25 July 2019

QUESTION: On how government intends to grow township economy as a vehicle for economic growth that is more inclusive and creates job opportunities

REPLY BY DEPUTY PRESIDENT MABUZA:

Honourable Speaker, we meet in this 6th democratic Parliament of the people to once again reaffirm the centrality of this Legislative House of our elected representatives in ensuring that accountability of the Executive is upheld at all times.

As this is the first Oral Reply by the Leader of Government Business during this term of the 6th Parliament, we wish to emphasize the importance of using this platform to foster the unity of our people, social cohesion across all sectors of our society and the elevation of public participation in all government structures and processes. 

All of us here are duty-bound to make this Assembly a critical instrument in bridging the social distance between the people and ourselves as public representatives.

In response to the question at hand, let us remind ourselves that the primary objective of our delegated responsibility of assisting the President in this important work of revitalising the rural and township economies, is to ensure that we transform townships and villages from labour and consumption reserves into thriving productive investment hubs. 

This is in realisation that some of the key challenges in the township and rural economies that are faced by our SMMEs in particular and entrepreneurs in general, include among others, lack of economic infrastructure, poor access to markets, restricted trading spaces, logistical constraints and uneven provision of municipal services. 

This is further compounded by a lack of proper regulation and enforcement of by-laws around where people establish and operate their businesses, leading to confrontations between local communities and foreign nationals.  

The biggest challenge we face in our Rural and Township economies, is the poor enforcement of the by-laws governing our economic activities. In particular, this failure at the local level tends to lead to unnecessary tensions in communities over economic opportunities, more so with foreign nationals.  

As a matter of priority, we need to strengthen our institutional capacity to enforce applicable laws and regulations to enhance the ease of doing business, prevent anti-competitive behaviour, and minimise conflict in township and rural economic spaces.

Revitalising the rural and township economies requires focus on the twin objectives of investing in economic infrastructure and enterprise development, on one hand, and consistent application of, and adherence to, the regulations as provided for in our laws on the other hand.

Our government’s interventions in this regard are focused on these two areas in order to build a platform wherein future resources can be applied to increase impact. Our government, through the Department of Trade and Industry, introduced the Industrial Parks Revitalisation Programme in order to facilitate broad-based economic participation to achieve inclusive growth, as well as facilitating the transformation of the economy. 

The purpose of this programme is to revitalise South Africa’s state owned industrial parks and enable them to serve as catalysts for broader economic and industrial development, with a specific focus on townships and rural areas. 

This revitalisation programme seeks to modernise the industrial parks infrastructure with the main objective of accelerating economic development by attracting investments into those areas. The programme also seeks to support job creation in manufacturing and related sectors so as to address underdevelopment and unemployment challenges that lead to out-migration into already congested major cities.

To date government has already revitalized 10 industrial parks in the first phase of its programme with the next phase targeting an additional 5 industrial parks as part of its overall revitalisation strategy wherein the investment of R300 million over the last 3 years has been made.

For example, the Botshabelo, Seshego, Komani, Isithebe, Vulindlela, and Babelegi Industrial Parks have provided industrial space to over 670 enterprises which in turn provide direct employment to over 41,000 people primarily from each Industrial Park’s surrounding Townships. 

In the next four months, government will launch the Township Entrepreneurship Fund which will assist township entrepreneurs to either scale up existing projects or provide start-up capital for new projects.

In addition to these measures, government will also support township and rural economies through: 

• Implementing a special dispensation or set asides in the awarding of medium- and long-term contracts to small businesses, co-operatives and township and village enterprises to allow for a period for incubation and other support to help reduce failure rates;
• Increasing support measures for co-operative enterprises by implementing critical elements of the newly amended Co-operatives Act, including operationalising the co-operative development agency and the training academy; and
• Addressing the dominance of big retail chain stores in townships.

These interventions are designed to deliver substantial socio-economic impact in a financially sustainable manner. They also represent the first phase to initiatives that will leverage government procurement and corporate supply chain development programmes.

If successfully implemented, these initiatives will promote job creation and reduce the failure rate of SMMEs. 

I thank you.

QUESTION: On government’s  rapid response interventions in addressing the challenges in municipalities designated as service delivery hotspots by the Auditor-General.

Reply by Deputy President Mabuza:

Honourable Speaker, 

The Department of Cooperative Governance and Traditional Affairs has reported that following the findings of the Auditor-General in the Consolidated General Report on the Local Government Audit Outcomes for the 2017-18 financial year, the Auditor-General identified 48 municipalities that require special intervention. 

In this regard, the Department of Cooperative Governance and Traditional Affairs will continue to implement support measures to improve leadership and governance in municipalities, including specific focus on financial sustainability.

