WC Department of Economic Development and Tourism & entities 2018/19 Annual Report

Meeting report

Introductory remarks by the Chairperson
The Chairperson said that the agenda of the meeting was to discuss the Department of Economic Development and Tourism (DEDAT), The Official Tourism, Trade & Investment Promotion Agency for Cape Town and the Western Cape (WESGRO) and Saldanha Bay IDZ Licensing Company (SOC) Ltd Financial Reports. The program would follow opening remarks from the Minister, Head of Department and Chief Executive Officer for respective entities. Then the floor would be opened to community and the public for questions.

Introductory remarks by the MEC
Mr David Maynier, MEC for Finance and Economic Opportunities in the Western Cape, led the delegation in presenting the Financial Reports of DEDAT, WESGRO and the Saldanha Bay IDZ Licensing Company (SOC) Ltd. He hoped that Members would acknowledge the good work done. All credit thereof should be given to his predecessors and the team present for the meeting.

Briefing by the Department of Economic Development and Tourism (DEDAT)

Discussion
The Chairperson opened by asking for any questions.

Part A
Ms N Nkondlo (ANC) asked how local markets have been regulated for equitable access for local halal suppliers to access the export market. ‘What were the challenges for Halal certification across the departments as standardisation could be discriminatory for those contract’ which do not require halal food’. On page 13 the departmental receipts disclose the payment for a liquor license. ‘Where is the location of the liquor authority’? In other provinces this falls under the Department of Trade and Industry (DTI). ‘Are there conversations between different departments around the authority so that traders are not prejudiced in their trading activities and abilities’? On page 13-14 more clarity is needed on what the Realignment of Funding of R2.6 million was used for. On page 15 there is mention of conflict of interest. ‘Were there any cases of conflict of interest and how were these cases dealt with’? On page 26 Atlantis IDZ is mentioned. ‘Is it part of the report activities of the current financial year’?

Mr D Mitchell (DA) referred to page 24-25 and asked if the vacancies had been filled and if not, how many are still outstanding or in the process of being filled.

Mr A van der Westhuizen (DA) said that it was the Department and Minister’s responsibility to lobby for Government investment in the Western Cape (WC). The report was silent on this. He was envious of Gauteng where Government investment benefitted the province. Investment was noted in initiatives like the Gautrain, highway network and infrastructure. In Kwa-Zulu-Natal investment was noted in a port. He said that Government investment was a necessary catalyst for economic growth in the WC and it seems that the WC is struggling to attract the same kinds of investment.

In response to Ms Nkondlo’s question on the access of local players in the halal food export market, Mr Solly Fourie, DEDAT: Head of Department, said that the Department focuses on the stimulation of halal products from the WC for export growth into foreign countries. It does not relate to how halal products are treated within government procurement as this represents a supply chain management issue. For example, within a Government Committee Meeting an African caterer had been contracted from a previously disadvantaged group providing halal services. By stipulating the halal services on the tender, the caterer was able to acquire and provide the halal component. There was no specific stipulation that all catering must be halal. He acknowledged Ms Nkondlo’s stance and said he would take up the halal catering issue with the supply chain management in the WC Provincial Treasury.

In response to Ms Nkondlo’s question on the location of the liquor authority, Mr Fourie said it was a policy decision because of the WC Liquor Act. It served the Department of Community and Safety better and so it was a policy decision to include the license. He recognised the technical related queries from applying for licenses. He noted that the Department is involved in the resolutions of these issues. There would be work done with the community and then the Department would intervene for Red Tape Reduction. According to policy there will be no realignment of responsibilities but investigation will be done.

In response to Ms Nkondlo’s question on what the funding of the R2.6 million was used for, Mr Fourie referred to page 13 saying that the project could not be completed. Application to the Provincial Treasury was submitted for a rollover for the R2.6 million and the R1.1 million and this was granted.

In response to Ms Nkondlo’s question on the vacancy, Mr Fourie said that there were no conflicts of interest. This information was disclosed so users of the financial report noted that the Department has mechanisms in place for potential conflict.

In response to Ms Nkondlo’s question on the mention of Saldanha Bay, Mr Fourie said that it is a subprogram within WESGRO. There is still a wait for the final approval to be granted for it to be established as a company. This will then be reported in the next annual report.

