National Assembly - 19 September 2000
TUESDAY, 19 SEPTEMBER 2000 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 14:01.
The Deputy Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
COMPOSITION OF ICASA
(Announcements)
The DEPUTY SPEAKER: Order! On 14 September 2000, the House adopted a resolution designating the Deputy Speaker to conduct the lot required in terms of section 7(2)(b) of the Independent Communications Authority of South Africa Act, to determine which three of the six members of the first council of the Independent Communications Authority of South Africa, Icasa, appointed by the President must vacate their offices as councillors two years after the date of their appointment. I have to announce that the lot was conducted this morning, and the following names were drawn: Ms Y T Carrim, Mr W H Currie and Ms L Lloyd.
The outcome of the draw will be communicated to the Office of the President.
NOTICES OF MOTION
Ms E THABETHE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes the high note on which the seventh national congress of the Congress of South African Trade Unions started;
(2) recognises that the historic support of Cosatu for the ANC was again confirmed;
(3) acknowledges that the hallmark of a lively, effective and meaningful democracy is vigorous debate around policy and implementation; and
(4) reminds the people of South Africa that there is only one alliance in South Africa that truly represents the interests of the many above the privileges of the few, and that is the tripartite alliance between the ANC, Cosatu and the South African Communist Party.
[Applause.]
Mr D H M GIBSON: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP:
That the House -
(1) expresses its appreciation to the honourable Mr Tony Leon, Leader of the Opposition, who has just returned from the United States of America where he met with influential individuals and organisations to advance the interests of South Africa;
(2) takes note that Tony Leon is promoting and marketing South Africa despite the difficult circumstances created by the South African Government, including worldwide criticism and rejection of the ANC policy on HIV/Aids and Zimbabwe;
(3) calls on the Leader of the Opposition to continue with his efforts to promote foreign trade with, and investment in, South Africa; and
(4) rejects with contempt the attempt by Deputy Minister Pahad to call into question Tony Leon’s patriotism - attacking colleagues by abusing the term “patriotism” is “the last refuge of the scoundrel”.
[Applause.]
Mr J H SLABBERT: Madam Speaker, I hereby give notice that on the next sitting day of the House I will move:
That the House -
(1) recognises the fact that regional court magistrates carry the heaviest burden of all our courts in respect of serious criminal matters; and
(2) requests the Minister for Justice and Constitutional Development to urgently consider increasing the salaries of regional court magistrates and to implement a vehicle financing scheme for regional court magistrates.
Mr J H MOMBERG: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that, although the system of paying farm workers in the Western Cape with alcohol has largely disappeared, it is reported that many farms still supply wine to workers on credit, contributing to poor health and social conditions;
(2) recognises that the levels of alcoholism and alcohol-related illnesses on these farms are unacceptably high; and
(3) calls on farmers and all concerned citizens to support efforts by the NGO sector to deal decisively with this problem, and to assist the traditionally marginalised farmworkers to become creative, productive and healthy members of our society.
[Applause.]
Mr H A SMIT: Madam Speaker, in response to the statement made yesterday by the Minister of Defence and the Chief of the National Defence Force regarding the possible reinstatement of conscription, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:
Dat die Huis -
(1) kennis neem van die stellings gister deur die Minister van Verdediging en die Hoof van die Weermag oor die moontlike herinstelling van diensplig; (2) meen die SANW moet eers toesien dat die bestaande mag optimaal benut word;
(3) van mening is dat die SANW moet toesien dat weermaglede nie vir nie- militêre aangeleenthede aangewend word nie, behalwe waar dit, weens buitengewone omstandighede, nodig mag wees dat die SANW die SAPD moet bystaan; en
(4) van mening is dat enige vorm van diensplig vrywillig moet wees en dat die SANW alle metodes moet ondersoek om te bepaal hoe dit moontlik bewerkstellig kan word. (Translation of notice of motion follows.)
[That the House -
(1) notes the statements by the Minister of Defence and the Chief of the Defence Force yesterday regarding the possible reinstatement of conscription;
(2) feels that the SANDF should first ensure that the existing Force is being utilised optimally;
(3) is of the opinion that the SANDF should see to it that members of the Defence Force are not employed for nonmilitary matters, except when it may be necessary, because of extraordinary circumstances, for the SANDF to assist the SAPS; and
(4) is of the opinion that any form of conscription should be voluntary and that the SANDF must investigate all options in order to determine how this can be practicably realised.]
Mr M N RAMODIKE: Madam Speaker, I hereby give notice that on the next sitting day of the House I will move on behalf of the UDM:
That the House -
(1) notes -
(a) with disgust and trepidation the death of the farm employee, Mr
Kapa, of Palmietfontein farm outside Pietersburg in the Northern
Province, who was bitten to death by a white farmer's vicious
bull terrier dogs;
(b) that the white farmer was grossly negligent and careless about
the lives of his black farm employees, and that he is directly
or indirectly responsible for the death of Mr Kapa and, in fact,
an accessory to this inhuman criminal offence; and
(c) further that the farmer's attitude and actions smack of racism
and a disregard for human rights and, in particular, the
employee's rights, and promotes discord and racism between black
people and white farmers in this country; and
(2) calls on the Minister of Safety and Security and his department to act decisively against the culprit and allow justice to take its course and, furthermore, to introduce enabling legislation which will make racism punishable by law.
Mrs M S MAINE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes -
(a) the report that Anglo-American Platinum mining (Amplats)
yesterday filed papers to Labour Court in a bid to stop the
National Union of Mineworkers from going on a strike; and
(b) that the dispute is about wage increases, equalisation of
benefits and conditions of employment, and an end to
discriminatory practices along racial lines;
(2) believes that Amplats can reach an amicable solution with the union as profit levels in the mining industry are reportedly on the increase; and
(3) calls on Amplats and the NUM to continue negotiations and reach an amicable solution which will be in the interests of all parties concerned.
Dr S E M PHEKO: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the PAC:
That the House notes that -
(1) one thousand residents of Ivory Park in Gauteng Province were violently evicted from land on Saturday, 16 September 2000;
(2) the municipal police shot and injured four people, one of whom had a bullet lodged in his mouth, and the injured residents were taken to Thembisa Hospital by ambulance after some delay;
(3) the police had no court interdict, as required by section 26 of the Constitution and, at any rate, these municipal police had no right to shoot homeless and helpless women, children and men;
(4) the police took away not only building material from these poor people, but also their bedding, furniture and cooking utensils, creating more suffering among these economically oppressed people;
(5) the Ivory Park people have not been offered any alternative land for homes, and have been squatting under unbearable and inhumane conditions for eight years;
(6) the PAC condemns this colonial culture of evicting Africans …
[Time expired.]
Mr F BHENGU: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes the recent visit by the Minister for Welfare and Population Development to seven provinces, evaluating poverty, HIV/Aids and social welfare programmes;
(2) further notes that our Government has been pursuing antipoverty programmes focused on the poorest in our country;
(3) welcomes the proposed Marshall Plan; and (4) hopes that it will act as a base from which the Government can combat poverty. [Applause.]
Mrs S V KALYAN: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP:
That the House -
(1) congratulates the Congress of South African Trade Unions on its tough stance on the causal link between HIV and Aids and their insistence that the link between HIV and Aids is irrefutable and any other approach is unscientific and, unfortunately, likely to confuse people;
(2) urges President Mbeki to take the advice of his allies in this regard and finally acknowledge the importance of HIV in causing Aids, and to shift his focus from theoretical debates towards providing inexpensive medicines to Aids sufferers; and
(3) encourages the frail ANC-SACP-Cosatu alliance to learn from each other, so that while the ANC comes to realise that HIV causes Aids, Cosatu should realise that amendments to the labour legislation are vital to the growth of the country’s economy.
[Applause.]
Mr M F CASSIM: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:
That the House -
(1) commends the department of agriculture in KwaZulu-Natal and the veterinary services for their prompt handling of the outbreak of foot- and-mouth disease in the Camperdown area; and
(2) urges -
(a) that every effort be made to comb outlying farms with a view to
containing the virus;
(b) that the importation of swill be stringently controlled at all
ports of entry; and
(c) that the problem of foot-and-mouth disease in the region as a
whole be dealt with promptly and systematically.
Dr B G MBULAWA-HANS: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes -
(a) that South Africa is making a comeback as a major exporter of
vehicle parts; and
(b) that the European Union and the Ntsika Enterprise Promotion
Agency, established to support small business, intend to open up
significant investment opportunities in the industry with an
initiative known as Ingage SA 2000;
(2) recognises that this initiative will promote specific business-to- business relations between local companies and potential European counterparts; and
(3) welcomes all initiatives aimed at promoting small businesses, the creation of jobs and ensuring economic growth to the benefit of all South Africans.
[Applause.]
Adv A H GAUM: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP and the DA:
That the House -
(1) notes the appointment of a task team to make recommendations regarding the contents and nature of history education;
(2) further notes with profound disapproval the lack of judgment shown by Minister Kader Asmal in appointing two ANC politicians - Dr Wally Serote and Dr Pallo Jordan - to this task team, clearly showing political motives which are questionable and incomprehensible; and
(3) urges Minister Asmal to respect and honour the separation of legislative and executive powers by immediately withdrawing these two ANC members from the task team, as this may provide a reasonable prospect that the recommendations of the task team will be free of political bias.
Dr G W KOORNHOF: Madam Speaker, I hereby give notice that on the next sitting day of the House I will move on behalf of the UDM:
That the House -
(1) notes with regret that the merger plans between Nail, Sanlam and Metropolitan have been abandoned;
(2) urges South African civil society, especially Business South Africa, to continue with all efforts that place black economic empowerment high on the agenda and which will ultimately lead to it becoming a sustainable reality in the South African economy; (3) acknowledges that black economic empowerment must form an integral part of South Africa’s macroeconomic future; and
(4) urges the Government to broaden its macroeconomic strategy to include enterprise development, with special emphasis on black economic empowerment, as a vital component in solving the unemployment crisis currently experienced in South Africa.
Ms S C VAN DER MERWE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that -
(a) the status report on South Africa's marine biodiversity states
that various local fish species have been depleted;
(b) overutilisation, development and the destruction of habitats are
the main causes of this depletion, as well as ignorance about
ecosystem conservation, and a shortage of marine biologists with
a mathematical background; and
(c) the most important sand beach ecosystems of the Eastern Cape are
totally unprotected; and
(2) concurs with the report that a holistic system of conservation areas is needed, and that a network of qualified monitors need to be employed to monitor fishing, the prevalence of alien species and to ensure that people obey the existing progressive conservation laws passed by the ANC-led Government.
[Applause.]
Mr S A MSHUDULU: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes -
(a) the restructuring, transformation and relaunch of the
Independent Development Trust from a funding bureau to the
Government's primary vehicle to combat poverty; and
(b) that the main role of the IDT is to enhance the Government's
delivery capacity at national, provincial and local level, while
acting as the driving force behind rural development;
(2) welcomes the initiative to make the IDT a development management agency; and
(3) congratulates the Government for adopting an all-round approach in the fight to eradicate poverty in South Africa.
[Applause.]
CONGRATULATIONS TO AMAGLUG-GLUG, PENNY HEYNS
AND THE REST OF THE SOUTH AFRICAN OLYMPIC TEAM
(Draft Resolution)
Mr G Q M DOIDGE: Madam Speaker, I move without notice: That the House -
(1) congratulates Amaglug-glug on the splendid and inspired display of football in their convincing victory over the formidable Brazilians at the Sydney Olympic Games;
(2) congratulates Penny Heyns on her performance in the 100-metres breaststroke event which earned her a bronze medal;
(3) recognises these victories as great and historic international sporting achievements for the nation;
(4) wishes Amaglug-glug, Penny Heyns and the other sportsmen and sportswomen representing South Africa everything of the best for the remaining events; and
(5) assures them of its solid support.
Agreed to.
Mr J H MOMBERG: Madam Speaker, on a point of order: During the motion presented by the hon the Chief Whip of the DP, he used the term `scoundrel’ after reference to the Deputy Minister of Foreign Affairs. I would just like to ask whether it is parliamentary or not.
The DEPUTY SPEAKER: Order! Indeed, it is totally unparliamentary. Mr Gibson?
Mr D H M GIBSON: Madam Speaker, may I address you?
The DEPUTY SPEAKER: Order! Please address me.
Mr D H M GIBSON: Madam Speaker, … [Interjections.] You will note when you read the notice that the words concerned were within quotation marks. It is a very well-known literary allusion. Of course, I would not expect Mr Momberg to know about it. [Interjections.] I would like to suggest that you read it, that you rule and eventually, if the allusion is considered to be unparliamentary, that you omit it from the motion that is to be printed tomorrow. [Interjections.]
The DEPUTY SPEAKER: Order! I will look at the draft notice of motion and see whether those words are, in fact, attributed to hon Gibson or to someone else. Therefore, I will rule after having done so. [Interjections.]
The DEPUTY MINISTER OF SAFETY AND SECURITY: Madam Speaker, can I assist you? The Chief Whip of the DP deliberately omitted to mention the name of the author from whom that allusion is derived, the great Samuel Johnson. It would be very embarrassing if anything by Samuel Johnson was regarded as unparliamentary.
The DEPUTY SPEAKER: Order! Well, hon member, we shall see that when we examine the draft. [Interjections.]
TRANSNET PENSION FUND AMENDMENT BILL
(Second Reading debate)
The MINISTER OF PUBLIC ENTERPRISES: Madam Speaker and hon members, let me, at the outset, thank the chairman and members of the Portfolio Committee on Public Enterprises for processing this Bill speedily and efficiently, so that we can dispose of the Second Reading today. I am also pleased that this Bill has the support of transport sector unions as well. This Bill is very specific, but its passage represents a very important milestone in Transnet’s transformation. It aims to eradicate economic inefficiencies in the pension fund, to provide more productive options for members and to eliminate a major stumbling block to Transnet’s restructuring.
Over and above the existing Transnet Pension Fund, it establishes two statutory pension funds, namely a defined contribution pension fund catering for the 89 000 current active members on the one hand, and another second defined benefit fund designed for the 102 000 or so pensioners who are on the books.
It also allows for appropriate rules and mechanisms for members, if they so wish, to cede their rights and transfer assets that are commensurate with those rights from the current fund to those two new funds. This modernisation of the Transnet Pension Fund is in line with emerging best practice both here in South Africa and abroad, and it provides a range of options with varying risk profiles for the different categories of participants in the Transnet Pension Fund.
When Transnet Limited was established in 1990, the pension fund was transferred from the former SA Transport Services to Transnet, with effect from 1 April 1990, with an actuarially determined shortfall of R17,2 billion, R10,4 billion of which was addressed by Transnet issuing loan stock to the fund. This loan stock, in turn, was primarily in the form of T- 11 bonds and is currently reflected at R8,4 billion on the company’s balance sheet.
The pension fund of Transnet, as of 31 March 2000, has an actuarial surplus of R2,4 billion, achieved through successful investment strategies, an increase in Transnet’s contribution to the pension fund and the issuing of the T-11 bonds, as referred to earlier. Whilst all these strategies have assisted the pension fund itself, they have had a very serious financial impact on the status of the company as a whole in four main areas.
Firstly, the profitability of the company has been reduced on a yearly basis to a loss-making position in recent years, influenced largely by the R1,4 billion annual interest payment on the T-11 bond. Secondly, the company’s ratio of debt to equity deteriorated from 57% before the bonds were issued to 72% when they were incorporated. Critically, the issue of these bonds restricted independent decision-making as the company now needed the consent of institutional bondholders before it could embark on any major restructuring endeavours.
One example of this emerged during the disposal of 20% of SA Airways to Swissair last year, where the T-11 bond created a debt burden sharing agreement that led to the SA Airways Unallocatable Debt Act with which all members are familiar. Thirdly, the company had to make additional contributions of up to 9% to the pension fund, until 1997, so that we are above the stipulated requirement of 7,5%. This has meant an additional contribution of R500 million per annum. Since 1998, Transnet has, however, been able to reduce this figure to 4,5% or R250 million per annum. Fourthly, the transfer of properties including here, in Cape Town, the Victoria and Alfred Waterfront to the pension fund in 1994, to deal with this deficit, eroded the asset base of Transnet.
The problem of the overall Transnet debt was further compounded because the present pension fund is structured as a defined benefit fund that houses pensioners and active members alike, confining them to a single option. Whereas the ideal situation in a fund is to have more active members than pensioners, in our case, in Transnet, the reverse is true.
This has also created problems for defining asset and liability models aimed at making strategic investment decisions. This Bill presents solutions that will benefit Transnet as well as members of the pension fund. The market volatility on a base of R14,9 billion creates a very serious investment risk that, under a defined benefit fund, is underwritten by the company whose obligations are also guaranteed by the shareholder.
Under the defined contribution pension fund, this risk is the responsibility of members, but is offset by allowing active members to seek a variety of investment options that can provide greater returns on mixed portfolios. The benefit fund, therefore, provides fixed and stable income at low returns.
Converting from the benefit to the contribution plan requires the consent of members because the investment risk is transferred from the company to the member. Because of the risk transfer and to encourage members to convert, the Transnet Board has agreed to pay an incentive of approximately R7 900 per capita for members who convert, with a ceiling of R700 million if everyone moves across. Hence, if 50% of the members convert, this will result in a contribution from Transnet of R350 million.
The effective date for conversion is 1 November 2000. The reduction in the state’s contingent liability and its guarantees can only be determined then, but already we are informed that nearly two thirds of active members are likely to convert.
It is also very important to note that up until 1974 black employees were not part of the Transnet Pension Fund. Instead a fund for so-called nonwhite employees was established and operated almost like a savings account, as the company was not contributing to this fund or to any retirement programme for black employees. Furthermore, widows of black employees and pensioners were also not entitled to pension fund benefits.