Among other key areas, support is provided to ensure that action plans are implemented to reverse the negative audit outcomes. In collaboration with National Treasury and SALGA, CoGTA is providing targeted support to improve revenue collection, budgeting, accounts reconciliation, debt management, and the implementation of financial recovery plans.  

Additionally, CoGTA is supporting municipalities through (i) post audit action plans, (ii) capacity building, and (iii) strengthening financial and performance management systems. These are complemented by the already deployed District Technical Support Teams. 

Through the Municipal Infrastructure Support Agency, struggling municipalities are supported to accelerate the implementation of infrastructure projects that address the delivery of basic services such as water and sanitation. This support also includes procurement, contract management, project management, infrastructure maintenance, and the overall institutional capacity to roll out key developmental infrastructure.

To strengthen government’s support to local government, the President has appointed an Inter-Ministerial Committee on Service Delivery at District Level to coordinate the work of government on the delivery of services in a manner that responds promptly to community concerns.

In the main, this Committee will work with CoGTA and key service delivery departments to respond in an integrated and coordinated fashion to challenges raised by communities. Where appropriate, it will also enlist and mobilise partnerships with the private sector to complement government’s resources in responding to urgent development and service delivery challenges.

Honourable Members,

We are cognisant that at its briefing to the NCOP Select Committee on Cooperative Governance and Traditional Affairs on 16 July 2019, the Department indicated that within the next month it will brief Parliament on a comprehensive five-year strategic framework. 

This will succinctly outline interventions aimed at changing the face of local municipalities. 

We anticipate that Parliament will engage the Department’s strategic framework when it is tabled so that together we can ensure the speedy implementation of interventions that will improve the quality of service delivery to all our people.

I thank you.

QUESTION:  As to whether the Leader of Government Business intends to fast-track any legislation through Parliament to regulate the establishment of intelligence services in government departments and state-owned entities.

Reply by Deputy President Mabuza:

Honourable Speaker, 

Section 209 (1) of the Constitution of the Republic provides that “any intelligence service, other than any intelligence division of the Defence Force or the Police Service, may be established only by the President as the Head of the National Executive, and only in terms of the national legislation”.

Currently, the National Strategic Intelligence Act, no. 39 of 1994, defines the functions of members of the National Intelligence Structures.

The relevant members of the National Intelligence Structures provided for in terms of the Act to support government with intelligence services are:

• The intelligence division of the National Defence Force
• The intelligence division of the South African Police
• The State Security Agency, and
• The Service  

As things stand, there is no Bill that the Executive has considered or processed in respect of establishing the intelligence services in government departments and state-owned entities.

I thank you.

QUESTION:  On the objectives that underpin the Public Employment Programmes as part of strategies to address poverty alleviation and providing work experience.

Reply by Deputy President Mabuza:

Our country’s blueprint, the National Development Plan, states clearly that, in order to eliminate poverty and reduce inequality, South Africa has to raise levels of employment, and thereby ensuring that people earn incomes to sustain their livelihoods.  

As one of our major public employment initiatives, the Expanded Public Works programme is our flagship programme which contributes to the National Development Plan’s core objective of achieving a “decent standard of living” for all South Africans by 2030.  

This programme focuses on creating work opportunities that enhance the acquisition of skills across a range of trade areas such as construction, plumbing, welding, painting, infrastructure maintenance, and enterprise development etc,– to name just a few.

In the process, they are paid stipends to sustain themselves and their families, thereby impacting on mitigating extreme poverty in our communities.

Central to the objectives of this programme is ensuring that, based on training and skills acquired during training, EPWP beneficiaries transition into sustainable employment within the labour market. Alternatively, new pathways are created for these EPWP beneficiaries to engage in business venture creation utilising training and skills acquired in the programme. 

Experience from the implementation of this programme indicates that the programme has contributed towards the alleviation of poverty and provision of work experience to the participants. 

Since Phase 1 of the programme, more than 10 million work opportunities have been created with over R64 billion paid in wages to participants.  

Even though the Expanded Public Works Programme offers short-term employment, the income support it provides in terms of wages to participants makes a meaningful contribution towards reducing prevailing poverty levels. 

As it enters its fourth phase, the Expanded Public Works Programme will continue to draw a significant number of the unemployed South Africans, especially our youth, into productive work in a manner that will enable them to gain skills and increase their capacity to earn income, and contribute towards the betterment of our country.

However, to broaden the scale and impact, the increased participation of the private sector and other non-state actors will be critical in the implementation of EPWP Phase IV. 

Our experience suggests that, while government has invested in this programme over the past few years, private sector participation has been limited or non-existent.