In response to Mr Mitchell’s question on the vacancy, Mr Fourie said that the reorganisation was done three years ago. There is cross containment of Chief Executive Officers because the vacancies have not been filled. The amalgamation of efforts has occurred. Vacancies are a challenge and they need to be filled. The work of senior members will be reviewed in the new five Year Strategic Plan.

In response to Mr van der Westhuizen’s question on the lobbying for Government investment, Mr Fourie said that in the 5 Year Strategic Plan which ends in this financial year, 69% on capital infrastructure was leveraged from the DTI for the Saldanha IDZ. This was estimated at R1 billion. This Seed Funding was used for servicing more people. The National Empowerment Fund (NEF) contributed 40% of this.

Mr Fourie said that the economic strategy going forward seeks to leverage more funding for long term infrastructural projects. These projects must lead to growth within the economic system in the WC. For example, increasing the capacity of dams for irrigation could be done via a partnership with government. The terms of projects must be longer than five years.

MEC Maynier in response to Ms Nkondlo’s question on the access of local players in the halal food export market took note of the interest in the halal sector and looked forward to reviewing the obstacles of access of the local players.

MEC Maynier in response to Mr van der Westhuizen’s question on the lobbying for Government investment, noted that infrastructure appears be dispersed across government and reported on by several departments and is not consolidated within an area or report. There are significant investments planned for in the WC like in the airport and in ports. These must be monitored. There are applications for funding in the health sector and transport sector. More work needs to be done and this will be prioritised.  

Ms Nkondlo appreciated the responses. She referred to page 30 and asked if there was fair play for halal suppliers.

Mr van der Westhuizen recognises the integrated nature of the infrastructure. Infrastructure is important for economic growth. Considered efforts need to be made for economic growth. ‘Can more be done to assist local entrepreneurs’?

Mr Fourie in response to Ms Nkondlo’s question on the nature of the halal supply market said that the Department has assisted. This is found on page 85.

Mr Fourie in response to Mr van der Westhuizen said that on page 72-79 it was stated that enterprise developed and helped companies like Informal, Small, Medium, Micro Enterprises (SMMEs). The Funding Fair had 1200 companies attend and participate. There was involvement in assisting companies through the Enterprise Development Unit to access capital and access markets. He asked an official to give a more detailed briefing on the matter.

An official responded that there are efforts made for small black businesses from the Cape Flats. 75 businesses have been assisted as part of an export development program. An Africa Halal week was held for international buyers. A Halal forum is also held quarterly for new businesses to hear about opportunities.
 
Part B

Ms Nkondlo referred to page 34 and asked if the skills development of artisans met performance targets. She asked what the challenges were. She also referred to page 58 and asked what work is being done to bolster Regional and Local Economic Development units in municipalities (RLED). She wanted clarity on the Pick ‘n Pay initiative.

Mr Mitchell referred to page 71 and wanted clarity on the preliminary investigations by the Red Tape Reduction Unit.

Mr van der Westhuizen referred to page 30 and wanted clarity on the expansion of new international target markets. In response to Mr Fourie’s mention of skills training, Mr van der Westhuizen noted that the National Skills Fund has money available. This could be used for effective in skills training. In reference to page 31, Mr van der Westhuizen said that there is no Customs official based at the Mossel Bay Port. There is space for development in Home Affairs. ‘In reference to page 37, why did the Red Tape Reduction Unit experience a procurement challenge in training tourist guides’? In reference to page 38, he noted that the number of people seeking assistance from the Red Tape Reduction Help line service has declined. ‘Is this because people do not receive the help they expect’? ‘In reference to page 60, which areas in the WC can attract tourists’? ‘Are there opportunities for an increase in the number of outdoor sports events’? ‘Are there opportunities for museums to be tourist attractions’? ‘In reference to page 69, why is there an increase in expenditure in the office of the HOD’? There was a 10% increase in the cost of financial management function of the Department. ‘In reference to page 76, is the Local Economic Development Office limited in its success’? This is an area for Municipalities to develop film application processes. ‘What can be done to assist the film industry in the WC’?

Mr Fourie in response to Mr van der Westhuizen briefly stated that the Department has successfully partnered with 15 Technical and Vocational Education and Training (TVET) Colleges. LED and municipalities are working to enable units to respond to economic challenges. WESGRO has a direct investment attraction. Municipalities have partnered with companies, but the Red Tape Reduction Unit has experienced challenges which are complex due to many departments contributing to the cause of the problem. The Department of Tourism wanted to visit the Big 6. Niche tourism requires time, money and effort. Limited budgets only allow focus on those investments where economies of scale will offer the most benefit. Each line manager would be able to answer questions relating to the respective departments.

