Hansard: NCOP: Unrevised hansard

House: National Council of Provinces

Date of Meeting: 05 Nov 2013


No summary available.






The Council met at 14:03.


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






Ms M G BOROTO: Chairperson, I hereby give notice that on the next sitting day of the Council I shall move:


That the Council -


  1. notes that South Africa is undoubtedly  worlds away from the place it was in 1994 when democracy was achieved;


  1. also notes that millions of people who were marginalised and shut out of government systems now have access to basic services and the state machinery;
  2. further acknowledges that South Africa, under the ANC, is in a better place than it was before 1994 since among other things our society has been transformed in every sphere with increased education levels, the  number of graduates have doubled, millions of houses have been built and more than 15 million people have benefited from government’s comprehensive anti-poverty initiatives;


  1. also notes that the social grant system has expanded from 2,7% million people to 16 million and a significant contribution has been made towards the reduction of the proportion of households living in poverty while the economy has since expanded by 83%;


  1. takes this opportunity to honour all those brave men and women who have fought tirelessly for the freedom and democracy that we enjoy today and who have paid with their lives and also takes this opportunity to commend the ANC-led government on its achievements and its commitment to taking South Africa forward to a better future.


Mr D A WORTH: Hon Chairperson, I hereby wish to give notice that on the next sitting day of the Council I shall move on behalf of the DA:


That the Council —

  1. notes that approximately 21000 jobs were lost in the Free State province between July and September this year, according to figures released by  Statistics South Africa; 


  1. notes that the decline in available jobs pushed the provincial unemployment rate to 43% from 33,1% in the previous quarter;


  1. also notes that in the Free State province, most of the job losses were recorded in the social services, manufacturing and utilities industries;


  1. further notes that this leaves only 740 000 people with jobs compared to 761 000 between April and June this year and that drastic measures  be taken to revive Mining and Agriculture, which is the backbone of the Free State economy.


Mr M P JACOBS: Chair, I hereby give notice that on the next sitting day of the Council I shall move:


That the Council -


  1. notes that the roll-out of the MyCiti bus services by the City of Cape Town to the poor and disadvantaged areas of Mitchells Plain and Khayelitsha will no longer be implemented by December 2013 as previously promised by Cape Town Mayor, Patricia de Lille;
  2. notes that despite Mayor de Lille‘s promise at the time that heads will roll if the service was not implemented by December 2013, she has now made a complete u-turn and all of a sudden now claims that the delay in respect of the roll-out is as a result of justifiable and acceptable reasons, as if she did not know of such reasons at the time when she made the promise;


  1. also notes that reasons that are now being put forward by Mayor de Lille, such as bus stops that still need to be constructed, the failure to train taxi drivers to operate the service, the failure to finalise the agreement with role players on how they would operate the service and the availability of buses, are questionable, unjustifiable and unacceptable as she now claims, should have been addressed long ago and resolved  before she made these promises;


  1. further calls on Mayor de Lille and the DA  to stop their political fooling around in order to take these communities in poor areas into their confidence and to inform them that the City of Cape Town and the DA have neglected and failed them.


Mr K A SINCLAIR: Hon Chairperson I give notice that on the next sitting day of the Council I shall move on behalf of Cope:


That the Council -

  1. notes the possibility of a sovereign rating downgrade from Moody’s Investors Services that has South Africa on Baa1 rating, one notch above the BBB+  rating awarded by Standard & Poor’s and Fitch;


  1. also notes the decrease in austerity measures announced by Minister Gordhan putting a brake on wasteful expenditure and overspending by government officials;


  1. further notes that the Auditor-General has, over the past two years, to no avail warned government of the lack of control over spending,;


  1. also calls on the Minister of Finance to spell out measures to take control of overspending and wasteful expenditure and to indicate how he will ensure that he rescues the budget deficit and meets the target he has set in February of 4.6% to avoid the Greece crisis.




(Draft Resolution)


Mrs B L ABRAHAMS: Hon Chairperson, I move without notice on behalf of the DA:


That the Council —


  1. sends condolences to the family of Sandy Maharla, an 18-year old Grade 10 student who was brutally murdered and burnt to death on 2 November 2013;


  1. notes that her parents sent her to the shops on Friday, 1 November 2013 and that she did not return home and that her decomposed body was discovered on an open field on Sunday 3 November 2013 by people passing by; and


  1. appeals to God to grant her family comfort during this time of bereavement and that her soul may rests in peace.


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




(Draft Resolution)


Mr B A MNGUNI: Chairperson, I move without notice:


That the Council —


  1. notes with shock and concern the allegations of the involvement of a security company and the AWB, another militant far right wing movement, in farm attacks and the killing of white farmers;


  1. also notes that the allegation that the motive behind such attacks and killings are twofold, namely on the one hand, to instil fear amongst farmers and thereby forcing them to make use of the security services of such security companies and on the other hand to incite racial hatred and tension and tension in order to keep alive the notion and illusion of the so-called ‘swart gevaar’ and that black people are being responsible for such attacks and killings;


  1. further notes the condemnation of such illegal, corrupt activities and especially the inciting of racial hatred and tension that harms the dream of a rainbow nation, in the strongest possible terms; and


  1. takes this opportunity to call on the Ministers of State Security and Police to urgently launch a comprehensive investigation into these allegations and practices and to ensure that the perpetrators are arrested and that they meet the full might of the law.


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



(Draft Resolution)


Mr V M MANZINI: Chairperson, I move without notice on behalf of the DA:


That the Council —


  1. notes that a 43-year old Midrand based business entrepreneur won R600 000 worth of hi tech equipment for her business at the prestigious Technology for Women in Business (TWIB) awards held in Mahikeng on Thursday last week;


  1. also notes that Dorothy Botsi, the owner of Botho Ubuntu Group, emerged the overall winner as the awards in recognition of her thriving business that now employs about 650 people;


  1. further notes that this company provides services like high access, ladder-less window cleaning, gardening, landscaping, hospitality, commercial and kitchen cleaning;


  1. also notes that the awards held by the Department of Trade and Industry, seek to promote and encourage the embracing of technology in upcoming business enterprises; and
  2. further notes that the Small Enterprise Development Agency(SEDA) will also help Botsi in implementing additional technology-driven initiatives that should take her business to new heights.


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




(Draft Resolution)


Ms D Z RANTHO: Chairperson, I move without notice on behalf of the ANC:


That the Council —


  1. notes with concern allegations of the abuse of ambulances at the Eastern Cape Department of Health as well as misconduct by ambulance officials;


  1. notes that two ambulances were allegedly seen over a weekend at a popular braai spot on the beachfront in East London in the Eastern Cape, parked under a tree next to a braai with an open fire and with the front doors open;


  1. also notes allegations of ambulance staff who are working with a syndicate which operate at petrol stations in overcharging for petrol and claiming exorbitant amounts for petrol while the ambulances had only travelled short distances;


  1. condemns in the strongest possible terms such misconduct and illegal practices that not only impact negatively on ambulance services and response times but also endanger the lives of people; and


  1. takes this opportunity to call on the Eastern Cape MEC for Health to urgently investigate this state of affairs and to implement urgent measures to detect such practices and misconduct and to prevent the recurrence thereof and also to ensure that the perpetrators are brought to book and that appropriate disciplinary steps be taken against the officials involved.


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




(Draft Resolution)


Mr A G MATILA: Chairperson, I move without notice:


That the Council —


  1. notes with shock and concern that, during a series of raids by the prison authorities at the Durban Westville Prison in KwaZulu-Natal, nearly 1 000 cellphones, Simcards, drugs, porn movies, hand-made weapons, household appliances, ropes, and the likes were discovered in the possession of prisoners;


  1. also notes that these items that included 1 000 drug straws and other drugs had been smuggled in by corrupt wardens as well as the public during prison visits and further notes that serious anarchy allegedly exist in this overcrowded prison where members of the public operate as drug syndicates with prisoners;


  1. further notes that 12 wardens have since been suspended and that 835 prisoners were recently moved to less crowded prisons; and


  1. calls on the Minister of Correctional Services to urgently launch a comprehensive investigation into this appalling breach of security and the corrupt activities, as well as the overcrowding of this facility and to develop and implement urgent measures to address and resolve this state of affairs and to ensure that all those involves are brought to book.


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




(Draft Resolution)


Mr K A SINCLAIR: Hon Chairperson, I move without notice on behalf of Cope:


That the Council —


  1. notes that a multimillion rand food security programme, a government initiative, was launched recently in one of the Northern Cape’s drought-stricken areas;


  1. further notes that the initiative aims to promote self-sufficiency and job creation, by growing butternut, spinach, potatoes and onions to sell to Pick ’n Pay in Kuruman and Kimberley and that it will provide much-needed income to its 159 beneficiaries; and


  1. also notes that this initiative is launched at a time when the Masibambisane Rural Development Initiative, a nongovernmental organisation run by President Zuma’s cousin, is surrounded by controversy for its failure to spend the funds much needed by emerging farmers to improve food security in rural areas, and yet stands to benefit from nearly R1 billion of government funding.


The CHAIRPERSON OF THE NCOP: Is there any objection to the motion?




The CHAIRPERSON OF THE NCOP: In light of the objection, the motion may not be proceeded with. The motion without notice will now become notice of a motion.




(Draft Resolution)


Mr M P SIBANDE: Chairperson, I move without notice:


That the Council —


  1. notes the reports of hired researchers by the Eastern Cape Department of Human Settlements to stop the selling of Reconstruction and Development, RDP, houses in the province;


  1. further notes that the hired researchers will try and root out the persistent problem of people who sell or rent out their RDP houses, only to demand houses from government again;


  1. also notes that the department states that the houses are sold and rented mainly to foreign nationals, and in most instances, the houses are used as spaza shops;


  1. applauds the initiative by the provincial department, which seeks to fight corruption and also to assist in speeding up the delivery of houses to the needy people.


The CHAIRPERSON OF THE NCOP: Is there any objection to the motion?




The CHAIRPERSON OF THE NCOP: In light of the objection, the motion may not be proceeded with. The motion without notice will now become notice of a motion.




(Draft Resolution)


Mr M H MOKGOBI: Chairperson, I move without notice:


That the Council —


  1. notes the violent protests that have recently erupted in Bekkersdal in the west of Johannesburg in Gauteng where residents were protesting against alleged corruption in the local municipality and demanding better service delivery;


  1. also notes that the protest action that also involved young children, has not only caused damage to municipal buildings and other infrastructure in excess of R11 million, but has also caused loss of lives and disrupted schools whilst matric learners were prepare for their exams which started last Monday;


  1. further acknowledges the right of people to protest but condemns these violent protests, involving children, damaging municipal property and other infrastructure, disrupting schools, endangering lives and calls on the mayor and the Council to urgently engage with the community and to addrss and resolve their concerns; an


  1. takes this opportunity to call on the Minister for Cooperative Governance and Traditional Affairs to urgently finalise the investigation that was launched into the matter and to implement urgent measures to address and resolve the matter satisfactorily manner.

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




(Draft Resolution)


Mr A J NYAMBI: Chairperson, I move without notice:


That the Council —


  1. notes that the Nelspruit Regional Court in Mpumalanga has sentenced a 42-year old married father with 3 children to 3 consecutive life terms for having raped his teenaged niece over a period of 3 years;


  1. also notes that this 14-year old girl, who has no other family to care for her, looked up to her uncle as a father who would care for her and protect her and in whose home she could feel safe and live freely but instead he failed her and hurt her in the most gruesome manner possible and, as the court described it, the rape of a child is worse than killing her;


  1. further notes that as a result of this barbaric deed the girl not only still suffers physical pain from the injuries her uncle had inflicted on her, but she has also been traumatised and injured to such an extent that she cannot continue with her education and her life is therefore ruined; and


  1. welcomes the sentence and takes this opportunity to call on the Minister of Women, Children and People with Disabilities and the Minister of Social Development to come to evaluate and monitor the situation and to come to the rescue of this girl, if necessary.


