The Portfolio Committee on Trade and Industry, having attended an induction workshop on 04 & 05 August 2004 held at Dti Campus, reports as follows:

  1. Background
  2. Section 55(2) of the Constitution confers powers to the Portfolio Committee on Trade and Industry to exercise oversight function over the Department of Trade and Industry and associated agencies.

    On the meeting of 11 August 2004, the Committee agreed to visit the new Dti campus and some of the associated agencies. The visit was mainly aimed at capacitating members of the Committee in terms of their future oversight role, by giving them a practical sense of how the Dti’s product and services work.

  3. Delegation
  4. Mr. B.A. Martins (ANC); Prof. B. Turok (ANC); Dr. M. Sefularo (ANC); Ms. D. Ramodibe (ANC); Ms. N. Khunou (ANC); Mr. Rasmeni (ANC); Mr. Maake (ANC); Mr. KO. Bapela (ANC); Ms. Mahomed (ANC); Mr L. Zita (ANC); Mr SJ Maja (ANC); Mr. S. Njikelana (ANC); Mr. LB. Labuschgne (DA); Dr. Nkem-Abonta (DA); Ms Chang (IFP); Mr PJ Nefolovhodwe; and Mr. Stephens (UDM), Mr. Mzwakali (Committee Clerk) and Ms. C. Nobevu (Secretary to Chairperson).


  5. Structure of Report
  6. The report presents the daily activities undertaken by the delegation while attending the induction workshop. The report therefore outlines various presentations introduced to the Committee by different divisions within the Department of Trade and Industry and associated entities. The report will then outline the concerns; questions; inputs; and recommendations that were raised by the Committee to the presentations thereto.


  7. Places Visited
  8. Day 1: The delegation visited the new Dti Campus where a workshop was also conducted. The format of the workshop was that of multiple sessions on different aspects of the Department and the economy. This was followed by a tour of the new campus.

    Day 2: The Committee visited BMW Rooslyn Plant in Pretoria and Industrial Development Corporation Offices as well as Khula Enterprise Finance, in Sandton, Johanesburg.



The delegation met with the Minister and officials from the Department of Trade and Industry, the delegation comprised of: Mr. M. Mphahlwa (Minister for the Department of Trade and Industry); Ms. L. Hendricks (Deputy Minister for the Department of Trade and Industry); Dr. A. Ruiters (Director General for the Department of Trade and Industry); and Mr. M. Ebrahim (Chief of Staff: Department of Trade and Industry).

In her welcoming address to the Committee the Deputy Minister stated that, one of the key strategic goals of the dti was to create conducive environment for businesses to thrive and become competitive. Secondly and most importantly, the Department of Trade and Industry was committed to look beyond macroeconomic stability and focus on microeconomic reforms, by firstly looking at its own institutional stability, with the principal focus on streamlining its organizational structure for better coordination and service delivery.

She assured the Committee that the Department would also be devoted in bridging the gap between the ‘first’ and the ‘second’ economy.

    1. "Making the economy work for growth, employment and equity"

Minister Mphahlwa (Minister of Trade and Industry) leading the discussion on how the Department of Trade and Industry will be contributing to growing the economy in a manner that enables equity and job creation, highlighted some of the fundamental economic challenges that were inherited in 1994 and government’s targeted responses to those challenges. He then reported to the Committee on Dti’s long-term and medium-term strategy framework.

Chief among the economic challenges inherited in 1994 include:

However, through direct strategic responses and introduction of a comprehensive macroeconomic reform, government has managed to remove the pressure on deficit financing which has enabled the country to carry out forms of social expenditure within a highly stable fiscal framework. Government has also managed to remove the balance of payments constraints.

He further pointed out that despite the above interventions, government was still faced with severe challenges of high magnitude of income inequalities; ‘first’ and ‘second’ economy dichotomy; high levels of unemployment and poverty; insufficient variation in the size and number of enterprises; disparities in the racial composition of ownership, control and management in the private sector; and low level of value-add in the economy.

As such, government broad goals in the next seven to ten years will be premised on the following key strategic pillars:


    1. Concerns and Recommendation Raised by the Committee

Second economy: The Committee commended the Minister on the points he raised, save for the following - that in implementing its strategic plans, the Department had to try to get the ‘trade-off’ precisely, in that while trying to strengthen the economic enterprise sector, the Department should also be able to evaluate the impact of its delivery outputs on the ‘second economy’.

Secondly, while adding value to export products, government should put more effort in the beneficiation of the people in the rural areas.

The Committee further enquired about the step that the Department intended to take in dealing with skills basis; funding and mentoring of enterprises in the second economy.

Members were also concerned that it was difficult to measure results at the grass-root level and asked if there were any strategies directed at micro-economic level.

