are aware that South Africa has a lot to offer, but they are very concerned about crime against their citizens when travelling to South Africa.



I must also indicate that, in their view, they believe all media reports, including social media, about South Africa. Media reports directly from South Africa are said to be the biggest contributor in shaping the negative market perception about South Africa as a destination of choice.



These have affected the investment level into sales and promotion of the country’s highly rated tourism products and facilities.



This calls on all of us as South Africans to reflect on our respective roles and contributions towards building the brand we want.



The department is working with the SA Police Service, SAPS, to address this challenge. To that end, we have developed a joint strategy, working with the industry and have also put in place a memorandum of understanding. The Minister will be outlining the plans with the stakeholders as we commence the festive season.



But just to highlight, it covers matters of awareness, physical deployment of monitors, application of technologies, and outreach to the inbound tourist.



I want to indicate that we have become a challenge to ourselves, because it is we South Africans who speak badly about ourselves and about South Africa.





NgeSiswati, mine lapho ngakhulela khona kutsiwa, tibi tasendlini atikhishelwa ngaphandle.





... but we are doing the opposite here in South Africa. Thank you.



Mr S E MFAYELA: Hon Deputy Minister, thank you for your wide answer.



Tourism is one centre that could create job opportunities in South Africa. The current challenges of crime, violence, and water and electricity shortages affect tourism in South Africa.



Furthermore, SA Airways, SAA, could benefit from an increase in tourism.



So, I would like to know whether you have had any engagement with any of the mentioned state-owned entities, the police and the water department to increase tourism in South Africa regarding the above-



mentioned specific problems. If not, why not? If so, what are the relevant details? Thank you.



The DEPUTY MINISTER OF TOURISM: Hon member, as indicated, we have a memorandum of understanding with the SAPS. We’ve developed ... There is national tourism safety forum which ... SAPS is part of it. At a provincial level, we’ve encouraged provinces as well to establish provincial tourism safety forums, which the majority of the provinces have managed to do.



The challenge of water we have acknowledged. That’s why we have a green incentive programme. One of foci is electricity and water. If an industry is able to display that it has put systems in place to save electricity and water, we are able to incentivise them. We give them a certain amount of money for the work that they did in order to contribute towards the reduction of water and electricity consumption.



But as you might know, the Minister of Human Settlements, Water and Sanitation has already tabled a master plan on how to deal with the challenges of water. South Africa is a water-scarce country. From time to time, we have droughts, and that becomes a huge problem.



So, we’ll be working with ... because they are part of our ... the water is part of the economic cluster in Cabinet. Therefore we are working together to see how we make sure that we provide water so that we don’t have a crisis around that.



So far, it has not been an issue for tourists not to come to South Africa. The main issue that would make tourists not come to South Africa is crime. That’s the biggest challenge that we have. That’s why we call on all South Africans to work together to deal with this challenge of crime and create safer communities, not just for tourists but for all South Africans. All of us have a responsibility to make sure that we don’t allow ourselves to be terrorised by a minority. Those criminals are just a few. Therefore we must come together and say enough is enough and get rid of these criminals in our society, because they don’t belong to us. So that we are able to create a positive image for our country. Once we are able to do that, we’ll be able therefore to attract as much tourists as possible because there will be certainty in terms of their safety when they come to South Africa.



We treat Safety and security as a human rights issue. Therefore it becomes a matter for which all of us must take responsibility and make sure that we create these safer communities and safer



environments for our people and also for our tourists. Thank you. [Applause.]



Mr H C SMIT: Hon Deputy Minister, according to the Airlines Association of SA, Acsa, millions of visitors are processed in Cape Town each year. Can you please state whether efforts are being made to bring other provinces on board so that they can also benefit from these visits?



Does the department have an updated record of all valuable visiting sites or destinations per town? Thank you.



The DEPUTY MINISTER OF TOURISM: Thank you, hon member. We are busy trying to develop South African products because the historical problem in which we find ourselves is that it is only two products that are dominantly sold by tour operators, namely Cape Town and the Kruger National Park. That is a problem.



That is why, at some point, we had a meeting with the French ambassador and he told us that they are saying it is very costly for them to come to South Africa. We didn’t understand why it’s costly because it’s euro versus Rand. They said no, we leave France and we only get exposed to two products. That is, they arrive in Cape Town.



From Cape Town they are taken to the Kruger National Park. Then from the Kruger National Park they fly back home. And they look at the costs that they incurred of travelling and all those matters, and only come to see two products.



That is an historical problem that we are beginning to say can’t be correct. We need to sell South Africa in its totality. The products that each province is able to provide ... so that we spoil tourists for choice, so that they are able to have a choice of their own, so that you don’t have this monopoly that is currently happening where it’s only the Kruger National Park and Cape Town that monopolise everything.