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




(Consideration of Bill and of Report thereon)


The MINISTER OF TRADE AND INDUSTRY: Chairperson, the Broad-Based Black Economic Empowerment Amendment Bill, which is before the Council today, along with the amendments which we made to the Codes of Good Practice which were gazetted last month, are the product of extensive discussions and considerable work undertaken within the framework of the Black Economic Empowerment Advisory Council.


The BEE Advisory Council is a statutory body which came into existence in terms of the Black Economic Empowerment Act of 2003 and it was appointed for the first time at the beginning of this administration by President Zuma. At the beginning of this administration, within the council, we analysed and evaluated the state of black economic empowerment, BEE, in this country, as we saw it at the time. We looked at some of the challenges that were required in order to make BEE a tool aligned with and supportive of other government economic policies.


What we found from the research which we had commissioned was that within the private sector, particularly, BEE was, in fact, a very modest event. Very little BEE was going on and the overall level of BEE, according to the scorecard for the private sector in 2007, was level 7, which is just above the minimum, which is noncompliant level 8. Of the BEE that was going on, much of it was what we can describe as passive shareholding deals, where individuals were involved in some transaction which gave them some shares in a particular enterprise, but often very little by way of real involvement in the enterprise concerned.


Although the Codes of Good Practice provided for broad-based empowerment in areas like enterprise development, supply development and skills development – all of the areas where BEE policies really count – we found, in fact, that there was very little performance except from multinational companies which were seeking exemption from share transactions. As a result, we found that empowerees, or people that were supposed to benefit from empowerment, often did not occupy positions of real leadership or real economic involvement in the enterprises that they were supposed to be participating in. In addition, there was far too little by way of generating real entrepreneurial development and enterprise development among black enterprises, in general.


Linked to all of that, was a phenomenon we came to describe as complex fronting. Fronting is, in fact, already an offence covered by the common law definition of fraud. Where you present a company as something which it is not or where you present a company as though it has a level of empowerment which it does not, in fact, have, you are normally doing this to secure some kind of benefit in terms of a tender, contract or access to some kind of regulatory benefit from government  or even  to present yourself to consumers in the public as something which you are not. Therefore, it is, in fact, a form of fraud, and there have been a few instances or cases of fraud arising from fronting practices which have passed through our courts. However, the problem is that the common law definition of fraud and the procedures required have been too difficult and too cumbersome to deal with this practice.


We also found that fronting was taking on new and different guises. The general idea that many people have of fronting is that a company takes somebody who is in a minor position in the company, let us say, the cleaner or gardener, and calls them the chief executive officer. They don’t, in fact, carry out the functions of the chief executive officer, nor do they have the powers, and the company then presents itself as though it is a black-led or black-empowered company.


That is a phenomenon which is becoming increasingly rare. Much more often, we find complex transactions which are presented to people, where people perhaps imagine that they are going to play a leadership role within the company, sit on the board and be part of the management team. Yet, they find that when they look at the small print, something else is actually on the cards. We therefore found that we need a more sophisticated set of instruments to deal with that.


The Bill which is before the House today will, in fact, provide a statutory definition of fronting. It will define fronting as misrepresenting or attempting to misrepresent the BEE status of an enterprise; providing false information or misrepresenting information to verification agencies or verification agency personnel in order to secure a BEE status for which that company is not entitled; or providing false information or misrepresenting information relevant to assessing the BEE status of an enterprise. It can also include the failure by BEE verification personnel or any agency to report offences which are detected.


What we have provided for is the statutory definition and then an instrument to deal with offences of this sort in the form of a commissioner who will be an official that operates without fear or favour but within the ambit of the Department of Trade and Industry. This will be part of our programme and policy of bringing regulatory agencies into the department. The commission and the commissioner will be required to oversee and supervise adherence to the Broad-Based Economic Empowerment Amendment Act, to receive and investigate complaints, and to find solutions where these are possible in terms of potential fronting practices – but at the end of the day where no solution of that sort can be found, to work with the law enforcement and judicial arms of government to ensure that there is prosecution for the statutory offence of fronting. For fronting practices, the Bill provides a maximum penalty of up to 10 years’ imprisonment followed by a period of exclusion from doing business with government.


We think that this provision within this Bill will also complement some of the provisions that are in the new Codes of Good Practice. Here we are essentially saying that we need to achieve some of the priorities to ensure that there is real empowerment, plus real transfers of skills, capacities and opportunities for black people to become involved in the productive sector of the economy, through, among other things, changing the scorecard. So, we require performance across the board on the scorecard by setting subminimum requirements in areas like supply development, skills development and ownership, and by saying that if enterprises don’t achieve those subminima, which are basically 40% of the target, then they will be reduced by one place in the overall scorecard. We are thus introducing an incentive or a disincentive, if you like, not to perform broadly across the scorecard.


Other parts of the Bill which is before the Council today will establish a regulatory framework for the verification industry. With the introduction of the Codes of Good Practice, we have seen the emergence of a number of verification agencies which offer a service by going to companies and indicating to them what their overall level of BEE recognition is.


We have not had an adequate regulatory framework. The Independent Regulatory Board for Auditors will function as the verification agency regulator. We believe that this is a strong, independent body conducting activities similar or akin to the kind of work undertaken by verification agencies, and that this arrangement will provide a degree of regulation. So, when verification agencies do make a determination, we can be confident in the integrity of that verification. Of course, the other point I made when I read out the list of offences under fronting is that if verification agencies do, as we have sometimes heard they do, give a higher score for a higher fee, that will also be dealt with as a form of fronting.


In addition to that, the Bill before the Council places an obligation – it is no longer a best endeavour but it is now an obligation – on all organs of state and public entities to implement BEE. There will be reporting and monitoring obligations –  reporting obligations by entities – and the commission will receive these reports and monitor the impact of BEE.


The generic scorecard principles will be elevated into the primary legislation. This will basically enhance the Codes of Good Practice. It’s further provided that all sector charters which have come into existence, some of them not in terms of the Black Economic Empowerment Act, but in legislation which predated the Act, will now be required to align themselves to the Codes of Good Practice.


We believe that, read together with the codes which, as I said, we published last month, this Bill will enable us to strengthen the impact of BEE in this country. BEE remains, in our view, a political imperative, a matter of social equity,  and also an economic imperative. If we continue to run our economy by drawing the skills, talent and leadership from only a small section of our population, we will be depriving ourselves of the talent pool, skills and opportunities that are really necessary for us to achieve levels of economic growth and inclusive economic growth, at that.


We are confident that this piece of legislation is a step forward. It was approved in the National Assembly, virtually unanimously, and I trust that it will pass through this Council with the support of the overwhelming majority. Thank you very much. [Applause.]


Mr D D GAMEDE: Chairperson, I would like to thank the Minister for what he has just delivered during the introduction of this Bill, and for what he and his department are doing. They are doing everything right these days. His department is leading, and taking this country forward to where we want it to be.


In 1994, we inherited a racial economy, the capacity of which to grow was severely constrained by the exclusion of the majority. We knew that transformation was not going to happen by osmosis. Deracialisation had to happen through an effective implementation of transformative policies.


We pride ourselves on having sound economic transformation policies. Our approach to economic transformation is informed by the historical principles espoused in the Freedom Charter; the document, “Ready to Govern: ANC policy guidelines for a democratic South Africa”; and the Reconstruction and Development Programme. It is further elaborated upon in ANC conference resolutions every five years.


The deracialisation of the South African economy and the effective participation of black people in the economy can no longer be delayed. Black economic empowerment is an economic imperative. Broad-based black economic empowerment, BBBEE, has, unfortunately not yielded the intended results, according to many in business and the corporate world, and indeed among intended beneficiaries. Some have even argued that it has only benefited a certain few.


Thus, the purpose of the amendment to the Bill is to align the Act with other legislation impacting on BBBEE with the revised Codes of Good Practice, which are clearer and more coherent. This includes the introduction of the concept of BBBEE-verification professionals; clarifying and extending the Minister’s powers to make regulations; and to give effect to government policy aimed at deracialising the economy to enable the meaningful participation of black people, women, youth, workers, people with disabilities and rural communities, thus defeating poverty and creating employment.


These amendments to broad-based black economic empowerment legislation are needed to ensure that South Africa’s economy is more inclusive and that transformation in South Africa is sustainable. It is not only socially unjust but economically unsustainable to think we can run an effective economy that draws its leadership and entrepreneurial capacity only from a minority of the population.


Simple fronting is easily recognisable. However, complex fronting requires rigorous measures and robust instruments. The establishment of a full-time commissioner and an armoury of punitive measures are expected to arrest this practice. Fronting is a sanitised term for fraud, and it is an affront to the dignity of the poor and emerging entrepreneurs. The proposed amendments to the Broad-Based Black Economic Empowerment Act would define the practice of fronting, including complex fronting, and introduce a commissioner with the power to impose penalties. Complex fronting involved companies drawing up complicated contracts, which deprived black managers of the appropriate authority for their positions.


Offences have been introduced in the amending Bill. These offences cover fronting practices and misrepresentation related to the BBBEE status of an enterprise. Depending on the severity of the offence, the penalty is a maximum imprisonment of 10 years, a fine not exceeding a percentage of the enterprise’s annual turnover, or both. A convicted person may also not transact with the state for a maximum of 10 years after the conviction.


The codes by which compliance was assessed also needed to be revised to encourage symbiosis between large and small companies. All heads of departments and CEOs of state-owned entities will have a legal obligation to report on the performance of their institutions regarding implementation of BBBEE.


In line with the ANC-led government’s policy, BBBEE seeks to go beyond mere shareholding and dividends, which is not creating sustainable transformation. The pathology of tenderpreneurship has been diagnosed and the harshest punitive protocols established. Furthermore, BBBEE will eliminate the tick-box scorecard mentality which, earlier, drove compliance instead of performance. In addition, the ancillary imperatives of education and access to the economy were limited, with an overemphasis on the ownership element.


The amendments recognise the need for a review of procurement methodology and the need to introduce specific and targeted measures of industrialisation. Credit will be given to companies facilitating these measures. The earlier, complicated codes have been simplified into three main groups, namely direct empowerment, which integrates ownership and management control; human resource empowerment, which integrates employment equity and skills development; and indirect empowerment, which integrates preferential procurement with enterprise development and social and economic development. The categories of employment equity and management control will be merged into a single category, as will preferential procurement and enterprise development.


The amendments also seek to introduce subminimum requirements for the priority elements of ownership, skills development and the enterprise and supply development categories. If a large business does not score subminimum, we will reduce its overall score by two places.


At present, small companies have to pay a verification agency for a certificate as proof of their BEE rating, but this places an inordinate and unnecessary burden on these enterprises. As such, these 100% black-owned, small enterprises will automatically be regarded as being on level 1. Essentially, what the amendments seek to achieve is to turn BEE from supporting passive shareholding to BBBEE that supports a much more active and productive empowerment of black people across the economy.


There is a fear, which is being fuelled by certain opposition parties, that BBBEE has destroyed opportunities for white people. Firstly, BBBEE has brought value to unlisted companies, largely white shareholders. Prior to BBBEE, no such opportunities existed to evaluate these entities. In short, evaluating one’s private company by applying BBBEE codes gives such owners the opportunity to sell off a percentage, perhaps as high as 70% or as low as 25%. It would be unfair if the legislation prescribed to each and every business to comply with BBBEE. However, this piece of legislation applies only to those businesses that wish to do business with the state or with state-owned entities. Again, within BBBEE itself, there are opportunities for whites to conduct business.


In conclusion, the amendments to the Broad-Based Black Economic Empowerment Act will have a positive impact on employment, income redistribution, economic growth and transformation within the developmental state. It is of great significance that today we have the opportunity to adopt this Broad-Based Black Economic Empowerment Amendment Bill in this House. Today, also, the new Land Act, passed in this House, will redress the basic economic injustices of the 1913 Natives Land Act, which, one hundred years ago, turned black people into pariahs in their own land. Today, black people can truly begin to reclaim their economic heritage.


