Madam Speaker, it was the Minister of Finance who was disturbing me and I apologise for that. This is a fairly broad question for which there isn't a straight answer because the issues differ from agency to agency, and very often the issues that relate to resourcing matters are subject to ongoing review and are often issues that are difficult to assess according to the different circumstances of each institution.
But, in relation to the Small Enterprise Development Agency, Seda, it is important to mention that this is an organisation that has been involved in a twin process of amalgamation where we are bringing together various institutions to create one agency and at the same time it was involved in the process of rolling out new infrastructure to support small enterprise development at national, provincial and local levels.
I think that, following largely the conclusion of that process, we have a better sense of the new scale of resources that are required and where the gaps are. For the record, for this year the Small Enterprise Development Agency has had a scale of resources of R253 million. With a better sense of where the gaps are we have begun a conversation with the National Treasury around further needs for the organisation.
Secondly, in relation to Khula, more recently the work that it has been involved with has related to the expansion of its footprint, as well as the expansion of the scale of funding for small business support. This is something that has been done quite successfully by Khula and it is an ongoing task. To sustain and further scale up the resources there are issues of recapitalisation that arise in relation to Khula as the scale of resources can only be supported by the degree of capitalisation of the organisation. And again, in this regard, conversation has begun with the National Treasury to begin to explore those issues around possibly further capitalisation for the organisation.
Thirdly, the National Empowerment Fund has steadily grown in size, budget and operations over the last three years. This growth is envisaged to be sustained over the Medium-Term Expenditure Framework period. In the implementation and delivery upon its mandate the NEF has up until now each year nearly doubled its staff complement and the Department of Trade and Industry has supported these additional budget requests to allow the NEF to sustain this growth in resources and implement its operational mandate.
The NEF received transfers of R561 million from the department for 2006-07. The allocations for the MTEF period are R710 million, R470 million and R481 million, mostly for further capitalisation, and no additional funding requests are being made at this stage.
On the question about successful projects, there are few that we could cite, and these include projects funded through the NEF rural and community development programmes. One such project is a raspberry farm in the Amajuba District in KwaZulu-Natal funded in conjunction with the Industrial Development Corporation. The NEF funding portion for this project is R19,4 million.
A further transaction in support of local economic development is a community-owned dairy farm in the Middlesdrift area of the Eastern Cape, and R9 million has recently been approved for the project.
In an attempt to address the issue of local economic development, the DTI has launched the South African Micro Finance Apex Fund and the Local Enterprise Fund. To date, 707 business loans to marginalised groups have been made through the Apex Fund.
The Local Enterprise Fund was funded by the United Nations Office for Projects for three years in four of the nine provinces, namely Limpopo, the Eastern Cape, the Northern Cape and Mpumalanga. The aim was to provide financial and nonfinancial services to the four selected district municipalities in these provinces utilising the capacities of the provincial development corporations as channels for support and funding. The pilot ... [Time expired.]
Madam Speaker, I thank the hon Minister for the response. Minister, since you mentioned that these institutions are different, the question that arises is about co-ordination. What form of co-ordination exists between the department and local government with regard to these institutions so that it gives impetus to growth and development at local government?
The second question that I want to pose is: To what extent has the protocol meant to access the funds been made user-friendly to ordinary people at the local level?
Lastly, given the high rate of illiteracy and unemployment amongst our people, what administrative support does the department gives to strengthen drafts of business plans that are focused on the second economy? Thank you.
I think the issue of co-ordination is an important one and it happens at various levels. At one level within the broad DTI family we do have a co-ordination forum, which is the Council of Trade and Industry Institutions, where as the department we meet formally with all of the agencies that fall under the department. Within that forum we do have a subforum of the Development Finance Institution and second economy and small business support agencies, who would then deal with issues that are germane to the kind of work that they are doing.
But there is a second level where co-ordination happens, and in that regard we have started to strengthen our co-operation with the provinces through Minmec and, more specifically, we have developed a three-year work programme among the DTI economic affairs fraternity where there are very specific programmes that we have prioritised. Some relate to industrial development and some relate to small business development - that is the other level at which this co-ordination is happening.
The more challenging issue for us, of course, is the issue of co-ordination with local government because of its diverse nature, but we are working in that area as well because one of the challenges that faces us today as the Department of Trade and Industry is how we register a presence on issues of local economic development. That is work that is in its early stages of development but it is work that is being attended to.
I think the issue of user-friendliness, of products and services, is something that is attended to on an ongoing basis. With Khula, for example, they do not just facilitate finance, they also provide pre-loan and post- loan support to small enterprises. Also, one of the products provided by the Small Enterprise Development Agency is precisely aimed at assisting small businesses to develop their business plans. That is the work that is ongoing. Thanks.
Minister, up to half of all working South Africans are employed by small businesses and they are responsible for up to 80% of formal jobs created in recent years. Yet, in spite of government's good intentions, policies and programmes, small businesses struggle under the dead weight of government bureaucracy and red tape. For example, Khula pleads for an expanded mandate regarding loan facilities and Seda is supposed to provide major support. Now, Seda offices are by and large dysfunctional and not fully rolled out yet.