An Official responded by saying that a detailed explanation relating to skills development of artisans can be found on page 120. There has been a 95% performance achievement of targets. One challenge was that industry does not see the value of young people being inputted into industry. A Basket of services to equip was produced. It consisted of a toolkit for those who did not have a qualification to enhance prior learning. This was deemed a “national success”. The mentorship program trained youth for competency and assimilation in the workplace. Industries include Golden Arrow, Imperial Training and Imperial dealerships and myCiti. Structured engagements with the Sector Education and Training Authority (SETA) are held quarterly which aids the response for supply and demand side skills-based needs. The skills budget is estimated at R60 million and this doubled due to Departmental allocations and partner funding.

An Official responded by saying that the LED needs to be looked at in its entirety. The Department is involved in enterprise development, skills development and Red Tape Reduction. The Red Tape reduction Unit improves access to funding. Cases are complex and often are not resolved within the period under review. Spaza shops are owned by foreigners and a model which empowers local people was considered. Through linkages with chain stores like Pick ‘n Pay, which are owned individually and are not part of the franchise, jobs were created.

An Official responded by saying that the Pick ‘n Pay initiative is concerned with the conversion of Spaza shops into independently owned supermarkets. This stimulates local township economics. Smart stores have been launched in Gugulethu, Blue Downs, Nyanga and Paarl. To reduce the cost of borrowing there were partnerships with the NEF and grant funding from the Department and Pick ‘n Pay. Products are priced competitively as they offer the same product and service offering as any other store in the province. The partnership agreement is split 40/60. Owners have a 40% responsibility and opportunity to procure products and services from surrounding areas.

An Official responded by saying that the e-hailing by law is still open for amendments. The proposed amendments do not place a regulatory burden on Uber and other e-hailing services. Vehicles must have tags that are registered with the City of Cape Town. Operators have to obtain licenses. These operations are still being worked on by the National Transport Regulator.  


An Official responded by saying that there has been a focus on niche tourism like the Madiba route and cultural niche like the performing arts. Adventure tourism refers to trail running, surfing, and mountain and adventure biking. WESGRO has leveraged international partnerships for the food and wine sector. WESGRO would provide further clarity on this matter. Trading with China continues. Access to trade with other African countries like Uganda, Mozambique and Ghana has been investigated. There is a need to diversify and adapt beyond previously held markets. In response to the question in tourist guides, the service provider who was going to be contracted misquoted and changed the price. The plan could not continue. In response to the question about investment for small Harbours, investment in dredging and civil works is out for tender. A total of R400 million has been invested in the past year into rural areas with Harbours which had government investment and support.

In response to the question about challenges in customs, an Official said that work is ongoing with the National Department to establish either a permanent office in either Mossel Bay or hire staff from the George office. Mossel Bay has been declared a port of entry for crew and tourists.

In response to the question about the increase in expenditure in the office of the Head of Department, an Official said that the budget includes the expenditure and the offices of three Deputy Director Generals which were hired for the energy game changer. The increase in financial management related to the increases from the Auditor General for salary increases and the intern salaries in the DEDAT.

Mr van der Westhuizen thanked the DEDAT for recognising the importance of smaller ports for investment and development. He believes that more can be done by counterparts of the NA to assist in economic growth and tourism. Smaller ports are scenic and thus provide room for more investment in tourism facilities.  

Ms Nkondlo highlighted that policy clearance is important for e-hailing services like Uber as foreign nationals are currently operating without permits. In reference to page 13 she asked why private enterprises were being funded. In reference to page 139 she wanted clarity on the timeline of job funding since inception to completion. She wanted to know if internships are defined as jobs. In reference to page 129 she wanted clarity on the underspending of economic planning and skills development.

The Chairperson referred to page 105 and asked whether the figures on smart growth energy related to the WC only or the whole of South Africa. She also wanted clarity on the process of applications for funding offered by the Department to Eskom.

Mr Fourie referred questions to the different line managers.

An Official responded by saying that funding to private enterprises was done as part of the supply development program. This provided support for businesses.  Business diagnostics helped identify what intervention was needed for improving productivity. The Pick ‘n Pay initiative was also funded via transfer payments.