This complicated racial architecture of the tricameral period had its effect on the structure of the fund, as well as producing complexities that I do not wish to elaborate on right now. However, let me just say that it was only after 1990 that black employees were fully included with the rest of Transnet employees as contributors as well as beneficiaries of the pension fund and the company contributed towards their retirement. Put bluntly, this means that black workers who toiled under very exploitative conditions to build the transport infrastructure of our country were thus directly discriminated against.
Since 1994, Transnet has explored innovative ways to deal with this historical problem. The projected improvements on Transnet’s balance sheet as a result of the enactment of this legislation, coupled with the improved financial standing, has enabled the Transnet Board to level the playing fields by committing approximately R275 million towards the account of these black members, so that their asset values in the pending contribution fund are brought on par with their white counterparts. Our Government and Transnet are fully committed to honouring the obligations we have to current Transnet pensioners.
The second defined benefit fund is intended to focus on their particular needs. It will be a closed fund with a fixed number of members and precise cash-flow requirements to service their needs. Currently about R2,2 billion is required to service pensioner needs and the T11 bond interests are seized towards meeting this particular requirement. Actuarial advise to unlock value in this fund emphasises a stable income to service pensioners’ cash-flow certainty and guaranteed products.
The investment shortage strategy on this fund therefore has to take these requirements into account. Recent negotiations with the Public Investment Commission to swap equities for Government-guaranteed bonds subject to the approval of the trustees of the pension fund see the need for these T11 bond interests fall away.
Pensioners will now also have representation on the board of trustees to ensure that their interests are protected. This improvement to the management of the fund is deepened through granting the Minister the authority to subject the fund to auditing and actuarial valuation from time to time in order to ensure that it is run and kept on a sound financial basis.
The enactment of this Transnet Pension Fund Amendment Bill will also enable us to modernise Transnet’s pension fund arrangements and address the legacies of our past, where recognition is accorded to all our elder citizens, be they black or white, who have contributed to the development of our transport infrastructure in South Africa. This enactment also forms an integral part of Transnet’s financial restructuring.
As of March 1999, 43% of Transnet’s total debt was due to its pension fund obligations as well as medical aid. The splitting up of the pension funds, the tailoring of investment strategies to suit the differing needs of groups of members, and the accompanied reduction of risk to the company will enable us to retire a substantial amount, if not all, of the T11 bonds, worth R8,4 billion, in the coming months. This means that the R1,4 billion annual interest payments would flow back into the Transnet books for more productive investment. This will, of course, have a very positive impact on Transnet’s restructuring and also boost its ability to fulfil its developmental role in our country.
In conclusion, let me express my thanks and appreciation to the interdepartmental team, comprising Leslie Maasdorp, Denzil Matjila and Siphiwe Matobela from the Department of Public Enterprises, Brian Molefe from the Department of Finance and Gloria Serobe from the Transnet Finance Directorate for their hard and diligent work in putting these exciting arrangements together. Before I sit down, I would like all hon members of this House to join me in congratulating this A-team, in particular Gloria who celebrates her birthday today. Let us present her with the Bill as her birthday present. [Applause.] We also thank the leadership of Transnet, including the chairperson, Louise Tager, who is present with us, for having provided guidance on this very important Bill which now removes this albatross from around our necks. [Applause.]
Mr S T BELOT: Madam Speaker, Minister and hon members, I wish to join the Minister in thanking and congratulating the members of the portfolio committee for the finalisation of the Transnet Pension Fund Amendment Bill before this House. The portfolio committee is at one that the amendments to the Transnet Pension Fund Act are necessary, essential and long overdue. In fact, during the briefing sessions by Transnet management to the portfolio committee on the performance of Transnet, it was always evident that the financial problems of Transnet could be found within the Transnet Pension Fund, which was systematically bleeding the company to death.
The members of the portfolio committee could hardly wait for this day so as to pass this Bill and stop what is tantamount to looting the Transnet company. This Bill therefore seeks to address that anomaly of looting the company.
As the Minister has already indicated earlier on, when Transnet Ltd was established in 1990, the Transnet Pension Fund was transferred from the former SA Transport Services to Transnet. As at 1 April 1990, the date of transfer, the pension fund was actuarially determined to have a shorfall of R17,18 billion. This shorfall increased annually and reduced the profitability of the company on a yearly basis. That cannot be acceptable.
When the committee met a few weeks ago to consider the amendments, it unanimously welcomed and supported all the amendments that sought to address, in the most comprehensive and equitable manner, the problems of the pension fund and Transnet.
I think, for the benefit of the members in the House, I need to present the objects of the amending Bill.
The object of the Transnet Pension Fund Amendment Bill is to provide, by means of various amendments to the Transnet Pension Fund Act of 1990, for the establishment of two statutory pension funds. Firstly, the Bill provides for the powers to establish a defined contribution fund and the amendment of a rule of the Transnet Pension Fund that allows for employee members to transfer from the Transnet Pension Fund to the Transnet Second Defined Benefit Fund. My colleagues from the portfolio committee and all parties will share with this House why all parties support this clause, and will also indicate to this House how the establishment and the transfer of members to the Transnet Second Defined Benefit Fund would benefit the members.
Secondly, the Bill provides for the establishment of the Transnet Second Defined Pension Benefit Fund and the transfer of members’ pensions from the Transnet Pension Fund to the Transnet Second Defined Pension Benefit Fund. Clause 1, for example, provides for the amendment of the definition, and clause 2 provides for the amendment of a rule of the Transnet Pension Fund that allows for the employee to transfer from the pension fund to the Transnet Second Defined Benefit Fund. The Bill sets out these clauses very carefully.
The Transnet Pension Fund Amendment Bill is seen by the portfolio committee as a solution to a problem which is unique to the Transnet Pension Fund. We believe, as the portfolio committee, that this Bill will not, and should not, be misconstrued as a solution to all pension fund problems. The Bill provides for the rules of the pension fund within the arrangement of the Act. The committee supports this as it will assist the administrators to manage the fund with confidence, and without any ambiguity.
We do however appreciate and commend the department’s and Transnet’s legal teams for a well-researched and well-thought-out approach to a very complex arrangement.
The committee is satisfied with the responses of the affected parties during the consultation process. The department did everything within its powers, and the time at its disposal to ensure that the views and voices of as many people as possible were heard. The Bill was published for the mandatory 30-day period, and only two responses were received. The third response was received during the sitting of the portfolio committee. The committee considered and deliberated on all the responses, and it is satisfied with the manner in which the legal team and the department accommodated and responded to the proposals.
I wish to report to this House that the committee has fulfilled its oversight role in respect of this Bill. We also believe, as the Minister indicated earlier, that the Bill also attempts to address the restructuring and transformation agenda which this country and this House are seized with.
There is only one rule of the pension fund that the committee had to get redrafted and that is Rule 19, which deals with the unsound financial position of the fund. The amendment was only accepted after the committee had satisfied itself that there would be a remedy for any situation that could result in an unsound financial position for the pension fund.
In conclusion, I wish to thank my comrades and colleagues from all parties, the parastatal Transnet and the department for the open-mindedness with which they approached matters in seeking sustainable solutions to the challenges of restructuring.
My sincerest thanks, on behalf of the committee, go to the Minister for his availability and willingness to interact and share his programme of restructuring of state-owned assets with the portfolio committee.
I also, on behalf of the committee, wish to join Comrade Minister in congratulating Gloria Serobe on her birthday. I have been advised not to tell what her age is. [Applause.]
Ms R TALJAARD: Madam Speaker, hon Minister Radebe, hon members, when Parliament passed the South African Airways Unallocatable Debt Bill, providing for the creation of a liquid, tradable instrument to the value of R1,3 billion to give effect to a burden-sharing arrangement between Government and Transnet and pave the way for the further privatisation of the South African Airways, the DP supported the Bill. As part of this burden-sharing agreement, Transnet absorbed R3 billion in debt, and when SAA was privatised for R1,4 billion, Government received R600 million of the proceeds and Transnet R800 million.
In participating in that debate, I gave a clear and unambiguous commitment to the Minister that the DP would support all legislation and measures brought before the portfolio committee that furthered the aims of the privatisation process. The Transnet Pension Fund Amendment Bill is such a measure, and that is exactly why it has the widespread support of all the parties in the House today.
Few would argue that a significant obstacle to a more rapid privatisation of Transnet to date has been the albatross of R27 billion, in both operational and pension fund debt, hanging around the transport parastatal’s neck. With this R27 billion burden, Transnet was forced to dedicate a large chunk of its net cash resources to funding the liabilities of its pension and medical aid funds. After paying for these liabilities, Transnet was left with little cash to invest in the upgrading of its assets, hence the group’s reliance on borrowed money and problematic gearing ratios.
With Transnet’s pension fund fully funded in December last year, the way was clear for a focus on resolving the debt issue. While the burden of the deficit was removed when the fund was fully funded, Transnet still had to service T11 bonds of which the actuarial value stood at close to R9 billion, with financing charges remaining at R1,4 billion of operating profit in recent years. This unhealthy situation has seen Transnet’s gearing level remaining unacceptably high, and its profit margins at an unacceptable level in deficit as such.
The detailed measures included in the Minister’s speech today will be studied. I am sure that the chairperson of our portfolio committee will invite the department to discuss the detail which was not in the Bill.
The Transnet debt is potentially lethal and needs to be resolved in conjunction with the focused effort to speed up company-wide privatisation.
In an interview in the Financial Mail in December last year, the then managing director of Transnet, Mr Saki Macozoma, ranked the problems at Transnet by importance in the following order, and first among these problems was clearly the debt and gearing ratio. He said, and I quote:
To rate Transnet’s current problems could be such a simplification as to be misleading. But I will hazard a rating: First, general Transnet debt and gearing. What we want from Government is simple: a coherent strategy that will be followed by a coherent story. On the pension fund, we require support for the conversion from defined-benefit fund to a defined contribution fund for current employees.
This is what we have done today.
The Bill before us takes the first step on the path to splitting Transnet’s fully funded pension fund into three components: a defined contribution fund, a ring-fenced and closed defined benefit fund and a separate defined benefit fund for those members who may decide against the conversion.
The DP hopes that the process of consultation with pension fund beneficiaries who are being urged to make the conversion will be extensive, and that the rules governing their rights and assets throughout the course of this conversion will be made transparent and will be implemented after extensive consultation.
When Transnet recently announced the sale of 75 million MCell shares to Johnnic Communications, the R2,5 billion strong injection of capital made the first contribution to the amelioration of the transport utility’s debt burden. At the time, the Minister said:
The proceeds from the transaction will be utilised for the continuing restructuring programme at Transnet. This includes the reduction of debt and recapitalisation within the Transnet group.
We hope that the detail we heard from the Minister today, which deals with the Transnet Pension Fund in particular, will be a precursor to the further detail we expect on the general debt of Transnet, how some of this debt will be further ameliorated; and how we will conduct the recapitalisation involved, with a view to privatisation at a more rapid pace.
Solving Transnet’s overall debt burden remains a burning issue, and will have wide implications, not only for Transnet, but also for Government, its finances and the transport industry in general. As I said earlier, we need clarity on the entire Transnet debt issue as a whole, and not only on the Bill before us today.
While Government is taking these necessary steps to alleviate the pressing and immediate pension fund problem it is lagging with some promised privatisations within the Transnet group. Firstly, Government has promised that Apron Services would be privatised and overcame the EU Competition Commission hurdle, only to find itself unable to finalise the bidding process for Apron Services to date in a context where competition from the Swiss is increasing. We need to get this privatisation process back on track.
Secondly, Transnet was due to sell its majority shareholding in the administrative division of Transmed, and bidders were due to register their interest by April this year. Government is yet to make an announcement on the privatisation of Transmed, and the resolution of the pension fund burden through the legislation we have here before us today is an incomplete effort unless a turnaround in Transmed’s fortunes is also effected.
Thirdly, clarity is required on whether or not further equity in South African Airways will be sold to Swissair during the current financial year, to assist us to reach the Budget’s targets for the proceeds from privatisation for this financial year. Clarity is needed on the timetable for South African Airways’s initial public offering, to make the further equity even more attractive to the Swiss. Therefore, clarity is needed as to whether all future IPOs will be held back until Government cuts its proverbial teeth on the initial Telkom public offering.
In the context of ongoing challenges for South African Airways’s turnaround strategy for winning, and in the context of escalating global fuel prices, clarity is also needed on whether or not Government is going to renew the contract of incumbent South African Airways’s CEO, Mr Coleman Andrews, or whether someone else will be placed at the helm of South African Airways. This decision will certainly imply a close discussion with Swissair as shareholders who have a commercial interest - not only the existing 20%, but also a commercial interest in potentially increasing their equity holding.
Fourthly, Transnet Housing had previously indicated plans to off-load more than 8 000 properties it is yet to sell as part of its plans to privatise noncore assets. Further clarity on Transnet’s property divesture process will assist efforts toward a healthy Transnet balance sheet. Lastly, clarity is needed on the links between the Department of Trade and Industry’s investment package’s industrial development zones that were recently announced and a clear ports and airports policy. Experience of export processing zones elsewhere, particularly in Namibia and Mauritius, has clearly shown that clarity is needed and that close linkage between a privatised ports operation, be it in the port or an airport, and an active IDZ policy, would be necessary.
Together with foreign investors and the opposition there are those, such as the Reserve Bank Governor, Tito Mboweni, and Black Economic Empowerment Forum chairman, Cyril Ramaphosa, who are watching this slow progress that South Africa is making to attract foreign direct investment with growing concern. In a recent briefing to Parliament’s Portfolio Committee on Finance, the hon Feinstein asked the Governor of the Reserve Bank about the structural factors in the economy that still concern him when one is discussing the missing elixir to growth. The Governor made specific reference to market flexibility and privatisation. He said, and I quote:
Yes, of course, most central bank governors would say the same thing that I said. It is a code that we use amongst central bankers. The code basically means that if the Government is committed to the restructuring of public enterprises, it will help a great deal if there was an implementation process because that is the thing that mostly attracts foreign direct investment.
Quoting from the Black Economic Empowerment Forum’s recommendations presented in Parliament last week, Cyril Ramaphosa said the following, and I quote:
Government should implement its restructuring of state assets programme to increase levels of foreign direct investment. It should also commit itself to divert an increasing portion of the budget towards capital expenditure.
When prominent former ANC MPs ring the foreign direct investment capital expenditure alarm bells in this fashion, responsible and responsive Ministers would sit up and take notice.
The DP will be waiting for the Medium-Term Expenditure Framework to see whether the deficit targets will be revised to provide for concerns about capital expenditure declines, whether the growth rates will be revised downwards, and whether the projected revenue from the privatisation process will reach Government’s Budget targets of R5 billion in 2001 and R10 billion in 2002-03 in the context of Government’s recently released policy framework of an accelerated agenda for the restructuring of state-owned enterprises. We will also be looking at whether we are on track to see a R40 billion yield from the proceeds of privatisation flowing to the fiscus over the next four years and, more crucially, whether such a minimalist approach will unlock the foreign direct investment which South Africa desperately needs.
Our Finance Minister will be championing the cause of developing nations at the annual meetings of the IMF and World Bank in Prague. It is again that time of the year when IMF teams conduct country visits in terms of Article IV, dealing with country consultations. The South African Government must remember that last year’s Article IV consultation indicated that it wished to see more action on the labour legislation and privatisation fronts. It remains an open question whether the minimal labour law reforms proposed by the Government and the release of Government’s policy framework for an accelerated agenda for the restructuring of state-owned enterprises will fulfil the expectations of the next round of Article IV consultations. As the Transnet Pension Fund Amendment Bill moves us closer to privatising Transnet, the DP supports the Bill in the hope that it will act as a catalyst for further foreign direct investment to flow into Transnet. [Applause.]
Mr H J BEKKER: Madam Speaker, the IFP subscribes fundamentally to privatisation as one of the cornerstones of its economic policy. Indeed, we will support this legislation.
Regarding the Transnet Pension Fund, its whole history and the run-up to that was affecting this country. It was practically impossible to think about privatising and selling these assets with such a burden looming all the time. As the Minister said, several billion rands were locked up in this particular aspect as a loss-making entity. Something drastic had to be done and, therefore, the support that is needed from the entire House in support of this particular aspect is of fundamental importance. Die geleentheid wat in die verlede vir persone in die blanke gemeenskap bestaan het, was dat hulle tot op ouderdom 16 jaar pensioen kon terugkoop, terwyl soortgelyke geleenthede nie aan die swart werknemers beskikbaar gestel is nie. Die regstelling wat in 1990 gekom het, het dus nog steeds baie mense langs die pad uitgesluit, en die IVP voel daarom ook baie sterk dat hierdie aangeleentheid in hierdie wetgewing gehanteer kon word. (Translation of Afrikaans paragraph follows.)
[In the past the opportunity was there for people in the white community to buy back pension to the age of 16 years, while similar opportunities were not made available to the black employees. The rectification that came in 1990 did consequently still exclude many people along the way, and the IFP therefore also felt very firmly that this issue could be dealt with in this legislation.]
In conclusion, we wish to congratulate the Minister and his office on what has been put before us, and we give it our full support. We trust that the House at large will also give its support.
Dr W A ODENDAAL: Mevrou die Speaker, ek staan vanmiddag hier as ‘n entoesiastiese lid van die Demokratiese Alliansie. [Tussenwerpsels.] Die Nuwe NP sal, soos die ander komponente van die Demokratiese Alliansie, ook vanmiddag hierdie wetgewing steun.
