Local Government monitoring; Jobs / Investment Summits, Presidential Stimulus package: DPME update; Minister present

Meeting report

The Chairperson, Mr J Maswanganyi (ANC) was on leave and extended his apology to the Committee. As per the Rules of the National Assembly, the Committee has to elect an Acting Chairperson for its meeting. Ms W Newhoudt-Druchen (ANC) was unanimously elected to serve as Acting Chairperson for the meeting.

Minister of Public Service and Administration/Planning, Monitoring and Evaluation, Ms Ayanda Dlodlo, informed the Committee that she would leave early to attend a Cabinet meeting but wanted to provide Members with an overview and answer any questions on the Department’s economic interventions to support growth and investment in terms of the stimulus package, jobs summit and investment conference.  

The Minister says that we must aim to build an economy that reduces poverty, inequality and produces jobs. This requires re-prioritisation of government spending that would create jobs and stimulate the economy. We must think of ways to improve investor confidence. The President has mentioned that he hopes to attract U$100 billion worth of investment in the next five years. That is why government is to develop infrastructure. It will make economic activities more efficient, while the process of infrastructure development creates jobs in itself. Government is also looking at infrastructure plant development which will accelerate economic and social infrastructure. The Minister further emphasised development of rural/township economies by decentralising the economy and involving more private sector growth in these areas.

 Attention must also be given to education, which the Minister says is vital to the economy because without a skilled labour force, our economy will not thrive or expand. Another area to address is the policy uncertainty that investors might face. For tourism, easy visa process or visa waivers can boost investment interest and growth of the tourism industry, creating revenue and jobs. Other areas of policy uncertainty for investors regard the mining charter, availability of electricity and rail tariffs. All these must be addressed to ensure investment is not deterred. She also draws attention to efforts of getting jobless graduates employed, either in government or the Department of Public Service and Administration’s (DPSA’s) programme to get graduates into internships.

The Minister reports the main reason for the Jobs Summit was to get the private sector to commit to creating more jobs. Further aims are to grow Small, Medium and Micro Enterprises (SMMEs), boost exports and domestic demand for goods, improve local procurement, ensure better workplace collaboration, develop the national minimal wage, address corruption, curb all illegal imports and expand the Public Works programme. If the agreements of job summit are followed through and achieved, it could create up to 275 000 jobs. These commitments must be well monitored to ensure these jobs materialise. The reports on the Jobs Summit are submitted to the National Economic Development and Labour Council (NEDLAC) who review them and monitor progress of the commitments made at the Summit.

Regarding the Investment Summit, the Minister trusts it is not a once off and that there should be more in future. She reports that commitment of U$300 000 has already been made across different sectors. She also mentions that a globally competitive smartphone company is interested in setting up factories in South Africa. The Minister says that the presentation will delve more into the status of the various projects to be completed, ranging from pre-feasibility to implementation phase. Provinces have been asked to create their own investment prospectus to suggest investment areas that would be effective for each province’s interests. Most provinces are still in the process of finalising their reports. So far, Kwazulu-Natal has already submitted its report.

Economic Interventions to Support Growth and Investment: Stimulus Package, Job Summit and Investment Conference

Mr Rudi Dicks, DPME Outcome Facilitator: Employment, outlined there will be a high level of synergy between the different projects as they are all concerned with job creation, increasing investor confidence and increased commitments from the private sector. Turning to the Presidential Economic Stimulus and Recovery Plan (ES&RP), following two consecutive quarters of negative growth, the President, on 21 September 2018, announced the introduction of an economic stimulus package. Objectives of the ES&RP are:
- Boost economic activity
- Increase investor confidence
- Create new jobs and prevent further job losses

The proposed changes are to be achieved through following five broad measures:
- Growth enhancing reforms
- Re-prioritise government spending to support job creation
- Establishment of infrastructure fund
- Investing in municipal infrastructure improvement
- Address urgent matters in education and health.

Mr Dicks then looked at the jobs summit where key commitment areas include:

- Economic sector specific interventions
- Small, Medium and Micro Enterprises (SMMEs) interventions
- Education and Skills interventions
- Inclusive growth interventions
- Public and social interventions

In terms of the impact and forecast for the jobs summit, there have already been positive impacts from the Jobs Summit. There are already 77 commitments in the framework agreement. It is expected that further commitments will be realised in the second year directly from current commitments relating to specific projects or sector arrangements. It is estimated this will create 275 000 jobs. Furthermore, there are employment multiplier effects contingent on the jobs created. Considering an average multiplier of two to one, this translates to 500 000 jobs which can result from these interventions.

Two oversight bodies have been established to ensure successful implementation and monitoring of the Jobs Summit commitments. A Presidential Committee will meet quarterly to review progress and address blockages. Secondly, the NEDLAC will be responsible for submitting progress reports to the Presidential Committee. DPME will ensure the Jobs Summit commitments are integrated into the National Development Plan (NDP).

