Covid relief & BEE don’t mix, say MPs
When the Department of Trade, Industry and Competition (DTIC) were presenting their 2020/21 performance plan to Parliament and after stating that all Covid19 distress funding would be allocated using B-BBEE guidelines, DTIC’s director general, Lionel October, found himself in a spot during questions.
He was asked directly by DA MP, Timothy Brauteseth, what DTIC would say to employees if children went hungry after application by a small time employer failed on such grounds.
Rules are rules
Although the question could be described as a little unfair, DG October replied tactfully that his department was staffed by civil servants “whose job it was to faithfully implement B-BBEE legislation”.
He said all DTIC incentive programmes were conditionally subject to a B-BBEE level and the private sector was usually most co-operative. DTIC was committed to all transformation processes, he said, but he was sure that the scenario in question would not happen.
In other words, the DG had dived for cover. Later during further questioning on the subject he remarked that DTIC did not “anticipate exclusions of this kind coming up with any programmes associated with the current crisis”.
The DA complimented DG October during the same meeting on his personal responses over the past months generally to opposition queries and on his dedication to trade issues during a difficult period. DA’s Dave McPherson said the DG was one of the few who responded timeously and in detail to their concerns, whereas a good number DG’s failed, he said, to even acknowledge a parliamentary query.
In general, on future plans, DG October told parliamentarians that any framework for the coming years would be subject to a number of downwards adjustments, especially on the issue of budgeted projects.
This, October said, was in the light of the forthcoming July cuts in budget appropriations as a response to the Covid-19 pandemic in terms of the R 500bn economic recovery package. (Parliament are to debate the DTIC adjustments in the next week or so)
DG October outlined the department’s total budget of R 11 bn for the 2020/21 financial year, of which 61% or R 6.8 bn is expected to be transferred to public corporations and private enterprises for incentives programmes. Of the total budget, 19% or R 2.1 bn will be transferred to the departmental entities in terms of agreed projects and targets. DTI operational expenditure, which comprises mainly of compensation of employees, and goods and services, is 18% or R2 bn of the total budget.
DTIC is working on the basis of global economy shrinking by 3% for 2020 as a result of Covid-19. This is working on IMF figures which figure that South Africa’s economy will probably shrink by approx. 6%, he said. To improve growth prospects domestic interventions included the R 500 bn COVID-19 package. There were also “Master Plans” for the automotive sector, poultry industry and retail – clothing, textiles, leather and footwear industries and others were being developed.
October concluded by describing ten key strategic programmes but again stating that all budgets and targets would have to be reviewed in July based on the progression of the pandemic. Accordingly, at this stage, it is quite clear that government planning and associated major capital spending is “on hold” for the moment
The good, bad and ugly
When asked what measures DTIC was taking to reduce the cost of doing business to create an enabling investment environment, DG October answered by quoting instances such as “how much easier it was to register a company and how better to apply for related benefits such as UIF.” He promised DTIC would make it easier to register properties and process building permits.
DTIC, he said, was also in discussion with Treasury for additional funding for a tax allowance as “an economic responsive package to assist companies in distress as well as to stimulate investment while retaining existing jobs”.
when asked about Section 121 tax allowance schemes where a budget of R 75m had been provided for support of greenfield or brownfield local investment schemes, this had come to an end October concluded. This was, he said, because almost all the budget had been used up and the fate of what was left would be the subject of “the diversion of funds and projects which are “gagged by the advent of Covid 19”., he said
Fielding the questions
Dr Corné Mulder re-expressed the hope that B-BBEE would not be applied in the midst of a pandemic with any future schemes (his main theme for the whole meeting).
Dave McPherson asked about DTI pressure upon the National Credit Regulator (NCR) to invoke Section 11 of the in order to allow credit needed under Covid-19 situations. October ducked this one and said that the NCR’s office and DTIC were currently studying the matter.
On questions on the need to build value-added exports, he quoted a platinum fuel cell production unit which had recently begun operations in Dube Trade Port SEZ.
Mathew Cuthbert, (DA’s shadow minister of trade), asked Lionel October why South Africa had failed to sign WTO Global Value Chain agreements (GVCs) in the past. (GVCs assist in reducing trade barriers, lower costs of transportation, can create additional jobs and assist in economic growth in developing countries – for example motor industry assembly plants).
October looked somewhat perplexed. In an inconclusive answer, he said he would check with the WTO Ambassador and reply to Cuthbert later in writing.
Cuthbert responded to remark that October had said earlier that support was continuing to be given to the motor assembly industry and it was in “fair condition”. He said that his feedback told him that this was not the case, particularly in the Eastern Cape where “some motor plants had gone about 98% inactive due to Covid 19 and that the situation was dire.”
He said that DTIC should note this fact and that the department must give the situation its urgent attention. He said Minister Ebrahim Patel must hear that “DTIC had got this completely wrong”.
The meeting ended abruptly due to timeout, but not before EFF’s Yoliswa Yako said that in her opinion Minister Ebrahim Patel was holding back on information and had not participated with any value to the meeting.