Die Minister het vir ons die tegniese detail uitgespel, wat hoofsaaklik behels dat daar twee pensioenfondse tot stand kom. Dit is die kern van die wetgewing. Die belangrike daarvan is dat die werkers van Transmed dit so wou gehad het. Dit pas hulle om ‘n keuse te hê om uit te oefen tussen hierdie twee pensioenfondse wat tot stand sal kom. Daarom is dit goed dat dit gebeur.
Wat egter waarskynlik nog belangriker is, is dat dit Transnet pas om hierdie wetgewing vanmiddag in hierdie Parlement deurgevoer te kry. Ons het gehoor dat dit Transnet R1,2 miljard per jaar gekos het om hierdie pensioenfondse in stand te hou en te finansier, maar dit val nou weg en die Minister het dit verduidelik.
Myns insiens is die heel belangrikste doel van hierdie stuk wetgewing om Transnet gereed te kry vir privatisering. Dit maak Transnet nie alleen ‘n meer winsgewende maatskappy waarin moontlike toekomstige vennote meer belangstelling sal toon nie, maar dit gaan ook waarde toevoeg aan die kapitaalwaarde van Transnet sodat wanneer aandele aan die private sektor verkoop word, dit vir die staat ‘n groter inkomste kan bied, ten opsigte waarvan die Minister inderdaad ook na die SAL verwys het.
Dit gaan beteken dat daar onder andere meer ruimte is vir versnelde swart ekonomiese bemagtiging in Suid-Afrika, waarsonder ons nie ‘n beter toekoms sal kan skep nie, want hoe meer swart lede van ons gemeenskap in die middelinkomstegroep ressorteer, hoe meer ruimte is daar vir die armes om uit hulle armoedesituasie te kan ontwikkel.
Die Parlement maak nou vanmiddag vir Transnet gereed vir privatisering, maar wat sê Suid-Afrika se President daar buite by Cosatu se kongres? Hy sê hy soek ‘n sterker SA Kommunistiese Party. [Tussenwerpsels.] Waarom soek hy ‘n sterker SA Kommunistiese Party? [Tussenwerpsels.] Om Suid-Afrika se banke te nasionaliseer? [Tussenwerpsels.] Om die privatisering van Transnet stop te sit? [Tussenwerpsels.] Natuurlik is dit hulle doel! Om die ANC te verswak? Is dit waarom hy ‘n sterker SA Kommunistiese Party soek? Om die ANC, wat alreeds so willoos hier sit omdat hulle nie besluite kan neem nie, nog verder te verswak?
Die President kan nie vir ons sê of hy ten gunste van privatisering is of nie, want Cosatu wil dit teenstaan. Dit is waarom die rand so in sy duiwel ingaan wat sy waarde betref. [Tussenwerpsels.] Waarom belê die beleggers nie in Suid-Afrika nie? Omdat hulle nie weet waar hulle met hierdie Regering in Suid-Afrika staan nie. [Tussenwerpsels.] Al die ekonomiese aanwysers is reg vir gesonde ekonomiese groei en vir werkskepping, maar wat gebeur?
Niks! Dit is net soos met HIV/vigs. Die ANC het nie ‘n beleid daaroor nie. Die res van die wêreld weet nie waar hulle daaroor staan nie.
Ons is besig om vanmiddag belangrike wetgewing in Suid-Afrika goed te keur. Ons ekonomie is gereed om te groei en werk te skep. Die beleggers staan gereed om, sodra hulle weet waar hulle met hierdie Regering staan, in Suid- Afrika te belê, en ek dink dit is nou tyd dat ons hierdie onheilige alliansie van die ANC met Cosatu en die SA Kommunistiese Party tot niet maak, want dan sal die Demokratiese Alliansie die Regering oorneem en hom lei tot ekonomiese groei en welvaart vir al sy mense. [Tussenwerpsels.] (Translation of Afrikaans speech follows.)
[Dr W A Odendaal: Madam Speaker, I stand here this afternoon as an enthusiastic member of the Democratic Alliance. [Interjections.] As the other components of the Democratic Alliance have done, the New NP will also support this legislation this afternoon.
The Minister has explained the technical detail to us, which primarily means that two pension funds will be created. That is the essence of the legislation. The most important aspect thereof is that the workers of Transmed wanted it that way. It suits them to have a choice between these two pension funds which will be created. It is therefore a good thing that this has happened.
However, what is apparently even more important, is that it suits Transnet to have this legislation passed in this Parliament this afternoon. We have heard that it costs Transnet R1,2 billion per year to maintain and finance these pension funds, but this now falls away and the Minister has explained that.
In my opinion the most important objective of this piece of legislation is to prepare Transnet for privatisation. This not only makes Transnet a more profitable company in which possible future partners will show more interest, but it will also add to the capital value of Transnet so that when shares are sold to the private sector the state will be offered a bigger income, with regard to which the Minister also referred to SAA.
This is going to mean, inter alia, that there will be more room for accelerated black economic empowerment in South Africa, without which we will not be able to create a better future, because the more black members of our community who fall in the middle-income group, the more room there is for the poor to be able to develop out of their situation of poverty.
This afternoon Parliament is preparing Transnet for privatisation, but what does South Africa’s President say out there at Cosatu’s congress? He says he wants a stronger SA Communist Party. [Interjections.] Why does he want a stronger SA Communist Party? [Interjections.] In order to nationalise South Africa’s banks? [Interjections.] In order to stop the privatisation of Transnet? [Interjections.] Of course that is their objective! To weaken the ANC? Is that the reason he wants a stronger SA Communist Party? In order to further weaken the ANC, which already sits here so passively, because they cannot take decisions?
The President cannot tell us whether he is in favour of privatisation or not, because Cosatu wants to oppose it. That is why the situation of the rand is so dire as far as its value is concerned. [Interjections.] Why are investors not investing in South Africa? Because they do not know where they stand with this Government in South Africa. [Interjections.] All the economic indicators are right for healthy economic growth and for job creation, but what is happening? Nothing! It is the same as the case with HIV/Aids. The ANC does not have a policy in that regard. The rest of the world does not know where they stand in that regard.
This afternoon we are approving important legislation in South Africa. Our economy is ready to grow and to create work. The investors are ready, as soon as they know where they stand with this Government, to invest in South Africa, and I think it is now time for us to undo this unholy alliance of the ANC with Cosatu and the SA Communist Party, because then the Democratic Alliance will take over the Government and lead it to economic growth and prosperity for all its people. [Interjections.]]
Ms N D NGCENGWANE: Madam Speaker, hon Ministers, comrades, ladies and gentlemen, today marks the dawn of a new day for many South Africans, because everybody is going to benefit from the Transnet Pension Fund Amendment Bill. In the past, lots of black South Africans who, for years, worked for the then SA Railways never got any pension benefits. They died poor, leaving behind poor families, on the one hand. On the other hand, the whites got their pension benefits, and their families benefited even after the death of the pensioners.
I wish to commend this ANC-led Government and the Department of Public Enterprises for the good job they have done in making sure that all South Africans, black and white, benefit from the Transnet Pension Fund. There was a need for the amendment of some sections of Act 62 of 1990. It was during that time that lots of changes to the Act were made to make sure that when the whites retired, they would be comfortable for life, at the expense of other people who never had that privilege.
The business of the Transnet Pension Fund is to provide for market-related retirement benefits for each member and pensioner through the creation, production and growth of wealth by means of superior investments and an excellent service.
Another objective is to meet the fund’s liabilities as they fall due and to alleviate the decline in the real purchasing power of benefits granted to members within the financial ability of the fund; to convert active members from the Transnet Pension Fund to the Transnet Second Defined Benefit Fund; to ring-fence pensioners; to broaden the scope of the guarantee of the employer to include the Transnet Second Defined Benefit Fund; and to include the Transnet Second Defined Benefit Fund under the scope of recoveries of amounts in respect of the Transmed Medical Scheme.
The current status of the Transnet Pension Fund showed that both active members and pensioners comprise approximately 60% of the Transnet Pension Fund. The composition of the pensioners is 102 000 members from the Transnet Pension Fund, and 89 000 active members. We are hoping to get the figures of the late members down after the introduction of this Bill.
Upon the death of a person who is in receipt of a pension in terms of these rules, there shall be paid to the dependant or dependants, benefits as determined by the fund provided for in the subrule in relation to the particular class of dependant.
If the dependant is the deceased pensioner’s spouse, there shall be paid a pension calculated as follows: If the deceased pensioner retired on attaining the age limit, it shall be calculated at 70% of the pension which was payable at the time of death of the pensioner.
In conclusion, I commend this ANC-led Government for having taken the responsibility to ensure that access to the Transnet Pension Fund is equitable to all South Africans, black and white. We all know that these benefits are the ones that created a lot of debt for Transnet, as there was no pension fund. I hope that this House is aware that the previous regime had allowed the then Transnet management to make loans in order to offer the benefits I referred to above to one section of the community, while the other section was getting nothing. This Bill is trying to clear up that mess.
The new Transnet management which assumed duties during the new dispensation did a lot to service the debt and address the imbalances, and we congratulate them heartily for that. Members of the opposition would never tell the truth about how the debt was created. All they like to comment on, through the media, is how Transnet was running at a loss without stating that, in fact, billions of rands which could be reflected as profit were being used to service the debt created by the New NP, which is now part of the DA.
I would like to make the analogy that the taking over of the South African Government by the ANC-led regime was just like buying a pre-owned motor vehicle voetstoots, soos hulle in Afrikaans sê. [as they say in Afrikaans.] This car has never gone through the AA test. I can imagine what the DA would have done if the vehicle had been bought voetstoots from the ANC. I do not think that the DA would have changed the Bill to clean up the mess as the ANC is doing today.
I pity Ms Taljaard, because she is too young to understand the evils of the past. She is just like the leaves of a tree which, while hitting a bird on the tree, also hit the leaves around the bird.
This also shows the efforts by this Government to uproot racism with its evils; one evil being the exploitation of the black workers, particularly by the SA Railways which, despite the bad conditions under which blacks used to work for years, excluded them from the Pension Fund Scheme. They were sent home to die in poverty with their families after spending half their lives working for the SA Railways. Some worked in shunting yards in the West Rand. Some off-loaded the goods trains, thus being involved in accidents which sometimes led to death without any insurance.
The South African Workers Union then tried to address these problems, without much success. But, thanks to the ANC-led Government, which initiated this Bill, this is being debated today. However, it would have been better if it had also covered the widows and families of those who never benefited from the scheme and have died poor.
If that is not corruption, then what is it? If that is not racism, then what is it? The SA Railways was regarded as a provider of priviledged job opportunities for whites only. Blacks were just tools to do the work and did not benefit. But today that is going to change, thanks to this Bill.
Mr C T FROLICK: Madam Speaker, hon Minister and hon members, the Transnet Pension Fund Amendment Bill aims to address the serious financial burden of the current fund in terms of Transnet’s debt and other constraints it places on the parastatal. The objectives of the Bill have been clearly articulated by the Minister, and the department should justifiably feel that the shortcomings of the 1990 Act are being addressed.
The new Act clearly differentiates between the different categories of pensioners and distinguishes amongst its active members. Successful implementation of the Act should provide a perfect opportunity for Transnet to fulfil its social mandate in terms of service delivery. Simultaneously, much-needed financial resources will be available to invest in infrastructural development, which requires vast amounts of capital. The UDM wishes to caution the department, though, to ensure that existing members are not prejudiced or negatively affected when implementing the Act.
At the same time, the submission of organised labour in respect of past or current employees of Transnet who were not classified as full employees for some or part of their employment requires attention. Although we concur with the department that this Bill does not cover this aspect, it remains vital for the department to deal with issues of this nature on an ongoing basis. The fact that people have been severely discriminated against because of their skin colour and are today in a financially worse position than their white colleagues is unacceptable. However, the comments from the Minister in this regard are encouraging. The UDM supports the Bill.
Ms C DUDLEY: Madam Speaker, hon Minister and members, Transnet’s pension fund has had a massive deficit since the early 1990s, and servicing this debt caused major problems that, in turn, impaired the business activities of Transnet. With more pensioners drawing from the fund than active members contributing to it, the situation was economically unacceptable. According to Transnet’s financial director, splitting the pension fund would remove one of the obstacles to privatisation. Members will now take responsibility for any surplus or deficit, freeing Transnet management to concentrate on operations.
Transnet has quoted losses of R1,1 billion over the past two years, and the MD recently said it was being strangled to death by inherited debt amounting to R27 billion. It appears, however, that Transnet is now set to see record profit for the year as the benefits of restructuring, the removal of pension fund obligations and expectations of improved economic growth flow through.
Although 6 500 jobs were shed last year and more jobs may go as a result of the overhaul, analysts say a profitable, efficient Transnet will help create jobs in the coming years. The previously ailing pension fund has also shown a big improvement with funding levels moving to 107,2% from 100,3%, and surplus rising to R2,4 billion from R88 million.
The ACDP has this proviso to our support to the measure: The existing pensioners should not be worse off than they are now, and future pensioners should be protected by Transnet and Government using some of the proceeds of privatisation to top-up the new pension pot to acceptable levels. With this proviso, we support the Bill.
Mr P H K DITSHETELO: Madam Speaker, this is just an amendment of Act 62 of 1990 in order to make provision for additions to the Act. The aim is to amend the Transnet Pension Fund Act of 1990, so as to insert a definition to empower the making of rules on the terms and conditions under which members may cede their rights and transfer assets commensurate with those rights from the fund to the pension fund established by the employer.
This amendment provides for the guarantee of the financial obligations of the second fund to recover from the pension money due to Transmed, ie the Transnet Medical Scheme. However, the amendment still says that -
… the obligations of the company and the state in respect of the new pension fund in terms of section 3(2) and section 16 of the Legal Succession of the South African Transport Services Act of 1989, shall be deemed to be obligations towards the fund and the second fund in such proportions as determined by the state actuary in consultation with an actuary appointed by the company.
The company may, subject to the approval of the Minister, acting with the concurrence of the Minister of Finance by notice in the Gazette, establish a pension fund notwithstanding the establishment of the Transnet Pension Fund in terms of section 2(1).
The UCDP supports the Bill.
Dr S E M PHEKO: Madam Speaker, the purpose of the Transnet Pension Fund Amendment Bill is primarily to amend the Transnet Pension Funds Act of 1990 so as to insert the definition about empowering the making of rules on the terms and conditions under which members may cede their rights and to deem the obligations of the employer and the state in respect of the new fund and the Transnet Pension Fund to be obligations of the Transnet Pension Fund.
The PAC believes that this Bill is in the interest of the workers of Transnet, and fully supports it. Many workers have, in their old age, suffered because the law governing their rights was vague or not properly amended where it should have been. Their pension rights were therefore jeopardised. This Parliament must do everything to protect the rights of workers, including their pension rights.
It is particularly heartening that clause 2 in the definitions states that pension funds in terms of section 14(b) of the Act shall include a widow or widower or someone dependent on the pensioner. The definition of recognised marriage also solves a number of problems regarding what a marriage is and who should benefit from the pension fund. The PAC welcomes this Bill.
Mnr C AUCAMP: Mevrou die Speaker, die AEB is ‘n vurige ondersteuner van privatisering en ons glo hoe groter die rol van die vrye mark en kleiner die ingrepe van die staat, hoe beter vir ekonomiese groei.
‘n Voorwaarde vir privatisering is natuurlik dat dit met verantwoordelikheid geskied en ons is oortuig daarvan dat die huidige wetsontwerp met betrekking tot hierdie pensioenfonds van Transnet hierdie toets slaag om met verantwoordelikheid hierdie privatisering verder deur te voer. Daarom steun die AEB hierdie wetsontwerp van harte.
Die privatisering van Transnet sou onmoontlik wees met die albatros van miljoene rande van die ou pensioenfonds steeds om hulle nek. Ons glo ook dat die daarstel van ‘n vaste bydraefonds, soos in hierdie geval, teenoor ‘n vaste voordelefonds die ideale manier is om in hierdie omstandighede te werk te gaan. Tewens, ons glo dat daar meer en meer daartoe oorgeskakel sal word. Die vaste bydraefonds het baie voordele; die risiko vir onderbefondsing is baie minder, die risiko vir die intuimeling van die pensioenfonds is minder, die bates vestig in die hand van die lid en daar is ook groter buigbaarheid en oordraagbaarheid.
Ons glo dat hierdie wetsontwerp ‘n voorbeeld is van hoe om enige probleme, ook die wat uit die verlede spruit, op ‘n wen-wen-grondslag aan te pak. Mag hierdie gesindheid deurwerk na ander sfere van die samelewing waar te maklik op ‘n wen-verloor-situasie teruggeval word. (Translation of Afrikaans paragraphs follows.)
[Mr C AUCAMP: Madam Speaker, the AEB is a fervent supporter of privatisation and we believe the bigger the role played by the free market and the fewer the interventions by the state, the better it is for economic growth.
A prerequisite for privatisation is, of course, that it must take place responsibly and we are convinced that the present Bill with regard to this pension fund of Transnet passes this test of taking privatisation further in a responsible manner. For that reason the AEB wholeheartedly supports this Bill.
The privatisation of Transnet would be impossible with the albatross of millions of rands of the old pension fund still hanging around its neck. We also believe that the introduction of a defined contribution fund, as in this case, instead of a defined benefit fund is the ideal way to proceed under these circumstances. Indeed, we believe that this option will become increasingly popular. The defined contribution fund has many advantages; there is much less risk of underfunding, there is less of a risk that the pension fund will collapse, the assets are in the hands of the member and there is also greater flexibility and transferability. We believe that this Bill is an example of how to tackle any problem, even if it arose in the past, on a win-win-basis. May this attitude filter through to other spheres of society where people revert too easily to a win- lose-situation.]
