Khula, Ntsika and Industrial Development Corporation: briefing

Meeting report

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
9 June 2004
KHULA, NTSIKA AND INDUSTRIAL DEVELOPMENT CORPORATION: BRIEFING

Chairperson: Ms N Ndalane (ANC)

Documents handed out:
Ntsika presentation
Khula Enterprises presentation
Industrial Development Corporation presentation part1
Industrial Development Corporation presentation part2

SUMMARY
The three agencies - Khula, Ntsika and the Industrial Development Corporation - briefed the Committee about the services they offer and their performance. Their service delivery came under scrutiny. What came out of the meeting was that a lot still needed to be done for the agencies to meet their mandate of service delivery.

MINUTES
The presenters were Mr Xola Sithole from Khula, Lefa Mallane from Ntsika and Lumkile Mondi from IDC. They each highlighted the history of their organisations and clarified their different roles in assisting emerging businesses.

Mr Sithole emphasised that Khula's mandate focused on three key issues; to promote access to finance, development impact and financial sustainability. The organisation's annual disbursement was R27 million per year since it was formed in 1997, but the problem was maximising access to finance. It was successful in job creation (100 000 direct jobs), black economic empowerment and moderately successful in rural development.

Mr Mallane said Ntsika, unlike its sister organisations, was running non-financial services. Its mandate was to train the employees of service providers. It was dealing with the needs of micro and macro enterprises. It has manufacturing advice centres.

Mr Mondi said the IDC had invested R60 billion since the 1960's. The investment target was R82 billion between 2000 and 2010. The organisation was disbursing loans from R1 million and above. He said the organisation had a critical role in economic development.

Discussion
Mr Z Kolweni (ANC) asked about Ntsika's strategies.

Ms Nosipho Ntwanambi (ANC) was interested in knowing how the organisations were marketed in the streets. She said she assumes that the institutions were dealing with less established businesses, noting that MPs wanted to help their constituencies. She wanted to know whether the organizations were represented in all provinces. Mr Sithole replied that Khula was marketed in various ways through media campaigns and they made about 120 presentations a year. At provincial level, the agency identified stakeholders and targeted specific groups. The institution had mentorship offices in all nine provinces helping to source money. Mr Mallane said Ntsika also did roadshows and presentations. Mr Mondi said he wrote articles and held talkshows to market the agency.

Mr K Sinclair (NNP) noted that the gap between the rich and the poor was widening. He said the members of the NCOP represented their provinces and each is looking out for the interests of their constituencies. He was happy to hear that the Northern Cape was on the list of the poor according to the IDC. But there was a predicament in rural areas where there were very few opportunities. He recommended that the IDC creates infrastructure to deal with such conditions.

Mr DD Gamede (ANC) noted that all the presenters from the institutions were men and that the agencies need to be gender sensitive. He wanted an explanation on how the institutions assisted people with disabilities. He also wanted to know more about job creation plans; success in rural areas and black economic empowerment fronting practices. Mr Sithole said Khula was committed to gender sensitivity. The new recruitment policy was to make sure that all demographic groups were represented. On the question of fronting, Mr Sithole said BEE was not just about ownership, but that operational involvement was critical.

Mr Mondi said the IDC complied with employment equity legislation. It is a national issue and the agency was addressing it. Mr Mallane said Ntsika identifies programmes for people with disabilities and that the agency had about R3 million to build capacity.

Ms S Cheng (DA) felt the agencies needed to be more aggressive in their strategies and wanted to know whether they had a database for targeted businesses.

Mr CJ van Rooyen (ANC) believed there are few organisations that were as financially sound as the IDC and that its current products had the ability to transform the "second economy". He noted that poor provinces like Limpopo lagged far behind and suggested that satellite offices be established in each province.

Mr Kolweni appealed to the agencies to furnish the Committee with a list of service providers and wanted to know what initiatives they took. He also asked about the problems they experienced in the provinces. He noted a history of failure in SMMEs and wanted to know whether there were "family schemes" in South Africa. Mr Mallane said Ntsika did company assessments to determine areas of support. Mr Sithole said that creating technical capacity for service providers and SMMEs was intended for long term purposes.

Mr Mondi said that technical support was outside the scope of the IDC. He noted that family businesses were successful in the country, especially among whites, but it was still to be successful in the black community.

The Chairperson noted that many people were blacklisted and wanted to know how the agencies were coping with this problem. Mr Sithole replied that his organization researched debt situations as the reasons for blacklisting were not always credible. Mr Mondi revealed that they had a pragmatic approach to blacklisting.

The meeting was adjourned.