I want to thank the officials of the department. Minister, they are always accessible, always available - even on the phone – and are open to suggestions and constructive criticism. With a very broad smile, we then urge the House to adopt this Bill. I thank you.


Mrs B L ABRAHAMS: Chairperson, Minister, members, and members in the gallery, good afternoon. I would also like to extend a special welcome to the Chief Whip of the DA.


The DA supports measures to broaden participation in the economy as one of our pillars of empowerment, along with other pillars: the need to grow the economy, to create jobs, and to provide education. The DA supported this Bill in the National Assembly in so far as it is aimed at strengthening measures against fronting and improving administrative support from government for BBBEE. We did so, however, on the assumption that the Codes of Good Practice, which would be tabled by the Minister, would ensure that the Bill will be implemented in a way that is truly broad based and nonracial. The subsequent publication of the codes has shown that the Minister has not acted in good faith.


Indeed, the codes are highly problematic, and we oppose them unequivocally for the following reasons. There appears to have been complete disregard for public submissions from business and civil society. The so-called regulatory impact assessment is a sham. Qualifying small enterprises are no longer able to choose from four out of seven elements on the scorecard. Now, we have to comply with the five mandatory elements, including ownership. Qualifying small enterprises no longer have a simplified scorecard but will be subjected to the same burdensome detail as large enterprises. The original codes made provision for built-in review periods. This reassured business and investors that the efficacy of the codes would continue to be evaluated and could be reconsidered, if necessary. This clause has been scrapped.


The change in the definition of new entrants, as well as the reduction of the target in this regard, serve to further narrow, not broaden the contribution of ownership deals to truly broaden the base of economic participation. The use of racial subcategories in this target for skills development and employment equity poses a particular challenge, because it requires a greater deal of racial categorisation by further breaking down the definition of black into African, coloured, and Indian. Why does this sound familiar? This is a perfect example of how the ANC misuses basic legislation, which gives extensive powers to the Minister to push through regulations without appropriate consultation or parliamentary involvement.


The DA looks forward to a time when everyone in South Africa will participate fully in a nonracial economy and society. We know that South Africa will be a giant – perhaps still in our time, Louis. At this present juncture where, 20 years on, we still face severe economic inequality, it is the responsibility of all South Africans, a responsibility from which we simply cannot shy away, to indeed promote strategic interventions to counter the devastating effects of apartheid. However, this cannot be done in the way envisaged by the codes and for the reasons I have outlined above. The DA therefore can no longer support the Broad-Based Black Economic Empowerment Amendment Bill. Thank you. Siyabonga. [Applause.]


The CHAIRPERSON OF THE NCOP: Order! I am sorry, Mr Watson, I did not see you in the gallery. On behalf of the House, you are welcome to watch the proceedings. Mr Watson is a former member of this House. Thank you. [Applause.]


Mrs M C DIKGALE: Hon Chairperson, Deputy Chairperson, hon Minister, Members of Parliament, ladies and gentlemen, when we took over the reins of power in 1994, we inherited a severely fractured economy with highly skewed economic opportunities and distribution of assets, such as land and capital. This was largely because, for many years, the masses of our people were systematically relegated to the harshest of living conditions characterised by deep deprivation and discrimination, the lack of an education, abject poverty and unemployment, and migrant labour located in the Bantustans.


In the document, “Ready to Govern: ANC policy guidelines for a democratic South Africa” we, as the ANC, recognised the fact that to overcome the legacy of inequality and injustice created by colonialism and apartheid in a swift, progressive and principled way, we needed to develop a sustainable economy and state infrastructure that would progressively improve the quality of life of all South Africans.


In this regard, we committed ourselves to making a concerted effort to transform South Africa’s economy, guided by the following pillars: creating decent employment for all South Africans; eliminating poverty and dealing decisively with the extreme inequalities in our society; democratising ownership and control of the economy, by empowering the historically oppressed, Africans and the working class, in particular, to play a leading role in decision-making; restructuring the economy so that it meets the basic needs of all South Africans and the people of the region, especially the poor; ensuring equitable and mutually beneficial regional development in Southern Africa, thereby fostering the progressive integration of the region; and limiting the negative environmental impact of our economic transformation programme.


We said this because we recognised that the path of economic transformation necessitates an energised, coherent and effective approach that will ensure the protection and empowerment of the masses of our people, who were previously discriminated against, marginalised, abused, and systematically rendered nonactive participants in the economy of South Africa.


Chairperson, these people are making a noise. They are not listening to me. [Interjections.]


Indeed, the lived experiences of our people clearly showed that the discrimination and marginalisation that they suffered during the long years of apartheid were at their most severe when race coincided with discrimination on the basis of gender and/or disability. It is for this reason that, as the ANC, we recognise the fact that no economy can grow by excluding any part of its people. We then embarked on a path to broaden the economic base of the country and, through this, to stimulate further economic growth and create employment.


Over the past 19 years of democracy, significant progress has been made in meeting the basic needs of our people, including through the growth of the social wage and the provision of social infrastructure. However, the redistribution of economic assets and the growth of job-creating industries have not met the expectations we had in 1994. Therefore, as the ANC, we have recognised that an integral part of the second phase of our transition from apartheid to a national democratic society is the need to accelerate growth and intensify our programme of economic transformation.


At the 52nd national conference of the ANC that was held in Polokwane in 2007, we committed ourselves to ensuring that over the next five years, the ANC will take decisive and resolute action to overcome the triple challenges of poverty, inequality, and unemployment, which are at the heart of South Africa’s socioeconomic challenges. We intend to transform the structure of the economy through industrialisation, broad-based black economic empowerment, addressing the basic needs of our people, including women and the youth, as well as strengthening and expanding the roles of the state and state-owned enterprises.


The Broad-Based Black Economic Empowerment Amendment Bill builds and strengthens the current national efforts and legislation to transform South Africa’s economy and redress the racial marginalisation of our people. The new measures seek to establish a commission to play an oversight and advocacy role. This Broad-Based Black Economic Empowerment Commission will oversee, supervise, and promote adherence to the Broad-Based Black Economic Empowerment Act and Codes of Good Practice in the interest of the public. It will also strengthen and foster collaboration between the public and private sectors, in order to promote and safeguard the objectives of BBBEE.


The Broad-Based Black Economic Empowerment Commission will receive and investigate complaints relating to BBBEE and develop programmes to promote advocacy, access to opportunities, and educational programmes and initiatives of BBBEE. It will maintain a registry of major BBBEE transactions and will receive and analyse reports, as prescribed, concerning BBBEE compliance from organs of state, public entities, and private sector enterprises. It will also promote good governance and accountability by creating an effective and efficient environment for the promotion and implementation of BBBEE.


This Bill also seeks to create legislative alignment and consistency to mitigate conflicting provisions and application. It seeks to clarify the Act’s status as the primary BBBEE legislation by providing that, if there is conflict with any law which was in effect before the Broad-Based Black Economic Empowerment Amendment Bill, the Broad-Based Black Economic Empowerment Act prevails in so far as provisions that were enacted before this amendment.


The effect of this provision is that if there is another statute that regulates an aspect of BBBEE that may be enacted in the future, then that would take precedence. The clause will therefore prevent inconsistency being introduced by legislation applicable to specific sectors that adopts a conflicting approach to BBBEE. The clause has no impact on legislation regulating other issues. There will be a one-year delay with regard to the trumping provision.


The amending Bill introduces offences pertaining to misrepresenting or attempting to misrepresent the BBBEE status of an enterprise and providing false information or misrepresenting information to the verification personnel in order to secure a particular BBBEE status. It also seeks to introduce offences relating to providing false information or misrepresenting information relevant to assessing the BBBEE status of an enterprise to any organ of state or public entity, and for failure by a BBBEE verification professional or any procurement officer or other official of an organ of state or public entity to report offences to an appropriate law-enforcement agency. It clearly expresses that the minimum penalty that can be imposed on an enterprise for an offence involving a deliberate misrepresentation of its BBBEE status is 10% of its turnover and a minimum term of 10 years’ imprisonment, if it is a natural person.


The core obligations of organs of state, public entities, sector councils and listed public companies to provide BBBEE information to the Broad-Based Black Economic Empowerment Commission are specified, in order to ensure integrated reporting on the impact of BBBEE. The Bill clearly states that the IRBA will function as the verification agency regulator, as opposed to establishing a new regulatory body. The IRBA will have a primary focus as a BEE verification regulator, mandated with the responsibility of protecting the interests of the public and strictly regulating individually registered BEE verification professionals. The Auditing Profession Act, Act 26 of 2005, is in the process of being amended, in order to empower the IRBA to regulate the BEE verification professionals.


In order to give expression to the broad-based approach of the scorecard, the five elements of the scorecard are encapsulated in the amending Bill. The status of the sector codes is further clarified by providing that an enterprise in a sector, in respect of which the Minister has issued a sector code, may only be measured for BBBEE compliance in accordance with that sector code.


I would like to invite the House to adopt this legislation, because it is a clear demonstration of our collective national effort and commitment to move with the utmost speed to transform the economy of South Africa. I thank you. [Applause.]


Mr J J GUNDA: Hon Chair, hon Minister, all protocol observed. Let me welcome this Broad-Based Black Economic Empowerment Amendment Bill, which is long overdue. Indeed, it is time for the poor and previously disadvantaged people who have been dispossessed, marginalised and oppressed to reap the fruits of our new democracy.


We need the BEE that will assist our people to gain access to real financial assistance, management skills and mentorship in order to fight this evil called poverty. The government financial institutions, like the Industrial Development Corporation, IDC, the National Empowerment Fund, NEF, and many others, must act in such a way that the ordinary, business-minded South African  must be able to approach these institutions, even if he or she is black-listed.


This amending Bill is precisely addressing this very problem, but we need to change some issues within the Bill. We are facing the fact that our people cannot be assisted because of their past. Even if they are assisted to overcome this evil called poverty, the interest rate is too high for them to pay back. It is even higher than that charged by the bank.


This Bill must not become a tool without any teeth where, like in the Northern Cape, our people are in possession of a mining permit but they cannot mine. Even though they have got a mining permit for a certain place, they don’t have the capital, and even if some people use their permits, they are not benefiting. They are being paid R5 000 a month for the mining permit, where other people are making millions out of our people. That is wrong! We need to rectify that.


Every effort should be made to ensure that legislated and regulated government empowerment efforts are aimed at those still trapped in poverty as a result of historical imbalances. We cannot allow the same people to benefit time and again, enriching themselves in the name of empowerment.


We know as we sit here today that South Africa is one of the most unequal societies in the world. In order to redress and to rectify that, our people need to be skilled so that they can be uplifted and so that their small businesses can become part of the mainstream economy. We can’t just stay where we are. It’s impossible!


How can the owners of a country remain poor when they own the country? It’s impossible and it’s unacceptable. We can’t have red tape laws that keep our people poor. We can’t! We must get our people to share in reaping the fruits of this country for which some of our people paid with their lives. Blood has been shed by some of our mothers, fathers and sisters. We need our people to be economically free. I thank you.


Mr K A SINCLAIR: Hon Deputy Chairperson, the Broad-Based Black Economic Empowerment Amendment Bill Bill that we are debating today is one of the tools that government believes will address some of the disparities and economic inequalities experienced by South Africa as a society in transformation. The critical question that we need to answer in the context of this debate is whether BBBEE will be one of the structural adjustments that will achieve that.


I will use two recent contributions to elucidate on that. Firstly, Anthea Jeffery, the Head of Special Research at the SA Institute of Race Relations recently said:


The fact is that no amount of reasonable effort can make the policy work. Attempts by the Department of Trade and Industry to reform BEE also fail to address most of the criticism.

The department’s proposed new codes put more emphasis on ownership, to which so much scarce capital has already been assigned. They also set out to make BEE requirements significantly more onerous, based on the unproven assumption that existing rules are too lenient. Investment, growth and jobs are all likely to suffer, particularly in an already difficult business environment characterised by soaring electricity and other inputs costs, scarce skills and low productivity, inadequate infrastructure, and persistent wildcat strikes and labour unrest.