The Committee recommended that there was a need to strengthen inter-departmental co-operation in dealing with the challenges of the ‘second economy.

It was further recommended that in ameliorating and helping enterprises in the ‘second economy’ there was a need to vigorously engage the banking sector and that the Department should focus on programmes that would seek to develop viable business ideas for such enterprises.

Global economy: The Committee was concerned that there were still a number of barriers for the developing countries despite the existence of the multilateral trade agreements.

The Committee noted that export trade was booming globally, however enquired whether South Africa’s export share was improving.

Members recommended that the Department should draw some experience from countries like China on how to improve South Africa’s export incentives.

Local Economy: The Committee asked if the Department as a participant in the economic cluster could set out qualitative targets; elements and indicators of a high level project for the economy.

The Committee recommended that there was a need for economic integration with Africa in order to open up South Africa’s market. However Members cautioned South African companies not to lean too much on the strength and weakness of the rand.

In general, the following issues were recommended:


    1. The Dti Strategy and Budget

The Dr. Ruiters (Director General) leading the discussion, reported that the dti’s divisions and business units were structured in a way that would facilitate the achievement of its strategic objectives. Dti’s divisions and business units are linked together in a value chain to generate public value for economic citizens. Each unit has core sets of outputs, or products and services, that it is responsible for delivering. The Executive Board is responsible for ensuring the efficiency and the efficacy of that value chain between the dti divisions.

In addition, the dti Group comprises of a range of public entities that had a specific mandate to fulfill and these include:

He then outlined Dti’s key flagships projects for the next coming five years as follows:


    1. Overview of Dti Legislation

Since 1999 the Department of Trade and Industry’s legislative agenda has been informed by the following policy objectives:


Acts administered by the Department of Trade and Industry include the following:



Alienation of Land Act 68, 1981

To regulate the alienation of land in certain circumstances and to provide for matters ancillary thereto

Broad-Black Economic Empowerment 53, 2003

To establish a legislative framework for the promotion of black economic empowerment; to empower the Minister to issue codes of good practice and to establish transformation charters; to establish the Black Economic Empowerment Advisory Council; and any matters ancillary thereto.

Business Name Act 27, 1980

To provide for the control of business names and for matters accidental thereto.

Close Corporations Act 69, 1983

To provide for the formation, registration, incorporation, management, control and liquidation of close corporations.

Companies Act61, 1973

To consolidate and amend the law relating to companies and to provide for matter accidental thereto

Competition Act 89, 1989

To provide for the establishment of a Competition Commission responsible for the investigation, control and evaluation for restrictive practices, abuse of dominant positions, and mergers; and for the establishment of the Competition Tribunal responsible to adjudicate such matters; and for the establishment of a Competition Appeal Court, and for related matters.

Consumer Affairs (Unfair Business Practice Act) Act 71, 1988

To provide for the prohibition or control of certain business practices; and for matters connected therewith

Convention on Agency in the International Sale of Goods Act 4, 1986

To provide for the application in the Republic of the Convention on Agency in the International Sale of Goods adopted by the international institute of the United Nations Organizations for the unification of Private Law

Copy Right Act 98, 1978

To regulate copyright in respect of inter alia artistic works, dramatic works, computer programs, musical and literary work.

Counterfeit Goods Act 37, 1997

Strengthens prohibition on trade in counterfeit goods, confers powers on inspectors and police to enter and search premises, with and without a warrant, confers powers on Customs and Excise to seize and detain suspected counterfeit goods.

Credit Agreement Act 75, 1980

To provide for the regulation of certain transaction in terms of which movable goods are purchased and leased on credit or certain services are rendered on credit.

Design Act 195, 1993

To consolidate the law relating to designs, to provide for the registration of designs and to delineate the rights pertaining thereto.

Estate Agency Affairs Act 112, 1975

To provide for the establishment of the an Estate Agency Affairs Board and an Estate Agents Fidelity Fund and for the control of certain activities of estate agents in the public interest

National Gambling Act 33, 1996

To control and facilitate the gambling industry

Intellectual Property Laws Rationalization Act 107, 1996

To provide for the registration of intellectual property rights subsisting in the ex-TBVC’s into the national system, to extend the South African intellectual property rights legislation throughout the Republic and repeal certain intellectual property laws

International Trade Administration Act 71, 2002

To establish the international trade administration commission; to provide for the functions of the commission and for the regulation of its procedures; to provide for the implementation of certain aspects of the Southern African Customs Union agreement in the Republic; to provide, within a framework of the SACU agreement, for continued control of import and export of goods and amendment of customs duties; and to provide matters connected therewith.

