Deputy President Cyril Ramaphosa: Reply to questions in National Council of Provinces on 7 Sept 2016

8 Sep 2016

Question 1

On the matter of the practice of fronting by established companies


Honourable Members,

Since the implementation of the Broad-Based Black Economic Empowerment policy, the practice of fronting by some companies has been identified as a significant problem. The policy did not initially address fronting because it was envisaged that companies would embrace the spirit and the intent of broad-based BEE.

However, through monitoring the implementation of this policy we became aware of many cases of fronting and attempts to circumvent the legislation. Broad-based Black Economic Empowerment is one of the most important measures the democratic government has put in place to address the economic injustices of the past.

Alongside employment equity, land reform and preferential procurement, BEE has contributed significantly to ensuring the entry of millions of black South Africans into the mainstream economy. Fronting is therefore a gross abuse of a very important process of economic transformation.

It undermines the very purpose for which broad-based BEE policies were established. Working together with the Presidential Broad-Based BEE Advisory Council, we therefore decided to revise the policy to define and criminalise fronting.

Under the amended B-BBEE Act, the Broad-Based BEE Commission now has a legislative mandate to receive complaints, investigate and institute proceedings in court to restrain any breach of the Act.

The Act has also introduced penalties for those entities or persons found to be involved in fronting – a fine of up to 10% of an entity’s turnover or imprisonment for up to 10 years. A person convicted of such an offence may not transact with any organ of state or public entity for a period of 10 years.

The B-BBEE Commission has begun with advocacy campaigns across the country to educate people about their rights and their obligations.

Fronting is not a victimless crime.

The perpetrators of fronting practices often target the poor and vulnerable in society. They deprive those most in need from opportunities that should rightly be theirs.

I thank you.

Question 2

On government’s progress to attract investment through the “one-stop investment shop”


Honourable Members,

The Department of Trade and Industry, through an entity that was set up when the President met the business community and labour, has been tasked with the process of setting up this institution to ensure that we manage and address the difficulties that many people in business had raised on an ongoing basis and that they had encountered in the regulatory environment.

Government responded positively to this and agreed that this should be set up; so, Investment South Africa has been set up.

In setting it up, it is meant to fast-track investments in South Africa and assist those who want to invest in our country, to ensure that all the difficulties and challenges they may have experienced, are addressed very quickly.

This was set up with the full participation of the private sector. It combines services provided by SARS and the departments of Home Affairs, Environmental Affairs, Water Affairs and others.

Invest SA played an important role in facilitating the investment by Beijing Automotive International Corporation of R11 billion in a facility in Coega that will produce 50 000 cars a year. This will create about 9 000 jobs in the construction phase, and will ultimately employ around 4 000 people. Fast-tracking of this project was done through this unit.

Invest South Africa will give great assistance to the investor community.

I thank you.

Question 3

On continuation of government’s anti-poverty and short-term Job creation programmes in Tshwane and Nelson Mandela Bay.


Honourable Members,

The recent changes of government in the metros of Johannesburg, Tshwane and Nelson Mandela Bay are not expected to negatively affect the anti-poverty programmes of national government. The Constitution enjoins all of us, from whatever political party, to seek to address the plight of the poor to the best of our ability.

Our Constitution defines a cooperative governance system that promotes collaborative relationships between the three spheres of government. Although local government is a sphere of government, and not an administrative arm of national or provincial sheres, the law compels all spheres to collaborate in the delivery of services.

The three spheres of government exist in a unitary South Africa. There is no part of the country that is not the responsibility of the ANC-led national government. There is no citizen whom this ANC-led government is not required to serve, support and empower.

It is therefore important that all three spheres work together on decision-making and coordinate budgets, policies and activities, particularly for those functions that cut across the spheres. The departments of Public Works and Cooperative Governance have institutionalised the implementation of the Expanded Public Works Programme and Community Works Programme across all three spheres of government.

These programmes are institutionalised through protocol agreements signed between the national departments and relevant implementing bodies. The cities of Johannesburg, Tshwane and Nelson Mandela Bay have all signed such protocol agreements and have each set targets for expanded public works and community works programmes.

We expect that these protocols will be respected and sustained. Our people still expect high levels of service delivery, effective administration, transparency and accountability.

In addition to cooperation between the spheres of government, communities have ways to ensure that these metros sustain a focus on poverty alleviation and public employment programmes.

Residents can interact with their municipalities through Integrated Development Planning consultations, petitions, questions to councils, and participation in ward committees.

We encourage communities to use these mechanisms to hold elected public representatives to account.

As the Presidency, we will continue to use structures like the President’s Coordinating Council (PCC) and Cabinet Makgotla to improve inter-governmental coordination and oversee the implementation of national priorities such as the EPWP, Community Works Programme and other anti-poverty programmes.

Mphephethwa, izinhlelo zikaHulumeni ezifana ne EPWP aziyi ndawo. Abantu bakithi bayazidinga. Bayazi ukuthi izona ezixosha indlala.