Indeed, the state should identify the real barriers to the advancement of the poor and start removing them. This means that the ruling ANC must now embrace the much harder tasks of fixing education; freeing the labour market; building up international competitiveness; and most importantly, of making South Africa much more attractive to investors, both local and foreign.


The government needs to shift from this big idea it has hadfor the past 18 years: The ANC has emphasised redistribution instead of promoting economic growth. Dividing up the existing economic pie without expanding it, however, will never be enough to meet the needs of a growing population. It’s about economic growth.


Secondly, this view is reflected by the Nigerian billionaire businessman, Aliko Dangote. He recently sharply criticised South Africa’s BEE laws, calling them an obstacle to investment from other African states and a brake on intracontinental trade. He said at the recent South Africa-Nigeria Business Forum:


In Nigeria, we had these laws demanding that any foreign investor had to have a Nigerian partner. But that just dried up the capital flows. Now, anyone can do business with anyone in Nigeria.


He criticised that legislation because of the fact that it had a serious impact on the economy of Nigeria.


Hon Minister, the proof of the pudding is in the eating. Nigeria’s economy is growing much faster than South Africa’s economy – more than 6% this year compared to just over 2% in South Africa. The gap between the two countries has been closing. As we know, economists predict that Nigeria will overtake South Africa as the biggest economy between 2020 and 2025, and why? It is because they are not prepared to live in the past, but rather to engage the future.


The biggest drawback, in terms of Cope’s approach to this proposed Bill, is that it fundamentally does three things. It entrenches race into the South African society, again; it creates a BBBEE commissioner with powers not dissimilar to the Spanish Inquisition; and it gives the Minister unprecedented powers to amend codes and interfere through his appointment, the commissioner.


In conclusion, South Africa’s destiny lies in the future and not in our past. As long as we entrench racist codes and prescriptions, we will not be the winning, sustainable nation that was envisaged in 1994. Because of this, Cope remains very sceptical of supporting this Bill. I thank you. [Interjections.]


Mr B A MNGUNI: Deputy Chair, hon Minister, colleagues and the House at large, let me paraphrase the ANC’s fundamental document on economic policy, the Freedom Charter. It says that the wealth beneath and above the ground shall be shared among those who live in the country.


Basically, this Bill is trying to deracialise the economy because, from the outset, the economy has been based on racial lines. When we, as the ANC, took over, we said that we wanted to level the playing fields. To do this, we need to have some instruments in place and BBBEE is one of them.


A study by Webber Wentzel, a renowned company of lawyers and accountants, found that the transactions on BBBEE initially have so many complex tax intricacies that they leave the historically disadvantaged individuals with huge debt. This Bill, through the Codes of Good Practice, will ensure that these complex tax transactions are eliminated.


We have the Mineral and Petroleum Resources Development Act that says that, by 2014, we need 26% of historically disadvantaged or black people to be in charge of the mining sector. How does this Bill help that? It will help because it will ensure that those people have access to finance and they are able to have a say in the running of the mines by owning them and making sure that they have developed the skills to run them. That is addressed by the sector codes that the Minister is going to introduce.


People in the industry, especially those in the casino industry, were complaining and wondering how they could adhere to this Bill if they are dealing with more than five sectors. For instance, they are in gambling and they are also in the hospitality industry. After the Minister has set up the sectors or the sector counsellors, that industry will make sure that it adheres to the codes of that particular sector. If you are in catering, they will make sure that you adhere to the codes in the catering sector.


So, there is no way that you cannot adhere to a code if you are in business, irrespective of whether you are a small or big business. The fact is that you must adhere to the Codes of Good Practice. This Bill makes sure that you adhere to them. The commissioner that is going to be appointed will make sure that you follow those regulations accordingly.


It is true, hon Gunda, that this Bill must not be a tool without teeth. It is going to have teeth because now there is a penalty if you break the rules. If you commit fraud – for example, you claim that the person is in charge of your entity, only for the commission to find that he is fronting for you – there will also be consequences. That is why it is going to bite.


In terms of ownership, the hon Bev said that the codes are highly problematic. The fact is that before, as the hon chairperson said, it was just a matter of ticking the boxes.  This time, you have to make sure that you adhere to the codes and make sure that they are regulated, irrespective of whether you are big or small. The issue here is that we want to see transformation. Unless the Bill bites, there will be no transformation. That is why we want to make sure that whoever it is, whether you are big or small, you have to stick to the codes.


Anyway, the Bill was deviated from earlier, in that, if you are a small business entity and your turnover is R5 million per annum, you don’t really have to stick to the rules, as such. However, all other people whose business turnover is more than R5 million per annum have to stick to the rules. That is the only way we can level these playing fields.


Hon Sinclair, my dear communist – I call him a communist because we have come a long way together in this committee – they say, “Study the past if you would divine the future.” In the past, we had these policies that were in favour of the minority. Now, this ensures that this Bill actually addresses the real issues. Honestly, it is the black people that were previously at a disadvantage. Now, we are just making make sure that the very same people who were at a disadvantage are on a par with everyone else, so we can start this race in order to grow the economy. Yes, I agree with you. We need to grow the economy. We need to make sure that everybody in South Africa benefits from the economy, but we cannot do that unless we are all on a par.


We can quote the fact that, in 2025, Nigeria will have the highest gross domestic product, GDP, in Africa, but the fact is that Nigeria is thriving because, basically, it has oil. They haven’t diversified their economy. Nigeria’s economy is growing because they have oil and for the past three to four years, the oil price has been very high. That is why Nigeria is going to overtake South Africa in 2025.


Their projection is that they will be producing a lot of oil and it’s only oil that will enable them to surpass the GDP of South Africa. It is not that their economy itself is fine. If perhaps it reaches a peak – as you know, there is a peak in oil – the predictions are that the Nigerian economy might collapse because of the peak oil. If you read properly, you can see that Nigeria doesn’t diversify its economy, but runs on peak oil. [Applause.]


We will emphasise redistribution in the ANC because, as I said, we need to level the playing fields. We know that we cannot go anywhere unless we grow the economy. This pie needs to grow in order for everybody to benefit. We need to grow the economy in order to alleviate poverty and diminish the inequality. The Gini coefficient is too high; 0,61% is the highest in the world.


Unless we, as government, take deliberate action to regulate and make sure that we stick by the rules, we won’t close the gap of inequality. Poor people will remain poor and the rich will get richer because we are not firm, as government, in taking action.

In every country, whether communist or capitalist, most investors look at the stability of the country. As long as there is stability in the country, there is prediction, and there is the rule of law, people will come and invest because they know that, once they invest their money there, they will get it back, irrespective of the old hindrances that could be there. As long as they know that they can invest in that country and their money will return, they will go into that country, irrespective of the political situation.


Take, for instance, Zimbabwe. People might shout in the media, and the like, but go to Zimbabwe. They will be there, physically. You will find that there are a lot of people who are trading with Zimbabwe. Even western countries are in Zimbabwe today, trading with them, although they speak ill of Zimbabwe in the media.


Go to Nigeria, as well. There is indigenisation. Go to Australia. There is indigenisation in mining. They make sure that they stick to their policy in order to make sure that they improve their countries. As South Africa, we cannot stand back and wait for God to come and change things for us. We have to make sure that we change this economy for the benefit of everybody. I thank you. [Interjections.] [Applause.]


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, I should like to thank the majority of members for their constructive comments and for understanding the direction we are moving in in BEE.


Participating in this debate has, however, been a bit of an eye-opener because, as was pointed out by the member from the DA, in the NA, the DA, unusually and to the surprise of some of us, said they were going to support this legislation. Now we are being told that that support has been withdrawn when it comes to this House.


Having listened to the hon Abrahams, let me unpack what she had to say. She said that the reason for this flip-flop is that there are things which were subsequently introduced into the Codes of Good Practice, which they find unacceptable. First of all, she accused me of not acting in good faith during the consultation process. I reject that with utter and complete contempt. We actually went through the comments in great detail and I personally participated in engagements with the members of the advisory council to decide what we were going to do about the different proposals made during the consultation processes.


I would like to give just two examples from several. As a result of the engagements, we did make some changes. I need to tell the hon Gamede that what he said about big companies not meeting the minimum and going down two places was our original proposal. However, after the consultations, we agreed to make it only one place down. We did, in fact, listen to what was said.


We also introduced a transition period before the new codes would take effect. So, I think that it is not true – it is simply not true that we did not listen during the consultation process. Of course, sometimes during the consultation processes a decision had to be made. There are some people who don’t believe in empowerment at all, and we have to say, well, alright, we have listened to you, but at the end of the day, we have to make a decision.


Secondly, I’m afraid the DA has got itself into a terrible twister on the regulatory impact assessment. When there was a discussion in the portfolio committee the other day, the department was accused of not conducting a regulatory impact assessment. The director-general then gave them the regulatory impact assessment. We then had to come back and hear that the regulatory impact assessment did not take account of all the submissions, and that they now wanted to see all the submissions. What utter and complete nonsense is this?


Then, on the qualifying small enterprises, the hon Abrahams says that they now have to comply with all the elements on the scorecard. Again, have you not been reading what is there in the codes? Qualifying small enterprises have to comply with two of the three compulsory elements – ownership and either enterprise supply development or skills development. They have to comply with two, not three, elements.


I actually think that what we are seeing now is that the support which was given to this Bill in the NA a little while ago was a flash in the pan for electoral opportunistic reasons. That’s what it was. [Interjections.] The DA stuck its toe into the mainstream, found it uncomfortable, and has now gone back to its comfort zone. What is its comfort zone? I pointed out in the debate in the NA that the DA voted against the Black Economic Empowerment Act of 2003. That is where the DA finds itself, historically. The then leader of the DA, in an opinion piece in Business Day today, pointed out that he led the charge against employment equity when he was the leader of the DA. That is the DA that we know.


Let us learn to contribute to the Know your DA campaign. We know the DA to be a force against transformation. [Applause.] In the battle for the transformation of this economy and this society, the DA has stood on the other side of the barricades and it has gone back there right now. [Interjections.]


Talking of flip-flops, what about Cope? Again, in the NA, Cope ... [Interjections.] ... well, I don’t know. Sometimes the Cope spokesman is not terribly clear, but, in the voting process, Cope supported this Bill - and for good reasons. There are people sitting on the Cope benches who have benefited from narrow BEE in the past!


Now, Mr Sinclair comes along and he quotes some funny people from different organisations that have always opposed transformation in this country, and he tries to bamboozle us with the idea that it is redistribution or economic growth. I’ve got news for Mr Sinclair: it’s not redistribution without growth, nor is it growth without redistribution. What we need is inclusive economic growth. That’s what it’s about. [Applause.]


Basically, one of the fundamental questions to ask is: Where does empowerment come in? Empowerment comes in because, if we are going to draw our market from a small minority in this country, if we are going to draw our skills, our leadership, our talent from a small minority of this country, we are going to be a much more impoverished nation than if we broaden participation in the economy. That is exactly what BEE is all about.


An HON MEMBER: Hear, hear!

The MINISTER OF TRADE AND INDUSTRY: Then he quoted Mr Dangote. I actually sat on the panel with Mr Dangote. What Mr Dangote was actually, really complaining about was having a partner presented to him who added no value to his company, and being told, this is your empowerment partner. We said to him that we actually agree with that. We don’t want to foist people like that on you. We want real, productive partners.


By the way, one of the things about Nigeria and West Africa, in general, is that they used to award mosquito decorations to people in the past. That was because the mosquitoes meant that there weren’t white settler communities in those countries. So, actually, we are not talking about the same type of colonial heritage. We are not talking about a large resident population that controls most of the assets in the country. When foreign investors come into Nigeria, they draw on Nigerians as the managers, leaders and talent in the country. It is not the same situation. In this country, we have a different set of agendas.


I think I should just simply underscore what the changes in the codes are about. The changes in the codes are about broadening, not narrowing, empowerment. They are about saying that the most fundamental challenges we have in this country are about skills development. The most fundamental challenges we have in this country are about building symbiotic relationships between big and small companies so that small companies and emerging companies can be drawn into productive relationships with bigger companies, as well as being suppliers to government.