Lastly, it seems to me that the fight-back campaign of the DP, now the DA, has entered a new phase today. For the first time, they have an extra- heavyweight in their corner in the person of Dr Willem Odendaal. Best of luck to him. [Laughter.]
Mr M A MANGENA: Madam Speaker, most subsidiaries in the Transnet group of companies have been badly managed for years. As a result, they have been losing business and money by the millions for a long time and therefore have been a drain on the fiscas.
However, there is a new breed of men and women at Transnet who are full of beans, who are full of ideas and enthusiasm. They are trying very hard to turn these companies into good public businesses that make profit and therefore become a positive asset to the nation. A few successes have been realised already, allowing the enterprises concerned to form partnerships with the private sector.
Of course, Azapo continues to urge that these partnerships that have been formed between the private sector and the state should remain with a controlling share in all the important companies in Transnet.
A major headache in these efforts to turn Transnet around has been the pension fund, which gobbles up hundreds of millions of rands of the company’s funds each year. The rather large number of pensioners and the structure of the pension fund have ensured that the fund becomes unsustainable.
The Bill before this House is an attempt to address this issue. Whilst ensuring that Transnet continues to service its pensioners, it also reconfigures the pension fund in such a way that it becomes less onerous to Transnet. It also gives the pensioners the flexibility to decide how their pensions may be invested.
Azapo supports the Bill.
Mr V G SMITH: Madam Speaker and hon members, the ANC Government has committed itself to the continuing struggle for the reconstruction and development of our country. The restructuring of state-owned enterprises is part of a broader transformation of the South African economy, and this restructuring and fundamental social transformation of our country must and will culminate in a better life for all our people.
Perhaps it would be opportune at this moment to educate the hon Taljaard about the fact that what we are saying here is that we are busy with a restructuring process and not a privatisation process. Perhaps it is opportune at this point to educate the hon member from the IFP about the fact that the fundamental transformation of our economy or the Transnet Pension Fund Amendment Bill is, in no way, an attempt to privatise Transnet.
The Transnet Pension Fund Amendment Bill seeks to address, in the most comprehensive manner, the problems and challenges faced by the company and the pension fund in an equitable fashion. It is in this context and with this background that I wish to argue that the enactment of this Bill makes good business sense and also deals with some of the moral and social issues as raised by the Minister.
The previous government, of which the hon Odendaal was a member, in line with its immoral apartheid policies, created a situation where only a very small section of the Transnet workforce and their dependants benefited handsomely from the pension fund. It is the very party of the hon Odendaal that today forces us to stand at this podium to reverse what they put in place because of their system of apartheid and division.
The Bill, if passed, will correct this historical imbalance in the treatment of blacks and of widows within the pension scheme. It will not only place the company in a much better position to carry out its business in a more effective and efficient manner, but also allow the shareholder to reinvest surplus funds generated by the company in more pressing areas of priority in South Africa.
It is common knowledge that the pension fund problem of Transnet has been an albatross around the neck of the company for a very long time. Comrade Jeff has adequately covered the historical facts surrounding the transfer of the pension fund from the former SA Transport Services and the implications that this transaction had on the day-to-day running of Transnet.
Last year alone, the effects on the financial position of Transnet was that while Transnet made an operating profit of approximately R2,5 billion, the final position after the pension fund obligations reduced the profit to R779 million. The negative impact on the company’s balance sheet debt-to- equity ratio and the transfer of valuable property to deal with the pension fund burden inherited from the SA Transport Services pension fund, which had white employees as its major beneficiaries, hinders Transnet’s ability to become an agent of change within the South African economy and restricts Transnet from assuming its role as a very vital player in our quest for an African renaissance.
On the employee front, the Bill seeks to enable Transnet to establish three pension funds. The current fund has 102 000 pensioners and 89 000 active members, which is not an ideal situation for any pension fund to be in, simply because a pension fund should have more active members than pensioners. The reverse creates an uneconomical situation when it comes to the investment strategy, and thus it has become important for these funds to be split, as already stated by the Minister and previous speakers.
The Bill will afford the company the right to ring-fence the current 102 000 pensioners into one fund. These members will remain in the defined benefit plan. The benefits of this include the stability of member numbers, so that the cash flow obligations can be more accurately projected and forecast.
The second fund, which would be made up of active members who choose to convert from the defined benefit plan to the defined contribution plan, are generally members who are much younger than those in the previous category, and thus their investment requirements as a group are very different from those of the pensioner category. The fund would now have the ability, therefore, to tailor investments that would better address the needs of this category of members. A further benefit is the fact that these active members who wish to resign from the company before their retirement age would have much better benefits than if the funds were not split.
The ANC believes that this amendment, when enacted, will result in a win- win situation for all stakeholders. As the hon the Minister indicated, the company and, therefore, the state would no longer have to carry the investment risk of the defined contribution fund, and the exposure to the company would be limited to contributions as defined and agreed. Very importantly as well, all pension funds will have the ability to better manage their investments in a manner specific to members’ requirements.
The ANC supports the enactment of the Transnet Pension Fund Amendment Bill. [Applause.]
The MINISTER FOR PUBLIC ENTERPRISES: Madam Speaker, hon members, it is very clear that this Bill is heralding a new era for Transnet and the people of South Africa inasmuch as this albatross that has been around our neck is being removed with the passage of this Bill.
However, I just wanted to emphasise to members who have raised some questions that the rules of this new defined benefit fund for pensioners will also provide direct representation for pensioners themselves, so that their interests can continously be protected, and that Transnet has been engaged in a very elaborate process of ensuring that all members are continously consulted, so that they can make an informed decision on whatever choice they want to make. We have held several workshops and seminars with members, so that by November they will be able to make this historic decision for themselves. Both as Transnet and as Government, we are committed to honouring this dynamic process.
This amendment to a new benefit fund is, therefore, a very good opportunity for all employees, black and white, to put Transnet on a sound financial footing, so that there should be no losers. We are all going to be winners.
On the issue raised by Ms Dudley of the topping up of the funds from the pensioners using privatisation proceeds, I want to respond by saying that there is no need, with the passage of this Bill, for any top-up, because the fund, in fact, as it is right now, has a surplus.
Of particular importance to most of us who fought against the system of apartheid are the benefits of this arrangement to our black widows who are now going to be covered by the roles and appropriate assets. Approximately R150 million has been transferred to this ring-fenced pension fund to take care of all those black widows who hitherto have not been benefiting because of what apartheid did to us in 1990.
Lastly, I wanted to correct Mr Bakker. We are no longer an office of public enterprises, we are a department. Perhaps we are moving so fast with this restructuring that the hon member is losing pace with us.
On the issues that have been raised by Ms Taljaard I am still extending the invitation for tea I extended to her last Thursday so that we can discuss some of these issues, but I am very appreciative of the support of all hon members for this transformative Bill amending this pension fund.
Last but not least, as we indicated, there is a party for Gloria Serobe and the passage of this Bill. All hon members of this House are cordially invited at 5:30 today. They know where it is. It will be next to the members’ bar here in Parliament at 5:30, not later than that. We are going to be jiving to kwaito music where we will be saying: ``Ebumnandini kula uzongithola khona.’’ [Applause.] The DEPUTY SPEAKER: Order! Hon Minister, I hope that that 5:30 party will not interfere with the work of this House.
Debate concluded.
Bill read a second time.
CONSIDERATION OF REPORT OF PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY - SMME SECTOR
Dr R H DAVIES: Madam Speaker, earlier this year Dr Stephen Gelb, who was co- ordinating a national enterprise survey for the Office of the President, told a porfolio committee meeting that the survey had found that while access to finance was not a major problem for the small-and-medium enterprise sector as a whole, it certainly was for black-owned SMMEs. Last week the Black Economic Empowerment Commission told a joint committee meeting that ``the major impediments to increasing black participation in the economy are access to funding and markets’’.
These conclusions confirm something that the Portfolio Committee on Trade and Industry as well as its predecessor in the previous parliament have been aware of for some time. Black-owned SMMEs continue to encounter enormous difficulties in obtaining access to finance. This is the case notwithstanding the considerable efforts by Government to leverage funds from the banking sector through, among other things, the Khula guarantee scheme.
It was against this background that our colleagues in the NCOP organised a workshop on SMME promotion earlier this year. When that workshop once again concluded that the issue of banks and SMME finance was a central one, the portfolio committee and the NCOP select committee decided to hold joint hearings on this issue. The report on these hearings was published in the ATC last week and is the subject of today’s debate.
The report basically finds that there are problems at several levels. First, the existing financial architecture of this country is far from ideal for the promotion of SMMEs and community enterprises. The formal banking system that emerged under the previous order was orientated to providing services to the big conglomerates and higher-income, mainly white customers. The entry of foreign-owned banks, following the opening up of the sector to foreign investment, has created additional pressures. Most of the new entrants are providing computerised, specialist services to corporate clients, and this is producing pressures on established banks to move upmarket to the detriment of lower-income clients who are becoming increasingly ``unbanked’’.
Most legislation and regulatory activity is focused on the formal banking sector, with alternatives like village banks, co-operatives, savings and credit unions and small-loans organisations operating on the basis of exemptions from the Banks or Usury Acts rather than through their own purpose-built legislation. We do not have sufficient venture capital or securities-based institutions that can channel risk capital or investments to SMMEs and community ventures.
There is clearly a need for a major project to transform the financial architecture of the country to encourage the emergence of alternative institutions that can perform the task better. The SA Reserve Bank is looking at this issue, as is the DTI which is responsible for administering the Usury Act. It is to be hoped that this work will receive increasingly urgent attention from both Government and Parliament. But that is not the whole story. Even if we accept that there is a need to encourage alternative institutions, there is still a critical role for the formal banking sector. Its resources and expertise will be needed if the project of transforming the financial sector is to bear fruit. And the banks themselves also need to play a more dynamic direct role. The banks told us during the hearings that at a structural level the only debate was about their serving the micro-enterprise sector. They said that the banks were, and indeed needed to continue to be, much involved in financing small and medium businesses as well as, through specialised institutions such as the Sizanani project, very small enterprises.
It is against that background that the committee’s report expresses concerns about what we called relationship problems. I am afraid that there appears to be a huge chasm between the lofty principles espoused in the industry’s code of practice and the reality on the ground at branch level. This was highlighted again and again in the testimony of black businesspeople who appeared before us. One that particularly stuck in my mind was that of a black-owned construction firm from the Western Cape. They told us that they were an established medium-sized company, not a start-up with signed Government contracts, yet they could not get bridging finance from the banks. All the black businesspeople who appeared before the committee spoke of arms’- length relationships and hostile attitudes from managers, and said that they received worse terms than their white counterparts in dealings with the banks.
In the committee proceedings Mr Bruce, I am afraid, once again put his thumb in his soup by suggesting that what we had heard were untested allegations. We pointed out to Mr Bruce at the time that our equality law does not require complainants to produce proof beyond reasonable doubt, but rather to establish a prima facie case, after which the onus shifts to the defendant to prove that the practices were not unfair discrimination. We suggested to Mr Bruce in the committee that what we had heard amounted to something close to a prima facie case.
With this in mind a number of us asked members of the Black Economic Commission what their view on the issue was. The chairperson, Mr Cyril Ramaphosa, confirmed that the perception of the bulk of the black businesspeople that the commission had interacted with was that they were being held back and hampered by discrimination by the banks. I do not know what else to call hostile attitudes towards people on the basis of their race or the provision of worse treatment to black people than to whites. There is in my view one and only one word for it, a word that some may find uncomfortable, but one which we had better confront if we want to move, and that little word is ``racism’’.
Our report draws attention in this regard to equality legislation. We should also note that the Banking Council has invited persons who claim to have experienced such discimination to approach the Banking Adjudicator or the equality courts when they are operational. I know that a number of cases have already been referred to the Human Rights Commission and I have no doubt that there will be litigation in the equality courts in due course.
It is partly with this in mind that our report calls for a uniform system of disclosure that will allow the performance of particular institutions in providing SMME finance and other priority activities to be measured and compared.
The Home Loan and Mortgage Disclosure Bill currently before the Portfolio Committee on Housing will require banks to account for their decisions in respect of home loans and mortgages to lower-income people. We believe that there is a need for something similar for SMME finance. Beyond that, the report suggests that there is a need to explore the possibility of comprehensive community re-investment legislation, adapted, of course, to the specificities of our own conditions.
Finally, let me say that we in the committee are not about mindless bank bashing. We need the banks to play a more positive and proactive role and we want to see a change in mindset. In addition to the ongoing dialogue between the banks, the executive and departments, we believe that there is a role for Parliament in this regard. The committee, together with our counterparts in the NCOP, is thus discussing, with the Banking Council, the timing and the format for a longer and more focused solution-orientated engagement. This we believe to be absolutely essential. [Applause.]
The CHAIRPERSON OF COMMITTEES: Order! Before I can call on the next hon member, it would appear that some of the members are not prepared to listen to the debates. If you do not and want to converse, please lower your voices. There is a tremendously loud noise in this House and too many conferences. Could you please behave and be in order!
Mr N S BRUCE: Mr Chairperson, if that member took his finger out of his mouth, perhaps we would understand what he is saying! Is it not strange that two Anglo-Saxon middle-aged males are now going to have a disagreement over racism in this country? What an extraordinary Chamber this is! It used to be said that if one saw a banker jump off the edge of a skyscraper, one should follow him for he or she was bound to make a profit - unless, of course, he is a Nedbanker, for he would have most likely tripped over a regulatory standard.
Wisdom is the essence of the epigram. What this one means is that the more bankers are left to their own judgment of risk - however eccentric it may appear - the more likely they are to make a profit, for their own self- interest requires them to seek superior efficiencies in the measurement of risk, which means their choice of customer.
When politicians interfere with that self-interest - and they usually do so by imposing their own interest or that of their cronies on the banks - they foster unpredictable results.
South Africa has a modern, efficient and adaptable banking industry that has been unblemished by overt political interference for the past 20 years. It has been left to finance the movement of goods, the provision of services and, more latterly, housing loans. However, it does so under prudential constraints that are appropriate to these markets - but not necessarily to others - where the judgment of risk is different and prudential constraints need to vary. Not all banks are all things to all men.
The financing of small, macro and medium enterprises involve small loans, and they tend to mean high administration costs and demand some local knowledge in the measurement of risk. If the established banks are coerced in this unfamiliar direction, their commitment will be qualified, their risk measurement unsure and the consequences for depositors, borrowers and shareholders uncertain.
Yet there is a demand for SMME finance and its satisfaction will create jobs. Why, therefore, have more appropriate institutions not endeavoured to satisfy this demand? The reason is that the costs of doing so are too high.
What is needed is a more modest legislative environment for peoples’ banks which are not subjected to onerous labour, equity and other political constraints, and whose prudential requirements are appropriate to the risks of a particular community. Both the Reserve Bank and Absa Bank have made suggestions along those lines, but the portfolio committee chose not to explore them.
The obsession of most of those who plead before the committee was with racism, which, in their views, was the root cause of the banks’ hesitation to funding SMMEs. No accusation was proven or even circumstantially justified. The banks - at least one was named - were given no opportunity for rebuttal, nor was any reason suggested why a banker would turn away a black customer if the latter’s risk profile was conducive to profitability. Few banks, motivated by profit, turn away business. It is manifestly not in their interest to do so.
The motive for the racist accusations appears to me to be what the economists call rent seeking to secure a privileged access to capital, which the disciplines of a competitive marketplace might allocate elsewhere.
None of the racist accusers had any constructive suggestions to make on the appropriate financing of the SMMEs other than coersion of existing banks. This was supported by the Department of Trade and Industry.
Likewise, accusations of red lining - which is the refusal of banks to grant mortgages to home owners in certain demarcated areas - were unblemished by the need for a suggestion of proof. But red lining has more to do with a breakdown of government in some communities than flagrant banking racism, for banks find that access to buildings that secure their loans is refused and repossession is made impossible by those who hold themselves outside of the law.
The intention of the Department of Trade and Industry and the portfolio committee was clearly to coerce banks into risky SMME commitments by requiring greater disclosure of loans to some communities. Neither the practicality, nor the cost was discussed. As it is, banks produce 280 pages of data to the regulatory authorities each month.
There are now 43 Acts of Parliament governing some financial institutions, 15 of which have appeared in the past 24 months - an increase of 54% in two years. The integrity of the banking industry provided an important shield to our economy from the excesses of the South-East Asian crisis. Government tampers with it at great peril, nor does Government enhance that integrity by assuming that every unproven accusation of racism is true - an assumption that is mightily convenient for the scoundrel, as much as for the mischievous ideologue.
If there is going to be further regulation of the banks, where will it be centred? The Registrar of Banks is in the Reserve Bank and the Department of Trade and Industry has no complementary skills in this regard. Indeed, over the past five years the history of the Department of Trade and Industry has been nothing, if not regulatory ineptitude, and a tendency to intervene in markets at even greater mishap.
The three officials who have presided over the greatest departmental failures are all being promoted. And now the Ramaphosa Commission, which is tasked with the enrichment of the black elite, wants the Department of Trade and Industry to take on this function, too.
Well, the Minister is certainly building an empire, Alex Imperious Rex. But when one looks closely, he is bereft of his clothes. Nothing seems to work at the Department of Trade and Industry - from company registrations to the issuing of import rebates; from R179 million in lottery moneys that have not been distributed to charities; businesses licenced to trade are hampered by lack of a monitoring apparatus, and various industries, like textiles and clothing industries, are in crisis.
