Deputy President David Mabuza Oral Replies to the National Council of Provinces
11 September 2019
On strategies to revitalise and bolster provincial economies in order to create jobs and economic opportunities.
To address the prevailing challenges of unemployment, poverty and inequality, we need a growing economy that creates opportunities for new investments that result in jobs especially in key sectors of our economy, including targeted infrastructure investment in townships and rural areas to stimulate growth and job creation.
In this regard, the President is championing an investment drive to attract much needed investment that will put our economy on a higher growth path.
We are currently working with Provinces to align their provincial economic development plans with the broader goals of the National Development Plan, and to ensure that we develop a clear pipeline of high impact investment projects that will drive growth in each of the 9 Provinces based on individual comparative advantage.
Government has prioritised investment in key economic and social infrastructure to enhance economic mobility and connect communities through our road network infrastructure in various provinces.
Through government investment in bulk water and sanitation infrastructure, we are enhancing the quality of life of citizens, while building incentives to attract private sector investment, and facilitating the ease of doing business in our provinces.
We are working with various provinces to grow the agricultural sector through targeted investment in infrastructure that will improve the levels of agricultural production and access to markets, including increased productive capacity in restituted land.
Provinces are implementing strategies to support farmers through negotiating competitive export opportunities, and ensuring that emerging farmers are integrated in value chains of big retail chain players and leveraging on government procurement through tapping into government’s nutrition programme. One of the critical measures to revitalise and support provincial economies focuses on the implementation of industrial policy initiatives. An important pillar of our industrial policy is to develop new economic centres through Special Economic Zones, revitalisation of industrial sites as well as business and digital hubs.
We currently have 10 SEZs that are in operation in South Africa. This has resulted in a number of foreign and domestic investors establishing new investments in these SEZs, with significant levels of new private-sector investments located largely outside of the main metro areas.
Work is currently underway to have the legal entities for further SEZ’s to be established within the next 12 months. Our goal is to ensure that we have a viable Special Economic Zone in each of our nine provinces.
Honourable Member will be very familiar with the Coega SEZ and the efforts of national government to bring new investors to this SEZ. The largest new light-manufacturing vehicle assembly plant is in fact being built in the Coega SEZ right now. More is possible through the SEZ model.
I am advised that in one decade investment in Coega has totalled to more than R9.5 billion, wherein 45 investors, both foreign and domestic, have come to the party, with more than 7 850 operational jobs created. This is in addition to construction jobs in the Coega SEZ.
The Industrial Parks revitalisation programme, is one of the programmes introduced by government in an effort to revive township and rural economies by attracting investment and creating the necessary jobs.
Government invests in upgrading security and building infrastructure, which seeks to make these Industrial Parks safe and more conducive for business activities to attract investors.
Government will also provide support 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 incubation and other support to help reduce failure rates.
Our industrial strategy focus is on expansion of manufacturing, mining, agriculture and other sectors recognises the comparative advantages of each of our 9 provinces.
In supporting provincial economic development plans, it is important to focus on specific sectors of comparative strength in each province.
For example, our current efforts to support the citrus industry, will support the Eastern Cape, Limpopo and Western Cape while agro-processing can support Free State and Mpumalanga.
Promotion of beneficiation of minerals will support mining in the Northern Cape and industrial activities in Gauteng and KZN.
We need to encourage greater levels of investment in provincial economies.
Through better coordination and alignment of infrastructure investment plans, we stand to achieve better outcomes in terms of growing our economy to address unemployment, poverty and inequality.
As we begin to implement a coordinated District-Based Delivery Model, there is no doubt that all spheres of government will work closely to drive local economic development initiatives that empower ordinary people where they live.
I thank you.
On efforts to fast-track land reform and coordinate programmes to provide support to the agricultural sector.
Honourable Deputy Chairperson,
Our moral duty to address the historical injustice of land dispossession remains one of the critical imperatives to transform society and forge a united and cohesive society.
Through our land reform programme, we are taking a responsible and measured path of restoration, redress and dignity for all who should share in the wealth of this beautiful land.