Liquor Act 59, 2003

To establish national norms and standards in order to maintain economic unity within the liquor industry, to provide for essential national and minimum standards required for rendering services, to provide for co-operative government in the area of liquor regulation

Lotteries Act 57, 1997

To establish a National Lotteries Board and to regulate and prohibit lotteries and sport pools

National Empowerment Fund Act 105, 1998

Establishes a trust to promote and facilitate ownership of income generating assets by historically disadvantage persons, particularly assets in state owned enterprises made available at a discount as part or restructuring programmes, gives powers to the trust to enable it to establish sub-trusts and investment companies to promote black economic empowerment

National Small Business Act 102, 1996

To provide for the establishment of the National Small Business Council and Ntsika Enterprise Promotion Agency; and to provide for guidelines to be followed by organs of state to promote small business in South Africa and for matters incidental thereto.

Patents Act 57, 1978

To provide for the registration and granting of letters patent for inventions and for rights of a patentee.

Rationalization of Corporate Laws Act 45, 1996

To provide that certain corporate laws shall apply throughout the RSA, to repeal certain corporate laws and to provide for the retrospective incorporation of certain putative close corporation

Trade Marks Act 194, 1993

To consolidate the law relating to trade marks and to provide for the registration of trade marks, certification of trade marks and collective trade marks and for the protection of rights relating thereto

Trade Practices Act 76 of 1976

To provide for the control of certain advertisements; to restrict the giving or supply of benefits and to regulate the use if trade coupons in connection with the sale or leasing of goods or the rendering or provision of certain services; and to provide for incidental matters


5.5 Concerns and Recommendation raised by the Committee


    1. Facts and Figures of the New Dti Campus
    2. The rationale behind creating a campus for the Dti group was mainly to create a one-stop "trade and industry" service delivery shop that would provide a platform that would stimulate sharing of intellectual assets and to create a synergistic environment to realize the strategic before objectives of the Dti.

      It was reported that the fixed price for the construction contract amounted to R 450 million and outsourced contracts valued at R 152 million were awarded to the HDE’s. A total of 2100 staff would be accommodated.



    3. Dti Structure

Under the leadership of Minister Mandisi Maphahlwa the Department of Trade and Industry is constituted as follows:

Deputy Minister – Ms Hendricks

Director General – Dr Alistair Ruiters

8 Divisions

26 Business Units

35 Foreign Offices
3 Provincial Offices

Parliamentary Office

1000 Staff

19 Agencies

At the heart of the Dti structure were the eight enabling divisions in their order.

Division 1: The Office of the Director General

This division is at the center of the Dti organization as it provides strategic support to the Minister; the Deputy Minister and the Director General on strategy and planning; research and policy analysis; monitoring and evaluation; intergovernmental relations programmes; and internal audit.

Division 2: Group Systems and Support Services Division

This division is inter alia responsible for providing support on human resources development; corporate affairs; financial management; facilities management; corporate governance; risk management and legal services.

Division 3: Marketing

The role and function of the Marketing Division within the Dti value chain is focused in positioning the Department of Trade and Industry as a partner for economic development. It is also responsible for promoting awareness about the Dti products and services to increase uptake and access.

Division 4: Enterprise and Industrial Development Division

Core business functions of this division focuses on small business development and promotion; cooperatives development; broad-based black economic empowerment; skills development; logistics and infrastructure; technology promotion; and national industrial participation programme.

Division 5: International Trade and Economic Development

Its core business functions include negotiating international trade agreement; promoting economic integration in the continent within the NEPAD framework; managing tariff structures for South Africa; as well as promoting South African in multilateral trading systems.

Division 6: Consumer and Corporate Regulation

Key among the core functions of this division is the management of the functional areas of concurrent national and provincial legislative competence as outlined in schedule 4 of the Constitution with the provinces for example in areas of liquor; gambling; and consumer protection. It also oversees and ensures the enforcement and compliance in micro-lending; competition; intellectual property rights; and corporate company law


Division7: The Enterprise Organization Division

This division focuses on administering the dti incentive schemes and these are:

Division 8: Trade and Investment South Africa

The division’s core functions include facilitating investment; export development and promotion; export marketing assistance; trade missions and busying missions; and development of sector strategies.

It was reported that out of the total budget allocation to the Department; 33% was spent on grants and incentives to support enterprises, in particular small businesses; 38% was transferred to the dti Agencies; 10% was spent on salaries; and the remainder was spend on procurement.

6 DAY 2: Visit to the BMW Plant in Roslyn

BMW Plant Rosslyn addressed the Committee on its core business functions and some of its key successful corporate social responsibility programmes. The key product for the plant includes the 3, 5, 7 and 8 series for the local market and is also involved in component export business.

