Forestry Charter Steering Committee: briefing

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
07 June 2006
FORESTRY CHARTER STEERING COMMITTEE: BRIEFING

Chairperson: Ms CC September (ANC)

Documents handed out:
Forestry Charter Steering Committee (FCSC) presentation: Part one, two, three & four
Forest sector Transformation Charter: Fourth Draft
DTI on Forest Sector Transformation Charter: Part one and two
DWAF: The Forest sector in South Africa: Part one, two, three, four and five

SUMMARY

The Committee was briefed by the Forestry Charter Steering Committee on broad-based black economic empowerment in the forestry industry. The Committee felt that the Steering Committee did not have proper mechanisms in place to make sure that the Charter benefits the poorest of the poor, and not the already empowered companies and individuals.

MINUTES

Forestry Charter Steering Committee (FCSC) presentation

Ms G Moloi (Steering Committee Chairperson) explained that the Steering Committee had established five sub-sector Working Groups: Growers, Forestry Contractors, Fibre, Sawmillers and Pole and Charcoal. The first task of the Steering Committee was to develop the Charter vision, identify key principles, determine sub-sector challenges and formulate recommendations.

Ms Moloi explained that according to the Sector Scorecard, forest enterprises that had a total annual turnover of less than R1.5 million were deemed to be “exempted micro enterprises” that qualified for Black Economic Empowerment (BEE) compliance exemption. However, enterprises with a total turnover of R1.5 million or more, but less than R50 million for the fibre sub-sector and R10 million for all the other forest sub-sectors were deemed to be qualifying small enterprises.

Discussion

Mr ZJ Kati (ANC) pointed out that since 1994 the ANC-led government had passed radical legislation to transform South Africa. However, he added that the ANC had political power but that did not translate into economic power, and so the economy was still in the same old hands, the capitalists.

Ms Moloi explained that the capitalist role in the economy needed to be contextualised in the greater macro-economy. She remarked that, rightly or wrongly, South Africans made a choice in 1994 to focus on the macro-economy and the big picture. She added that this choice had done well for the country.
 
Mr Kati emphasised the importance of the Transformation Charter. He added however that the transformation process was not quick enough. Having said that, Mr Kati made it clear to the Committee that their obligation was to make sure that the class, which had exploited South Africa for over three hundred years and the last 50 years, was stopped. He said the Committee could do this by making sure that the Transformation Charter was passed immediately and the implementation process speeded up.

Ms Moloi emphasised that the pressing issue was not to forget to focus on the poor. She explained that ten years after the advent of democracy South Africa had enough resources and experience to focus on and uplift poor communities. 

Ms JA Semple (DA) pointed out that the objective of the Charter was poverty alleviation and job creation. However, she added that, based on past experiences, the problem with Charters like this was that they tended to benefit the already wealthy and privileged. She asked what kind of mechanism the FCSC was putting in place to make sure that the benefits of the Charter were passed down to grassroots level people as opposed to the big, already BEE empowered companies.

Ms Moloi explained that what was needed was to look at issues in perspective. She pointed out that the people on the ground were not current with the transformation process and developments taking place in the country. She added that government was finding better ways of engaging with people on the ground to allow them to be part of the transformation process.

Ms Moloi made it clear that the reason that the top five companies invariably got top deals was because they were 100 percent informed all the time. She added that the majority of the people were not 100 percent informed all the time. She explained that the challenge that needed to be dealt with was how to increase government accessibility to the people. 

Ms Semple commented that there seemed to be a problem around the Fibre Working Group. She pointed out that in the scorecard targets included in the presentation every single item under the fibre scorecard working group had a question mark next to it. She asked the FCSC to explain to the Committee what the problem was.

Ms Moloi explained that the Fibre Group was a problem, had been a problem and was going to continue being a problem, mainly because it was a conservative sector. She explained that the Fibre Group supported BEE in words; however, what was needed was for them to support BEE in action. She added that what was needed for the Group was to come to the table and to accept the majority of what was being said. She pointed out that all the working groups were playing along, except one working group which was stalling the transformation process. That group was the Fibre Group.

Ms Semple pointed out that under the problems that were raised by the FCSC in their presentation, she noticed that there was no mention of the tender process. She emphasised that she was well aware that there was a huge concern around the tendering process. She asked the FCSC to explain how the tendering process was going to work.

Ms Moloi explained that the FCSC did not deal with the tendering process directly. She added that the Department of Water Affairs and Forestry’s (DWAF) task team was going to be looking at how the FCSC could approach the process.

Ms Semple remarked that at the end of the presentation Mr Qomoyi, the Director of Amatole Timber, had said that DWAF had “not come to the party”. She asked him what he had meant by that. 

Mr Qomoyi explained that the FCSC was dealing with rural areas where the “legacy of apartheid was vibrating”. He added that in the forestry industry some of the forests were located in the former homelands, the dumping grounds of the apartheid regime. Further, he pointed out that ten years on, the new government had not managed to improve the quality of education in those areas.

Mr Qomoyi explained that in the Eastern Cape, a lot of white families who owned sawmills had lost their contracts due to the decrease in timber. He pointed out these families had managed to set up an association which was misleading people by saying that white families had lost their contracts because of black empowerment. He explained that in reality the reason behind the decrease in timber were devastating fires which destroyed many of the DWAF and private plantations.

Mr Qomoyi explained that his point was that due to inferior education given to black people in the Eastern Cape and due to the legacy of the past, DWAF officials in the Eastern Cape had failed to counter the propaganda of the association formed by white families who had lost their contracts due to decreases in timber and not because of black empowerment.

Mr T Ramphele (ANC) enquired about workers’ participation in the BEE transactions.

The Chairperson asked if the FCSC had any plans to provide funding to people who did not have access to banks loans. She wondered if the FCSC was considering the option of forming cooperatives for such people.

Mr T Simelane (DWAF: Director) explained that in the Charter they had addressed all the issues related to poor people benefiting from BEE. He pointed out that they had broadened the definition of the term “designated groups” to include even cooperatives. He added that they gave bonus points to enterprises who strived to include all the designated groups in their business operations.

The Chairperson thanked the Forestry Charter Steering Committee for the presentation.

The meeting was adjourned.