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SA: Mlambo-Ngcuka: Oral reply to questions in NCOP (19/03/2008)

19th March 2008

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Date: 19/03/2008
Source: The Presidency
Title: SA: Mlambo-Ngcuka: Oral reply to questions in NCOP

Questions to the Deputy President P Mlambo-Ngcuka: oral reply, National Council of Provinces (NCOP)

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1. Mrs A D N Qikani:
Whether Cabinet has discussed the impact or rising fuel prices, with particular reference to the impact on household expenditure for the working class and the poor in terms of rising transport and food costs; if not, why not; if so, what recommendations were considered to (a) provide relief to such households in the short term and (b) revamp the regressive taxes and over-regulated industrial scheme that underpins fuel prices at present?

Reply:
Honourable member, Cabinet has discussed the impact of rising food and transport cost on households' budgets in the context of the recently released Income and Expenditure Survey 2005/06 of Statistics South Africa. More recently, the issue of rising food prices was discussed at length by Cabinet. The survey shows that for the bottom four income deciles, food accounts for about 30% of household expenditure and transport for 11%. This means that over 40% of the household expenditure by the poorest 40% of the population is spent on transport and food. Any increase in the prices of these goods has always been a concern to government. After the steep increases in food prices in 2001/2002 government formed the Food Price Monitoring Committee (FPMC) to look into this matter and to monitor any untoward behaviour. The FPMC reports to the Minister of Agriculture who has the responsibility to appraise Cabinet on these issues.

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Cabinet today decided that the Minister of Agriculture should bring a comprehensive report as well as recommendations to the next Cabinet meeting for consideration. On the question of the pricing of liquid fuels I would like to remind the House that government has restructured the pricing of liquid fuel in 2003 with the introduction of the Basic Fuel Price Formula (BFPF). It is estimated that the introduction of this pricing formula has saved motorists over R1 billion per annum since its introduction. The fuel tax has had a relatively small impact on recent price increases. The tax also has a social role in that it internalises some of the social costs of using liquid fuel driven vehicles. However, as fuel prices are determined internationally and we import the majority of liquid fuel, we do not have a great deal of control over fuel prices.

Let me reassure you Honourable members that government is closely monitoring all economic indicators. Our quest for higher rates of growth calls upon us to balance the macro economic imperatives with a sustained fight against poverty. We understand the impact of increases in food and transport costs especially for the poor. We also understand the cost of delaying the delivery of basic services to rural communities. That is why we are developing a comprehensive approach to social security and health; we are implementing universal access to basis services; we have extended the social wage to many of the indigent; we are moving towards quality education and training for all; we have reduced food insecurity as measured by the declining number of our people who go hungry; we are introducing affordable transport for all as we recently witnessed the launch of new rail and bus services targeting rural communities in the Eastern Cape government. We are marching forward to win the fight against poverty!

2. Ms H F Matlanyane:
What (a) is the total number of youths receiving training through the Joint Initiative for Priority Skills Acquisition (Jipsa) in each province and (b) are the criteria used to identify young people that are allocated to the programme; whether such criteria take into consideration young people in rural and farm areas; if not, why not; if so, what are the relevant details?

Reply:
To appropriately respond to the question s raised by Honourable Matlanyane, it is important that I briefly reflect on the Joint Initiative on Priority Skills Acquisition (JIPSA) mandate. JIPSA is a specific initiative within government's wider Accelerated and Shared Growth Initiative for South Africa (AsgiSA) strategy, aimed at addressing one of the binding constraints, the skills shortage, on achieving a 6% growth rate which is seen as key to halving poverty and unemployment by 2014. JIPSA is a joint initiative by social partners including government, business, labour, and key role-players, such as the higher and further education and training sectors. JIPSA is not an implementing agency and as such does not directly train people. We are therefore unable to comment on actual numbers trained and anyway all the JIPSA targets are national targets and not provincial targets.