We are saying that the problem we have seen is that we don’t have enough of those kinds of activities in South Africa. So, we are actually saying that, if you want to call yourself a significant contributor to black economic empowerment, you must get involved in those activities. We want to see active supply development. We want to see skills development, but we are not going to let you just do this and allow you to keep the ownership as it is. So, we have put that in, as well. The subminimum points are a tool to achieve broadening of empowerment, and that’s exactly why it is there.


With those few remarks, let me thank everybody for their contributions and express the hope that the House will support this particular Bill. Thank you. [Applause.]


Debate concluded.


Question put: That the Bill be agreed to.


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): [Interjections.] [Applause.] Unfortunately, the hon member cannot vote on behalf of the Western Cape. The results are that eight provinces have voted in favour. I therefore declare the Bill agreed to in terms of section 65 of the Constitution.[Interjections.] Hon Adams, I corrected you; you cannot vote. You are not the head of delegation for the Western Cape. Please sit down. Let’s proceed. [Interjections.]


Hon MEMBERS: Sit down! Sit! Sit down! [Interjections.]


Mr F ADAMS: Hon Deputy Chairperson, may I address you? On the basis of what Rule can I not vote? I presented the Bill to the Western Cape legislature and I did all the final mandates in the committee. So I would like to find out under what Rule I cannot vote. [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Hon Adams, firstly, you never got the mandate from the Western Cape, and secondly, hon members, as you are seated here, the Western Cape has voted in favour. That then means nine provinces have voted in favour. [Laughter.] [Applause.] [Interjections.]


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


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


Hon members! Hon members, let us proceed. Hon Sinclair, we are in a process here! [Interjections.]

Ms B V MNCUBE: Hon Deputy Chairperson, am I correct in saying that the member from Gauteng who spoke earlier represented the DA? At the end, she said that the DA will not support the Bill. However, the Western Cape, which is led by the DA, has sent a mandate to vote in favour of the Bill. Gauteng, where she comes from, also voted in favour of the Bill, as did the DA in the legislature. Thank you.


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): It’s more of a statement. [Interjections.] Thank you.





(Subject for Discussion)


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, it’s a great pleasure to participate in this discussion. It is down on the Order Paper as Debate on National Credit Amnesty, although in Cabinet we have called this “the removal of adverse credit information exercise”. It’s a great pleasure to participate in this debate because this House, and, in particular, the select committee chaired by the hon Gamede, has been very instrumental in pushing forward this idea that there should be a process of removing adverse credit information, which affects many, many consumers in this country.


The National Credit Act was introduced in 2006 with the aim of doing two things: firstly, facilitating access to credit for a broad section of the South African population; and secondly, to deal with abusive practices which had plagued the credit market for many, many decades. What we have seen is that this Act, which provides for quite careful definitions of what is permitted in terms of credit provision and restricts what we call reckless lending, has had an enormously positive reputation, internationally, as well as in South Africa.


What we found in the recent years is that there are quite large numbers of people whose names are on credit bureau records as credit impaired, even in cases where they have, in, fact settled the debt which put them there in the first instance. There are people who are there because their circumstances 10, 15 or 20 years ago were very different to what they may be today. They incurred a debt at that stage when they were in conditions of impoverishment, and they found themselves unable to meet the debt. They were placed on the credit bureau listings, and to get off the listings is not an automatic process. It’s something that actually requires you to approach a court, sign on with lawyers and pay a considerable amount in addition to the settlement of the debt concerned.


The implications for people in that position are not just that they find it difficult to access credit. Quite often, it’s difficult to access rental property. Quite often, it is a factor which is held against you when you apply for a job, and we found significant numbers of people who are in that situation.


At the same time, we found a significant expansion of credit activities in this country, particularly what is called the extension of unsecured lending. That has many subcategories, but some of it has involved the extension of credit to low-income, working people who are actually not in a position to meet the credit obligations arising from those transactions.


We found that, all too often, credit providers find a short cut, in a sense. They go to the credit bureaus and see if someone is on their list. If they are on the list, they don’t get credit. If they are not on the list, no further affordability assessment is conducted. What this has meant is that for people who are not on the list, anything goes.


We found some very unfortunate circumstances in the work of the National Credit Regulator. For example, after the Marikana tragedy, the National Credit Regulator went to that area and found that there were 13 credit providers, 11 of which were noncompliant with one or other aspect of the National Credit Act.


Sometimes we find that people have had up to 80% or more of their salary impaired in servicing credit agreements. The way that the credit provider avoids the risk is simply to go and get a garnishee order. In fact, what you do is get an automatic deduction from the person’s wage. The person gets perhaps 20% of the wage, and the credit provider doesn’t have to concern themselves with a robust affordability assessment, which is basically one of the directions that the National Credit Act seeks to take credit providers towards.


So, in the discussions of the department with the select committee, we’ve come up with the idea that, as part of the process of addressing this challenge, we should engage in this exercise of removing adverse credit information. The other part of it is contained in amendments to the National Credit Act, which are currently before the portfolio committee in the National Assembly. Those will require more robust affordability assessments. They will also require processes of continuous removal, and I’ll come to those in a minute.


As part of the exercise, we have engaged with the select committee, which has proposed that there should be a once-off removal of adverse credit information. We’ve come up with the term “removal of adverse credit information” because we need to make it clear to people that may benefit – and that could be 1,6 million people according to the calculations which have been arrived at. It may be necessary to use this term rather than “credit amnesty” because, in fact, people who are affected are not exempted from the debt in question. So, if you owe somebody money, you still owe them money. You’re still obliged to pay them, and if you don’t pay them, you’ll find yourself back on the credit register after this exercise.


What we are saying, though, is this. Let us remove all this information. Let us, in a sense, create a new, blank sheet. The information being removed does not include information about the payment profile of the people concerned. We believe that that information on the payment profile of the people concerned, together with a more robust affordability assessment, ought to provide the basis on which credit providers can act responsibly in these particular circumstances.


So, in response to the work that’s been done, the select committee recommended that we should choose the option of removing all adverse information listings, irrespective of value and irrespective of nonpayment. Furthermore, included in the new legislation would be an automatic removal of paid-up, adverse information listings, on an ongoing basis. So, as you pay there should be a simpler, easier and cheaper process of removing that information. Similarly, if you have a judgment against you and you pay up, there should be a simpler and easier process for automatic removal of that information.


Cabinet endorsed this proposal for public comment and we went out for public comment. The closing date was 31 October. I can report to the House that the Department of Trade and Industry, DTI, received 98 written comments: 66 of those were in support of the proposal; 15 of those expressed concerns and were not in support of the proposal; and 17 posed questions of clarity. Added to that, there were consultations in six of the nine provinces - three more still remain to be conducted - and those consultations have also yielded a result in which there is overwhelming favour for this particular measure.


The DTI team will be meeting with the Credit Bureau Association next week to discuss some of their concerns and how this measure could be implemented. Basically, as I’ve indicated, we are of the view that we can mitigate the risk that all of these people who have been credit impaired will suddenly become credit impaired again through a combination of enhanced affordability assessments that will need to take place, as well as other interventions, such as financial literacy education, and so on.


So, that is where we are at. When we have finished that process, we will take a further proposal to Cabinet. We don’t anticipate this taking longer than a few more months. Hopefully, then, a final decision on this proposal emanating from this House will be forthcoming. I thank you very much for your attention and I thank the members of this House for the hard work that they put into this particular process. Thank you. [Applause.]


Mr A J NYAMBI: Hon Deputy Chairperson, hon Minister, hon members and guests, let me start by thanking the Minister, the director-general and the officials of the department for the role they have played thus far. I thought it would be proper to preface my speech by quoting Martin Luther King:


An individual has not started living until he can rise above the narrow confines of his individualistic concerns to the broader concern of all humanity.


The research results had been presented to the Board of the National Credit Regulator, NCR, which then directed the management of the NCR to deliberate on the findings with the Department of Trade and Industry. The DTI principally supported the views expressed by the NCR in its report. The research showed that the 2006 amnesty, even though wide in scope, did not really have as much impact as the DTI would have liked, because of the global recession in 2008.


The aim of the national credit amnesty is to effectively regulate the provision of credit in South Africa, with a particular focus on protecting consumers, especially from the predatory practices of capitalist credit grantors, institutions of microcredit, loan sharks and the credit bureaus. Most public servants are blacklisted. There have also been reports of employers using credit information to assess potential employees, and people who are unable to rent accommodation because of impaired credit records. In South Africa today, there are an estimated 2,4 million people blacklisted by credit bureaus, meaning that, in essence, they cannot have access to any form of credit. The great majority of those blacklisted are workers and are poor.


The priority of the ANC-led government is to address poverty and the huge challenge of underdevelopment in our country. To this end, the ANC–led government is embarking on a number of measures focusing on the underdeveloped sections of our society, including a focus on small, medium and micro enterprises and co-operatives.


Government’s research shows that, in South Africa, over R360 billion is provided in credit every year. However, the poor pay far more interest. In fact, the lowest-income earners pay an average interest rate that is seven times more than that paid by the rich. High-income earners pay an interest rate of around 26%, on average, for their credit. The lowest-income earners pay an average interest rate of an incredible 175%.


Some oomashonisa [loan sharks] charge up to 360% interest per annum. For the poor, the official interest rate is only an abstract figure, far from the realities they are faced with. This is akin to a credit black market. In essence, the poor are subsidising the rich. No wonder millions of our people are caught up in debt spirals and end up blacklisted. It is time to wipe the slate clean and close this chapter of massive exploitation of the poor.


The DTI, the National Credit Regulator, the National Credit Tribunal, NCT, credit bureaus and the Credit Providers Association, CPA, made presentations to the select committee on progress made since the promulgation of the National Credit Act. This was in relation to the amnesty granted to all qualifying blacklisted consumers. The DTI and NCR stated that the impact of the first credit amnesty was very small, although its scope was quite wide. There was a need to revisit the aims and purposes, as set out in section 3 of the National Credit Act and to ask how the playing fields could be levelled.


One of the ways of doing this will be through the proposed credit information amnesty. The purpose of the proposed credit information amnesty will be to increase access to credit and to help consumers pay less for their credit. However, it will be difficult to achieve a balance, because credit information helps credit providers to price their credit. So, this will have to be done in a carefully measured way. The aim was also to reduce the cost of credit repair, as it was quite expensive for consumers to sort out their credit records.


The NCT stated that it had seen more than 7 000 consumer credit agreements with a combined value of over R200 million during the past financial year. The consent orders that had been granted by the NCT resulted in consumers being able to retain both movable and immovable properties whilst servicing their credits in a responsible manner. The number of debt rearrangement applications received was not significant compared to the number of debt and credit agreements in the industry, but a pattern was emerging that will require investigation.


Even if the listing was removed, certain consumers who should benefit from the amnesty proposal would not have access to credit because they were under debt review. Credit providers must therefore be required to do proper credit assessments before extending credit. In cases where a debt had been written off and the record removed, consumers might access credit beyond their means with adverse implications for the consumer and the credit provider.


Our people continue to be excluded from participation in the economy due to blacklisting by credit bureaus. The removal of adverse information listings is expected to liberate our people and allow them to access finance for economic participation. We applaud the ANC-led government for taking decisive steps to remove the barriers created to exclude the majority of South Africans from playing an active role in the quest for socioeconomic freedom and emancipation. Having noted these and many other successes of delivery by the ANC led-government, the progressive ANC-led government’s policies and legislations reaffirmed our faith and confidence in the ANC as a governing party.


It is quite interesting that lately one sees parties like Cope  quoting the Freedom Charter simply because it is relevant to them when it suits them. In addition, we have people that were not part of the meetings organised by the select committee - various presenters – assisting us to understand. We are quite mindful of what is happening to the ordinary masses on the ground.