One of the major challenges facing the programme in Provinces has to do with the ‘placement’ of EPWP graduates after the end of their contracted periods. Some of the beneficiaries have had to go back home. As an unintended consequence, this has created an expectation that government has to employ all these EPWP graduates.  

Such a position is fiscally untenable and unsustainable. 

We need an approach that draws in a significant contribution from our private sector partners. Our close collaboration with the private sector will ensure that a ‘Placement Plan’ is jointly agreed to, in order to ensure that opportunities are created by companies for the placement of some of the EPWP participants after graduating, depending on the skills they have acquired.

As part of increasing the intake of youth into public employment, government has already removed the requirement of experience as one of the criteria in the recruitment of new graduates.

Going forward, the work of the Anti-Poverty Inter-Ministerial Committee will integrate our Public Employment Programme with other anti-poverty initiatives focusing on broad based participation in the productive sectors of our economy. 

As we have highlighted in our earlier response, it is critical to prioritise the development of rural and township economies as part of boosting employment prospects in these poverty-stricken areas. 

Alongside public employment programmes, specific focus will continue to be put on enterprise, and skills development initiatives to empower our unemployed youth to participate in all the key sectors of our economy.  

I thank you.

QUESTION: On government’s urgent interventions to stimulate and support rural and township economies to address youth unemployment in particular.

Reply by Deputy President Mabuza:

Honourable Speaker,

As we have indicated earlier, part of the new Responsibilities delegated to us by the President, is to coordinate interventions aimed at stimulating rural and township economies. This work includes facilitation of socio-economic empowerment models for increased economic inclusion at a local level, championing of high-impact tourism empowerment projects for rural and township communities, and facilitation of linkages to private and public markets and value chains for SMMEs in Special Economic Zones across the country.

For the benefit of the House, the socio-economic empowerment models we are referring to here, as per our Delegated Responsibility, flows from an appreciation that across the country, in every province and every district, there are a number of local economic development initiatives that are working, albeit in a fragmented and disconnected manner. 

For instance, the Department of Small Business Development is implementing the Aggregated Community Produce for School Nutrition Programme while Mpumalanga has begun with the implementation of Government Nutrition Programme to stimulate agricultural production and empower farmers to supply fresh produce to government institutions such as hospitals and schools. In KwaZulu-Natal the Radical Agrarian Socio-economic Transformation provides support to small-scale farmers by offering them market access to leverage on government procurement.  

We believe that if these economic activities were to be consolidated, with a view to elevate their potential business and growth impact,  a lot of our rural and township enterprises can be uplifted and supported to become sustainable enterprises with the capacity to contribute to local economic development and job creation  in these district and local communities.

In the process, the much needed employment to respond to the present youth unemployment challenge, could thus be addressed.

We trust that you will agree with us, Honourable Members, that rural and township economies are places with vast untapped productive capacities and markets. 

Think of how many panel beating and spray painting operations, how many wheels and tyre operations, how many carpentry, welding, textile and creative industry operations are found in many parts of our townships and rural areas. Think of how many women-led small-scale, informal enterprises are there to feed families and educate our nation. The potential is vast and untapped. These are the real small businesses that must be uplifted and provided with the necessary support whether financial or non-financial. 

Our models should ask what purpose the development of big malls and shopping centres would serve if it does not tap into local markets and value chains in the townships in which malls are built?

For township and rural economies to thrive, localization and ring-fencing of certain economic sectors to achieve real transformation, should be the primary pillars of this programme.

We will not meaningfully address existing obstacles to sustainable participation of black people, especially those that are operating within township and rural economies, if we do not take bold actions now to create the necessary conditions that would deconcentrate economic activity from big players.

Therefore, dealing with this unemployment challenge requires a comprehensive and coordinated approach that is targeted and multi-sectoral. This effort requires careful development and coordination of relevant opportunities, taking into account the level of know-how of unemployed young persons. 

While government does have various interventions and partnerships through national government, provincial government and agencies, we need to ensure that all these interventions that are targeted to address youth unemployment must be part of a multipronged intervention which includes skills development especially for those youth not in employment, education or training.   

Furthermore, we need to direct industrial funding towards our youth to provide the capital for the growth and expansion of their ideas. Four years ago, targets were set for industrial financing to youth-empowered enterprises over a five-year period. 

With one year left in this period, the Industrial Development Corporation (IDC) has already exceeded their targets, providing more than R5.1 billion in funding to more than 120 youth-empowered enterprises. 

In addition to funding for youth, we have to find ways to open up markets so that new enterprises can compete fairly. Earlier this month, the Competition Amendment Act was promulgated by the President. A key focus of these amendments is on opening markets where concentration and the behaviour of dominant firms is harmful to the creation of jobs and the growth of small and medium businesses in sectors across the economy.