An Official responded by saying that the timeline of job funding was for a four-year period which was coming to an end in the period under review. Expected outputs were to employ young people and provide time bound internships.

An Official responded by saying that underspending related to staff resigning due to uncertainty about whether contracts would be renewed.

An Official responded by saying that the figures on smart growth energy related to the WC. This impact was done via a social matrix model. There were two applications for funding for Transet and Eskom. Both were still in progress as conditions were still being liaised.  

PART D

Mr van der Westhuizen asked what contributed to the high staff turnover. ‘Were exit interviews conducted to investigate why employees were leaving’?

Ms Nkondlo referred to page 171 and asked why foreign nationals were being hired and what specialised skills were they offering. ‘78.4% of employees used sick leave, did human resources monitor and respond to this’?

Mr Mitchell asked why vacancies are not filled yet. He wanted clarity on performance bonuses. He shared Ms Nkondlo’s sentiments on the issue of sick leave and wanted clarity on the matter.

In response to Mr van der Westhuizen’s question on the rate of filling vacancies, Mr Fourie said that exit interviews were a voluntary process. Because of the low aged population, 30-39 years old, staff was more mobile and moved jobs across governmental departments.

In response to Ms Nkondlo’s question on filling vacancies, Mr Fourie said that vacancies were advertised on an open basis. The process of hiring was in accordance with stringent and uniform requirements as advertised. Thereafter interviews are conducted, and a shortlist is compiled. There was provision for employment equity. This was applied consistently across all levels. The hiring of senior management is done via an interview panel consisting of various designated groupings reflecting gender and race equally. This was based on fairness.

In response to Mr Mitchell’s question on sick leave, referred to age 172, Mr Fourie said that this calculation was done using the total number of working days and the total number of working days available to staff. The total number of staff was approximately 200.

Mr Mitchell interrupted by saying that annual leave had a cost implication for the Department.

Mr Fourie said that employees were entitled to sick leave. Annual leave entitled employees to take their full allocation within six months otherwise this was forfeited. Some employees had capped leave and were entitled to carry this as a contingent liability. Page 174 addressed this. Performance bonuses were based on a performance review of a senior person and was moderated thereafter. Policies are in place when sick leave is excessive and line managers address this accordingly.

Mr Mitchell disagreed with the way in which the information in the financial report was displayed. The organogram and table did not translate.

Ms N Makamba-Botya (EFF) asked if there were processes in place for compliance of the Black Empowerment Act.

In response to Ms Makamba-Botya’s question of BEE compliance, Mr Fourie said that this was incorporated into the 5 year workforce plan. Headhunting is used for specific posts and as a last resort to filling positions.

In response to Mr Mitchell’s remark on the way information is presented, Mr Fourie said that the organogram deals with directors and the employee band above that.

Mr Mitchell remained dissatisfied because unless the vacancies have been filled the information still did not correlate.

An Official added that the vacancy rate relates to 2% of the active posts in the establishment where funding has been allocated.

Ms Nkondlo remarked that her question on the hiring of foreign workers remained answered. Her assumption was that the 78% sick leave was an indication of the state of health of the employees. ‘Is there a response from human resources to employee wellness’?

The Chairperson wanted clarity if the vacant posts on pages 24 and 25 have been filled.

In response to Mr Mitchell’s question on the mistranslation of information, Mr Fourie said on page 24 and 25 the vacant posts relate to those in accordance with the formally approved organisational structure which is unfunded. On page 156 the vacant posts relate to those which are funded.

An Official added that the sick leave translates to 12 days to be utilised annually. She asked for clarity on the question relating to the hiring of foreign workers.

The Chairperson restated Ms Nkondlo’s question. ‘What specialised skills where the foreign labourers bringing to the Department’?

The Official responded by saying that the positions were for specialised areas like The Office of the Consumer Protector and the Green Economy energy space.

Mr Mitchell highlighted that in future information in annual reports needs to be easy for members of the public to read. Footnotes need to be inserted for the matter of funded and unfunded posts.

The Chairperson requested a summary of the funded and unfunded posts dealt with during the resolutions.

Ms Nkondlo wanted more clarity on whether the foreign workers were employed because it was a scare skill in the country.

Mr Fourie asked for permission to go back and investigate so as to report further on the matter.