Mr Dicks informed the Committee that the Investor Conference was identified during the State of the Nation Address (SONA) 2018 as a measure to boost the economy. The aim was to target investment of U$100 billion over the next five years. So far, investment commitments of over U$300 billion have been pledged mostly from the South African private sector. Most of the funding will be allocated to expansionary, infrastructure and green fields investment, all which would contribute to job creation

Discussion

Ms Z Dlamini-Dubazana (ANC) voiced her discontent to Minister Dlodlo over the Department of Telecommunications and Postal Services Electronic Communications Amendment Bill. Ms Dlamini-Dubazana said that she comes from a community where the scope of the Bill does not reach and the Bill was not adequately consulted with departments such as Arts and Culture and Sports and Recreation. How will this Bill enhance economic growth in arts, culture and sport if it was not consulted? Ms Dlamini-Dubazana asked if the Minister can raise the matter of inadequate consultation of the Bill to Cabinet or in the DTPS Legacy Report.

Minister Dlodlo responded that the Bill is unlikely to go back to Cabinet as it is already in Parliament. She agreed that these matters should be raised once the Sixth Parliament is constituted and that more attention should be given to the Department of Arts and Culture DAC (DAC). Many artists with great potential are not being adequately supported by the DAC although the root of this matter goes deeper than the DTPS Bill and can better be addressed independently.

Mr D Khosa (ANC) asked what plans there are to expand infrastructure, such as road and rail, to fast track decentralisation and encourage investment in rural/township areas. He stressed that infrastructure in these areas are essential in attracting investment. He also asked about the aforementioned provincial ‘investment books’ - do the various provinces have the capacity to compile such investment books/prospectuses? Will a lack of capacity not hinder the ability of provinces to produce such reports? He also asked if these provincial investment reports have deadlines. Mr Khosa asked whether the stimulus package, which aims to address sanitation in schools, has reliable data on how many public schools need attention. He cited a sanitation tragedy in the Eastern Cape and asked if government has the budget to address the scope of sanitation matters at schools before such a tragedy happens again.

Minister Dlodlo agreed the absence of infrastructure hinders economic growth and therefore a rural infrastructure fund has been approved. Rural economic growth depends on rural infrastructure development and through infrastructure investment, government also provides new jobs.  The Department of Water and Sanitation has done an audit of schools and the Minister of Basic Education has details of how many schools are in need of sanitation assistance. Although she did not have the exact figure, Minister Dlodlo said this initiative is already in progress and partnerships with private investors have also been established to deal with this matter.

Regarding the capacity of provinces to compile investment reports, Minister Dlodlo said there has not been an official audit on the provincial capacity to produce reports. In the Sixth Administration, these audits should be completed. Having said that, Minister Dlodlo said she has no reason to doubt the ability of provinces to produce such reports. She cited Kwazulu-Natal which produces very competent reports.

Mr S Motau (DA) was encouraged to hear about the monitoring and evaluation framework reported by DPME but emphasised the importance of consequence management which is not reported about enough. He said these quarterly reports must be submitted and debated in Parliament and not only in Portfolio Committees – this would assist in ensuring accountability is not only formal but also rigorous. He suggested something akin to ‘mini SONAs’ where Parliament can ask questions to the responsible structures and give feedback on these reports.

Minister Dlodlo said the platform to take these reports and discuss consequences is when the President attends his parliamentary session to take questions from the House. That will be most effective. On the question of consequence management, she agreed there must be increased monitoring of this.

Mr M Ntombela (ANC) asked if there has been any uptick in tourism after the update in travel regulation by the Department of Home Affairs. He was concerned about emerging black farmers and their development path - white farmers are well established and control the prices and markets for agriculture, so how can the government’s job creation plans help emerging farmers integrate and so they are not ‘forever emerging’? Further, he asked how the Jobs Summit and investor commitments can ensure the protected participation of emerging, black business is meaningful and sustainable when inviting foreign investment in South Africa. When the Committee previously looked at the three sectors of the Expanded Public Works Programme (EPWP), namely, social, environment and infrastructure, it was found the social sector consists of predominantly women. He asked if there are measures in place to ensure the sectors are treated equally. Are the workers being paid the same stipend as their male counterparts? If not, how would equity in these sectors be ensured?

Minister Dlodlo said these tourism measures have not yet been adopted by Home Affairs but she assured that DPSA has been interacting with tourism stakeholders who say this policy change can unlock the potential of tourism in South Africa. Through visa waivers, the Chinese and Indian tourist market can be tapped into but it will have to be ensured that controls are in place to prohibit the illegal entry of foreigners in the country.

Minister Dlodlo assured Mr Ntombela there is support in place for emerging farmers – these emerging farmers must have access to local and international markets and form part of the value chain. Regarding the possible threat to SMMEs by foreign investment, the Department has necessitated that private companies explain how they source their workers and their plans to integrate SMMEs into their supply chains and business model. The end goal is to create an environment where SMMEs graduate and become larger industry players. Regarding equity in the EPWP, Minister Dlodlo confirmed that women receive the same stipend as men in those sectors.