So, it’s a matter that we are working on, to sell South Africa as a package with all its products in all nine provinces. We are developing those products and that package through SA Tourism, SAT, and also through the provincial agencies because each province has its own agency.



So we are collaborating and working together so that we don’t have a situation in which we don’t talk to each other – each province does its own thing. They market their own way. So, we want to have an integrated approach towards the marketing of South Africa in terms



of what products Northern Cape provides. What products can people get in the North West? What products can people get in the Free State? So that the tourists are spoilt for choice instead of being channelled, which is the current situation ...



That’s the matter that we are working ... It’s not going to be easy, but we will have to crack it and make sure that if we want to make sure that there is beneficiation for all South Africans, it must be handled in that particular way. Thanks. [Applause.]



Ms M O MOKAUSE: Deputy Minister, there are small businesses in rural areas. For instance in Heuningvlei in Kuruman, QwaQwa in the Free State, Vryburg in the North West. Those businesses depend entirely on tourism for sustainability. They find themselves in a situation where government excludes them because they are not well established. They do not enjoy equal publicity like those other, well-established businesses.



What sustainable plan does your department have to make sure that you bring them to the level of where those other big businesses are? Thank you.



The DEPUTY MINISTER OF TOURISM: We have the Tourism Grading Support Programme. We encourage all our facilities to be graded. Grading ensures quality as it meets the maximum standard that a tourist will expect and require. The Tourism Grading Support Programme allows us to give small, emerging businesses an 80% to 90% reduction in the charge for them to be graded.



We also have the Lilizela Awards programme which is beginning to encourage emerging small businesses to be able to participate in whatsoever activities are taking place.



We attend international shows. We take a number of small businesses from each province along with us to these shows. Either it is SA Tourism or it is ourselves as a department.



This is an approach that we have agreed upon. It gives them exposure to the international market. Recently there was a World Tourism Market in London. We took various small businesspeople to go and sell themselves on the international market. We attended some exhibitions. In all those exhibitions we agreed with provinces for them to give us these small businesspeople so that we are able to go together with them.



So we have acknowledged that there is a challenge in terms of them being exposed to international markets. We have taken it as our responsibility to make sure that, when we have international events, exhibitions, conferences, we are able to identify these small and medium enterprises, SMEs, and be able to pay for their accommodation, travelling and everything so that they are able to go there and be able to sell the products they have. It’s some of the things we are trying to facilitate.



So government is not ignoring them. We have acknowledged that the industry is dominated by SMEs. The majority of these SMEs are owned by black people.



Therefore we have an obligation to make sure that we expose them into the markets so that they are able to benefit at the day.



So, we are working on this matter. We will be turning the corner. We want to make sure that their businesses become successful at the end. That’s why I said we want them to move from small to big businesses at the end.



Mr M DANGOR: Hon Deputy Minister, on Saturday morning, a Gulf ambassador called me and said please come and talk to a group of



influential people. Now you take people to the Dubai Fair every year. They had a very negative perception of South Africa. He said to me, please come and persuade them and tell them the other side of the story so that they don’t have this negative perception. Now these are the people — and you’ve got a visa waiver for them — that spend between $6 000 and $10 000 every time they come. They are not backpackers!



But, your challenge, and the department’s challenge is how to change the negative narrative into a positive narrative. But also our challenge is how we become positive in selling South Africa and not talking South Africa down. Thank you.



The DEPUTY MINISTER OF TOURISM: As I have indicated, you see, the revival of the brand South Africa and the selling of South Africa is a collective responsibility. All of us have a responsibility to sell South Africa. We have a responsibility to be patriotic. We have a responsibility to show to the world that we are a good country.



We have managed to host a big event like the 2010 Soccer World Cup without any incident. That means we do have that ability to be positive. Therefore it is a collective responsibility of all of us to work together. We are currently planning together with Brand SA



to see how we can go out there and talk positive about South Africa and tell the world what South Africa is able to offer, so that we are able to attract as many people as possible.



I agree with you. Those are big spenders. That’s why, when we were looking at prioritising the visa waivering, the Gulf region was prioritised because we know that when they come here, they are able to spend.



As you might be aware, the UAE last month launched their biggest airline that will leave from OR Tambo. That is a positive development as well.



But, as you have said, we will have to work together very hard and make sure that we create this positivity about ourselves as a country.



The issue of crime, I still emphasise, remains the biggest obstacle. That’s why we are mobilising business ... we are mobilising everybody ... communities ... we are working with the community police forum in various provinces so that we are able to make sure that create a safer environment.



But, equally, we have also agreed with the police that they will begin to segregate tourism crime from ordinary crime so that we are able to have the facts and the statistics as how many tourists get mugged, attacked, etc ...



When we were looking at the figure ... for example, Germany has highly decreased. And when we look at the reasons ... because the

... one of the total bus ... their buses were once hijacked. And that has a huge impact, negatively so.