Addressing the challenge of skewed land ownership patterns through equitable access to land is not only an act of justice, but a social imperative to broaden economic inclusion and participation.
Land is a productive asset that supports development, social upliftment and sustainable livelihoods. When land is restored to its rightful owners, we have an obligation to ensure that every piece of restituted land remains productive, and accrues economic value to those who own it and to the whole country.
Land must contribute to the broader economic and developmental goals of the country.
For this to happen, we must ensure that our post-settlement support programmes to beneficiaries of land reform are effective to ensure that restituted land is utilised optimally.
Therefore the government land reform programme must be implemented in a way that land access is complemented by necessary support for it to be suitable for use by different beneficiaries given the land use planning that is consistent with their needs.
With respect to agriculture, support services are critical for any farmer development interventions. These support interventions range from extension services, research and technology transfer, mechanisation, production inputs, finance and market access.
Government, through its agricultural departments nationally and provincially offer extension services, production inputs for subsistence and small holder farmers, technology transfer, finance, mechanisation and market access.
More importantly, the provision of production infrastructure such as dams and irrigation infrastructure is essential to achieve higher levels of production. ILima/Letsema is largely for support of vulnerable and subsistence farmers in order to address food security needs.
Mechanisation support through creation of Service Centres have been budgeted for where farmers at local level, can have access to tractors and other implements. In some provinces, Service Centres are already in operation. These will be streamlined with farmer production support units which are part the broader integrated producer support system.
Financial support to land reform beneficiaries has been made available through various channels of support, including the provision of working capital requirements.
However, the main issue to address more urgently has to do with the finalisation of an integrated model of agricultural financing that design and deliver a suite of affordable products for farmers, ranging from farm insurance, farm expansion, blended finance, and all financing of working capital requirements.
This approach will be strengthened by our deliberate partnerships with the private sector to draw in new capital for agricultural financing.
The growth of emerging farmers into becoming commercial players will expand the productive capacity and contribution of the sector to the Gross Domestic Product (GDP).
I thank you.
On mechanisms employed by government in reducing intergovernmental debt.
Honourable Deputy Chairperson,
On an ongoing and continual basis, Government discharges its financial responsibility in respect of all debt owed.
This includes intergovernmental debt, the debt owed by different government departments, debt owed by state-owned enterprises as well as debt owed by and to municipalities. As a result therefore, the amount of debt owed and disbursed between and among government departments and entities changes continually and rapidly.
Therefore it would not be feasible to provide a precisely quantified amount of debt owed at any given moment as these amounts change on a continuous basis.
Nevertheless, we thank the Honourable Member for directing this House to a real need to consider making laws that would regulate and monitor on an ongoing basis, given the current economic environment of constrained fiscal resources.
At this point, we can state that a system of managing debts owed by different organs of state to each other, is indeed in place, and is in line with Public Finance Management Act No.1 of 1999.
The National Treasury has advised that aggregate Municipal Consumer Debts amounted to R165.5 billion as at 30 June 2019. Due to escalating consumer debt, many of the affected municipalities have been struggling to meet their own payment obligations.
Of particular concern is the municipal debt to Eskom. According to Eskom’s 2019 Integrated Report, the total municipal arrear debt has continued to escalate to unacceptably high levels, amounting to R19.9 billion.
This represents 71.7% of total invoiced municipal debt (including interest).
The top 20 defaulting municipalities constitute 81% of total invoiced municipal arrear debt with total arrear debt of more than R100 million each. However, indications are, these figures have increased significantly over the past few months.
Furthermore, according to the Department of Co-operative Governance and Traditional Affairs, over R9.7bn is owed by national and provincial government departments to Municipalities, and this remains a major challenge for municipalities to provide required basic services to the people.
Part of the challenge that we must confront as a nation is a culture of non-payment, especially with regard to consumer debt.
We therefore call on all South Africans, particularly those with income to play their part in ensuring that we lessen the burden of debt faced by our municipalities.
We must engender a culture of paying for services that have been rendered and consumed, especially from public entities like Eskom, just as we do with any other form of services rendered for private consumption.