In conclusion, we believe that it is only the ANC that can be entrusted with the future of South Africa, as already proven. Only the ANC led-government can continue with the progressive agenda for Africa and a principled contribution to world politics. I would like to re-emphasise the fact that the amnesty proposals are aimed at reducing credit impairment by addressing its cause, allowing for restorative justice; and redressing the failure of credit providers to make proper assessments of risk. The credit amnesty is also intended to address overpricing, stimulate economic growth and address some of the barriers to credit. I thank you. [Applause.]


Mrs B L ABRAHAMS: Hon Deputy Chairperson, I see I’ve got a big audience and many spectators here! Hon Minister, hon members and hon guests in the gallery, once again, good afternoon.


Will South Africans and the economy really benefit from the 2013 credit amnesty and is an impaired credit record the only ill in the secured and unsecured credit market? Of the 16 million people with compromised credit records, more than9 million have more debt than what they can afford to pay off every month.


Access to credit is central to economic growth and, thereby, individual access to building personal assets over the long term. Individuals may rise out of one level of society to a better position, creating small businesses and employment. For this credit market to stimulate growth, it needs to be well regulated, reasonably affordable and the customers educated in all aspects of these loans. The main issue revolves around illegal loan operators in the market, also known as oomashonisa, better known as loan sharks, who charge any interest rate and actually rob the borrowers.


The removal of adverse credit information held by credit institutions, if forced through, as currently proposed, will adversely affect the small, medium and micro enterprise, SMME, sector and jobs. Many good noises are made, such as the Cabinet statement that the credit amnesty “seeks to address the issue of access to credit to those South Africans that can afford credit”; and Cabinet spokeswoman, Phumla Williams, saying: “Inaccessible or expensive credit hinders growth. Access to the sustainable credit market is essential to all developmental goals.”


How are we proceeding with regard to this project? The actuarial report on this project was not submitted to the Select Committee on Trade and International Relations and the DTI only presented a watered-down slide presentation. The DTI informed the DA that the document was before Cabinet and therefore could not be revealed. [Interjections.] The DA’s application for this document in terms of the Promotion of Access to Information Act is way overdue and still outstanding, in spite of Cabinet having now approved the project.


Government Gazette Notice 966 of 2013 was published by the department on 30 September, inviting public comment on the proposed Removal of Adverse Credit Information project. The closing date for comments was 31 October 2013. Today, we are debating this project. What will the effects of the public comments be after the whistle has gone? Will they still influence the process or are the boxes merely tick boxes? [Interjections.]


The credit industry issued warnings on and objected to the second-round repeat process for several reasons. The 2007 credit amnesty did not have the desired effect. In fact, 74% of those pardoned are now defaulting on payments. Clearing the adverse credit information will increase the cost of credit, could close small credit providers and will certainly affect SMMEs which are creating the most jobs in local and rural communities.


The proposals, according to Notice 966 of 30 September, are the removal of all adverse information listings held by the credit bureaus, irrespective of value and irrespective of non-payment; removal of all paid-up adverse information listings by credit bureaus on an on-going basis; and removal of all paid-up judgments and information held by credit bureaus, on an on-going basis.


Mr R J TAU: Deputy Chairperson, I rise to check whether the member would take a question.


Mrs B L ABRAHAMS: No, thank you. Perhaps over lunch. [Laughter.] On his account. [Interjections.]


The contradiction to the select committee agreement lies in “irrespective of nonpayment”. This is not what was agreed to. In fact, section b was agreed to, namely, “removal of all paid-up adverse information listings”.


Technically, one cannot agree on both, especially with the “ongoing basis”, which will encourage nonpayment of any debt after the amnesty. Thereafter, the risk of new credit will increase the costs to both high- and low-risk borrowers. Yet, even if adverse credit records are to be removed, it does not exempt the borrowers from making all the payments due to the creditor.


Jobs are at risk. The potentially high-risk borrowers without adverse credit information will be labelled as high-risk clients who, because of the high percentage of defaulters in the market, will be instrumental in the cost factor of credit. The good high-risk borrowers are those who need an opportunity in life. However, they will now have to pay a high, unaffordable price for credit, without any credit records that would, under normal circumstances, have improved household circumstances for the better.


This leaves development goals at risk. The low-risk SMME will have to pay the same costly rate for credit which is now governed by the risk factor of the high-risk borrowers. Credit will become inaccessible. This is where the job market will be adversely affected as it will become too expensive to borrow money to create jobs.


Cabinet statements refer to credit for those who can afford it, but what is the price going to be? It will be very high rates, the SMME sector doomed in the economy, and jobs at risk. Could the hon Minister be shooting job creation in the foot? Cabinet, itself, said:


Inaccessible or expensive credit hinders growth. Access to the sustainable credit market is essential to all development goals.


I thank you. Siyabonga. Dankie. [Thank you.] [Applause.]


Mrs M C DIKGALE: Hon Deputy Chairperson, perhaps before I start, I should tell these hon members that, when we were in our committee meeting, the DA did not support the Bill. They are saying to our people, even if you are facing a sea of problems, take a bucket of water and try to wash those problems away. So, I am saying the DA is not taking care of our people, but the ANC is here to help them. [Interjections.] I am talking about what happened in the committee meeting.


Credit is a key enabling mechanism for investment and development. For many of our people, it is one of the significant ways they may access opportunities to better their lives. Access to credit spares consumer spending, and serves as a key driver of economic growth.


Historically, access to credit in South Africa was characterised by many factors other than the ability to repay. For many years, our people were subjected to discriminatory access to credit because they were black and poor. Those who were given access to credit were made to repay exorbitant amounts and were subjected to highly discriminatory credit arrangements compared to the rest of the population of South Africa.


It is for this reason that we adopted the National Credit Act of 2005 to promote responsible credit granting and use, and for that purpose, to prohibit reckless credit granting. We also adopted the Consumer Protection Act in 2008, which seeks to promote a fair, accessible and sustainable market place for consumer products and services, and for that purpose, to establish national norms and standards relating to consumer protection. We did this in order to provide for improved standards of consumer information and to prohibit certain unfair and discriminatory treatment of our people by credit providers.


Despite all these initiatives, our people continue to face discriminatory access to credit in many instances. Many credit providers have taken the opportunity to exploit the economic conditions of our people, leading them to further indebtedness. This, coupled with the difficult economic situation facing many workers across the globe, including in South Africa, has resulted in many people defaulting on paying their credit.


In many instances, impaired credit records have resulted in expensive credit for our people. As the ANC, we have said we need to reduce credit impairment by addressing its causes. We need to ensure that credit impairment is not used as a barrier for our people to access economic opportunities, goods and products that will enable them to change their lives and those of their families. These include housing, business opportunities and education. As the ANC, we have said we need to remove barriers to credit and to assist those consumers who can afford credit to access it.


We need to embark on a restorative justice system that will give our people an opportunity to restart their credit information. Guided by the objectives of the National Credit Act, we need to assist consumers impacted upon by the economic recession. It is our responsibility, as government and Parliament, to redress the failure of credit providers to consider the broader economic factors that have placed our people in the most difficult of economic situations.


In many instances, adverse economic information has been used by employers to determine whether to employ people or not. It is for this reason that we say that in order to fight unemployment and the systematic discrimination of our people because of their economic conditions, we need to remove adverse credit information, which has proved to be one of the barriers to the employment of young people throughout the country.


We need to ensure that our people are not made to endure overpriced goods and services because of the adverse information held by credit providers. Removing credit information will not only stimulate economic growth but will also broaden access to credit providers. The removal of all paid-up adverse information and paid-up judgments on an ongoing basis will benefit over 1 516 960 consumers. The removal of all adverse information and paid-up adverse information listings, irrespective of value and irrespective of nonpayment, will benefit over 1 605 763 consumers. This will ensure that these households are able to be active participants in the economy. They will be able to buy houses for their families. They will be able to borrow money to send their children to school. They will be able to borrow money to start small business initiatives, and thus be self-sufficient.


We are aware that there are those whose lives were privileged who may think that we are reckless and irresponsible. We want to say without a shred of doubt that in many countries, such as Brazil, these measures have not only changed the lives of the people, but also resulted in economic growth. We shall ensure that government unleashes all its resources to ensure that credit providers conduct more comprehensive affordability assessments in order not to create further indebtedness.


Hon Minister, we want to congratulate your department for championing the plight of our people. We want to reassure you that this initiative will not only change the lives of our people, but also those of their families and communities. I thank you. [Applause.]


Mr K A SINCLAIR: Hon Deputy Chairperson, this is and can be a very emotional debate if we really address the issue. The issue at stake is not about credit or amnesty, but about the type of society we are trying to build. We know the realities out there. We know the realities of our people who are so poor and marginalised, that they are desperate. In all reality, we must be careful of engaging in a debate which suggests that there will be a magic wand on debt that will address the ills of our society. That, certainly, can never be true.


I have always presented myself as a capitalist with a social conscience. [Interjections.] I am not a socialist with a capitalist conscience like some of the members who stood here previously, pretending and masquerading, as if they were speaking on behalf of the poor. The reality is that if we don’t address the poor in our country, we will create serious, serious challenges. Those challenges will lead to the establishment of parties like the Economic Freedom Fighters, which now pretends to speak on behalf of the poor. [Interjections.]


So, the ANC-led government and all of us as a matter of fact, have an obligation to answer this critical question: Are we prepared to build a solid and prosperous middle class? That is the question that we need to answer. In terms of the debate on how our collective path to building a credit-healthy society can be realised, the question is: How are we going to achieve that?


This debate has two elements. The first one deals with the aspect of credit. Now, the reality is that we live in a debt-ridden society, not just in South Africa, but worldwide. The reality of debt is that if you do not manage it, it manages you.


What I heard earlier from the previous hon member is that people will borrow money. The fact of the matter is that it’s not about borrowing money, but about paying back the money that you were lent. That is the critical issue. In terms of credit and its availability, many people in our society are so indebted that they are desperate and can’t move or survive.


As a party that was built on the principles of the Freedom Charter, Cope is very specific that it supports this. [Interjections.]That’s our position. In order to achieve that ...


Mr M H MOKGOBI: Hon Deputy Chairperson, on a point of order: Will the hon member take a question?


Mr K A SINCLAIR: Deputy Chairperson, I know that the hon member doesn’t get a lot of opportunity to speak in his caucus, but I am not going to give him one. [Laughter.]


With regard to amnesty, if we agree that it’s necessary to deal with this issue, Cope pleads for a structured approach and process. In terms of that, the first issue is the capacity of the courts to deal with the administrative process. The first question that I want to raise is: Do the courts have the capacity to deal with these processes, as you envisage? Is it there?


The second issue is on the role of banks and credit providers. As we speak now, the exposure of banks is almost R1,25 trillion. We certainly can’t tamper with the fact that if you don’t pay back your loan and you become credit impaired, you are a risk. No investor, not in South Africa, Zimbabwe or America, likes risks. It is necessary to address the issue on the roles of banks and credit providers.


Lastly, with regard to the role of the National Credit Regulator, we must ... [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Hon member, will you wrap up, because your time is over?


Mr K A SINCLAIR: Thank you very much, Chairperson, I know you like me. That is why I will finish now. [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): You are the wasting time.


Mr K A SINCLAIR: The issue about affordability and measures that need to be in place are of crucial, crucial importance in making sure that we create a society that we all want to live in, and one that is prosperous. I thank you.


Mr F ADAMS: Hon Chairperson, hon Minister, hon members, ladies and gentlemen, I want to quote from today’s Business Day: “Take pride in what we have achieved — and raise the bar.”


That already gives us a very good sign. It points out and marks what this ANC-led government has done, is busy doing, and will still continue doing until Thy Kingdom come. [Interjections.]


The hon Sinclair was saying that Cope was built on the principles of the Freedom Charter. However, Cope doesn’t have any principles. Their principles are crafted out by the court. They still don’t have any policies. How can an hon member come and stand at the podium and say that their principles were built on the Freedom Charter, when there are people like you, Deputy Chairperson, all the other veterans in the country, in this House and all around the globe, who fought for this democracy with blood, sweat and tears; who paid with their lives for this democracy; who built and wrote the Freedom Charter in blood; and who were shot at and beaten up while writing the founding principles of the Freedom Charter? Then, Cope wants to take a chance and say that they are standing on those principles!