Question 4

On the national minimum wage


Honourable Members,

In his State of the Nation Address on 17 June 2014 – just over two years ago – President Jacob Zuma called on Nedlac social partners, under the leadership of the Deputy President, to establish a process to address wage inequality and protracted and violent strikes.

Structured work on a national minimum wage began following the Nedlac Labour Relations Indaba of November 2014.

This Summit tasked a Committee of Principals – representing government, business, labour and community – to determine the modalities of a national minimum wage and measures to stabilise labour relations.

Negotiations on a national minimum wage have been taking place within a technical task team, where the social partners have put forward various proposals and presented relevant research. In addition to discussions on the level at which such a wage should be set, the technical task team has been considering issues such as exclusions and exemptions and the relationship between a future national minimum wage and existing sectoral wage determinations.

While progress has been made on several principle issues, there are a number of matters on which the social partners have not reached agreement.

To encourage progress, I have recently appointed, in consultation with the Committee of Principals, a seven-person panel to advise on an appropriate level at which the national minimum wage could be set.

This advisory panel is in the process of reviewing available research into the potential social and economic impact of a minimum wage, as well as considering international experience. The panel is expected to report back to the Committee of Principals towards the end of next month.

This is vitally important work because we need to ensure that the national minimum wage makes a meaningful difference in the lives of the working poor and in their communities. At the same time, we need to ensure that the national minimum wage does not undermine our efforts to grow the economy and create jobs on a far greater scale.

As a country, we are keen to have a national minimum wage in place as soon as possible, but for its implementation to be effective, we need to ensure that all social partners are on board.

We therefore welcome the commitment from all social partners to work with urgency to conclude this process.

I thank you!

Question 5

On the nuclear deal


Honourable Members,

Government has not entered into a nuclear deal with any country. Government remains firmly committed to an open, fair and transparent procurement process, and to implementing the programme at a scale and pace that our country can afford.

A request for proposals for a nuclear new build programme of 9,600 MW will be released to the market during this financial year in line with the Cabinet decision taken on 9 December 2015.

The Department of Energy is currently consulting with relevant stakeholders to finalise the documentation.

Government is committed to implementing an appropriate energy mix, comprised of coal, nuclear, renewables, gas and hydro, to ensure security of electricity supply and support economic growth.

In pursuing a suitable energy mix, government is determined that our investment in generation capacity should be evidence-based, sustainable and affordable. As indicated by the Department of Energy in December 2015, any decision to proceed further with a nuclear build programme will only take place after the Request for Proposals process has been completed and a final funding model has been developed.

The documents to which the Honourable Member refers have been requested by applicants in a review application presently being opposed by the Minister of Energy and the President of the Republic of South Africa.

As this matter is the subject of ongoing litigation in the Western Cape High Court, it would not be appropriate to comment directly on the documents requested. The rules of discovery will be applied and the Court will make a decision if needs be on their disclosure.

I thank you.

Question 6

On binational commissions


Honourable Members,

Bi-National Commissions and other structured bilateral mechanisms are critical to directing and managing bilateral political and economic relations between South Africa and its international partners.

In most BNCs, strategic guidance is provided by political principals on matters of mutual interest, while senior officials coordinate the technical implementation of agreed activities.

Bilateral instruments often provide for separate working groups that, among other things, routinely:

  • assess the implementation of current areas of bilateral cooperation;
  • identify future areas of bilateral cooperation;
  • identify responsible entities to monitor progress and secure implementation; and,
  • identify challenges and obstacles in implementing bilateral programmes of action and proposing possible solutions.

As part of its participation in BNCs, government conducts its own assessment – on a case by case basis – of the state of bilateral relations and progress in the implementation of agreements and bilateral programmes.

A recent assessment conducted by the Department of International Relations and Cooperation in August 2016 concluded that the various BNCs with other African countries contributed to the advancement of several national priorities.

These include resolving the energy challenge, encouraging investment and mineral beneficiation, the development of the ocean economy, and effective implementation of the Industrial Policy Action Plan and national infrastructure development programme.

Our experience is that BNCs provide an important platform for structured expansion of political, trade, investment and developmental relations with key partner countries. They have assisted, for example, in expanding the value of South Africa’s trade with the rest of the African continent from R11.4 billion in 1994 to R420 billion as of December 2015.

Similarly, our trade with China – another significant partner with whom we have a BNC – has soared over the past few years. China is now South Africa’s number one trading partner with total trade at the end of 2015 reaching R294 billion. 

We have also used BNCs to effectively promote skills development, capacity building and sharing of expertise.

An example of this, is the agreement with Sweden through which young people from South Africa received scholarships for post-graduate study in Sweden in a wide range of fields, including entrepreneurship, economics, law, international health, bioinformatics and engineering.

Through BNCs and other bilateral mechanisms, South Africa’s international relations policy continues to contribute significantly to the expansion of trade and investment relations, the development of the skills and capabilities of our people, and the promotion of cooperation and collaboration.

I thank you.

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