Last week we learnt of another debacle in your department when a forensic investigation on Seda reported that a lot of money went on irregular expenditure.
Mr Minister, there are too many institutions and duplications. The question is: Why do you not institute an effective, simplified one- stop operation for small business support coupled with swift, strict action against miscreants? Thank you.
Madam Speaker, perhaps it is important to say that our objective is to make sure that the contribution of small business to growth and employment creation rises beyond the level where it is at the moment. All our efforts are geared to ensure that we can create the right institutional infrastructure and provide the right services, but also create the right climate for small businesses to succeed because it is one thing to intervene on the supply side by providing various forms of nonfinancial and financial support, but it is quite another to create an environment within which there is enough demand for the goods and services that are provided by small businesses.
That is why we've had to also identify things that we need to do on the demand side to make sure that there is that environment for consumption of the goods and services that are produced or supplied by small businesses. This is the context within which we've got to examine the various things that are being done.
The identification of the need for government to set aside certain products to be bought from small businesses is one such measure, but also the work that we have done through the codes of good practice on black economic empowerment creates further room for greater demand for the services of small businesses.
Secondly, let me say that at the moment small business is growing in South Africa at a faster rate than the Gross Domestic Product, and I think that is a good sign, and it will always be an ongoing challenge getting the institutional mix right and getting the services right for small business. It is not a task that you tackle and finish. It is an ongoing responsibility. We worked very closely with the Indian government and institutions. They have been doing this for decades and it is an ongoing challenge all of the time to improve and perfect the institutions and the services that you provide to small businesses. So, we just have to keep doing it all of the time for a very long period of time.
Democratic South Africa is only 13 years old. So, I think that we should not despair; we should just keep up the work that we are doing and keep on carrying out the refinements that are necessary in order to support small businesses.
With regard to the issue around the forensic audit that has been done at the Small Enterprise Development Agency, well, for us it is not a new issue; we instituted that forensic audit. It may have come to light for yourself, hon member, just recently, but the issues emanating from that forensic audit are being handled between the department and the board of the Small Enterprise Development Agency.
I am satisfied that we moved in terms of identifying what went wrong and moved also to strengthen the systems of the organisation because, as I said earlier on, this is an organisation created out of various agencies that we amalgamated. We had to look at the issues around strengthening the systems of those organisations. Thanks.
You say that the resources are different from agency to agency. I agree with you 100%. But, do you know how many resources of those agencies there are? Instead of asking you let me tell you something that I believe, which is that no matter which agency we are talking about, they must have human resources, knowledge, skills, financial and marketing resources and, most importantly the quick response of raw material resources.
Minister, can you tell me how you are going to address the killer of our economy at the moment, which is the quick response to the raw material resource? Thank you.
Is this still a question that is related to small business and the agencies? Okay. [Laughter.] I think that the issues around raw materials, generally speaking, are issues that affect the entire economy.
If we look, for instance, today at the levels of demand that we are experiencing for such things as steel and cement, it is an issue that is generally facing the economy and I think that to an extent those small businesses would face a crunch in terms of accessing those kinds of raw inputs. I am not sure, hon member, that I am quite clear about your question but I would imagine that those would also impact on your smaller enterprises.
If we look, for instance, at the issue of steel in the country at the moment, we've been quite vocal and consistent in raising the issues of access to steel in terms of pricing. Our interest in raising this issue is because we would like to promote downstream fabrication and manufacturing, and access to steel becomes quite a critical issue and so it is also with a view to those smaller scale manufacturers that we have particular concerns around such issues as the pricing of steel.
But, I am really making an attempt to answer a question which I am not so sure I fully understand. [Laughter.]
Launch of Motor Industry Development Programme
331. Dr P J Rabie (DA) asked the Minister of Trade and Industry:
On what date will the new Motor Industry Development Programme (MIDP) be launched which will take the South African motor industry past 2012? NO2113E
Madam Speaker, the Motor Industry Development Programme Review Report that we received from the consultant had, as one of its recommendations, the introduction of a new programme and an improved programme. The development of a new programme is a long and detailed process, especially if one considers that it took about three years to design the current Motor Industry Development Programme.
Part of the work is to ensure that whatever programme is designed is both simple to administer whilst robust in controls to limit the risk of abuse. The programme also needs to be aligned to government's goals and vision. The new scheme also has to be flexible to the extent that it allows for periodic reviews and amendments.
Finally, the new scheme needs to be designed so as not to be unduly costly to the country as there are competing needs for the available limited resources. In the next few months, work aimed at designing this new Motor Industry Development Programme will be led by Prof Anthony Black, who has been appointed by the Department of Trade and Industry to fast-track this process. He will be working with an interdepartmental team of the Department of Trade and Industry and National Treasury, including agencies such as the International Trade Administration Commission, as well as the SA Revenue Service. An update on the finalisation of the MIDP will be made available within the next six months. The new programme will be launched in due course. Thanks, hon Speaker.
