Posted: May 18, 2021
Deputy Minister Majola.
Fellow South Africans.
One of the outstanding and renown motivational speaker specializing on the coping mechanisms for grieving mothers who have lost kids, Megan Hillukka, once said:
“It is understood that the beauty of a rainbow does not negate the ravages of any storm. When a rainbow appears, it does not mean the storm never happened or that we are not still dealing with its aftermath. It means that something beautiful and full of light has appeared in the midst of the darkness and clouds. Storm clouds may still hover, but the rainbow provides a counterbalance of colour, energy and hope”.
Chairperson, It has gone to pass that 2020 as a year, represented the worst to human kind. The massive losses of life through pandemic and the economy almost grinding to a halt, was the worst experience that the World had to navigate. We are still grappling with the reality that many companies and even more worse, the SMMEs, which were the hardest hit by the hard lockdown are facing liquidity challenges, if not at the edge of insolvency. The global headwinds associated with the disruptions of supply chains plunged our economy into an off-balance, but its overall resilience from total collapse represent a glimmer of hope as we chart a path forward in fixing it within the context of the Economic Reconstruction and Recovery Plan (ERRP). The ERRP, as Megan Hillukka would have said, does not negate the ravages of any storm (the Covid ravages). The appearance of a rainbow does not mean that the storm is over – and that we are not dealing with its aftermath – it simply means something beautiful and full of light has appeared in the mist of the darkness and clouds.
Honorable members, we are here today to commit that we are geared towards coordination of a reset button for our economy to claw it back to a sustainable pedestal. We commit ourselves that re-industrialisation, protecting of vulnerable sectors against the global vicissitudes, whilst locating Localization at the core of our policy objectives, will inform our forward-looking approach. We invite the nation into navigating with us this minefield, and travel with us in this path as we seek to reconstruct and make substantive recovery measures for what has been lost as a result of Covid-19 throughout the economy.
Small Medium Enterprises, which represents the largest employer, experienced devastating the effects of COVID-19. For those SMMEs that are100% black owned, the picture is even more worse because of their fragility. The strategic implication of this is the fact that there is going to be a reversal of the strides that we have covered over the last 20 years, as government, in our deliberate efforts made in building the black owned companies. Post-Covid, black owned companies will be in a difficult conundrum because they have fragile balance sheet with no collateral to assist them in accessing credit even in times where government had cut the base for lending rate. There is also a real danger that because of liquidity challenges, more and more of the BBBEE Level 1 companies may face closures and be forced to sell either their large percentage shareholding to non-black companies thereby lose their BBBEE 100% ownership to avoid insolvency. We are concerned about this reality because it represents a fundamental reversal of the very foundations and the objectives of the BBBEE and transformation policy instrument in our economy.
The B-BBEE Commission last year released a report on the state of women progress in ownership in enterprises referred to as the National Status Report on B-BBEE (National Trends). It is with absurdity that in terms of the Report, management control and ownership scorecard for women are still far below the acceptable levels in terms of companies’ agenda for inclusion. Majority of women still don’t sit in company boards where decisions and votes are made yet having shares, this is evident even where they have 50% shareholding or above. We must make it our campaign as leaders both in government and private sector to discourage women from accepting “silent control” in companies without decision-making.
We must fight against corporate patriarchy where women are bullied into inactive silent partners, only good enough for receiving dividends without board participation. These areas of concern have been and continues to be a battlecry for many women in the corporate environment, let’s intensify a campaign to address this anomaly. This state of affairs perpetuate the distorted nature of economic ownership in South Africa, in terms of demographics as women remains majority, especially African women. We must make a call “there must be nothing without us”
President Ramaphosa directed us through his announcement of a new approach on industrial policy – which is the reimagined industrial policy plan. This policy plan is anchored on sector specific growth approach with clear measurable targets. It is within this context that we must understand the dtic leadership, working with sectoral industries, in establishing sectoral Masterplans. Industry’s commitment to the imperatives of the Masterplans is critical for us as it is an important element for our approach to Localization. At the back of the COVID-19 pandemic, we continued the work with sectoral stakeholders around negotiating and finalizing some Masterplans.