Briefing by WESGRO

Mr Fourie said that WESGRO was a part of the broader economic delivery related to investment, trade, tourism and marketing promotion. It had a role in the integrated approach to things that impacted the ecosystem. Special mention was given to drought communication especially for tourism and businesses.

Mr Tim Harris, Chief Executive Officer: WESGRO, said that WESGRO acts as an intermediary between Government and business. There has been economic promotion alongside tourism. The Annual Report focused on economic challenges, the main being the drought. He was pleased to table a report which reflected results obtained under difficult circumstances.

Discussion
PART A

Ms Nkondlo commented that there was a need for increased representation of women on the board. She called the current board a “boys club”.

In response to Ms Nkondlo’s question Mr Harris replied that he was not involved in the appointment of the board. But a woman has recently joined the board.

PART B

Mr van der Westhuizen asked to what extent trade fairs are deserving of support as an initiative for trade promotion. ‘How does WESGRO balance the interests of the city and rural areas in the WC?

Ms Makamba-Botya referred to page 30 and wanted clarity on the performance appraisals. ‘On page 31 why was the performance target indicator not met’?

Ms Nkondlo referred to page 26 and wanted clarity on what was meant by contact management. ‘Did the target setting account for the deviation in the actual and estimate figures on page 31’? She wanted clarity on relationship between the Rand value of investment versus the number of jobs and what drives these numbers.

In response to Mr van der Westhuizen’s question on balancing interests, Mr Harris said that it was a complex matter but marketing the WC in entirety benefits the province. The metro of CT excluded the real economic tourism drivers like the Garden Route, the Winelands and Saldanha Bay IDZ.

In response to Ms Makamba-Botya’s question on performance targets, Mr Harris referred to page 30 and said that the targets were exceeded. There was an attempt to achieve a network downtime target of four hours or less but it was exceeded by four hours and two minutes. Staff morale exceeded the estimated 80% over the estimate of 75%. He referred to page 31 and said that there had been an improved turnaround time on work flows. Three days was a reasonable target given that less was achieved. This target will remain in the next financial year. He referred to page 26 saying that technology has enabled the management of client relationships. The Customer Relation Management System had been recently implemented. Revision of the Swat Analysis and contact management is no longer featured on the list. He referred to page 34 saying that it takes a R3 million investment to create a job and this requires a degree of capital intensiveness. It was important how much capital an investor employs versus the number of additional labour units added. It varies from sector to sector. Less labour was required for Bokomo because it is mechanised. Bokomo plays an important role in adding value to wheat and exporting across Africa and the world. This has a knock-on effect on job creation. In reference to “Job impact on committed investment” this relates to direct jobs created at the factory.

An Official added that the DTI missions are the backbone of missions undertaken by WESGRO. Incentives used by the DTI translate to trade missions being vital for entering the market. Countries are identified within which products will do well. Exports are used as a focus to grow the economy and create jobs.

In response to Mr van der Westhuizen’s question on trade fairs, an Official added that trade exhibitions are in Europe, North America and Asia. They are still developing in Africa. With digitization trade and exports are changing. Conversations on how to bring these digitized processes into the WC are being considered. WESGRO has been approached by service providers for the creation of a platform which can be linked to WESGRO’s website. New initiatives are expected to boost current trade platforms.

Mr van der Westhuizen noted that the Annual Report deals mainly with physical goods. ‘Has the importance of intellectual services as exports been considered’? India is a big competitor, but SA has a comparative advantage with well-trained youth that can compete in the field.

Ms Nkondlo asked what the long term knock-on effects of investment were and would this be found in the Status A labour force.

In response to Mr van der Westhuizen’s question on service exports, Mr Harris said service exports are a new area which WESGRO is focused on. 70% of the output in the WC is services. 75% of employment relates to the service market. The film industry is a leading service export in the WC.

In response to Ms Nkondlo’s question on the long-term effects of investment, Mr Harris said investment was labour intensive. The Labour Force Survey measured the supply side number employed and the demand side measures how many jobs have been created. Broad trends are observed but the focus is on investment and how many jobs are created as a result thereof.

An Official added that devices are a fundamental part of the WC economy. The last year was used to develop strategy for service exports with a pinpoint on software.  

An Official added that there is less support from the DTI due to the definition of the ‘working space’. Industry is growing events locally. E-sports represent a potential area for investment. The current goal is to attract buyers for local events.