Thank you, Madam Speaker and thank you, hon Minister, for your answer. The MIDP has been very much of a success, but according to reports in a number of financial magazines and so forth, the motor industry in South Africa is extremely perturbed about the delay in the finalisation of this motor programme. Is it possible to furnish the House with other reasons why there has been such a delay because our manufacturers compete with emerging countries like Russia, India, China and so forth and thousands of jobs are at stake? Their request is that this programme be speeded up so that they can negotiate contracts with their overseas counterparts. Thank you, Madam Speaker.
Madam Speaker, the critical issue here is that when we received the report as the Department of Trade and Industry, or upon receipt of the report by the consultant, it became quite evident to us that there is still further work that needs to be done in order to fully respond to the issues around coming up with a scheme that is in line with our international obligations; coming up with a scheme that will respond to the new objectives that we have set for the motor industry. It is this work that we have set out to undertake and achieve over the next period.
There is really no other reason, except the fact that we've had to undertake further work that will ensure that we can respond to the critical issues. We need a scheme that is World Trade Organisation compliant because it is not quite comfortable as a country to always be facing a risk of being challenged at the World Trade Organisation, as happened with the leather aspect of the Motor Industry Development Programme. So, we've had to pay very close attention to that issue of a scheme that will be confident, that we can implement without fear of being taken to the WTO.
I think the report enabled us to immediately achieve the necessary alignment of all the different instruments that are part of the MIDP to achieve harmonisation between now and the end of the life of the MIDP as it currently stands, whilst the work around a new scheme needs a little bit more time.
Let me say that last week we had a very good meeting with all of the CEOs of the original equipment manufacturers. It was a very good meeting that enabled us to identify the critical issues, to talk about the timelines and to look at the things that would enable them as the local operators to give confidence to their capitals around the work that is being undertaken in South Africa. We will be issuing a joint statement arising out of that meeting. I think the atmosphere and the environment between the department and the CEOs of the automotive companies are healthy.
Thank you, Minister. The IFP suggests that the MIDP be extended to 2020 with the condition that the car industry must be encouraged to gradually increase the use of South-African-made cars and components to over 85% by the year 2020. It is the only way to ensure that the motor industry is sustainable and competitive.
In 2005, the Minister of Finance, in response to arising questions, stated that Import Rebate Credit Certificates, IRCCs, were issued to the motor industry in 2003 to the value of more than R23 billion and more than R22 billion in 2004. Based on this, we estimate that IRCCs amounting to at least R100 million were issued to the motor industry for the period 2000- 06.
My question to you, Minister is: Have you ever started to see during these periods how many components in the factories were established from 2007 to 2012? I want to pose the same question to you. How many companies and factories will be built between 2012 and 2020? How many companies is the manufacturer going to establish?
Minister, do you agree with that?
Some motor manufacturers import the cars from their mother companies, which are in other countries. And it is easy for them to sweep the profits back to the countries they come from. It doesn't benefit our country. The prices in our countries were benefited. We are the highest in the car market at the moment. Thank you.
Indeed, a large quantum of resources has gone into supporting the motor industry through the Motor Industry Development Programme. That is why to us it continues to be an important issue to pay attention to, and it is important to recognise that the support we make available to the motor industry is support in the context of a lot of competing interests. We therefore have to continue to be concerned around ensuring that we get the maximum benefit for the country from the resources that we plough into any particular industry, for that matter. We will continue to be seized with the question of ensuring that we don't make more resources available to any particular industry than is necessary or sustainable.
Secondly, I think around the issues of components manufacturing there has been some growth in components manufacturing. Some of the automotive companies actually export components to other facilities from South Africa, but in terms of the industrial policy action plan that we have prioritised amongst four sectors, including the automotive sector, one of the key objectives that we are setting for the period up to 2020 for the automotive industry is to deepen local content and to increase components manufacturing in South Africa.
It becomes important as we move to expand components manufacturing to also expand the volume of production, because in order to sustain the components manufacturing you need increased volumes of production. That's how you actually ensure that you can grow your local components manufacturing. This is one of the key objectives in terms of the industrial policy action plan. [Time expired.]
Thank you, Madam Deputy Speaker and thank you, hon Minister. The ANC welcomes the initiative. Would the hon Minister share with the House the level of employment that will be generated by this MIDP?
Thank you, hon member. In terms of current employment levels, in automotive assembly we have 35 000 people employed and in components manufacturing we have 70 000 people employed. In the service industry of the automotive sector we have 100 000 people employed.
While I cannot give you figures of the sorts of employment levels that we would expect to attain, let's say over the period for which we intend to double the volume of production, I think from the current employment trends it should be expected that we would be able to generate a lot more employment across the entirety of the value chain in automotive assembly and in components manufacturing, especially where we are growing the manufacture of components locally, as well as in the service industry because the size of the sector will actually be expanding.
Progress made to stop the eviction and violation of farmworkers
324. Mr D M Dlali (ANC) asked the Minister for Agriculture and Land Affairs:
What progress has been made to stop (a) the eviction of farmworkers by white farmers in particular since a nongovernmental organisation's report on the matter on which the media reported and (b)(i) the human rights violations and (ii) beating of farmworkers by white farmers in northern KwaZulu-Natal (details furnished)?