The Chairperson asked if funding to the National Youth Development Agency (NYDA) has already been given or not yet. She was concerned by the safety and aging of the rail system and wanted to know what type of support and funding is allocated for improvement of the rail system to ensure effectiveness and safety. Furthermore, the Chairperson raised matters of SMMEs not receiving their 30-day payment deadlines on time. If SMME development is to succeed, government must ensure it provides businesses with regular, timeous 30-day payments. Regarding points of entry, she was concerned by the inflow of illegal goods into the country and whether the SA Revenue Service (SARS) is well enough equipped to handle this matter.

Minister Dlodlo agreed safe, reliable transport is very important as people live far from work. She reported that the 30-day payment results have improved slightly but not to an acceptable standard which is that everyone is paid within 30 days. The Public Servants Association (PSA) has also asked that there be consequence management regarding overdue payments. The Department of Health is the biggest contributor to this non-payment challenge. This is due to an increase in legal costs arising from public health institutions being taken to court. Increased legal expenditure means there is fewer funds for 30-day payments. Minister Dlodlo suggested the standard of medical services must be improved as it would mean less expenditure on legal fees. Cases of fraud in public health care related legal matters must also be addressed.

Local Government Management Improvement Model (LGMIM) State of Management Practices in 33 Municipalities for 2017/18; 2018/19 LGMIM Assessment progress to date

Mr Hassen Mohamed, DPME DDG: Local Government, reports on the state of management practices in 33 municipalities for 2017/18. He introduced the LGMIM framework which analyses the internal process and environment of municipalities in South Africa and the success of its various management practices. The general performance of the 33 municipalities, judged within the LGMIM framework, was substandard. The majority of municipalities are underperforming worryingly low in transport and audit findings. There were exceptions, such as Emalahleni and Nkomazi, showing promising year-on-year improvement. A lot of state funds are spent on municipal support yet it does not have the desired outcomes due to a lack of robust process and coordination. DPME visits municipalities and the results of these reports are then discussed with senior management. Municipalities are often hostile and defensive about these reports and do not illustrate any commitment to improve on these progress reports. He suggested that municipalities should include their respective LGMIM reports in their mandates.

Discussion

The Chairperson found the poor performance indicators worrying.

Ms Dlamini-Dubazana echoed that this is not the type of report the Committee enjoyed receiving. The Committee requested former Minister of Planning, Monitoring and Evaluation in the Presidency, Jeff Radebe, and his Department to do scientific research toward an integrated development plan for these municipalities. As South African municipalities operate differently based on their circumstance and level of remoteness, a standardised municipal monitoring system will not address its inherent problems. She referenced the Public Audit Act 5 of 2018 and changes to how local spheres of our government must be monitored to identify where problems lie in the various municipalities.

Mr Ntombela said that part of the reason for performance gaps in municipalities is the lack of employee qualifications. He asked if the Public Service Commission can increase monitoring and effectiveness of the recruitment process of senior management and supply chain employees in municipalities. He believed that if this can be done, half the battle will be won.

Mr Khosa remarked that responsible financial management is key to the functioning of municipalities.  It is DPME’s responsibility to evaluate municipal capacity in this area. To what extent is support given to financial managers and decision makers in the various municipalities?

The Chairperson would have liked to see the progress and status of all municipalities in the country, not just the 33 identified in the report, to compare if any trends changed or improvement were made. She asks if there is any collaboration between LGMIM and the School of Government. She asked whether municipalities expect too much input from their constituents in order to function and whether this is a capacity problem. She said in the municipality where she resides, for example, she reported faulty street lights and the City Council responded that she must assist them in identifying the problem. The Chairperson said this is not her job - it is the job of municipality.

Mr Mohamed agrees that municipalities are very different. For municipalities to deliver on their mandate, they must show competence in six aspects, aspects which are constant across all municipalities regardless of individual municipal dynamics. The LGMIM report is helpful as it gives a holistic assessment of the municipalities from which further individualised policies can be developed. Because this report gives attention to key focus areas, it does not give an integrated overview of municipal performances. The next part of the process will be to do on-site evaluations and give feedback to the various municipalities. This development will help identify root causes of problems that plague individual municipalities.

Mr Mohamed said government spends a lot of money on municipal support and capacity building yet it is not effective as the support is not targeted enough. He agreed with Ms Dlamini-Dubazana that support must be better suited to the individual municipality’s needs. In terms of recruitment regulations, regulations for minimum competencies are specified. The provincial Members of the Executive Council (MECs) will play a role in ensuring these regulations are followed. Government will not simply fire employees if they do not perform - there is leeway for employees to either acquire skills or given time to find another job.

Ms Dlamini-Dubazana agreed the six aspects of competent municipal governance are applicable but one must then categorise the 257 municipalities to more effectively deal with specific, dynamic matters.

The Chairperson concluded by hoping DPME will continue to deliver its annual LGMIM report so the Committee can monitor progress made at local government level.

The meeting is adjourned.