However, in response to the intermediate and the high level skills demand in the country, various initiatives to increase access of young people to high quality education and skills acquisition are currently in place. One of the key initiatives to mention is the transformation of further education and training (FET) colleges by making them centres of the skills revolution offering outcome-based training. The participation of youth in urban, rural and farm areas is enhanced by the bursary scheme of R600 m over three year-period to enable young people access training opportunities at FET colleges.

The latest Department of Labour figures reflect an increase in the number of artisans in training. The 2007 - 2008 service level agreements signed between the various sector education and training authorities (SETAs) and the Department of Labour reflect a total of 18 879 artisans to be registered. Furthermore, provisional SETA service level agreements indicate that an additional 20 000 learners will be registered for the period 2008/09. In addition, the Department of Education (DoE) forecasts that the number of engineers graduating from universities will increase from about 1 500 per year to 2 000 per year by 2010. The business commitment to supporting the training of artisans, technician, and technologists and to providing workplace experience for those not yet in employment is a clear undertaking by each Business Leadership South Africa CEO to take actions towards human capital development.

The JIPSA placement programme does not track the provincial spread at the moment, since young people register on the Umsobomvu Youth Fund (UYF) and Independent Development Trust (IDT) database from all provinces, so giving a comprehensive report per province would need tracking of the young people to get details of their place of origin. We however work with several provinces in recruiting for JIPSA placement opportunities. Provinces like the Eastern Cape, Western Cape, Gauteng and KwaZulu-Natal have formed Jipsa offices that place unemployed graduates within government. As of 31 August 2007, Eastern Cape had placed more than 700 and Western Cape more than 90 for example. Locally some of the companies that we have worked with have chosen mostly rural candidates. For example, KPMG took 80 accounting trainees between 2006 and 2008, and half of them were rural unemployed graduates.

For our international placement opportunities we deliberately target all provinces especially rural women. We advertise opportunities in all
African language radio to achieve this spread and we also advertise in the City Press to target black disadvantaged graduates. For our recent intake of graduates to India, and Netherlands, most have been women. In India in the information and communications technology (ICT) sector we had a good spread across all provinces. Over 20 000 graduates have been placed nationally and internationally. Companies like Eskom, Microsoft and Shoprite Checkers have taken a thousand or more each. India as a country, has hosted most international graduates in various companies and sectors. It is also worth noting that UYF has placed 100 matriculants in India for vocational skills, thus giving exposure to matriculants for the first time, similarly Shoprite Checkers has placed 1 000 matriculants. The programme is continuing to focus on both matriculants and unemployed graduates, to fast track the unlocking of skills for economic growth.

It is important to note that placing graduates internationally raises some cultural challenges, and some of the graduates fail to adapt. To date we have had three trainees fail to complete the programme for various reasons. This number may grow as we have now placed a total of more than 300 trainees in India through the IDT and UYF. A good example of an internationally rural focused Jipsa placement is one done with Satyam Computers. Satyam Computers is a listed company in India and USA. They offered to place graduates in their International Academy in India, in order to create skills for their operations in South Africa. The first group of trainees, totalling 12, eight men and four women is back in the country and employed by Satyam. All these trainees were recruited from rural areas in Limpopo, and excelled in the programme in India, and are presently doing excellent work within Satyam in Limpopo.

Another important JIPSA project that is creating opportunities for rural communities is Siyenza Manje implemented by the Development Bank of Southern Africa (DBSA). The project has seen 118 professionals placed at 101 municipalities. These include 67 technical and 51 financial experts. More significantly, the project includes a Young Professionals Development (YPD) Programme which has seen 50 young graduates recruited and deployed in municipalities. We do this encourage graduates to serve in municipalities and build their careers there. We must enhance the mentoring capacity in rural municipalities to avoid the migration of graduates from rural to well established urban municipalities.