The doors of the Department of Trade and Industry seem to be permanently closed, and seldom is the telephone answered. That is the most frequent complaint from business. When I got through to a lady last week, she said: ``There is nobody here - they are all in Mauritius. What was that I heard about a new executive jet?’’ [Laughter.]
Yet the Minister’s friends just keep on getting richer. They are Joe Foster, an old trade union buddy who chairs the National Lotteries Board and Humphrey Khosa of the lottery operators, Uthingo, which is funneling money into foreign shareholders. They could not give a damn for the sick, the poor and the suffering who were supposed to be the beneficiaries of this lottery. Their silent insensitivity is resounding. [Time expired.] [Applause.]
Mr L T LANDERS: Mr Chairperson, on a point of order: Was the hon Mr Bruce inferring that the chairperson of the National Lotteries Board, Mr Joe Foster was lining his pockets and enriching himself? In which case I would put it to you that it was unfair of the hon member to make such an assertion in this House without Mr Foster being allowed the opportunity to respond. I ask for your ruling in this regard. [Interjections.]
The CHAIRPERSON OF COMMITTEES: Order! Hon Mr Nel. Could I deal with the first point of order first. Hon Luwellyn Landers, are you saying that he is not the chairperson of the board?
Mr L T LANDERS: Mr Chairperson, Mr Joe Foster is the chairperson of the National Lotteries Board. The hon Mr Bruce, in his speech, inferred that Mr Foster was enriching himself as the chairperson of the National Lotteries Board. I put it to you, Mr Chairperson, that the hon Mr Bruce has abused his position as a member of this House by using the podium to make such an assertion, and I ask for your ruling in this regard.
The CHAIRPERSON OF COMMITTEES: Order! Mr Bruce, I think that those are wild allegations, and it casts aspersions on the person to say that he is enriching himself, when we do not have proof of that. Could you withdraw those words, please!
Mr N S BRUCE: Mr Chairperson, what I said was: ``Yet the Minister’s friends just keep on getting richer.’’ [Interjections.]
The CHAIRPERSON OF COMMITTEES: Order! Could you withdraw those words, please! You said that the chairperson of the board …
Mr N S BRUCE: … just keeps on getting richer.
The CHAIRPERSON OF COMMITTEES: Order! Did you say that he is making himself richer?
Mr N S BRUCE: I said that he just keeps on getting richer. The CHAIRPERSON OF COMMITTEES: Order! The best thing to do is to check the Hansard, and we will rule on this matter.
Mr A C NEL: Chairperson, I rise on a related point of order. Mr Bruce’s words, as I heard him, were that the Minister’s friends are getting richer. Therefore, he is casting very, very serious aspersions on the Minister, which I think is highly out of order and unparliamentary. We request your ruling on that.
The CHAIRPERSON OF COMMITTEES: Order! Thank you very much. I will combine those two points of order into one, check the Hansard and come back to the House to make a ruling.
Mr H J BEKKER: Chairperson, the Portfolio Committee on Trade and Industry conducted hearings on the role of banks, particularly, with regard to the role of SMMEs. The National Enterprise Survey commissioned by the President’s Office and the Ministry of Trade and Industry has reported that black-owned firms find it more difficult to access finance than their white counterparts, and that SMMEs also find it a major problem to access finance in contrast to larger companies.
The survey highlighted the problems of lack of collateral and equity finance, effectiveness of affirmative procurement, perception of risk, failure rate of start-ups, management support systems, high cost of operating SMMEs and the adequacy of credit guarantees. The banking supervision department of the Reserve Bank reported a number of initiatives that have been taken to address some of these constraints. They are the passage of the Mutual Banks Act, the promotion of community banking, stokvels, saving co-operatives, village financial service co-operatives, the launch of the mortgage indemnity scheme and consultations with stakeholders about alternative strategies to informal finance and microlending. There have also been moves to establish an effective regulatory environment for the microlending industry through the Microfinance Regulatory Council.
The most important aspect, however, is to create competition in the banking sector. The profit margin or the difference between deposit rates and lending rates, in South Africa, is about one to two points higher than banking institutions in other countries. Banks in South Africa say that their risk factor is substantially higher than that of their counterparts in other countries. It may interest members to know that small loans made to, specifically, women in Bangladesh without any form of security for start-up capital were paid back with about a zero default factor. A bad debt factor for those women was less than 3%, which was substantially lower than even the formal sector at that time. That just shows the dedication of women who start up their own small enterprises and how dedicated they could be in terms of this particular aspect. I believe that this is a matter that should further be investigated in South Africa and particular emphasis should be placed on this.
Criticism about financing of banks, in terms of the Khula scheme, seems to be vague or even misdirected. A question that should be posed is: Of the banks and Khula, which has rejected more of their applications? According to information at hand, it would seem that Khula, indeed, has rejected more of these schemes because of the risk factor than some of the banks. I think that this particular matter should be investigated to establish what the true position is.
Another member has mentioned redlining. Despite denials, it still takes place in an indirect way in CBD areas and in the more poorer parts of our cities. This is something that needs attention. I think that the banking sector and Government must join hands and try to see where one can do the necessary improvements and where one could have risk assumption at a better level than before.
Mnr F BEUKMAN: Mnr die Voorsitter, klein, medium en mikro-ondernemings dra ongeveer 28% van die bruto binnelandse produk by, en ongeveer vier uit elke 10 werkers in die formele ekonomie kom uit dié sektor. Hierdie groep ondernemers en hulle vermoë om nuwe werkgeleenthede te skep is ‘n voorvereiste vir die sukses van die Gear-strategie. Ten spyte hiervan bly die verlening van krediet aan die KMMO-sektor laag ondanks die kredietwaarborgskema van die Departement van Handel en Nywerheid se groothandelfinansieringsarm, Khula.
Die betrokkenheid van handelsbanke by die finansiering van die KMMO-sektor moet altyd die gewone risikofaktore wat by kredietverlening ter sprake is, verreken. Aandeelhouers van banke wil die hoogste opbrengste op hulle aandele hê. Dit is die realiteit van die mark. ‘n Lening van byvoorbeeld R500 deur ‘n handelsbank sal ‘n rentekoers van 62% per maand vereis ten einde dit vir ‘n bank moontlik te maak om sy kostes te dek.
‘n Moontlike oplossing sou wees om die finansiering van KMMO’s te hanteer deur beleggings in die sekuriteitsmarkte. ‘n Kollektiewe beleggingskema kan gevestig word ten einde beleggings van die publiek te aanvaar. KMMO’s kan gegradeer word en verhandelbare effekte kan geskep en verhandel word in ‘n gereguleerde beleggingsbeurs. Hiervoor sal daar egter wysigings aan die Maatskappywet en ander verwante wetgewing moet kom. Dit is van belang dat die nuwe raamwerk gevestig word om te verseker dat KMMO’s toegang tot kapitaal en finansiering kry.
Dit sou wys wees om weg te stuur van politieke motiewe by die evaluering van die huidige rol van banke aangesien hul spesifieke fokus die finansiering van kommersiële aktiwiteit is en hulle die beleggingsvereistes van deposante moet bestuur. Kundiges in die formele banksektor, rolspelers in die finansieringsbedryf en regeringsagentskappe moet poog om by wyse van gesprek nuwe oplossings te soek ten einde KMMO’s se rol in die Suid- Afrikaanse ekonomie te bevorder en toegang tot finansiering te vergemaklik. ‘n Siening van die beleidsraamwerk wat ondersteunend moet wees tot KMMO’s moenie bloot uit naamveranderings van bestaande agentskappe, die skep van nuwe agentskappe en burokrasieë of wetgewende intervensies in die formele banksektor bestaan nie. Ons glo daar moet na eenvoudige en praktiese oplossings gekyk word, wat die volgende insluit: verstaanbare prosedures en maklike toegang, minimum regeringsinmenging, die aanmoediging van kompetisie, nuwe geleenthede vir entrepreneurs, die betrek van buitelandse kundigheid en maksimale bemagtigingsgeleenthede.
Die Regering moet daarop fokus om ondernemings wat bereid is om by die finansiering van hierdie sektor betrokke te raak te beloon deur aansporingsmaatreëls. Dwang- en strafmaatreëls en stappe om sektore se kommersiële besluitneming te reguleer moet eerder vermy word. Die vertrekpunt moet ‘n lewensvatbare vryemarkgedrewe ekonomie bly. (Translation of Afrikaans speech follows.)
[Mr F BEUKMAN: Mr Chairperson, small, medium and micro-enterprises contribute approximately 28% to the gross domestic product, and approximately four out of 10 workers in the formal economy are from this sector. This group of entrepreneurs and their ability to create new job opportunities are a prerequisite for the success of the Gear strategy. Despite this, the extension of credit to the SMME sector remains low in spite of the credit guarantee scheme of the wholesale financial arm of the Department of Trade and Industry, Khula.
The involvement of commercial banks in the financing of the SMME sector should always take into account the normal risk factors which are relevant to the granting of credit. Shareholders of banks want the highest return on their shares. That is the reality of the market. A loan, for example, of R500 from a commercial bank will require an interest rate of 62% per month to make it possible for the bank to cover its costs.
A possible solution would be for the financing of SMMEs to be handled by way of investments in the securities markets. A collective investment scheme could be established in order to accept investments from the public. SMMEs could be graded and negotiable securities could be created and traded on a regulated investment stockmarket. In order for this to happen, however, amendments will have to be made to the Companies Act and other relevant legislation. It is important for the new framework to be established in order to ensure that SMMEs will have access to capital and financing.
It would be wise to steer away from political motives when evaluating the current role of banks since their specific focus is the financing of commercial activities and the managing of the investment requirements of depositors. Experts in the formal banking sector, role-players in the finance industry and government agencies must attempt to seek new solutions, by way of talks, in order to improve the role of SMMEs in the South African economy and to facilitate access to finance.
The view of the policy framework which should be supportive of SMMEs should not merely consist of name-changes of existing agencies, the creation of new agencies and bureaucracies or legislative interventions in the formal banking sector. We believe attention should be given to simple and practical solutions, which should include the following: understandable procedures and easy access, minimum government interference, the encouragement of competition, new opportunities for entrepreneurs, the involvement of foreign expertise and maximal empowerment opportunities. The Government should focus on rewarding those enterprises that are prepared to become involved in the financing of this sector by way of incentive measures. Coercive and punitive measures and steps to regulate the commercial decision-making of sectors should rather be avoided. The point of departure must remain that of a viable free market-driven economy.]
Mr C T FROLICK: Mr Chairman and hon members, the importance of the SMME sector for the economy and future prosperity of South Africa cannot be overemphasized. All commentators are in agreement that access to finance remains the single largest obstacle for SMME development.
The UDM agrees that especially large commercial banks must do more to accommodate the needs of SMMEs, especially emerging black entrepreneurs. Discrimination, racism and practices such as redlining must come to an end. There is a need for greater commitment from banks with regard to financing and its continuous monitoring of SMME development. This lack of commitment is illustrated by the difficulty experienced in determining what percentage of current loan books are committed to black entrepreneurs. However, we wish to caution against legislative interventions to force banks to offer finance and to disregard the viability and sustainability of the receiver’s enterprise.
The role and responsibility of the Department of Trade and Industry with regard to the development of SMMEs must not be forgotten. The department remains ultimately responsible for encouraging and nurturing the enterprises. It has been adequately illustrated by role-players that alternative avenues for SMME financing must be explored. The department can seriously consider numerous innovative SMME financing alternatives such as the establishment of local stock exchanges, investment corporations and community development banks, setting aside a percentage of investment and insurance funds for venture capital, and abolishing the marketable security tax on investment in the venture and development capital markets to encourage more funds to flow to this sector on the JSE.
Ms C DUDLEY: Mr Chairperson, hon Minister, hon members, access and entry of all South Africans into the economy is an urgent priority and must be promoted at every level. It will, however, not help to continue trying to split the same cake into smaller and smaller slices, we must bake a bigger cake with bigger slices for all.
Although banks could and should play a bigger role in improving access to finance, they are more than willing to do so. It would be foolish to force banks to abandon sound practices. They are, after all, in the risk business and their ability to manage risk determines their success. It would, therefore, be counterproductive to legislate in this regard. Although bringing into the open the difficulties being experienced by certain sectors of the economy is a positive and necessary exercise in addressing imbalances towards a more equitable banking system, to insist on making banks open a new form of race classification is retrogressive. Khula and Ntsika need to be more user-friendly and to work with the banking sector. The needs of small and medium sized businesses are distinct from those of micro or first level entry businesses. A carefully managed system of Government grants would be better suited for microlending as bank charges make these ventures unrealistic.
There is also a big difference between microlending and the need of individuals to simply deposit money safely. This service should be provided by post offices that are located everywhere. The ACDP is also in favour of and would promote alternative banking structures, especially amongst the poorest of the poor, based on stokvels and mogodisano.
Clearly, one of the biggest obstacles to the provision of finance is the lack of recognisable business and management skills. We should be promoting any NGOswhich develop or encourage entrepreneurs. An accreditation and subsidy system could be introduced by Government for those who are developing skills and competitive enterprises should be encouraged and extended to allow for microenterprises.
In addition, past successes such as industrial hives should be expanded on. Generally, the state is not a suitable vehicle for promoting and developing SMMEs; and the R200 million which Government failed to spend is a case in point. Business and Government should work together through NGOs with proven track-records with business supplying the skills and Government the money.
Miss S RAJBALLY: Mr Chairperson, hon Minister, SMMEs are an essential factor in promoting economic growth and development in South Africa. Therefore, the MF advocates that local government must expand its role in actively participating in the development of SMMEs by providing financial assistance. For example, we should replace the traditional collateral requirement with group liability as practised in Bangladesh or the banco sol in Bolivia, where the recovery rate is 95% and provide technical assistance such as information on changing markets and technology.
Also, industrial cluster development must be encouraged, for this brings together small-scale factories which allows easy economic access and affordable rent. In Japan, Korea, Taiwan, India, Italy and Sweden, industrial clusters have nurtured diverse economic integration.
In India 412 different types of products are purchased by government sectors exclusively from villages and small-scale industries. The bottom line is that Government needs to use the SMMEs as a driving force behind job creation. [Applause.]
Mr L ZITA: Mr Chairperson, the banking system is the conduit for all economic activities in market economies. Nothing happens until it is financed. The operation and the power modalities of the banking sector are therefore matters that should arrest the attention of all of us. They are important issues that we should all attend to, and not play at, as the hon Bruce was doing just before me.
He pointed out that the report does not come up with alternatives. I think he is not taking the work of our portfolio committee seriously. The report talks about the work of Sizanani, the initiatives of the Reserve Bank, which is coming up with alternatives that can be used to ensure that alternative banking methods can be developed.
Comrade Rob Davies has just borne testimony to the pain that is experienced by thousands of black entrepreneurs who find themselves unable to access credit along the normal lines, purely on the basis of their colour. This overt racism that continues after six years of democracy is a shame. Such a shame renders shallow, and less palpable to many, our project of democratic change.
The banking sector claimed during our hearings that they were equally concerned about the inability to extend credit to the micro and small business sector in our country. They claim that their incapacity to facilitate these entrepreneurial energies is because this sector is unbankable, does not have collateral and has a high-risk profile. They acknowledge that apartheid has predisposed many to be prejudiced against black entrepreneurs. They conclude that they have to strike a balance between their involvement in the economic transformation and the maintenance of a sound financial sector.
But we cannot abandon the fundamental mandate and challenge to improve the quality of life of millions of our people through effective participation in the mainstream economy.
Should we accept the notion that sound economics are essentially contrary to developmental goals, as the hon Bruce says? There is no evidence of this, except a generalisation of the specific developmental path that was followed by Britain in the past. Why should we see the world through the eyes of our former colonisers? We say: ``No!’’
There are some members in this Parliament who claim that the public hearings were a farce. Hon Bruce is one of them. They argue that financial markets, like all markets in a capitalist economy, operate through the mechanism of supply-and-demand. If there are racial prejudices, they say, that in time, the market will correct these distortions. Six years into our democracy, these distortions still persist.
They advise us that we should not interfere with the market, which will undermine one of the most efficient banking systems on the African continent. These modern day Rip van Winkels should be advised to continue with their sleep, as it is clear that they have not studied the economics of development of the past 130 years. They want us to believe, as they so foolishly do, in the economics of wishful thinking. We must engage with and digest the insights from these public hearings, and collectively work to find the solutions to them.
We must ask whether the present banking system is appropriate to the developmental and accumulation challenges and needs of the country. Based on the present experience and evidence, the ANC has many concerns. We looked at the issue of banks even in our national general council in July. In our discussion document ANC - People’s Movement and Agent for Change, we encourage boldness in ourselves as we pose questions. For instance, in dealing with matters of the allocation of capital for investments, we need to look at the balance between bank-based and stock exchange systems of savings; capital and enforced savings; assistance to SMMEs, fostering of the co-operative sector, and so on. Should we be satisfied with merely a modern sophisticated economy and infrastructure that the white man had bequeathed to us or should we search for bold and creative solutions? These are the questions that we asked as ANC.
We accept the role of the market mechanism in an industrial society, but do not believe that we should be so awed by capitalism that we throw the national liberation movement prostrate in front of this system as if in pagan prayer.
There is increasing scholarly evidence that there are major differences in outcomes between economies whose banking structures are capital-based, as in the US and in UK, and those that are bank-based as in Germany, France, South Korea and Japan.
The capital-based system emphasises the exit principle in its dealings. Once there is a problem, shareholders simply take their money and exit the system. In this model, there is no close relationship between finance and industry.
The bank-based system maximises the voice of mechanism which encourages involvement and responsibility by the banks. The bank is not an uninterested lender, but is represented on the board and uses this presence to strengthen the viability and stability of the enterprise.