Mr van der Westhuizen asked if there had been any thought given to potential of conference venues outside of CT?

Ms Nkondlo referred to page 37 and asked what challenges face the service delivery improvement plan. ‘How are the challenges being mitigated in partnership with national departments’? She referred to page 46 and asked if the five halal companies are the same or different. ‘What was the feedback from the companies and has any trade had taken place’?

In response to Mr van der Westhuizen’s question on conference venues, Mr Harris said that the designations for operations are venue neutral.

An Official added that 50% of the conferences attracted are large conferences. WESGRO worked closely with Stellenbosch as it represents an ideal second tier city. Hosting conferences in larger cities leverages the business tourism itineraries of those attending.

In response to Ms Nkondlo’s question on halal companies, an Official said page 46 relates to the halal export promotion missions. This was a part of the trade promotion program which successfully funded companies to join missions. Each mission had five different companies. Halal exports performed well globally due to the high demand based on good quality. Projected export income to be generated over a five year period consists of Cameroon estimated at R68 million, Senegal at R175 million, Nigeria at R320 million and the Middle East at R600 million.

PART D

A member of the community asked what steps were taken since last year to help small businesses in dealing with Red Tape Reduction. Nyanga businesses consist of more than 380 informal traders who are unregistered due to costly processes and represent prospective tax payers. He referred to page 32 and noted that Nyanga had one library and five computers. More than seven schools in the area are without labs. ‘How will the issue of development happen if it does not start at the school level’? He referred to page 34 and asked what the Government is doing about unregulated taverns as this contributed to violence in the area. He highlighted that Nanga had empty under-utilized spaces and asked if the Government saw potential to use the space for economic activities.

The Chairperson noted that this was an active member of the community.
In response to the member of the community, Mr Fourie noted that small businesses are the biggest beneficiaries as more than 5500 have been assisted. They have been assisted to access markets and funding. Liquor licensing is done by the Department of Community Safety. Issues of licensing and Red Tape Reduction are currently being dealt with.

An Official replied that in promoting the tech industry it is important that citizens have access to digital literacy. She suggested a ‘Bizjump’ platform which gives businesses access to all information relevant to improve business practice. Currently it was in the process of converting it from an online platform to an app which makes it more accessible. She said that there are two entry points via the school pipeline. A pilot program focuses on how to implement after school programs. The second point received support from the Department of Education for infrastructure. This should increase employability in future.

An Official added that work focuses on informal sectors like manufacturing. The entity was currently in the process of seeking entry points to assist and engage with small businesses like those in Nyanga. It was also in the process of land identification, land which is not being utilized and identifying businesses that can benefit being in respective areas. The Ikhasi program involves speaking with locals in townships which creates network opportunities for tourism. The tourism masterplan is for tourism promotion and development in the WC for the next 20 years.

Briefing by the Saldanha Bay IDZ Licensing Company (SOC) Ltd

Discussion
Mr van der Westhuizen referred to page 49 and asked if the delays in construction have been addressed, what were the current position and how the delays would be caught up upon.

Ms Nkondlo wanted clarification on the Ease of Doing Business Complex, if it had been finalised and the costs associated thereof.

In response to Mr van der Westhuizen’s question on the delay in construction, Ms Kashiefa Beukes, Chief Executive Officer: Saldanha IDZ, said that the reasons for this was because of longer tenant lease negotiations than what was anticipated, and the infrastructure delay on servicing the port land led to delay in revenue collection. There were no targets for revenue collection in the period under review because it was in an establishment phase.

In response to MsNkondlo’s question on the cost association of Ease of Doing Business Complex, Ms Beukes said the new estimation of completion dates were being managed diligently. The Strategy project management teams worked with local subcontractors. The Budget for the building is estimated at R134 million and this funding was secured from the DTI IDZ Fund. The Ease of Doing Business Unit was focused on improving the business environment in the IDZ.

Mr van der Westhuizen wanted further clarification on the extent of the delays, how the time was made up and what was the value of revenue expected. ‘What was the percentage of empty spaces for tenants to take up’?

Ms Nkondlo asked what the issues currently were being dealt with by the Ease of Business Unit and the extent to which it was arising from local enterprises. ‘How were compliance standards met when engaging with international companies’?