Chairperson, The Sugar Master Plan was formally signed off by all stakeholders on the 16th of November 2020. An achievement of 15% growth in local sales, addicting 188,233 tons compared to 150 000 tons; 22% increase in direct market procurement of local sugar, including retailers and in wholesales; 7% increase in soft drink manufacturer procurement of local sugar.
But in the overall, the annual sugar production in South Africa has declined by nearly 25%, from 2.75 million to 2.1 million tons per annum over the past 20 years. The number of sugarcane farmers has declined by 60% during this period, and sugar industry related jobs are estimated to have reduced by 45%. Two sugar mills which are Illovo and Hullet are facing extreme difficulty. These are bad news for the sector given the stated ambitious goals as contained in the Master Plan. Factors that have driven this decline has been:
- Distorted global prices, that are below South Africa’s cost of production
- Increasing volumes of low-priced tariff-free exports from eSwatini into the SACU market.
- The Health Promotion Levy (or HPL), and the Covid-19 impacts
As part of the Master Plan, R 1 billion was set aside by the industry for purposes of transforming the sector with regards to the BBBEE as a critical element of inclusivity. Progress is being made in this area as SASA is now implementing it, with R400m already been spent for over a 2 year period.
Chairperson, for about two decades now, the furniture industry has been under severe strain as a result of the impact of deregulation and opening up of our economy to global competition. Our furniture industry submerged to the heavy-handed competition against imported furniture, often cheaper than ours, coming from China, Vietnam, Italy and from other markets. The net effect of this has been the near collapse of the local industry with massive jobs losses.
As a response to this reality, we have just concluded the work around Furniture Masterplan, after extensive consultative process in 2019/2020 with the entirety of the industry. The minister and the industry signing it off in March 2021. We are working on establishing various work streams per each pillar of the Masterplan. We want to rebuild the industry as part of re-industrialisation, transformation and catching up with new technologies used in the sector. With AfCFTA, South Africa stands a chance of growing the sector through Continental exports.
We are noting the positive progress in the Clothing, Textile, Leather and Footwear in line with sector CTLF Masterplan. The industry is responding well in committing to the targets as outlined in the Masterplan. The industry has committed to the skills development, the Department is engaging with the TVET College on working out the curriculum development. One of the concerns that we have as government in the industry is the lack of transformation, black Africans are finding it difficult to break the glass ceiling. One of the good component about the Masterplan is the transformation imperatives which forces the industry to be inclusive of the previously disadvantaged people.
Honorable chairperson, we want to make a call that South Africans must buy local as part of building local industries and protect our jobs. Before buying any items, let’s consciously check if these are locally produced.
Special Economic Zones and Industrial Parks.
We have seen the rapid growth of the Special Economic Zones (SEZs) such as Coega, Dube TradePort, East London, Tshwane Automotive sector which demonstrates the significant role played SEZs Programme in the country. We continue to be optimistic about the different investor pipelines committed to each SEZs before COVID-19 economic knocks globally. Our survey points out to the reality that investors’ appetite still remain to the Zones. As part of the Economic Reconstruction and Recovery Plan (ERRP), SEZs will be an important element of reigniting manufacturing led industrialization in an accelerated manner. We have embarked on a new SEZ approach that draws in all spheres of government to a partnership in the planning, development and management of Zones.
Whilst many of the SEZs are well effectively standing on their own feet, with strong governance and solid management, we are paying attention to few designated SEZs which must be developed in order to begin attract more investors. It’s satisfying that even before these SEZs are operational, already there are investors waiting to settle, out of interests. We are working on finalizing the business case of Bojanala SEZ in North West along the platinum belt. We are building management capacity for Maluti-A-Phofung SEZ in Free State, addressing governance issues and building of its infrastructure through Development Bank of Southern Africa. We are finalizing the Namakwa SEZ application in Northern Cape. We are held back by the conclusion of environmental impact assessment (EIA).