Our response therefore seeks to consolidate various impactful initiatives that are being implemented in a fragmented manner by some provincial governments and national departments.  

The interventions will identify, develop and support qualifying SMMEs in order to assist them to become competitive manufacturers and suppliers of building materials where these could be sourced for development of human settlements and paving of municipal roads and pathways. 

For our part as government, we will develop and support SMMEs and Cooperatives through targeted procurement initiatives for government’s infrastructure and human settlements projects.

As we move forward, the Anti-Poverty Inter-Ministerial Committee will prioritise the implementation economic empowerment models that aggregate government’s procurement spend in key areas to drive the incubation and participation of small businesses in general, and in township and rural areas, in particular.  

We are pleased that some of the government departments and provinces have started with piloting and implementing some of these initiatives. 

Our task, as the centre of government, is to lead, coordinate and consolidate our efforts to expand the scale and impact.

As we upscale these programmes, we must pay particular attention to the incubation of youth and women owned enterprises to support their meaningful participation in the economy. 

I thank you.

QUESTION: On government efforts to provide drought relieve support for farmers in the Northern Cape, Eastern Cape and Free State to ensure sustainable food security. 

Reply by Deputy President Mabuza:

Honourable Speaker, 

In line with our Delegated Responsibility to accelerate the Land Reform programme, our Government remains committed to pursuing this programme without disrupting agricultural production. In this regard our focus will be to ensure the effective coordination of integrated farmer support interventions including small-scale farmer linkages to market value chains. 

In the course of the implementation of this programme, we are mindful of the challenges faced by farmers related to drought, which is exacerbated by climate change, as well as rising input costs that impact negatively on agricultural production, resulting in job losses and closure of agricultural enterprises. 

As government, we will not allow our agricultural sector to collapse because farmers are the lifeblood of our economy.

That is why part of our response to these challenges, we have set aside a package of financial assistance to affected farmers in various provinces.

I am advised by the Department of Agriculture, Land Reform and Rural Development that various Provinces were assisted with drought relief funding.

In this regard, the Free State, Northern Cape and Eastern Cape Provinces are among provinces that received drought relief funding during the last quarter of the 2018/19 financial year. 

This does not amount to agricultural subsidies, but our efforts to alleviate the negative impact that this drought may have had on farmers and the sustainability of the enterprises.

Allow me to briefly enumerate some of the funding allocated and disbursed to all approved provinces. Funds were disbursed from the then National Department of Agriculture, Forestry and Fisheries to various provinces for implementation of projects according to their needs assessments. In this regard:

• R20m was allocated to the Eastern Cape, where the Sarah Baartman and Amathole Districts were supported with fodder which was distributed to farmers in need
• R13,5m was allocated to the Free State where the Thabo Mofutsanyane District was supported with the refurbishment and equipping of boreholes as well as mitigating water challenges.
• R43m was allocated to the Northern Cape where the Namakwa and Pixley ka Seme Districts received fodder to support farmers in need.
• R10m was allocated to Limpopo where in Vhembe, Mopani, Capricorn, Sekhukhune, and Waterberg Districts, where farmers benefitted from the support which assisted them with boreholes and desilting of dams
• R10m was allocated to Mpumalanga where Bohlabela, Ehlanzeni and Nkangala Districts were assisted with fodder, boreholes and desilting of dams. Many farmers benefitted from this support programme.
• R170m was allocated to the Western Cape where in the Central Karoo District and parts of the Garden Route, West Coast and Overberg District, farmers received fodder.

Both the Northern Cape and Eastern Cape Departments of Agriculture provided fodder to the affected farmers while the Free State Department of Agriculture is currently providing relief in terms of water infrastructure projects including boreholes and desilting of dams. The main focus was on subsistence and small holder farmers, however, in provinces like the Western Cape and the Northern Cape all categories of farmers benefitted in the affected municipalities. 

Fodder and water infrastructure were used to support affected livestock in terms of feeding and drinking water. Some farmers have both livestock and crop and would use the water for irrigation as well. The Department of Agriculture, Land Reform and Rural Development in collaboration with the Provincial Departments of Agriculture also continuously provide dissemination of early warning information, awareness and drought coping strategies. Provinces are also putting measures in place to assist affected farmers. 

In cases of drought, municipal and district agricultural offices guide farmers in terms of legislated processes relating to support as outlined in the Disaster Management Act, 2002. This Act stipulates that provinces and municipalities must set aside a percentage or reprioritize their budgets to address the disaster in terms of relief and recovery. 

When this percentage has been exhausted, the province or municipality may access funds from the National Revenue Fund, which is managed by National Treasury through the National Disaster Management Centre housed at the Department Cooperative Governance and Traditional Affairs to deal with all disasters. 

I thank you.