No. With all due respect, I think the member must have his head read or he must go for political education. In the ANC, we can give him free political education. [Applause.] We can even provide him with copies of Umrabulo, and such documents. [Interjections.]


Mr K A SINCLAIR: Deputy Chair, I just want to ask the hon member if it is true that he was the first black organiser for the National Party. [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Well, hon Sinclair, it’s good that you decided to sit down before you were given an order. [Laughter.] Hon Adams, continue.


Mr F ADAMS: Thank you very much, Deputy Chair. The fact of the matter is that there is a saying that if you leave your mother and father’s house, you are going into the wilderness and the darkness, because you have left your parents’ house to go and seek greener pastures that are not there. Unfortunately, the hon Sinclair is bewildered. He is in the wilderness because he left the ANC, while we took a decision to join it; to be under its discipline; to become its disciples; and to preach its gospel. He wandered off. That is why he is in the wilderness, asking silly questions that are irrelevant to the topic we are debating today. Yes, I am a disciplined cadre of this ANC, hon Sinclair. I do not have other titles and things hanging around. I am under the discipline of the ANC. [Interjections.]


The hon Abrahams was quoting a lot of things here. I think she was very reluctant to tell the truth, deviating a lot from the truth regarding what happened in the committee. The committee started looking at this matter in 2012. The hon Abrahams was in the meetings. I am not sure whether it is because she saw the hon Watson in the gallery that she decided to take a different angle and role.


As a committee, we were briefed by the Banking Association of South Africa, the National Credit Regulator, lawyers’ associations, the Casino Association of South Africa, the SA Securities Lending Association, the Department of Trade and Industry and various other people. For the member to come here and say that we were not briefed is totally misleading the House. We even asked for a study of the credit amnesty. That was not done in October, as the hon member said here, but by February-March 2013. The DTI then considered the report internally at the end of March 2013.


What does the ANC want? Cabinet approved this on 4 September. I just want to refresh the hon member’s memory, because it seems to me that the DA has short-term memory or selective memory. That is why on the Cape Flats in the Western Cape, they are called the deurmekaar [confused] alliance, and somewhere in the Eastern Cape they are even called the dagga alliance, and other names.


The committee studied, and a study on access to credit by the poor in South Africa was conducted by Francis Nathan Okurut. The hon Abrahams, the hon Gunda and the hon Sinclair know that their constituency wants this. Their constituency wants this because this ANC-led government is a caring government. That is what it is. [Interjections.] Even the commissioner knows that. [Laughter.] In his constituency, in the rural areas and rural provinces, they want this. They need this. [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Alright, just hold on. Hon members, it’s going to be a very long day. Can we just concentrate on the debate? Thank you. Continue.


Mr F ADAMS: With regard to access to credit by the poor in South Africa, evidence from the household survey data shows that about 90% of households in South Africa had no access to any form of credit. It needs to be noted that in most instances, the majority of the people who accessed credit did so largely from the semiformal financial institutions. The most worrying factor was that the study showed that a large proportion of poor households have less access to credit.


In many instances, the poor were more likely to access informal credit, which is characterised by high interest rates, and this increases the cost of the credit. Despite several claims by some people that it is easy for South Africans to access credit, the lived reality of our people is that they are not able to access formal credit and are relegated to dealing with unscrupulous loan sharks and businesses that render their lives unbearable.


In fact, the study by Francis Nathan Okurut shows that the majority of the poor are forced into seeking semiformal credit because of adverse economic information on their names. The distribution of sampled households within each province by the different credit sources reflects the same trend as on a national level. Most households do not have access to credit, and the main source of credit was the semiformal financial sector. I hope the hon Abrahams is listening.


Mpumalanga had the highest proportion of households 94,3% – with no access to any form of credit. Access to bank credit was highest in the Western Cape. Households in the Eastern Cape and North West had the highest access to semiformal credit, whilst in Mpumalanga it was 21,2% of households. Informal credit was mainly accessed by households in the Eastern Cape and Mpumalanga.


Among the non-poor within each province, those located in the Western Cape have the highest likelihood of accessing formal credit. With regard to semiformal credit, the non-poor located in North West, 12,8%, and Mpumalanga, 25,5%, had a higher probability of access to formal credit compared to other provinces. However, the poor in the Eastern Cape, at 22,5%, and in Gauteng, at 7,6%, had a higher probability of informal credit access.


Black households had a higher likelihood of having no access to credit, compared to other races. In terms of gender, the study suggests that access to bank credit was higher among male-headed households compared to female-headed households. The main access to credit shows a racial, gender, class and geographic phase. Blacks, poor and women are largely affected by access to credit. It is no surprise that the hon Abrahams defends the policies of the DA, because the DA has no respect for gender policies.


As the ANC, we rise to welcome and support the initiative to remove adverse credit information to allow our people to make a new economic start. Contrary to what many of the privileged amongst us have said, the removal of adverse credit information will enable our people to be active participants in the economy. They will be able to access housing loans, and many of them will be able to start small business initiatives, and send their kids to school. It will ensure that our people are given an opportunity to break with the past and find other creative ways to support their families.


South Africa should note how the world is looking at us. This ANC-led government has come a long way. It has done a lot in 20 years. More still needs to be done, but we can thank the ANC-led government for guiding and leading the way. If we had had any other government, I don’t know what would have happened.


I want to thank the Minister, the chairperson of our committee, the hon Gamede, all the ANC comrades in the committee and in the House, and everybody that has worked hard, including the department under the guidance and leadership of Director-General Lionel October. Thank you for leading and paving the way so that the South African people can stand by the slogan and promises of the ANC - “A better life for all”. I thank you. [Interjections.] [Applause.]

Mr T E CHAANE: Deputy Chair, during the speech made by the hon Adams, an assertion was made that another hon member over there had deliberately misled the House. That was supported by the facts of what happened in the meeting. That has not been rebutted. I would like to know if it is parliamentary for an hon member to deliberately mislead the House. Thank you.


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Hon Chaane, when the respective member, Abrahams, took the stand, you never raised a point of order.


Mr T E CHAANE: Yes ...


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): As it is right now, there have been other people who have actually been involved in the debate. Are you expecting me to now rule retrospectively?


Mr T E CHAANE: No, no, Chair. The fact that she ... [Interjections.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Is it a statement, and not a point of order? If that is the case, I will accept it. Thank you.


The MINISTER OF TRADE AND INDUSTRY: Deputy Chairperson, I thank members of the Council for the overwhelming support they have given to this process. I will start by saying that the fundamental motive for this is that on the register of people who are credit impaired are poor, working people who have been pressured into credit transactions that they shouldn’t have got involved in in the first place.


There is also, as the hon Sinclair was talking about, the solid and prosperous middle class. There are people who are now in the middle class who were previously in those circumstances and have a record deriving from that period which is hard for them to shake off, as they are in a different situation. In short, we’ve got people who shouldn’t be on a list of people who are credit impaired. It’s not their fault. They shouldn’t be there.


At the same time, a list of people who are credit impaired is not providing a basis on which there can be an adequate countering of the tendency to prey on low-income people. This occurs through practices which, perhaps not in the strict legal sense of the term, but in the broader, generic sense of the term, are actually reckless lending. There is not an adequate basis to rely on this record as a means of determining whether or not a particular transaction should take place.


So, as I tried to describe it, we’ve got about 1,6 million people in this situation. Then, we have got practices where, if someone is not on the list, anything goes. People are not conducting proper affordability assessments. So, what we need to do is to address both of those factors. That’s what it is. Deal with the impairment of people that are on this register as credit impaired. Deal with it in a way which is responsible.


We are not saying to those people, and let me repeat, we are not saying that your debt is cancelled. You are still required to pay the debt. If you pay the debt, then we will have a regular process of getting you off the list more easily than we have up to now. That will be provided for in the new legislation. This will enable those people to have a fresh start, which affects not only their ability to get credit, but also to rent properties, get employment, and so on.


I think most of the contributors understood this. I think the DA is going to have to learn not to try to put up process red herrings to hide the real positions that they support. Last time around, it was that we hadn’t acted in good faith, we had disregarded all the submissions on the black economic empowerment, BEE, codes and we hadn’t conducted the regulatory impact assessment. I tried to show that all of those were nonsense.


This time around, it was that we didn’t provide the select committee with all the information from the actuarial study. What nonsense! What is fundamentally underlying this is that you are turning around to 1,6 million people who are credit impaired and saying you don’t care about their plight. It’s the same argument as you have put forward when you say that you don’t care if farm workers get paid R65,00 per day rather than R105,00 per day. [Interjections.] It’s the same argument that you put forward just now when you said you don’t support a broadening of BEE.


Come on, I think that the fig leaf is extremely flimsy. We can all see though it. We know where you stand and I think that you’ve shown your colours on this particular issue, as well. Thank you very much. [Applause.]


The DEPUTY CHAIRPERSON OF THE NCOP (Ms T C Memela): Thank you, Minister, for availing yourself of your time.


Debate concluded.




Mr F ADAMS: Hon Deputy Chairperson, the select committee was briefed by the Department of International Relations and Co-operation The Southern African Development Community, SADC, Protocol on Trade Services is envisioned in the 1996 SADC Treaty, articles 21 and 22, on areas of co-operation and in the SADC Trade Protocol, article 23 – Trade Services.


The overall objective is to promote regional integration in SADC by creating a single market for service trade. The protocol sets out the legal framework for trade in services, and required ratification by two-thirds of SADC members to be enforced. It is based on the World Trade Organisation, WTO, General Agreement on Trade in Services, GATS, which allows for preferential services trade agreements amongst members.


The objectives are to promote sustainable economic growth and development in the SADC region; enhance economic diversification and investment in the services economies of the region; liberalise intraregional trade in services on the basis of mutual benefit and eliminate substantially all discrimination in services trade between members; create a single market for trade in services; and preserve the right to regulate and introduce new regulations.


The Select Committee on Trade and International Relations, led by the hon D D Gamede, considered the request for approval by Parliament to ratify the SADC Protocol on Trade Services in terms of section 231(2) of the Constitution, Act 108 of 1996.We recommend that the Council, in terms of section 231(2) of the Constitution, approve the said Protocol. I thank you. [Applause.]


Debate concluded.


Question put: That the Report be adopted.

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


Report accordingly adopted in accordance with section 65 of the Constitution.




(Consideration of Bill and of Report thereon)


Ms M W MAKGATE: Deputy Chairperson, the Africa Institute of South Africa was established in 1960 as a nonprofit organisation. Its research output on policy matters affecting South Africa sympathised with apartheid in South Africa and provided advisory services to countries willing to associate with the apartheid government. The Africa Institute was used to secure support from other countries for the apartheid government.


Under the democratic dispensation, the Africa Institute of South Africa has been undergoing reconceptualisation. The focus is on turning the Africa Institute into an organisation whose competency in research on South Africa and evidence-based policy briefs can be used to inform South African policy on the African continent.


In 2004, through the Minister of Science and Technology, the Department of Science and Technology took over the responsibility for the administration of the Africa Institute of South Africa Act. An institutional review that took place in 2010 discovered a mismatch between the strategic role and functions of the Africa Institute in relation to the core mandate of the department.


Upon reviewing the structure and functions of the Africa Institute, the department identified that the institute had significant overlaps with the Human Sciences Research Council relating to mandates and operational activities. There was some consideration about a possible merger of the two bodies, but it was eventually deemed appropriate to incorporate the Africa Institute into the Human Sciences Research Council because the former is smaller.


The Africa Institute of South Africa Act Repeal Bill seeks to respond to the prevailing overlaps in an efficient manner. Furthermore, the Bill promotes alignment of the institute’s role and activities within the department’s broad mandate in line with the recommendations from the 2010 institutional review.