Also, development practice in the developing world shows that the poor are bankable as long as due attention has been paid to institutions. The Grameen Bank, which I made mention of earlier, in Bangladesh, is a bank for the poor, and is a clear demonstration that everyone, even those who do not have collateral, are bankable. It had 15 000 clients in 1980 and 2,34 million in 1998, of which 2,24 million were women.
This bank has a 98% repayment rate and 95% of women repay of their loans. The majority of those who participate are now living above the poverty line. Of course, this bank is not the most profitable and just breaks even. These people in Bangladesh are not necessarily entrepreneurs, but are working people who are trying to eke out a living. If ordinary poor people can be bankable, how many economic and social returns can we achieve with actual entrepreneurs who are the ones that we are frustrating in South Africa today because of the banking system? It is only proper that we address the problem of black entrepreneurs and their relationship to banks. [Applause.]
The MINISTER OF TRADE AND INDUSTRY: Mr Chairperson, thank you for this opportunity to respond in this debate on small and medium enterprise financing. I think one of the measures of a Parliament and its worth is whether it listens to its people. I congratulate the committee on holding these hearings and on the whole exercise that we have undertaken, because what we have done is to give ordinary people and other structures in our society a chance to express their views and their frustrations.
I think what I found impressive, both in this House and earlier when I was in the NCOP, is that all the parties have heard this, with one exception. Those parties that have heard it have all realised that we do have a problem, that we should be thinking about this problem and that we should be working on it in some or other way.
Unfortunately, one of our parties, our own little Don Quixote, insisting on merely tilting at little windmills all over the place without any regard to fact, but with considerable emphasis on fiction. But still, those parties that choose not to listen to ordinary people will pay the price. I do not think there is much merit in debating with someone who just refuses to listen to anything and tilts away at their windmills. My only nightmare is that this particular person does not have one of these Duracell batteries in, otherwise we are going to see her wobbling like this for another 10 years. [Laughter.]
However, let us then deal with the issues, and I think all parties apart from that which this particular spokesperson represents, have applied their minds to it. I think all of us agree, including the banks, that the system of delivery of finance for small and medium enterprises in South Africa is, firstly, inadequate. Secondly, everything shows that if one is a black businessperson, one has even greater difficulty in getting access to that finance.
We do not need to go through the reasons for that. The Banking Council of South Africa and banks have put their views. The Reserve Bank, DTI and Finance, as well as many small businesses and ordinary people have put their views. I think we should also ignore and remove what is merely political point-scoring. What we are talking about here is trying to work together between all parties - the borrower, the lender, Government and other institutions - to improve this flow of finance into the small and medium business sectors, particularly for black businesspersons.
In doing that, we must understand what each party can bring to the partnership. The argument that we have put forward, from my department, is that we accept that the banks must act as banks. They must be responsible for risk. They must be responsible for prudential measures to ameliorate that risk. But we argue as well that they have a responsibility to develop their market; that small enterprises are their future market, and that any business should be attempting to develop that market. We also argue that, given the structure of our financial sector and given the sociology of race in that sector, specific and clear managerial strategies must be developed to correct and counter that.
That, we argue, is the responsibility of any responsible corporate citizen in this country. The banks themselves and the Banking Council of South Africa, to their credit, have said if there are racist practices in our banks, we must address them. That is the correct position to take. By bringing this home to people and making this clear, I think we put sufficient social pressure on the banks to address some of these managerial dimensions. To argue that any form of regulation of the banking system is unacceptable and wrong is just pure nonsense.
Many countries have realised that, at points in time, their banks have not fulfilled their important function of financing the poor and financing those who have been discriminated against. The community reinvestment Act- type legislation, in our view, is quite an acceptable type of legislation. The banks themselves have said that they can live with that sort of legislation. Why is it acceptable legislation? It is acceptable because what it says is: Here is a market failure. As the private sector, they have certain responsibilities to try and correct that. What we want them to do is to continuously publish information to remind everybody that this problem is being addressed and say how successfully it is being addressed it.
That sort of pressure has proved to be important and useful for any institution and, in this case, getting the banks to apply their minds as managers and as business leaders to correcting the problems in these communities. No one has said this. The DTI has not said this, the Ministry of Finance has not said this and neither has the Reserve Bank said this. We are not talking about forcing people to lend. We have stressed that the banks, as banks, have responsibilities to assume risks and they must take risk. They cannot take no risks. They must take steps to ameliorate that risk and develop their markets. So we are not talking that.
In fact, if one looks at what Government has done, we have said that in the realm of microlending, this is a failure of banking, because people are lending money to ordinary people without having to assess any risk whatsoever, and the repayments are deducted from their salary. So, we have said: No, that is not how a banking system should work. That is open to massive exploitation and abuse. We want them to conduct themselves as banks, ie you assess the risk. One of the risks is you do not lend money to very poor people. That is not banking. That is abuse.
So it is quite clear that, as Government, we do not adopt the approach that the DP is attempting to ascribe to us. What we are very clear on is that there are failures in the system, that we work with the banks to correct that and we believe that many other people can correct this as well.
My department - as was indicated by hon member Dudley or one of the other speakers - accepts that, in the current circumstances, the cost of finances is too high, access is a problem, which we must address, and the procurement patterns are also problematic, forcing small enterprises to have to hold large amounts of working capital. It is for that reason that we have developed the small manufacturing enterprise development programme. Recently, we extended that programme across more sectors. It is essentially a cash grant designed to support small start-up enterprises or major expansions in the first two or three years of their operations. That has the effect of reducing the cost of finance.
I think that instead of us standing here and saying that Government must do everything, which Government cannot do, why do we not, as representatives of our people, play a more active role, irrespective of our parties. We have the privilege, as representatives in this Parliament, of knowing what it is that the Government can and cannot do, and what it is we are trying to assist the small enterprises with. Why do we not play a role in our communities? Why are we not talking to small businesses? Why are we not offering them counsel and guiding them to make use of the facilities that have been provided by public money for small enterprises?
We did a survey, members will recall, for my Ministry last year. We asked every MP: Are there small business support centres in your constituency? Are there banks in your constituency that support small businesses? What are you doing about it? Let me tell members that only one third of the members of all parties replied to that.
So I think the challenge we have, in addition to analysing and assessing this problem of the capital market and bringing about corrective steps, is that one of the responsibilities that we can assume as members of this Parliament and the NCOP is to play a role in supporting small businesses through the knowledge we have, through the counsel we can give and through the contacts we can make. I think that would be a far more fruitful exercise than standing up and, as soon as we see DTI, wobbling like a Duracell battery. [Applause.] Debate concluded.
Report adopted. (Democratic Party and New National Party dissenting.)
SEA TRANSPORT DOCUMENTS BILL
(Second Reading debate)
There was no debate.
Bill read a second time.
FINANCING FOR DEVELOPMENT AND A NEW PARADIGM OF ECONOMIC AND SOCIAL
DEVELOPMENT DESIGNED TO ERADICATE POVERTY
(Subject for Discussion)
The CHAIRPERSON OF COMMITTEES: This item is a subject for discussion as a Speaker’s debate. It is also an agenda item of the Inter-Parliamentary Union.
Mr J H VAN DER MERWE: Chairperson, I introduce the subject for discussion as placed on the Order Paper and I take this opportunity to thank Madam Deputy Speaker for inviting me to be the lead speaker in this debate.
The backround to this debate is that a delegation of this Parliament will shortly be leaving for Indonesia to attend the IPU meeting, and this debate is part of the preparation for that. I have been fortunate to attend some international meetings, such as those of the CPA, the United Nations and this forthcoming IPU meeting, and I have often asked myself whether these huge international structures really achieve anything, or whether they are simply huge time- and money-wasting institutions.
Many participants, unfortunately, also use these international meetings as social outings, and are more involved in socialising and sightseeing than attending to the agendas of the meetings. I have seen this happening.
I am proud to state today that the delegations of this Parliament have always taken their responsibilities seriously. They have also proved that these international structures can, in fact, be turned to immense advantage for human beings all over the world. I know of no South African member of Parliament who has disgraced our land at such conferences. I know of many excellent performances by our delegations.
In particular, I remember how in Wellington, New Zealand, our black women saved the CPA massive embarrassment. We were all gathered in a huge reception hall at the time, when a black lady from Jamaica, all of a sudden, herded a number of black women to the platform to sing a song. Unfortunately, the singing was a huge flop. Not all the women knew the words and tune of the Jamaican song. It was then that an ANC lady quickly seized the initiative. Within seconds, she had gathered about six South African black women around her and they let fly with the famous click song.
I remember how Faith Gasa, who is now the Minister of Education in KwaZulu- Natal, even led the little choir with a little toyi-toyi. They had the audience up on their feet and cheering. Our women, in fact, seized success from the jaws of defeat and received a deafening ovation. Since then I have been trying to find somebody to teach me the click song. The most important requirement for a delegation such as this one that is leaving is not only to be well prepared for what lies ahead, but also to have proper inputs and directives from this Parliament. How can we make statements affecting our Parliament at international fora without the guidance of this Parliament?
In fact, the secretary-general of the IPU wrote on 7 August 2000 to Madam Speaker, emphasising exactly this point. On page 1 he says:
Parliaments and their members are strongly encouraged to take appropriate steps to hold discussions in parliament, in preparation for the meeting.
I wish to thank the leader of the IPU delegation, Deputy Speaker Baleka, who has already ensured that all delegates receive all relevant information about the IFP … [Laughter.] Not IFP, the IPU meeting! It would have been a wonderful occasion if everybody had been going to an IFP meeting.
In addition, she called a meeting of our delegation, making it clear that all participants must be fully prepared and, very important, that we need a debate in this House to enable members - you ladies and gentlemen - to debate the IPU issues, making inputs and giving guidance to the delegation. For that very reason, this debate has been arranged.
The members of the delegation are today sharing with Parliament the agenda of what is to be discussed at the forthcoming IPU meeting, in order for this Parliament to debate the issues and to give guidance to the delegation. Apart from the item as it is printed on the Order Paper, the subject for discussion, the agenda of the IPU meeting covers the following six items: first, mobilising domestic financial resources for development; second, mobilising international resources for development, foreign direct investment and other private flows; third, trade; fourth, increasing international financial co-operation for development through, inter alia, official development assistance; fifth, debt; and sixth, addressing systemic issues, enhancing the coherence and consistency of the international monetary, financial and trading system in support of development.
One can notice from this that the issues that are going to be debated are extremely important and extremely serious, and for that reason, we decided to have this debate, so that each and every member can make inputs and give guidance to the delegation that is leaving.
In conclusion, I sincerely hope that members will really use this opportunity today to give inputs and guidance to the delegation. We also wish to thank the various state departments, in particular the Department of Finance and the Department of Foreign Affairs, and staff members, for valuable inputs which the delegation has received so far. If we are fully prepared, if we make use of all these inputs, I am convinced that the delegation under the leadership of Deputy Speaker Baleka will return with many feathers in our cap for this beautiful Parliament.
Ms B P SONJICA: Mr Chairperson, my focus will be on mobilising domestic and international resources for development within the context of globalisation. In all countries, development happens against a backround where, and I quote -
… national economies are interlocked, commercial banking and business ownership transcend economic borders, international trade is integrated and financial markets are connected through instant computer link-up.
Obviously, globalisation is not new. It is just the latest stage in the development of capitalism. However, for previous governments in South Africa, it was less challenging. It was better managed because it served the interests of the few, hence the imbalances. It has two very important features. Firstly, it can be a force that increases inequality, unemployment and other social ills, but also it can increase the potential for co-operation and could lead to mutual benefit.
Perhaps I should preface my presentation with a question: How has the South African democratic Government responded to this challenge, and how has it mobilised its financial resources for socioeconomic development? Obviously, we needed an enabling environment, political stability and sound economic policies. Those fundamentals are in place, as is always said, and all these would be in line with the dictates of the major players that set the global economic agenda. The areas of focus for development for South Africa were the following. We looked at the development of policy, where we were able to create this enabling environment; we looked at the development of human resources; we looked at economic growth; we looked at social development; we looked at infrastructural development. But the budget was also used as a very important tool to realise this development.
The aim was to enhance economic activity through the expansion of domestic capital, which would lead to social and economic development, but also place South Africa in a better position as a player in the global economy. There have been successes. The first success that one can mention is an environment that is beginning to attract investors; a legitimate government enjoying respect the world over and, of course, a lot of delivery on social services that has led to the improvement of the lives of millions of our people. Of course, there have been shortcomings or failures. Unemployment, for example, is one area that needed more attention as are poverty and inequality, and there were inequalities in income as well.
We seem to be trapped in a vicious cycle where, while we are trying to comply with requirements as suggested by the economic powers, very little is achieved in terms of socio-economic development. Some of the problems that I have referred to, like unemployment, are indicative of the adverse effects of globalisation. For instance, poor technology has contributed to the loss of jobs, especially in the mines, because of the process of modernisation around that area. With mining being one of the biggest contributors to economic development, we need, as a matter of urgency, to improve or develop our technological capacity, to create better opportunities for South Africans. That in itself puts pressure on the Government to speed up delivery on basic services, especially in water and electricity.
The Department of Education has also to look into coming up with a strategy for the development of human resources, also as a matter of urgency, which will incorporate sectoral human resource development strategies so that these can be implemented by all the departments. This will help to unlock the potential of all South Africans, the majority of whom are currently either unskilled or illiterate.
On economic growth, I think we need to put more emphasis on the micro-based economy, where people must create employment rather than looking at the Government to create jobs for them. South Africa has to focus on the following with the purpose of improving them: first, the implementation and the co-ordination of policy, and second, the integrated approach to programmes. I think that will be addressed, hopefully, by the clustering within Ministries. We also need to look at reviewing and refining policy whenever and wherever necessary. We need to strengthen our capacity to monitor the implementation of our programmes and our policy.
The policy on public-private partnerships needs to be formalised, and it needs to be formalised in such a way that it will have a regulated relationship that will create a balance between the need to contribute to social transformation and that to make a profit, especially on the part of the private sector.
South Africa definitely cannot do it alone. It needs to operate as a unit. As we are aware that global trade is concentrated in three blocs - Europe, America and Asia - the African renaissance is a step towards the right direction for Africa to approach development as a collective with a unity of purpose, making it ready to pursue the South-to-South co-operation that is spoken about in the international arena. Africa has to assert its strength, for example in relation to its natural resources. It has to be in control of them and use them as a trading tool. We are not in control at present. The pricing, for example, of tea is not necessarily in the hands of the majority of these people. We need political stability in Africa so that we can move swiftly on the question of development.
At present SADC processes are focused internally, and I think the challenge is that we need to focus more externally where our SADC trade protocol and similar programmes have a role in international trade. We need the harmonisation of policies to enhance growth and development. Poverty and Aids are another challenge. Lastly, everything considered, it is clear that negative trends of globalisation could be counteracted if the international community heeded the call made by the President on the eradication of poverty and the cancellation of debt, because that would ease the burden of developing economies and enable them to direct all their resources towards social and economic development.
In conclusion, we appreciate the IPU’s effort in ensuring that issues that affect the lives of the majority of the global community, the poor, are taken seriously and are addressed earnestly through extensive debate. [Applause.]
Mr N S BRUCE: Chairman, no one should make the mistake of believing that all developing countries are poor. There are some that have been growing at growth rates approaching 10% for decades. They are rich, resilient and raring to go. Much of what they have achieved has been done despite the absence of natural resources and other benefits that nature has bestowed in abundance on some of the world’s poorest nations.
There exists in these rich developing countries a state of mind that is neither subservient nor resentful. They do not attribute the wealth of the industrial world to cheap cashew nut imports from Africa. They acknowledge that the Renaissance and the Industrial Revolution, which brought great wealth and benefit to the West, were based on individual ingenuity, the courage to take risks, a determination to succeed and the absence of foreign aid.
No country was ever created rich. Few have succeeded in having wealth thrust upon them. Many have tried, but most succeed in dissipating capital flows faster than they can be received, to the considerable benefit of the Swiss bankers. More capital in the form of aid and a little investment has been thrust into Africa over the past 60 years than was seen here in the previous 1 000 years. The outcome has been a loss of agricultural self- sufficiency and a general increase in poverty in many of the recipient countries, of which happily our own was not one, and accumulated debt which now cannot be repaid.
It is surely pertinent to ask why. Well, when governments can spend donor funds rather than have to rely on tax revenues from their own citizens, they are unlikely to take seriously the conditions in which their citizens live. It is a formula for corruption which, once ingrained in these countries, is nearly impossible to eradicate.
That, in turn, encourages an attitude of mind that has destroyed confidence and encourages criticism of the very international agencies that have the skills and the resources to help alleviate poverty. Let me give hon members an example. The IMF and World Bank activities in Eastern Europe have been widely regarded as salutary. In Africa they are held out as being, if not the cause of poverty, then certainly the reason for its entrenchment. The difference is that the Eastern European governments embraced the policies of the IMF with enthusiasm and made them work. In Africa, governments have accepted these ministrations only under protest. They were determined, with some perversity, not to make them work. Instead of accepting the blame for their own misgovernment, they try to blame those who come to assist.
Of course, no country anywhere has to turn to the IMF. Countries go to it in desperation as basket-case economies because they themselves have been unable to run their own economies with a minimum of facility.
Of course, the IMF has its faults. It has tried to avoid the obligations of political commitment. It should have been harder in public on recalcitrant politicians. There are many economists today who believe that it is an agency that has outlived its use and that it should be disbanded, and that is not an illogical view. But while it is there and is prepared to help, those who call it in should at least be supportive of the policies which, contrary to received wisdom, have not been unsuccessful in even very poor countries.