In response to Mr van der Westhuizen’s question on the delay of construction, Ms Beukes referred to page 47 and said that there was a late commandment of the project dealing with the servicing of the port land. It required a lengthy negotiation. The Board decided to disallow the contractor to commence on site without security of the land. The community protest further delayed construction. Local platforms were established to ensure those wishing to participate in the construction project provided engagement about the projects. Delays were being managed through a proactive management framework and completion was shifted to the end of the current financial year. Part of the sites have been serviced and are ready for tenants to move in but there is still ongoing construction. The lack of detail will be taken into consideration with management and in the review of the Annual Performance Report. Over the past year the company reviewed and set a new five year strategy for the company that will be effective in the next financial year. It involves commitment to commercial sustainability within the next three years.

An Official added that the Ease of Business Complex specifically relates to enabling businesses to operate within the customs-controlled area or a free port area.

An Official added that efforts are being made to help tenants and investors to comply with national standards. R1.5 million was committed during the current financial year. A company was appointed to perform an assessment on the type of business and business operations. An evaluation has been done and the report is finished. A gap analysis has been done and the next step is to look for funding.

Mr van der Westhuizen referred to page 47 and asked for clarity on the free port business case project. ‘Was Phase 1a and Phase 1b referring to the same project’? ‘Is there capacity for growth and what are the current challenges and the underutilised space’?

Ms Nkondlo referred to page 34 and asked if the expected Gross Domestic Product (GDP) contribution would be able to be achieved. She referred to page 45 and asked how the innovation hub is different from other programs and how this is being funded. Through engagement with the community there is the expectation that change will happen. How can risk be mitigated?

In response to Ms Nkondlo’s question on mitigating risk, Ms Beukes said that cooperative ways are used when working with communities. It was Important to deal in a direct, frank and respectful manner. The conversation focused on targeted communities.

An Official added that within the mandate the focus was on creating socio-economic activity, jobs and stimulus for suppliers, contractors and on maximising the number of companies on the property. The port lands have become of more value because of the closer location to the sea. The percentage utilisation was not measured and there was no numeric indicator. Phases 1a and 1b and Phase 2 are reasonably 100% full. The longer term projects take longer to visibly see tenants on site. The North property was fully serviced and there is still space for new tenants.

An official added that the initial five year plan involved creating a pipeline of tenants and businesses that would create the estimated GDP. The economic model measures GDP and the number of jobs. The innovation campus is desired to be a world class marine, oil and gas centre. This requires a combination of research, development, high learning and a high level of training. A bankable feasibility study has been completed. This will be started as a virtual centre.

Ms Beukes added that the costs of the innovation campus have been funded by the DTI Small Enterprise Fund (SEF). This will be done on the same model as all infrastructures to date. This does not form part of capital expenditure.

PART D

Mr van der Westhuizen referred to page 60 and noted the average cost per staff member. He asked if all posts had been professionally evaluated and if so, what system had been used to do this. ‘Why was staff performing so well’? ‘Why was the vacancy rate 14%’? He referred to page 61 and asked why four employees were studying towards the same program. He wanted clarity on the program, costs associated with the program and the time of enrollment.

In response to Mr van der Westhuizen’s question on the average cost per a staff member, Ms Beukes said that salaries were of the 50-70% percentile benchmark against other similar IDZ and SEZ units in the country. The Patterson grading was used for evaluating positions. Performance rewards were incentives.

An Official added that when contracts are negotiated performance incentives are included in the package.

Ms Beukes added that projects take longer due to the volatility in the national and global investment climate. Training costs related to the group discount for the same training for different units. Training was for specialist project management and is important for the integrated work to be done from the different unit. Recruitment and selection for employment and vacancies has been difficult due to nature of work. There was competition with other IDZ’s and SZE’s for talent. The required skills are difficult to hold onto.

Mr van der Westhuizen said that he believes that targets were partially achieved. ‘If all targets were achieved what would the maximum bonus be that all staff would have been entitled to receive’? ‘Where will the project management program lead, will there be certification and is it a multiyear program’?

In response to Mr van der Westhuizen’s question on the upper limit of performance rewards, Ms Beukes said that the upper limit is 25% of the performance rewards. On-going training leads to certificates as new staff are assimilated into the project management environment in the organisation.

Mr van der Westhuizen congratulated Ms Beukes on her appointment as CEO.

The meeting was adjourned.