The draft Repeal Bill was introduced to Parliament on 15 March 2013. It provides for the disestablishment of the Africa Institute of South Africa and also gives powers to the Minister of Science and Technology to provide for the transfer of assets, liabilities, rights and obligations of the institution to the Human Sciences Research Council.


The draft Repeal Bill was approved by the Portfolio Committee on Science and Technology in June 2013. The Bill is a section 75 Bill and, in terms of the Constitution, does not affect provinces.


The Bill was presented to the Select Committee on Education and Recreation for approval. The select committee, having considered the Bill, recommends that the House approve the Africa Institute of South Africa Act Repeal Bill. I thank you. [Applause.]


Debate concluded.


Question put: That the Bill be agreed to.


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


Bill accordingly agreed to in accordance with section 75 of the Constitution.




(Consideration of Bill and of Report thereon)




(Consideration of Bill and of Report thereon)


Mr M P SIBANDE: Deputy Chairperson, the select committee considered and approved these Bills on 8 October 2013. We received the presentation on the Bills from the Department of Transport and took note of the corrective amendments that the Portfolio Committee on Transport had made.


The committee engaged with both the department and the Maritime Safety Authority. It also considered the implications of continuing with the old status quo relating to the provisions of the International Convention on Civil Liability for Oil Pollution Damage of 29 November 1969. It further interrogated the benefits to the country, the shipping industry, the economy and the environment at large if the two pieces of legislation were passed.


The passing of the two Bills will enact, in the case of the Merchant Shipping (Civil Liability Convention) Bill of 2013, the International Maritime Organisation Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage of 29 November 1969, into law. It is part of a comprehensive package of measures that are designed to ensure that our country can perform its obligations under the International Convention on Civil Liability for Oil Pollution Damage and the International Maritime Organisation Protocol of 1992 to amend the International Convention on the Establishment of an International Fund for the Compensation for Oil Pollution Damage of 1971.


In the case of the Merchant Shipping (International Oil Pollution Compensation Fund) Bill 2013, the passing of the Bill will enact the International Maritime Organisation Protocol of 1992 to amend the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971, into law. It is part of a comprehensive package of measures that are designed to ensure that our country can perform its obligations under the International Fund Convention for Compensation for Oil Pollution Damage and the International Maritime Organisation Protocol of 1992, to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969.


We should note that Parliament has already approved the two protocols referred to above, under section 231(2) of the Constitution of the Republic of South Africa of 1996. The Select Committee on Public Services is satisfied with the provisions of the two Bills and herewith reports that it has adopted the two Bills to give effect to its role as a committee of the National Council of Provinces so that the Council can further process its enactment. I thank you.


Debate concluded.


Question put: That the Merchant Shipping (International Oil Pollution Compensation Fund) Bill be adopted.


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


Report accordingly adopted in accordance with section 65 of the Constitution.


Question put: That the Merchant Shipping (Civil Liability Convention) Bill be adopted.


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


Report accordingly adopted in accordance with section 65 of the Constitution.




Mr M H MOKGOBI: Hon Chairperson, hon members, the Select Committee on Security and Constitutional Development, having considered the Annual Performance Plan, Strategic Plan and the Budget Vote of the Department of Correctional Services, reports as follows: That the department satisfied its constitutional obligation as well as its four legislative requirements, namely the Correctional Services Act, the Correctional Matters Amendment Act, the Criminal Procedure Act and the White Paper on Correctional Services.


The budget of the Department of Correctional Services will grow over time to R20 795,3 billion in 2015. The committee also looked into the implementation of the department’s five programmes. These programmes are: Programme 1, Administration; Programme 2, Incarceration; Programme 3, Rehabilitation; Programme 4, Care; and Programme 5, Social Reintegration.


Key issues were raised by the committee. The committee, after analysing and engaging with the department to address and to amend, has satisfied itself and therefore makes the following recommendations.


It recommends that the department fill all vacant posts; provide the committee with a copy of findings of the Ministerial Task Team within 90 days; apply the provisions of the travel policy fairly; report which matters it has legally defended; make available its human resource development strategy; roll out the tuberculosis, TB, screening equipment throughout the country; and train warders to be able to better handle the new situation in correctional services.


Therefore the committee recommends for approval. Thank you. [Applause.]


Debate concluded.


Question put: That the Report be adopted.


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


Report accordingly adopted in accordance with section 65 of the Constitution.




Mr M H MOKGOBI: Hon Chair, and once more, hon members, I submit the report by the Select Committee on Security and Constitutional Development on the domestic violence reports, as presented by the Civilian Secretariat for Police Service, dated 9 October 2013.


The introduction complies with section 1(6)(c) of the Civilian Secretariat for Police Service Act. The implementation challenges which were identified include, amongst others, issues of community service centres, issues of incident forms and issues of difficulties in the management of escapes.


The committee further looked into the recommendation by the Civilian Secretariat for Police Service and urged that the department should look into all those recommendations that were raised by the Secretariat. Amongst others is the flow chart, the issue of review, issues of an undesigned checklist that should be redesigned again, issues of noncompliance forms, and issues of recording of domestic violence instances – which is very important. Those SA Police Service members who perpetrate domestic violence also have to be looked at with a critical eye with a view to correction or, if needs be, to letting justice take its course.


After the Select Committee on Security considered all these, it recommends as follows. The Civilian Secretariat for Police Service should firstly, review the training content of the Domestic Violence Act in police training colleges and report back to the committee within three months; secondly determine the reasons for the nonimplementation of the Domestic Violence Act at station level and report back to the committee within three months; and lastly, provide a report to the committee within three months on the reasons for the high levels of withdrawals of Domestic Violence Act complaints by complainants.


We therefore recommended the committee’s report for adoption. [Applause.]


Debate concluded.


Question put: That the Report be adopted.


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


Report accordingly adopted in accordance with section 65 of the Constitution.




(Consideration of Bill and of Report thereon)




(Consideration of Bill and of Report thereon)


Ms M P THEMBA: Chairperson, hon members, the Select Committee on Labour and Public Enterprises, in keeping with our commitment and obligations to afford our people an opportunity to influence and shape the legislation that we pass, we invited interested people and stakeholders to submit written comments and make public submissions on the Basic Conditions of Employment Amendment Bill of 2012 and the Labour Relations Amendment Bill of 2012.


These are two very important Bills, even for us as members sitting in this House. I understand that some of us here are employers – we must listen very carefully. The committee considered these submissions which, in many ways, enriched our discussions and understanding of the two Bills and the challenges that are still facing many workers, especially those in temporary employment.


The Basic Conditions of Employment Amendment Bill proposes amendments that seek to assist trade unions which have historically struggled to secure representivity in certain sectors, due to the structure of the workplace in those sectors. It empowers the Minister to prescribe a threshold for union representivity within industries that are subject to sectoral determination. This will allow trade unions to automatically acquire organisational rights in all workplaces where covered by the sectoral determination upon achieving a prescribed threshold or representivity in that sector.


Whereas the Basic Conditions of Employment Amendment Act does not currently provide for minimum wages or minimum wage increases, the proposed amendments allow the Minister to make sectoral determination for any employee not already covered by existing sectoral determination. In terms of such general sectoral determination, the Minister may set minimum wages or minimum wage increases, which may therefore apply to all employees.


The amendments also aim to streamline the mechanisms used to enforce compliance with the Basic Conditions of Employment Amendment Act. The amendments aim to do away with the current mechanisms which provide that an employer may, inter alia, object to compliance orders issued by the Department of Labour and may appeal against compliance orders made by the Director-General of the Department of Labour. According to the Bill, any failure to comply with a compliance order would constitute contempt of court.


The amendments also remain committed to the Minister’s stated intention to further criminalise Basic Conditions of Employment Amendment Act contraventions. To this end, the Minister has proposed increasing the maximum terms of imprisonment to six years for specific contraventions. Maximum fines will also increase to between R300 and R1 500 for specific Basic Conditions of Employment Amendment Act contraventions.


Amendments were proposed to give the Minister of Labour powers to intervene to halt exploitation of vulnerable workers. This Bill seeks to give the Minister of Labour the power to be able not only to increase the minimum wages, but also effect increases on actual wages.


The Labour Relations Amendment Bill, which was passed in the National Assembly with an overwhelming majority after two years of intense engagement in Parliament, provides more protection to fixed-term employees. The proposed amendment to section 186(1)(b) of the Labour Relations Amendment Bill provides that failure by an employer to permanently retain an employee who was engaged under a fixed-term contract of employment and who reasonably expected to be permanently retained on the same or similar terms constitutes a dismissal.


In this regard, temporary employment services, also commonly known as labour broker, employees will be subject to a maximum period of three months, after which those employees will be deemed to be permanent employees of the labour broker’s client. [Interjections.] [Applause.] The amendment seeks to achieve a balance that considers the commercial sustainability of businesses while protecting the interests of workers.


The amended section 145(5) seeks to provide that a person who institutes a review application must arrange for the matter to be heard by the Labour Court within six months of commencing proceedings. However, the court has been given the power to condone a failure to comply with this provision on good cause shown. In terms of a new section 145(6), judges will be required to hand down judgment in review applications as soon as reasonably possible. This provision reiterates the need for the speedy resolution of review applications.

Given the renewed imperative to quickly dispose of matters, we expect that employers will take care in managing their own review applications. They will take all necessary steps to progress the matter to avoid censure for delays in the proceedings.


I move that the House adopts these two Bills. They are not only a sign of our decisiveness to protect vulnerable workers, but also ensure that we continue to build a nation that respects a strong culture of human rights, as espoused by our own Constitution. I thank you. [Applause.]


Debate concluded.


Question put: That the Basic Conditions of Employment Amendment Bill be agreed to.


Bill accordingly agreed to in accordance with section 75 of the Constitution.


Question put: That the Labour Relations Amendment Bill be agreed to.


Bill, subject to the proposed amendments, accordingly agreed to in accordance with section 75 of the Constitution.


The Council adjourned at 17:22.








National Assembly and National Council of Provinces


The Speaker and the Chairperson


1.       Bills passed by Houses – to be submitted to President for assent


  1. Bills passed by National Council of Provinces on 5 November 2013:


  1. Africa Institute of South Africa Act Repeal Bill [B 6B – 2013] (National Assembly – sec 75).


  1. Merchant Shipping (International Oil Pollution Compensation Fund) Bill [B 19B – 2013] (National Assembly – sec 75).


  1. Merchant Shipping (Civil Liability Convention) Bill [B 20B – 2013] (National Assembly – sec 75).


  1. Basic Conditions of Employment Amendment Bill [B 15B – 2012] (National Assembly – sec 75).

National Council of Provinces


The Chairperson


1.       Message from National Assembly to National Council of Provinces in respect of Bills passed by Assembly and transmitted to Council


  1. Bills passed by National Assembly and transmitted for concurrence on 5 November 2013:


  1. Division of Revenue Amendment Bill [B 38 – 2013] (National Assembly – sec 76(1)).


The Bill has been referred to the Select Committee on Appropriations of the National Council of Provinces.


  1. National Environmental Management: Integrated Coastal Management Amendment Bill [B 8B – 2013] (National Assembly – sec 76).


The Bill has been referred to the Select Committee on Land and Environmental Affairs of the National Council of Provinces.


  1. National Environmental Management: Air Quality Amendment Bill [B 27B – 2013] (National Assembly –sec 76).


The Bill has been referred to the Select Committee on Land and Environmental Affairs of the National Council of Provinces.


  1. Legal Metrology Bill [B 34B – 2013] (National Assembly – sec 76).


The Bill has been referred to the Select Committee on Trade and International Relations of the National Council of Provinces.




National Council of Provinces


1.       Report of the Select Committee on Finance on the Draft Supply Chain Regulations issued in terms of the Financial Management of Parliament Act, 2009 (Act No. 10 of 2009), dated 05 November 2013.


The Select Committee on Finance, having considered and examined the Draft Supply Chain Regulations issued in terms of the Financial Management of Parliament Act, 2009 (Act No. 10 of 2009), referred to it, and tabled in terms of section 65(6) of the Act, reports the Draft Supply Chain Regulations with amendments.


Report to be considered.