If the rulers of these countries can accept their own culpability for what has happened in their countries, they should move with considerable speed toward sustained recovery.
The argument that economic growth is not enough to sustain development without government intervention is really a sterile one. The important thing is to get growth going; thereafter we can argue about redistribution. The chances are that it will quickly be a sterile one.
The other mental block to development and the reduction of poverty exists in the minds of the industrial countries themselves, where sentiments that support protection remain a reality. It does so despite the fact that the citizens of countries in protected trade blocs are put at a considerable disadvantage by these illogical sentiments. The high cost of food in Europe is an example of the perversity with which Europeans are prepared to exist. The outcome of this is that too many industrial countries find that aid to the developing world is cheaper than trade. These countries do not want to acknowledge the logical outcome of reduction in Third World poverty and what it will mean, that is, they will have to accept developing countries increasingly as competitors, and not as inert recipients of their charity.
This is a state of mind as difficult for the industrial world to accept as it is for the Third World to acknowledge the reality and efficacy of the International Monetary Fund’s advice. To overcome this credibility gap would require a tolerance and open-mindedness that it is seldom characteristic of international trade negotiations. The material benefits both to the industrial and developing worlds would be material and enduring. To find that common ground will not be easy. If it can be found, the outcome will so material that the outcome of debt forgiveness and reform of the International Monetary Fund and World Bank would pale into insignificance.
However, that tolerance will not be achieved while the developing world harbours more resentment than economic enlightenment nor while the industrial world embraces policies that are, in important respects, surrogates for socialist protectionism that is unrealistic, expensive and counter-productive.
Of course, globalisation is a phenomenon that is capable of forcing the credibility gap to close, for the benefits of participation far outweigh the stagnation of denial. But it too requires commitment and courage, as well as acknowledgement that all are not equal in opportunity and in ability, and never will be. There are social and economic realities that have to be acknowledged and faced with determination and credibility. They do not fit easily alongside the residual concept of collectivism which still pervades both the industrial world and the developing one.
History has shown that, at times of deep differences, institutions can help bridge what appears to be irreconcilable points of view. So, instead of turning our backs on the international institutions that exist today, both sides should use these structures to seek a common purpose - which means resisting transforming them into sterile ethnic shells which are out of harmony with reality and are devoid of the potency with which history has endowed them. [Applause.]
Dr P J RABIE: Mr Chairperson, hon members, the crux of my presentation will be the eradication of poverty.
The eradication of poverty presents one of the global economic challenges at the beginning of this new millenium. It requires an integrated holistic approach. The few success stories of the eradication of poverty was when the countries concerned addressed the diverse range of issues and when they paid particular attention to their domestic financial resources. In fact, I think that one cannot solve the problem of poverty if there is no will on the part of the people from within the particular country to address its own domestic problems.
This new approach in particular not only looks at material issues, but recognises that human development is also of primary importance. Human rights, access to education and health are also very important. I am afraid to say that in the past, aid in many of the poorer countries only benefited the so-called elite or the privileged segments of society, and not the whole society. Sustainable economic development must take cognizance of gender issues and environmental issues - these are, at the moment, the points of departure. One of the speakers earlier today spoke about international financial architecture. This often refers to the entire social fabric of society and the manner in which international debt is serviced and conducted.
Financing mechanisms for private and public resources must retain a balance if we want to try and attempt to eradicate poverty. If we look at the trade beneficiaries of the poorer countries these days, we often find that it benefits the so-called sophisticated or the elite.
Trading and economic capacities must be developed, and it is extremely important that we, as a country, cater for diverse circumstances, and, especially in the poorer countries, we find that their particular economies differ from region to region.
It is very important when we think of aid that we define the concept of foreign direct investment. We found that foreign direct investment in many of the poorer countries in developing countries is often of a speculative nature. It was only for short-term gain, and it often impeded or had a very harmful effect upon the fragile financial systems of those particular developing countries.
Economic growth goes with good governance. We have to manage inflationary pressures and fiscal discipline. Another priceless asset of many developing countries is the banking sector. Often we find that if we harness all the financial role-players, particularly pension funds, we find that that particular country develops and experiences financial growth.
We find that foreign direct investment in the manner I have mentioned has been very volatile, and we found that many of our developing countries require oversight transparency. I think some of the my colleagues’ for instance, Mr Bruce alluded to the fact that if there is corruption, if human rights are abused and the fundamentals of a democratic government are not upheld, the chances of eradicating poverty and encouraging economic growth are extremely slim.
I read a report produced by the Parliamentary Union which says that 6-7% of the total foreign direct investment goes to so-called low-income countries. What is rather alarming is that we found that something like 70% of all foreign direct investment goes to the so-called 20 high-income countries.
I think that the International Monetary Fund and the World Bank have paid particular attention to this. The hon the Minister has also said that the new fiscal system requires a new code of conduct. We have to look at the terms of international trade; we have to look at the liberalisation of trade agremeents between developing countries and developed countries, and we must try and see whether we cannot accommodate all the respective role- players.
At the moment, we find that the odds are stacked against the so-called poorer countries. I think it is very important that the so-called developing countries set an example in this respect. I am referring to the Netherlands and the Nordic countries. They have decided to use something like 0,7% of their gross national product as foreign direct aid to developing countries. I think that this is a very responsible and a wise way of injecting aid into these developing countries. It is well-written. There are - not what I would call constraints, but they do expect these countries to adhere to certain codes of conduct. If we do not adhere to this particular frame of reference, I foresee that there will not be an innovative approach to the eradication of poverty.
Something else which is very often said is that one of the great impediments to the eradication of poverty is the spiral of debt in a number of the poorer countries. This again … [Time expired.] [Applause.]
Mr T ABRAHAMS: Chairperson, I could not agree more with the previous speaker. There were so many salient points that he raised in his speech.
I am very pleased that the Deputy Speaker will be leading the delegation to Jakarta. I have come to know her as a highly efficient person. I am certain that she will see to it that this delegation does something good. I am happy to have been invited to be part of the delegation as well. I shall strive to do my best there.
South Africa tends to be more interested in developing its own domestic economy than in prescribing to rich countries how the world economy should be redesigned. However, we live in a world which has shrunk very rapidly and which is still shrinking even faster. Travel is so much easier and faster. Communication and information is available so much more freely. Interaction between people of the different states in the world takes place so much more readily. This shrinking serves to underscore the fact that we are indeed our brother’s keeper.
Developing countries, though, have major concerns about the pace at which globalisation is sweeping through the world. It is evident, as the previous speaker said, that the massive benefits of globalisation are reaching developed countries and that these states are not really interested in having these benefits extended to the poorer countries. Advances in information technology and communications cannot be fully exploited in these poorer countries in the developing world. For example, in South Africa, we are grappling with grinding and chronic poverty. It is not possible for us to get the maximum benefits out of these tremendous gains made in communications and information technology. Again, the richer countries are the beneficiaries of this.
Experience has shown that domestic economic development, in itself, cannot be relied upon to combat poverty adequately. International and regional trade must be developed. But, please, do not tell South Africa that it must only concentrate on trade in its regional context. Poor countries do not profit by trading with each other. They have to be assisted in that regional development.
Also, it has to be said that developed nations should closely examine the origins and sources of their own developed status. It is morally unacceptable that some countries should wallow in stupendous wealth and luxury while more than 1,2 billion people in this world today are forced to get by on less than a dollar a day. It is immoral.
If developed countries really wish to engender sustainable development and address poverty reduction, they should ensure that resources, via official development assistance, trade and private external flows benefit the larger populations in developing countries. In the past decade, official development assistance has declined in favour of private external flows. That is wrong. In the year 1990, ODAs made up 60% of all flows. By 1998, they made up 20%. This is a reduction instead of an increase, and is wrong. This imbalance must be corrected and the international community must do it. How else are we doing to develop the rural areas of South Africa? [Time expired.]
Mrs R M SOUTHGATE: Mr Chairperson and colleagues, there is a need for a new paradigm shift in the way socioeconomic development financing has been administered over the past decades.
In a recent publication of The Economist, May 2000, it is stated that Africa is losing the battle against poverty. It says that all the bottom places in the league’s tables are filled by African countries, and the gap between them and the rest of the world is widening. Only 15% of Africans live in an environment considered minimally adequate for sustainable growth and development. At least 45% of Africans live in poverty, and African countries need growth rates of 7% or more to cut that figure in half in 15 years.
With regard to the January 2000 foreign direct investment confidence index, only about 10% of foreign senior business executives saw the SADC region as a driver for investment. Many of those interviewed have created a negative impression about the region in its efforts to create additional investment opportunities. In the same study, Africa is perceived as the highest risk region in the world. Even though Africa has shown certain positive rates of return over the last few years, many investors are still too wary to commit themselves to invest. These are some perceptions that, unfortunately, will not be easily erased as the shadow of prejudice is cast over a long period of history.
To achieve a paradigm shift, certain basic principles must be put in place to draw the attention of investors towards a sustainable investment policy. The belief in the free market system must be encouraged. A clear democratic system of government must form the basis of future financial assistance. One of the first areas for a readjustment financial aid package is to tackle the problem of inherited debt in certain developing countries. Debt relief must be an important element that should be considered if we are to be successful in realigning the continent’s financial strategies with economic growth and developmental progress.
According to page seven of the conference report, writing off this debt is critical to the future efficient functioning of any development finance system. On the same page, it is suggested that cancellation of this debt will not be as onerous as it would appear. South Africa has, to date, not come out very clearly in support of this strategy. But, whatever our economic reasons may be, there is a wider developing world that will benefit from some form of debt relief, and South Africa must throw its weight behind these countries in solidarity.
The report calls for a change from the old ways of doing things. In Africa alone, there are some old ways that must definitely be rooted out. The eradication of poverty is more than simply a financial solution. Africa suffers from a poverty of the soul. If one wants to overcome the battle of economic poverty, the reversal of the moral void on the African continent must be included as part of the equation within a sustainable development paradigm.
If this century is the African century, as we are led to believe, then what is called for is intolerance towards self-enriching agents and contemptible governments which, through corruption, reduce their people to poverty.
This document aims to redress the patterns of financing of the developing nations. It suggests a number of financing conditions that ought to achieve better results in the future. What appears to be a problem with this document, though, is that it appears to be more speculative than actually providing clarity on how the various stakeholders will take this process forward. [Time expired.]
Prof B TUROK: Chairperson, I want to address one of the most fascinating phenomena of our age, namely, the transfer of technology between countries and across the world. This is not merely a technical matter, as I will show, but it is a matter of great importance for the whole world and particularly for South Africa.
The new technology of the information age is penetrating everywhere and holds great promise. But who benefits from this? Does it bring a better life for all countries and people everywhere? The evidence is that it moves very unevenly, even increasing polarisation between countries and peoples. Since South Africa is already a highly divided society, how can we prevent the new technology from dividing us further while yet joining the global technological revolution?
I would like to refer to two experiences of my own. One was in Tanzania, in 1967, when President Nyerere began a process of villagisation and building collective farms. In order to progress farming, he introduced a tractor in each of these villages. The tractors were provided by foreign funding. Within a year, the tractors were inoperative and rusty. The reason for this was that the mechanics necessary to maintain those tractors were not available, and spare parts were also not available. This was clearly an example of inappropriate technology in a developing country, and had a lesson for the rest of Africa.
On the other hand, two weeks ago, Mahomed Yunus, at a conference in New York, told us how the Grameen Bank had supplied not only credit to women famers in Bangladesh, but was also beginning to supply cellphones. He argued that even though these women are illiterate and innumerate, they are able to use the cellphones in order to improve their economic activities as farmers. Clearly, this is an appropriate use of modern technology.
So, what are we saying? We are saying that we live in a new global world of information and communication technology called ICT, which is establishing a network society in which primarily business is taking the lead forming network clusters. Indeed, we now have a world marketplace. This phenomenon is growing so fast, as is illustrated by the fact that there were 14 million Internet users in 1995, and this year, there are 250 million - a huge expansion. In 1990, there were 33 billion minutes of international telephone traffic. In 1998, there were 89 billion.
Global trade has risen from $2 trilion in 1986 to $5,58 trillion in 1999.
The foreign exchanges, which are a major concern to South Africa because of
hot money - speculative money moving around the world - had a daily
turnover in 1989 of $500 billion. And now, it is $3 trillion daily. This is
the turnover on the stock exchange. A lot of this money is speculative and
volatile. We call it hot money''. At a conference I was at two weeks ago,
we called the system aworld casino’’. An American trade unionist called
it ``a kind of Wild West.’’
What is happening is that speculative finance is taking advantage of technology, but is also driving it. So, it is benefiting from this new technological age, because of computer systems and so on, but it is also driving it and, as a result of speculative capital wanting to move internationally, we find that technology is growing very fast all over the world in order to serve the speculative capital.
Now, the question arises: Is this technology appropriate everywhere? Can this technology work for every citizen of the world? Must South Africa join the stream and try to become world-class in technology? If so, who will benefit? These questions are very important for us. Only a few weeks ago, Emmanuel Castells, the very distinguished Spanish professor who visited South Africa, said to us - and he met the President - ``Either South Africa sinks or swims. You either swim in the tide of technology or you sink as a country.
He went on to say - I hope the hon Mr Bruce is here and listening - that the world brand of capitalism is implacable and cruel. Globalisation is sundering the world into two groups: One, with dynamic information-based economies and the other with the vast deteriorating old economies dominated by informal and survivalist activities, and Africa is the case. He said that if we - Africa and South Africa - do not join this new technicological age we will be obliterated.
Now, my own experience - and I have worked, studied and taught in Africa, - is that one must be very careful, as my examples of Tanzania and Bangladesh show. One must be very careful of how one incorporates new technology into one’s system because one may incorporate it, as Nyerere did with the tractors, in a way that does not work.
It is very tempting for us to incorporate the new technology in our rural areas in a form that may not work, and even into our townships and so on. We must be careful how we incorporate this new technology. It must be appropriately incorporated. So, I believe that we must indeed join the new age - the ICT age - because there is a huge danger in being left out, but we must introduce it in a careful manner.
Globally, ICT, as I have indicated, creates huge divisions between countries and within countries. The north-south divide is growing bigger, and poverty and polarisation within countries is also getting bigger. The UN development report of 1999 said this, and I hope those people interested in finance listen:
Liberalisation, privatisation and tighter intellectual property rights are shaping the path for new technologies, determining how they are used. But this has gone too far. Poor countries risk being pushed to the margins in the control of the world’s knowledge.
Damaging also within countries is the following. Listen to this: In Latin America, inequality is higher than it was. In Brazil, the Gini coefficient is 0,59. In Eastern Europe and in the former Soviet Union, inequalities are growing. In Russia, the Gini coefficient was 0,24 in 1988, and in 1994, it was 0,48, which means it doubled. So, inequality doubled in Russia in a few years. In the sub-Saharan Africa, incomes are now lower than they were in
- So, the world is being polarised and the danger is that this new technology will polarise us further.
So, the way we introduce it into every country is highly problematic. It requires training and a great deal of planning. What I am arguing for is that we in South Africa, if we join this new age, must prepare now, plan the process and create the training, and let us tell the DP that the market alone will not see to this. The market alone is based on profit and opportunity. If we do not plan as a country, the market will only increase the polarisation and the divisions in South Africa will become worse.
So, concerning the financing of the information technology that is coming to us, there is no doubt that the market will do a great deal. The drive for profit will ensure that there is an ever-expanding reach of information technology in South Africa. But, if we are to participate properly in this country in this information age, the state will have to do a great deal more by way of training, planning and introducing this technology as the Grameen Bank has done in Bangladesh.
Those women farmers in Bangladesh have been given cellphones, not for social use, but for use in marketing, stydying the market, communicating and planning their production in a far better way. We need to do the same thing.
Fortunately, South Africa has received a great deal of overseas development assistance. Since 1994, this country has received R18 billion in overseas development assistance. We are getting something like R3 billion a year from ODA. We must use this for our technological revolution. We must make sure that the state uses this money and other monies which we have in our coffers, development funds and so on, in order to introduce technology in a planned way.
So, to conclude, those who regularly applaud the market and say that we must join the international system at whatever price and in whatever form are wrong. We need to plan our introduction, our entry into the information age. We must have the state playing a major role, because the market will only distort the way technology is introduced ito South Africa.
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Before I call on Dr Mulder, hon members, I am not adverse to your having mini-conferences, provided you keep eye contact with the Chair. [Laughter.]
Mr D H M GIBSON: Mr Chairperson, on a point of order: Would you be kind enough to explain to us how we, from these benches, can keep eye contact with you if you are keeping eye contact with the ANC on the other side?
The DEPUTY CHAIRPERSON: I am trying to keep contact where I think there is the greatest degree of disorder. So, if I am concentrating somewhere, that is where the greatest disorder is. So, if you are within order, hon Mr Gibson, then, of course, I will excuse you from keeping contact with the Chair.
Mr D H M GIBSON: May I suggest that you keep one eye this way and the other eye that way? [Interjections.]
The DEPUTY CHAIRPERSON: Thank you, I will try. [Interjections.]
Dr P W A MULDER: Mr Chairperson, if I had more time, I would have liked to react to what the previous speaker said with regard to the market and technology. But, unluckily, I only have two minutes.
When we debate financing for development, there is no doubt that some countries are more equal than others. According to an Oxfam report, the donations to developing countries vary widely, especially when one compares Africa to other countries. The per capita donor response to Angola, for example, is $48; to Burundi, it is $17; to Sierra Leone, $166 and to Somali, $11. Compare this to the per capita donor responses to, for example, East Timor, which is $139 or Yugoslavia, which is $207.