We are addressing the policy issues with regards to the scheduling of SEZ companies registration as it relates to inhibitions posed by PFMA against the provisions of the SEZ policy. This problem is affecting in particular the Western Cape Atlantis SEZ as it cannot be scheduled appropriately to do its work as a government agency.
We continue with our programme of revitalization of the industrial parks across the country. By reviving industrial parks, our intervention is promote decentralization of industrialization to the less economic activity laden areas such as townships and semi-rural areas. The revitalization programme is meant to improve industrial infrastructure which has aged because of investors exits in the last few decades. Working with provincial governments, we are attracting investors again to settle in these parks and create jobs. To date, R770 million has been approved through the dtic’s critical infrastructure programme (CIP) fund for revitalization of industrial parks in 7 provinces.
Part of the revitalization is building of Digital Hubs within the parks so as to create central points for technology, promotes innovation and facilitating the creative businesses around these regions. We have completed the revitalization project in Botshabelo Industrial Park which will be opened soon in Free State. We anticipate completion within this financial year work around Mandeni in KwaZulu Natal.
Consumer Protection Work
We are paying attention to the work of protecting consumers especially during this time of the pandemic. More reported consumer’s exploitations have necessitated our focus through the Consumer Commission. In the mist of COVID-19, the National Consumer Commission has stepped up its work against retailers who have escalated the prices of COVID-19 immune system essentials like Garlic, Lemon and Ginger. Curbing of price gouging which began with inflation of prices for sanitizers, masks and other essentials.
Another important area has been the work around the mushrooming of pyramid schemes. The National Lockdown resulted in hundreds of South Africans losing their income or some receiving less than what they normally received. While the country was grappling with the effects of Covid-19 and the National Lockdown, most South Africans took a lot of financial knock and food security was threatened. Unscrupulous people used the Covid-19 disaster to their advantage and preyed on desperate and unsuspecting victims. The Consumer commission has successfully investigated and shut most of them down, working with other organizations such as Financial Service Board (FSB).
Work around the imports, looking at labelling requirements by the Commission. In promoting compliance with the Country of Origin Labelling (COOL), we have increased our work on inspections as an enforcement tool to check the levels of compliance and non-compliance. SARS has reported the high levels of non-compliance with the Country of Origins Labelling especially with regards to the clothing, textiles, shoes and leather categories working with SARS. A lot of arrests have made between in Durban and Cape Town Ports.
District Development Model.
The President in 2019 introduced a concept of District and Model (DDM) as a new mechanism to effect intergovernmental relations, and eliminate silo mentality from different spheres of government. For us in the dtic DDM has enabled us to find creative ways of appreciating important mission for bringing economic development at a district level, coordinating provincial government, and district municipalities. In my capacity as a champion of Namakwa District in Northern Cape, since last year, we have had fruitful engagements which has resulted in setting up political and technical team. the product of those committees has produced a long range Nine-Point Plan for Namakwa District, with much focus on catalytic infrastructure. A single plan of development is made on the basis of achieving “One district, One plan and One budget”.
We are on a path to reconstruct our economy. We might have taken a knock but our economy has proven to be resilient, and this becomes an important aspect to build on. The setback notwithstanding, our head as a country has remained above the parapet. We are calling for the private sector to join hands with government and cooperate in reigniting our economy back. South Africa is country of enormous resistance and we are confident that we will weather the storm. I will like to take this opportunity to thank minister Patel for his political leadership and guidance, and also extend appreciation to Deputy Minister Majola. But I want to pay a special tribute to our out gone Director General, Mr Lionel October, who had led this Department as an Accounting officer since 2011. He has steered the ship very well. The DTIC is a solid tight ship that at the centre of trade and industry’ policies with him playing the no small part.
Together we will overcome!