Honourable Deputy Chairperson,
In improving the current situation of debt by our state-owned entities, the National Treasury and the Department of Public Enterprises are working on a strategy to reduce the reliance by State Owned Entities on government guarantees.
Mechanisms for ensuring that government departments and State Owned Entities’ settle their debts in time, are provided for by section 38 of Public Finance Management Act.
In this regard, Accounting Officers are required to settle all contractual obligations, and pay all monies owed, including intergovernmental claims, within 30 days of the submission of an invoice, or on a specific period agreed with creditors or suppliers.
Accounting Officers and executing authorities must take appropriate disciplinary steps against any official in the service of the department who fails to comply with a provision of the Public Finance Management Act.
I thank you.
On the implementation of rapid response interventions on service delivery to improve the municipalities that are currently under administration.
Honourable Deputy Chairperson,
The President has appointed an Inter-Ministerial Committee on Service Delivery at District Level primarily to accelerate service delivery and support to the Municipalities that are struggling for various reasons including those under administration.
This area of work is focussed on unlocking bottle-necks as well as deal with emergent governance challenges that undermine delivery of quality services.
Among the focus areas that this Inter-Ministerial Committee will direct its work on are the following:
- Addressing community and business forum disruptions that are stopping existing projects;
- Addressing numerous compliance and related issues that have created serious challenges for municipalities in the Supply Chain Management and Procurement processes;
- Addressing Compliance issues around planning; and
- Addressing the security problems faced in the provision of electricity, water, and other services.
These interventions, including the establishment of the IMC, are as a result of our Government’s recognition that there are various challenges faced by municipalities, which over time have impacted on the quality of service delivery and the collapse of services. This has inadvertently led to sporadic protests which at times have turned violent, leading to destruction of public and private property.
Some of the interventions that we are implementing focus on improving governance matters in these municipalities, through for example recruitment and selection of competent managers in critical senior positions and enforcement of compliance with the Municipal Systems Act and its regulations; professionalisation of corporate systems and processes like performance management system; and effective implementation of integrated service delivery models and resolving political infighting that affects administration and service delivery.
Furthermore, there is effective support by COGTA and National Treasury with the implementation of Post-Audit action plans to reverse negative audit outcomes; and compulsory utilisation of data base on employees dismissed for misconduct, fraud and corruption.
The above-mentioned measures will in no doubt strengthen the functioning of our municipalities especially those that are under administration so that they meet the expectations of our people as far as service delivery is concerned.
Therefore we are pleased that increasing numbers of municipalities are cooperating with information on their specific challenges.
Beyond the Municipalities under administration, Cabinet has also resolved that the IMC must focus on monitoring and, where needed, supporting and intervening, across all 44 District and 8 Metropolitan municipalities.
The intention is an all-of-government process of planning, sequencing of projects and monitoring the service delivery process.
As of now, we have undertaken to immediately respond to all areas where there are service delivery challenges, to ensure that all infrastructure development plans and operations are aligned across all spheres of government. We do this with an intention to intensify the implementation of pipeline infrastructure projects as well as to ensure policy coherence and consistency.
In this fashion, we will be able to improve the alignment of infrastructure development plans and operations, ensure policy coherence and unlocking bottlenecks to fast-track service delivery.
As we have mentioned we will react to early warnings so as to pre-empt service delivery challenges, promote economic development and investment through the revitalization of township and rural economies, and ensure that service delivery challenges are addressed programmatically.
I thank you.
On the land reform programme and other matters such as land tenure security and the provision of title deeds.
As the Honourable Member will recall the response we gave to her previous question on the same matter on the 12th of March 2019, let us restate that as Government, we are indeed committed to addressing security of tenure in communal areas.
As for this Government, we are indeed committed to addressing security of tenure in communal areas. This is a Constitutional mandate as stipulated in Section 25(6) which talks to the need for the security of tenure to those whose tenure is insecure.
To give effect to the provisions of the Constitution, government is in the process of considering the most appropriate tenure security systems that will be applicable to communal land. This process will be undertaken in a consultative and transparent manner in consultation with all affected parties including traditional leaders and communities.