The Committee was informed that BMW SA spent R 2 billion worth of investment between 2003 and 2005 on the Roslyn world-class facility. BMW SA’s export markets include: USA, Africa, East Asia; Japan; Australian; and New Zealand.

However, it was reported that despite the increase on the productivity levels, the volatility of the rand was making the plant to lag behind its global competitors. The following manufacturing challenges were highlighted:

Notwithstanding the challenges stated above, it was reported that the plant has re-engineered to international benchmarks and export opportunities.



The Committee was informed that BWM-SA has invested consistently on various corporate social responsibility programmes and these include:


    1. Concerns raised by the Committee
    1. Dti’s involvement in promoting Government’s objectives in the automotive sector

Integrated Manufacturing Strategy (IMS) was highlighted as one of the dti’s contribution to Governments’ Micro Economic Reform Strategy (MRS). Chief among the mechanisms in the implementation of the Integrated Manufacturing Strategy were Customized Sector Programme (CSP) for the priority sectors (including automotive industry).

The automotive customized sector programme was targeted at providing among other things:

The Motor Industry Development Programme, in essence was intended to encourage manufacturing of high volume products, obtain economy of scale benefits, and export competitiveness.

It was reported that the key strategy for the success of the Motor Industry Development Programme for the next coming seven years would be premised on the following pillars:

The Department reported that South African Automotive Industry as a leading manufacturing sector in the economy, was contributing 6,6% towards GDP and has been ranked 18th in the world. Manufacturing plants were mainly concentrated in Gauteng, Eastern Cape and Kwa-Zulu Natal.

Recent investment announcement by the OEM’s include the R2 billion by BMW SA, the R 3,5 billion by Toyota SA and R1 billion by Ford (first USA OEM to invest in export programme) for the next generation models. Above all investments on the TISA investment pipeline would amount to R6, 3 billion.

In the light of the facts presented before the Committee, there was a realization that the automotive industry was a key growth area in South African economy and as such, the Department and the Committee reaffirmed their commitment to support the automotive industry as a major growth sector.

    1. The Automotive Industry Development Centre: The South African Auto Industry in perspective
    2. Focusing on the present situation in South Africa’s automotive industry it was reported that future projections in the sector looked certain. However social, economic and political risks would still prevail.

      Future challenges include integration of entire local value chain into global arena; job creation; equity and BEE; growth; and economic upliftment. External pressures from Eastern and China; globalization; globalization excess production capacity; and market downturn continued to exist.

      In meeting the aforementioned challenges, institutional support to technological efforts of firms was identified as a key, through the establishment of basic industrial services; technology information centers; infrastructure development; and skills development and training.


    3. Visit to IDC offices in Sandton: Presentation by KHULA
    4. The presentation provided an update on key priority areas of critical intervention by Khula in the next coming six months.


    5. Presentation by the IDC
    6. The presentation outlined IDC’s corporate profile, vision and mission; financial policy and financial track record; IDC’s financing process; organizational structure; evolution of IDC’s focus areas; and the key development objectives for the next coming three years.

      It was reported that with R24,5 billion worth of capital and reserves the IDC has generated a net attributable income of R697 million for 2004 financial year. IDC’s total assets were valued at R30, 9 billion.

      In 2003/2004 IDC has approved finance to the value of R4, 8 billion representing over 3% of private sector fixed investment in South Africa. More than 250 entrepreneurs have also been assisted. The finance value to empowerment firms represented 53% of the number and 35% of the value of approvals.

      The financial instruments offered by IDC for the new or existing investment projects include: equity funding; quasi-equity instruments; commercial long term loans; share warehouse; wholesale finance; export and import finance; short-terms trade finance; and venture capital and guarantees.

      The key developmental objectives in the next coming three years will be focused on job creation; more equitable distribution of investments in rural, provincial and exploring township development; BEE; NEPAD support; fully operationalise existing local development agencies and introduce new LDAs.

    7. Concerns and Recommendation made by the Committee


In its response to the questions and concerns raised; Khula reported that with Dti’s corporation the Treasury was revising the mandate of the DFI’s. It was reported that 1.1 billion has been dispersed since Khula’s inception. Hence, Khula had to be measured in terms of equity distribution and sustainable enterprises.

It was also reported that interest rates on Khula’s facilities were geared towards flexible support products for the end users as the approach was purely based on a ‘means test’ on the basis of each individual.

In closing, Chairperson of the Committee stated as the Department and the associated entities endeavor to meet the targets as set out in the State of the Nation Address, the Committee would sought to intensify its oversight function. He further noted that Dti’s Annual Reports and those of the COTII Group were soon to be tabled before Parliament to strengthen the interaction between the Department and the Agencies.


Report to be considered.

Chairperson Date