So it is a matter that all of us must say, it can’t be done in our name. We must work very hard and make sure that we create a safer community and safer environment for South Africans and for tourists so that they are able to be sure when they come to South Africa that they are safe.



Question 177:


The DEPUTY MINISTER OF TOURISM: Thank you very much, Chair. As I have indicated earlier on that tourism remains our priority and it has got the potential to create jobs, it has got the potential to ensure inclusive economic growth, it is a potential to make sure that it closes the gap between the haves and the haves not, and it is a labour intensive industry which needs semiskilled individuals.



We are working together as I’ve indicated with the SA Police Service to ensure that our tourists are safe and have pleasantly memories experiences when they visit our country. Both ourselves and the SA Police Service, SAPS, understand that in a sector with combine employment impact, direct and indirect of no less than 1,5 million, we have got an obligation to succeed.



A joint strategy and a memorandum of understanding that I’ve indicated between the department and the SA Police Service are in place and we are currently in a process of implementing it. All these efforts which are co-ordinated through the National Tourism Safety Forum that I’ve indicated are applied in targeted manner and stakeholders within affected localities, including municipalities, are part of this plan because we have identified tourism hotspot.

Where we have identified tourism hotspot, we work together with the local business people there. We work together with the local council of municipalities in that area. We mobilise Community Policy Forum with the view that they then interact with communities. However, all of these things, hon Chair, will not yield any results until such time that ordinary people see benefits of tourism. As long as tourism peak is elitist and as long as there are no beneficiations from ordinary people that they can feel and see it, it will be very



difficult to mobilise them because they will not understand what it that is them as beneficiations for tourism is.



That’s why, therefore, transformation of the tourism industry becomes paramount and key so that we are able to ensure that it becomes inclusive and there are beneficiations for all South Africans so that they see a value of protecting tourists, because there’s beneficiation that they see as a result of tourists’ arrival in South Africa. However, more importantly, we must also mobilise South Africans to be travellers so that we are able to expand the cake because we can’t rely only on international tourists. We need to mobilise our own South Africans to be able to travel and explore their own country and enjoy it and know that it belongs to them before it belongs to anybody from outside. Thank you, Chair. [Applause.]



Ms H S BOSHOFF: Thank you very much, Chair. Thank you for the comprehensive reply, Deputy Minister. However, is there a possibility that this House can be provided with a copy of the outcome of the discussions with the SA Police Service, together with the detailed implementation plan that includes the budget and the timelines, as we know that this is the one sector that is able and has proven to create jobs? Chair, if I may through you, the Deputy



Minister spoke about the mobilisation of the benefits of tourism. Can he just explain to this House how he will mobilise and address the benefits for our people so that they can also take it forward? Thank you very much.



The DEPUTY MINISTER OF TOURISM: No, no, thank you very much. We can provide the memorandum of understanding that we’ve entered into with the SA Police Service. We can also provide as well the tourism plan that we’ve developed which is anchored on three pillars that is proactive measures so that they would prevent tourists from being attacked, and then the responsive measures that when an attack has happened, how do we respond and the aftercare of the tourist that might have been attacked. The plan is there. We can share with the House a copy of that plan that we are concluding with. We are engaging everybody and tourism industry is part of discussion on the plan. We’ve got municipalities, especial those that are affected.

For example, you will recall that two months ago the Minister came here in Cape Town together with the mayor of Cape Town and went and launch the tourism monitors at Table Mountain. It is part of that bigger plan of tourism safety. Therefore, we can share that with you.



I have indicated that we want to see the beneficiations and we have got the transformation fund. Currently, since the fund was established we’ve able to ... we are working with the National Empowerment Fund, NEF. We have been able to make sure that we approved about 17 projects. Secondly, we are intervening around the

- as I’ve indicated - SA National Parks, Sanparks, because most of our Sanparks are surrounded by rural communities – ordinary people. We are coming up with incubators project as I’ve indicated. We’ve got various incubators programme that are there which deal with accommodation, tour operation, arts and crafts – what the people want – that’s what we provide - based on their needs and that is how we support them. As I’ve indicated we have given money to Sanparks which they are using to employ or contract the small, medium and micro-sized enterprises, SMMEs, surrounding communities so that they go and do the maintenance refurbishment of the facilities inside the parks. Therefore, those beneficiations become community beneficiations because of that.



As I’ve indicated, we have various programmes that we are dealing with because tourism is a value chain system. Be at a transportation level, we are working on it. Be it at accommodation level, arts crafts and all, we are working very ... with all those chains so that there is a huge beneficiation at the end. We are currently



targeting some of the agritourism and ecotourism at the end so that there are huge beneficiations around communities that were previously not benefiting out of tourism. [Applause.]