At this stage, we would not want to pre-empt the provisions of Communal Land Tenure Bill that is being discussed.
I thank you.
On government programmes to address the high rate of unemployment, especially youth unemployment.
In the context of low levels of economic growth, the capacity of the economy to absorb new entrants into the labour market remains a challenge, resulting in high levels of youth unemployment.
Compounding this problem is the growing number of youth ‘not in employment, not in education, and not in training’. This situation is untenable if we are to address the high rate of unemployment in general, and youth unemployment in particular.
As part government’s response to dealing with unemployment and poverty challenges, youth development has been prioritised to ensure that government implements targeted programmes to empower young people and deepen their economic participation and inclusion.
In his June 2019 State of the Nation Address, President Ramaphosa re-emphasised youth development:
“We will develop programmes to ensure that economically excluded young people are work ready and absorbed into sectors where ‘jobs demand’ is growing. These sectors include global business processing services, agricultural value chains, technical installation, repair and maintenance and new opportunities provided through the digital economy and the fourth industrial revolution.”
The diverse nature of the sectors outlined by the President for the inclusion of young people demonstrates that the challenge of youth unemployment is cross-cutting and requires action not only by government, through policies, but from all sectors of society.
Dealing with the challenge of youth unemployment requires a comprehensive and coordinated approach. This must take into account opportunities presented by new and growing industries across our economic sectors.
In the main, our youth development interventions focus on:
- •Quality education and training to provide relevant and appropriate industry skills for the youth;
- •Private sector partnerships to promote the placement of youth in employment opportunities with private companies; and
- •Supporting youth entrepreneurship through targeted financing of youth owned enterprises.
In respect of education and training, the Human Resource Development Council which is made up government, business, labour, community and the academic sectors, has prioritised youth development. Its focus is on industry-driven approach to training and skills development that ensures that training and work experiential learning are integrated.
The category of youth that are ‘not in employment, not education, and not training should be provided with artisan skills training opportunities in order to enhance their employment prospects.
Across government, a number of programmes focused on creating job opportunities for our youth are currently being implemented. The major thrust of these is to provide the youth employment or business opportunities through the placement of unemployed youth in job positions to gain experience.
Among some of the key youth employment initiatives are:
- The Youth Employment Scheme (YES) Programme;
- Expanded Public Works Programme (EPWP)
- Tshepo 1 Million in Gauteng;
- Harambee Youth Employment Accelerator, as well as;
- The National Youth Development Agency support programmes.
Alongside training and youth employment initiatives, we need to ensure that our young people participate in innovation and entrepreneurial activities across a number of key industries.
We need to direct industrial funding towards our youth to provide the capital for the growth and expansion of their ideas. Four years ago, the then-Minister of Economic Development set targets for the Industrial Development Corporation (IDC) regarding funding for youth-empowered enterprises.
The IDC was set a target of R4.5 billion in industrial financing to youth-empowered enterprises over a five-year period.
We are pleased to say, that with one year left in this period, the IDC has already exceeded their targets, providing more than R5.1 billion in funding to more than 120 youth-empowered enterprises.
This funding from the IDC has crowded in significant investment from the private-sector, with a further R10 billion in funding provided from non-public investors as a result of IDC funding.
These included projects in food, film, manufacturing and other sectors. Support from the IDC for youth over the last four years is expected to support the creation or protection of more than 7 000 jobs.
In the next five years, the IDC expects that a further R5.5 billion will be provided to youth businesses to further drive opportunity and job creation for South Africa’s young people.
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, certain sections 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.
In the ICT sector, the Department of Communications is implementing programmes to support the development of youth enterprises involved in technology innovations.
The implementation of the Enterprise and Entrepreneurship Development Programme led by the Department of Women, Youth and Persons with Disabilities provides opportunities for the youth to participate in new venture creation and entrepreneurship.
Our future depends on how we succeed in preparing our youth for the future, how we hone their skills to integrate them into the economy, and how we prepare them to lead when granted that responsibility.
I thank you.