Die vraag is, waarom dié probleem rondom donasies en ontwikkeling? Of, anders gestel, wat is die voorwaardes vir suksesvolle ontwikkeling van ‘n land, veral ‘n ontwikkelende land, en veral dan die voorwaardes vir internasionale hulp? As van beleggings gepraat word en veral van geld uit die buiteland is dit so dat die normale markkragte waarna die vorige sprekers verwys het tot ‘n groot mate bepaal waar die geld belê word, en onaanwendbaar gaan sulke geld vloei na lande waar daar ‘n onmiddelike voordeel vir die belegger is. Dit is gewoonlik lande wat reeds begin ontwikkel het en wat reeds ‘n demokrasie in plek het.
Dit beteken arm lande, en veral arm lande sonder demokratiese stelsels, word ál armer, met die implikasies wat daarmee saamgaan. Dit is die één aspek wat ek in hierdie verslag wat ons gekry het, mis, naamlik dat die voordeel wat demokrasie vir ‘n land bring nie hierin behandel word nie. Dit is nie net die voordeel van buitelandse belegging nie, maar daar is ook hoeveel bewyse dat demokrasie voordele binne ‘n land bring en ook geld binne ‘n land na vore bring.
Indië, met ‘n beperkte demokrasie, het geen algemene hongersnood gehad sedert 1947 toe dit onafhanklik geword het en ‘n demokrasie gekry het nie. Sy laaste hongersnood was in 1943 voor demokrasie. Waar is die hongersnode? In die outoritêre state, in plekke soos Noord-Korea, Soedan en selfs in China in 1959. Alhoewel China baie hulpbronne het, kon hy nie daarin slaag om sy mense te voed nie. Dit blyk dat demokrasie outomaties ontwikkeling en voordele bring en dit moet in die verslag kom. [Tyd verstreke.] (Translation of Afrikaans paragraphs follows.)
[The question is, why this problem regarding donations and development? Or, in other words, what are the conditions for successful development of a country, particularly a developing country, and then in particular the conditions for international assistance? When investments are being discussed, and specifically as regards foreign funds, it is a fact that the standard market forces to which the previous speakers have referred can to a large extent determine where such funds will be invested, and inevitably the flow of such funds will be towards countries where immediate advantages for the investor are to be found. These are usually countries that already have started to develop and already have a democracy in place.
This means that the poor countries, and in particular countries without a democratic system, are becoming poorer still, with the concomitant implications. That is the one aspect I do miss in this report that we have received, namely that the benefits which democracy brings to a country are not discussed in it. It is not only the benefit of foreign investment, but there is also plenty of proof that democracy brings about benefits inside a country, as well as money.
India, with a limited democracy, has not suffered a general famine since 1947, when it gained its independence and became a democracy. Their last famine was in 1943, before democracy. Where is famine found? In the autocratic states, in places such as North Korea, the Sudan and even China in 1959. Although China has many resources, they could not manage to feed their people. It is evident that democracy automatically brings development and benefits and this should be included in the report. [Time expired.]]
Mr P H K DITSHETELO: Mr Chairperson, the establishment of the Inter- Parliamentary Union by Messrs Cremer and Passy in 1889 must be hailed as a very important forum for parliamentarians to brainstorm world events and propose possible solutions. It provided the origins for today’s form of industrialised multilateral co-operation, and advocated the establishment of corresponding institutions at the intergovernmental level which eventually came into being as the United Nations. The IPU was also instrumental in setting up what is now the permanent court of arbitration in the Hague.
It should now focus on the wider requirements of sustainable development and poverty reduction, and therefore demand that the balance is once again tilted towards increased public resources, especially ODA, to be made available. Market mechanisms by themselves cannot address sustainable development issues. It is imperative that there is better balance between public and private resources.
Also, it is essential that private flows and international trade are also directed towards the more purposeful facilitation of sustainable development and poverty reduction processes. If these flows are to generate benefits to the larger population in developing countries, they must incorporate a stronger development and poverty reduction dimension.
Markets work in favour of those countries where there are immediate economic and financial opportunities. [Time expired]
Dr S E M PHEKO: Mr Chairperson, the Inter-Parliamentary Union was established in 1889. Today the IPU is supposed to be the focal point for worldwide parliamentary dialogue. It purports to work for peace and co- operation among peoples and for the establishment of representative democracy. Meaningful democracy must address the eradication of poverty and transfer of technology to countries which were underdeveloped as a result of slavery and colonialism. By technology, I mean acquired technology appropriately suited to our African conditions and mastered by the people of Africa. I think that the hon Ben Turok had a very good point when he elaborated on technology.
The Inter-Parliamentary Union should foster the exchange of experience among its members. This exchange must be based on values which recognise the suppressed afrocentric view of the world and the interest of Africa’s people. African parliaments must see that they have genuine, independent electoral commissions whose members are not surrogates of the ruling party. Africa must also mature and move away from where its elections are policed by former colonial powers which arrogate to themselves the right to determine whether the election results in an African country are free and fair.
These elections are often free and fair if they favour the interest of the West, and not free and fair if they protect the interests of the people of Africa. A recent example is the situation in Zimbabwe. For 20 years, her elections were not questioned, but the day Africans there claimed their national asset, the land, which is the backbone of a nation’s economy, all hell broke loose. [Time expired.]
Mr M M S LEKGORO: Mr Chairperson, hon members, allow me to join the Inter- Parliamentary Union in welcoming the initiative by the UN to intensify the debate on the financing of development and the fight against poverty.
The world we live in has undergone tremendous changes in the last century. Many things have changed which could have made it possible for human lives to change for the better. Unfortunately, the reality of the poor remains unchanged. Changes in technology, science and other spheres of human endeavour have failed to bring about meaningful change in the lives of the rural and urban poor. It is for this reason that any discussion on development or its financing should focus on the plight of the poor.
We should expand the discussion on development beyond the narrow confines of economic growth, global expansion and the rest of the often-used economic concepts. We should focus on people and the ways to build our capacity to improve the quality of lives of the people.
If this is our point of departure, we will always ask ourselves the question: How do our achievements in one sphere or the other contribute to the improvement of the quality of lives of the people? This is important in that we live in times when social trends and priorities are propelled and determined by market forces. Things that are not of interest to the markets are left to fall by the wayside. Unfortunately for the poor, development is one of those things whose achievement will not be attained through the automated functions of the markets. History has, however, given governments and the state a special responsibility in this regard. National governments must use their limited instruments of power in their hands, such as the budget and fiscal policies, to contribute to the struggle against poverty and deprivation.
For these instruments to be effective, government should develop scientific knowledge of existing social and economic conditions, and how these are impacted upon by those external environments. It is imperative for Government and Parliament to demonstrate the country’s development priorities through unambiguous policies and programmes. Such policies should be backed by the force of law and political will.
This would create conditions conducive to the mobilisation of the country in a particular direction. In our case, South Africa, the Reconstruction and Development Programme and our clear macroeconomic policies are a step in the right direction.
To enhance the country’s ability to mobilise development financing, we must make our policies and programmes specific, as this will enhance the accountability of Government and those in power. Policies should state specific areas of need, what they will address and to what extent. Generic policy statements make it difficult for funders to know how the resources will be used and do not create trust between the funders, the intermediaries and the beneficiaries.
Governments need to mobilise other social sectors to improve in their fight against poverty. The private sector, in particular, is important because it is responsible for the creation of worthy and sound economies. It must be mobilised to share in the national development objectives and to ensure that its business and commercial interests are not antagonistic to those of the nation.
Recent research, for instance, has pointed to the fact that joblessness is responsible for alarming levels of poverty in the developing countries of the globe. The business sector is, by far, the only sector that can assist in developing a sustainable solution to this problem of joblessness and poverty. The time for handouts is over. Businesses must play a critical and central role in the development of societies in which they create their returns. The mobilisation of finances for development should also be looked at together with the need to ensure that such resources, when mobilised, reach the people for whom they have been earmarked. This is important because change takes place in people’s lives when their material conditions change, and not when policies are developed.
It is within this context that we need to seek to strengthen the nongovernmental sector and use its proximity to the people to deliver the much-needed services. A well co-ordinated NGO sector could as well be used as a platform to mobilise resources for development.
In conclusion, it should be noted that no government can succeed alone in achieving developmental goals; it has to co-operate with all other sectors in society, like the private sector and the community in the form of NGOs and CBOs. [Applause.]
Debate concluded.
The House adjourned at 17:23. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
National Assembly and National Council of Provinces:
Papers:
- The Minister of Communications:
(1) Report and Financial Statements of Sentech for 1998-99.
(2) Report and Financial Statements of Telkom South Africa Limited
for 1999-2000.
(3) Report and Financial Statements of the Independent Broadcasting
Authority for 1998-99, including Report of the Auditor-General on
the Financial Statements for 1998-99.
National Assembly:
- The Speaker:
The Minister for the Public Service and Administration submitted the
following letter, dated 14 August 2000, to the Speaker of the National
Assembly, informing the National Assembly of the progress made in
respect of the development of an asset register for senior civil
servants.
REPORT ON PROGRESS MADE IN RESPECT OF THE DEVELOPMENT OF AN ASSET
REGISTER FOR SENIOR CIVIL SERVANTS
Your letter dated 19 June 2000 has reference.
I would like to report as follows:
During March 2000 Cabinet approved the introduction of a financial
disclosure framework to be applied in respect of -
(a) all heads of departments (all Heads of National and Provincial
Departments and Heads of Organisational Components);
(b) all Deputy Directors-General; and
(c) any other person appointed as an accounting officer.
To give effect to Cabinet's decision, I approved that the financial
disclosure framework be incorporated into the Public Service
Regulations. The framework became operational on 1 April 2000.
The key requirements of the framework are the following:
(i) A designated employee must disclose to the relevant executing
authority particulars of all her/his interests in respect of the
period 1 April of the previous year to 31 March of the year in
question not later than 30 April of each year. The Executing
Authority must submit a copy of the form to the Public Service
Commission not later than 31 May of the year in question.
(ii) Any person who assumes duty as a designated employee after 1
April in a year must make such disclosure within 30 days after
assumption of duty in respect of the 12 months preceding her/his
assumption of duty. The Executing Authority must submit a copy
of the form to the Public Service Commission not later than 30
days after it has been so submitted.
The Public Service Commission has initiated an awareness-raising
programme on the importance of the financial disclosure framework as
part of its Anti-Corruption workshops held in all Provinces.
To date the Public Service Commission has received 115 forms. Steps are
being taken to remind those departments that have not yet fulfilled
their obligations in terms of overseeing the completion of the forms.
It is unfortunately too early to provide a report on the framework. A
more comprehensive report will be made available to Parliament before
the end of November 2000.
Yours faithfully
MS G J Fraser-Moleketi
Minister
- The Minister of Finance:
Resolutions of the Standing Committee on Public Accounts for 2000 and
replies thereto obtained by the National Treasury - First, Second,
Third and Fourth Report, 2000.
National Assembly and National Council of Provinces:
- The Speaker and the Chairperson:
(1) The Minister of Transport on 12 September 2000 submitted a draft
of the South African Rail Commuter Corporation Limited Financial
Arrangements Bill, 2000, as well as the memorandum explaining the
objects of the proposed legislation, to the Speaker and the
Chairperson in terms of Joint Rule 159. The draft has been
referred to the Portfolio Committee on Transport and the Select
Committee on Public Services, respectively, by the Speaker and the
Chairperson in accordance with Joint Rule 159(2).
- The Speaker and the Chairperson:
(1) The Joint Tagging Mechanism (JTM) on 15 September 2000 in terms
of Joint Rule 160(4), classified the following Bill as a section
76 Bill:
(i) Construction Industry Development Board Bill [B 59 - 2000]
(National Council of Provinces - sec 76) - (Select Committee
on Public Services - National Council of Provinces).
National Assembly and National Council of Provinces:
- The Speaker and the Chairperson:
(1) The Minister of Finance on 29 August 2000 submitted a draft of
the South African Reserve Bank Amendment Bill, 2000, as well as
the memorandum explaining the objects of the proposed legislation,
to the Speaker and the Chairperson in terms of Joint Rule 159. The
draft has been referred to the Portfolio Committee on Finance and
the Select Committee on Finance, respectively, by the Speaker and
the Chairperson in accordance with Joint Rule 159(2).
(2) The following papers have been tabled and are now referred to
appropriate committees as mentioned below:
(1) The following papers are referred to the Portfolio
Committee on Finance and to the Select Committee on Finance
for consideration and report:
(a) Second Adjustments Estimate of Expenditure to be defrayed
from National Revenue Fund during the Financial Year
ending 31 March 2000 [RP 5-2000].
(b) Explanatory Memorandum to the Adjustments Estimate for
1999-2000.
(2) The following paper is referred to the Portfolio Committee
on Transport and to the Select Committee on Public Services.
The Report of the Auditor-General contained in the report of
the Road Accident Fund is referred to the Standing Committee
on Public Accounts:
Report and Financial Statements of the Road Accident Fund for
1998-99, including the Report of the Auditor-General on the
Financial Statements for 1998-99.
(3) The following papers are referred to the Portfolio
Committee on Communications and to the Select Committee on
Labour and Public Enterprises:
(a) Report and Financial Statements of Sentech for 1998-99.
(b) Report and Financial Statements of Telkom South Africa
Limited for 1999-2000.
(4) The following paper is referred to the Portfolio Committee
on Communications and to the Select Committee on Labour and
Public Enterprises. The Report of the Auditor-General
contained in the report of the Independent Broadcasting
Authority is referred to the Standing Committee on Public
Accounts:
Report and Financial Statements of the Independent
Broadcasting Authority for 1998-99, including Report of the
Auditor-General on the Financial Statements for 1998-99.
National Assembly:
- The Speaker:
The following papers have been tabled and are now referred to
appropriate committees as mentioned below:
(1) The following papers are referred to the Portfolio Committee on
Provincial and Local Government for information:
(a) Agreement between the Government of the Republic of South
Africa and the Government of the Federal Republic of Germany
concerning the project "Provincial Administration Support
Programme in the Eastern Cape", tabled in terms of section
231(3) of the Constitution, 1996.
(b) Agreement between the Government of the Republic of South
Africa and the Government of the Federal Republic of Germany
concerning the project "Decentralised Development Planning",
tabled in terms of section 231(3) of the Constitution, 1996.
(2) The following paper is referred to the Portfolio Committee on
Finance for information:
Agreement between the Government of the Republic of South Africa
and the Government of the Federal Republic of Germany concerning
the project "Economic and Development Policy Advisory Programme",
tabled in terms of section 231(3) of the Constitution, 1996.
(3) The following papers are referred to the Portfolio Committee on
Justice and Constitutional Development for consideration and
report:
(a) Statutes of the United Nations African Institute for the
Prevention of Crime and the Treatment of Offenders, tabled in
terms of section 231(2) of the Constitution, 1996.
(b) Explanatory Memorandum to the Statutes of the United
Nations African Institute for the Prevention of Crime and the
Treatment of Offenders.
(4) The following papers are referred to the Portfolio Committee on
Public Enterprises:
(a) Policy Framework for an Accelerated Agenda Towards the
Restructuring of State Owned Enterprises.
(b) A Summary of the Policy Framework for an Accelerated
Agenda for the Restructuring of State Owned Enterprises.
(5) The following papers are referred to the Portfolio Committee on
Health:
(a) Government Notice No R.567 published in the Government
Gazette No 21245 dated 9 June 2000, List of approved
facilities for the purpose of performing community service in
2001 by medical practitioners, made in terms of the Health
Professions Act, 1974.
(b) Government Notice No 2234 published in the Government
Gazette No 21292 dated 21 June 2000, the Chiropractors,
Homeopaths and Allied Health Service Professions Amendment
Bill, 2000 published for comment.
(c) Government Notice No 644 published in the Government
Gazette No 21313 dated 30 June 2000, Authorisation in terms of
section 24 of the Human Tissue Act, 1983.
(d) Government Notice No R.570 published in the Government
Gazette No 21256 dated 5 June 2000, Regulations made in terms
of the Medical Schemes Act, 1998.
(e) Government Notice No R.569 published in the Government
Gazette No 21255 dated 5 June 2000, Regulations made in terms
of the Medical Schemes Act, 1998.
(f) Government Notice No R.638 published in the Government
Gazette No 21317 dated 22 June 2000, Regulations made in terms
of the Medical Schemes Act, 1998.
(6) The following paper is referred to the Portfolio Committee on
Foreign Affairs:
General Agreement of Co-operation between the Government of the
Republic of South Africa and the Government of the United Mexican
States, tabled in terms of section 231(3) of the Constitution,
1996.
(7) The following paper is referred to the Portfolio Committee on
Health. The Report of the Auditor-General contained in the report
of the Medical Research Council is referred to the Standing
Committee on Public Accounts:
Report and Financial Statements of the Medical Research Council
for 1998-99, including the Report of the Auditor-General on the
Financial Statements for 1998-99.
(8) The following paper is referred to the Portfolio Committee on
Safety and Security for information:
Agreement between the Government of the Republic of South Africa
and the Government of the People's Republic of China in respect of
Police Co-operation, tabled in terms of section 231(3) of the
Constitution, 1996.
(9) The following paper is referred to the Portfolio Committee on
Trade and Industry. The Report of the Auditor-General contained in
the report of the National Lotteries Board is referred to the
Standing Committee on Public Accounts:
Report and Financial Statements of the National Lotteries Board
for 1998-99, including the Report of the Auditor-General on the
Financial Statements for 1998-99.
(10) The following paper is referred to the Standing Committee on
Public Accounts:
Resolutions of the Standing Committee on Public Accounts for 2000 and replies thereto obtained by the National Treasury - First, Second, Third and Fourth Report, 2000.