Question 194:


The DEPUTY MINISTER OF TOURISM: Hon Chair, while we have not conducted a study, the department is indeed aware of the impact of crime on the growth of tourism as such it is mainly the feedback from both inbound trade and tourists alike.



This is more so when stories about incidents of crime against tourists are carried in the media, be it print, online, social media in their home countries. Negative word of mouth carried through these platforms has negatively impacted travel trade investment decisions as well as consumer travel decisions.



The department has indicated that it’s working with SA Police Service, SAPS, to deal with these opportunistic criminals. While it will be self defeating to outline the operational details of the strategy, the one that hon Boshoff has requested. It is important to highlight that it includes operators and tourist awareness, physical deployment, application of technology and outreach to inbound



tourist trade. To this end we are also working closely with organised tourist industry.



As I’ve indicated the tourism safety forum is already in existence, it’s functioning and some of the members of the forum are from the security sector namely that is Business Against Crime South Africa, the SA Banking Risk Information Centre and the SA Police Service in order to enhance safety to visitor experience.



Furthermore, as South Africans, we have a collective as I have indicated, I want to keep on emphasising this. We have a collective duty and responsibility to deal with the challenges of crime. We should not be standing there and casting stones. All of us are together in this and we must deal with this crime issues. We can’t look away and think that it will disappear on its own.



Let us stand up against these unacceptable attacks, not just to tourists but to our own people because if we stand together and say enough is enough, we can’t allow ourselves to be terrorised by few individuals. We have got the ability to and the capability to defeat it and we can defeat it. The only thing that we need is patriotism, commitment, dedication and willingness to see South Africa succeed and South Africa belongs to all of us.



Therefore all of us have got this obligation and responsibility to create a climate that is conducive for people who want to come and invest in South Africa, for people who want to visit South Africa and it’s the responsibility for all of us. It can’t be a matter that we want to be bystanders and think that somebody somewhere will resolve it. We all need to engage in this matter within the context of participatory democracy. Thank you very much.



Ms S SHAIKH: Deputy Minister, maybe I should just indicate that I think you have responding to this question over a multitude of questions that you have been responding to especially in terms of crime and I think given that, maybe we should also thank you for highlighting that we also have the responsibility in this regard but House Chair maybe I should just indicate that I’m satisfied with the response that was given by the Deputy Minister. Thank you.



Mr A B GXOYIYA: Hon deputy Minister, there’s a saying that says prevention is better than cure. We always look at crime in a reactive kind of a manner instead of being proactive. So the question that I’m having to your good self is whether the department has a plan to advocate to local communities to embrace tourists as well as to educate local tourists because when we speak about tourists we think about people who come from overseas and come into



our localities, we don’t think about that person who drives from Port Elizabeth to Cape Town as a tourist.



So, how does the department plan to advocate that and educate local people in the tourist attractions to embrace people who are touring there as part of preventing crime because those who experience crime are as guilty as those who commit the crimes without reporting so that is basically the question?



The DEPUTY MINISTER OF TOURISM: Thank you very much for the question. As I have indicated, the plan has got three pillars and the first pillar proactive measures. The proactive measure is to ensure that we prevent crime from happening. One of the measures that we have taken is training tourism safety monitors, we have deployed tourism safety monitors in all the nine provinces.



We work with the provinces and they identify all the tourist attractions and the hot spots, we then train those tourist safety monitors. We train them in terms of the hospitality, tour guiding and all related matters but they are linked with the police station and they are linked with a police officer that is responsible for them so that they are able to proactively report to the police when



they suspect something and there is a reaction from the police before the incident could happen



We have conducting izimbizo to local communities to be able to mobilise society to understand the benefits of tourism, the economic benefits of it, what is it that it brings to South Africa but at the same time mobilising South Africans to travel because the study has shown that South Africans are mainly not travellers.



They travel when they go to funerals and church. That’s why when you look at the domestic travelling, Limpopo is the highest in terms of domestic travellers because people go to Moria but if you look at the value, regardless that Limpopo is the highest in terms of domestic travel but they are the lowest in terms of the value because these people go to Moria and they don’t sleep in hotels and bread and breakfast, B&Bs, and all that. So they don’t spend money as a result of that.



It’s a matter that we need to work out and see how we mobilise them so that they understand that when you visit a friend it must be a tourist a visit where you then sleep either in a B&B, lodge, and you take your friends and families and tour. Now, it’s festive season and people will be moving around but people will be visiting



friends, they will not be taking hospitality. So, it’s a matter that we must mobilise our people to understand that it is part of the things that they are supposed to do so that we are able to have economic benefits as a country as a result of that.





like to thank the Minister and Deputy Minster for availing themselves to take questions. Hon members, before I conclude I would like to make this announcement that the transport is waiting outside and will be leaving in ten minutes. That concludes the business of the day. Hon are requested to remain standing until the precession has left the chamber. The House is adjourned



The House adjourned at 21:48