We acknowledge that the initiatives I have just mentioned do not address the masses of youth in rural and peri-urban areas. That is why we are focusing attention and resources on initiatives that responds to the challenges of youth we have. That is, those who reside in poor communities have poor social capital, have no more that secondary education and lack the skills necessary access sustainable labour market opportunities. Members of this House are urged to communicate the message that young people are expected to join and sustain their participation in these training programmes. Government now offers bursaries for people to enrol in the new Further Education and Training (FET) programmes, another JIPSA initiative, so we do not expect money to be a challenge. Government offers travel allowances to people participating in National Youth Service (NYS) and Expanded Public Works (EPW) programmes, so we do not expect transport costs to be a barrier anymore. Government is expanding the training and size of auxiliary workers. We do not expect lack of formal work opportunities be a long-term problem.

Let us jointly monitor these initiatives and make sure that our rural youth are not left behind in the skills revolution!

3. Ms H F Matlanyane:
Whether there are any indications of bias in the allocation of resources towards areas and provinces that have presidential nodal points in order to meet their service delivery needs; if so, (a) what are the relevant details of the allocation made to the Sekhukhune region and (b) when will such allocations be made?

Reply:
Honourable member, as you may be aware, the nodal points were selected in 2001 on the basis of having a higher than average poverty level in the country. In the case of the rural nodes, the nodal programme was targeted at district level. It should be noted that the local municipalities within these districts are among the most under resourced councils when compared to the rest. Some of these municipalities are also among the youngest institutions since their establishment after the local government demarcation process.

National sector departments have indicated in their business plans how they plan to contribute towards the boarder development of nodal points. Since 2003, there has been an increase in the number of departments that have indicated their support to the nodes. At national level, we use the cluster system to encourage integrated planning, co-ordination and monitoring. As a mechanism to boost our support to these areas, nodal municipalities receive an additional 5% of Municipal Infrastructure Grant (MIG) allocations by virtue of being in the nodes. The 5% allocation for 2008/09 financial year is estimated at R433 million. Further more, the bias towards the Nodes is clearly demonstrated in the institutional mechanisms that have been set up to provide support to the nodes in the way that perhaps other programmes may not have. The Intergrated Sustainable Rural Development Programme (ISRDP) and Urban Renewal Programme (URP) are supported by political and technical champions, national ministers, provincial MECs, municipal managers and mayors to ensure that these programmes are able to rally support across the three spheres of government.

Common to all the rural nodes are the municipal managers' and mayor's co-ordinating forum, Integrated Development Planning (IDP) Representative Forum/Steering Committee. At provincial level what is common is the Premier's Planning Forum which is a technical structure consisting of representatives of all the sector departments as well as the Premier's co-ordinating forum, a political structure consisting of the MECs and mayors. The Eastern Cape and the Free State provinces have established strong Inter-Departmental Task Teams consisting of all sector departments.

In addition to these, the establishment of these inter-governmental co-ordinating mechanisms, the nodes have witnessed the involvement of the business trust, a strategic private sector partner, the Independent Development Trust (IDT) and other agencies such as the GTZ who have offered critical support in these areas. As indicated, no many other programmes have enjoyed such huge support and bias. But one may ask: What are the results of our involvement in the Nodes. Evidence is abundant. For example, there has been increased awareness, participation and contribution by stakeholders in the programme.

Several studies and community engagement sessions conducted in the nodal areas in the current financial year have come to the same conclusions, that is, there is improvement in both service delivery and the lives of the citizens in the nodal areas. In the case of the rural nodes, 2 913 882 households have benefited from services provided through MIG funding in the six nodes that were part of the study. A total of 37 834 women, 86 618 men, 59 225 young women, 34 792 youth males, 562 disabled (female) and 402 disabled (male) benefited from jobs created out of these interventions. The number of households that have access to water has increased in all nodal areas since 2001, when the programme was introduced.

To date, 219 road; 46 sanitation; 169 water; 14 street lighting; taxi ranks; 10 storm water drainage; 8 solid waste disposal and 40 Thusong Centre projects that were allocated MIG funding have been implemented across the nodes. The Department of Water Affairs implement sanitation, water, rudimentary and bulk schemes, bulk scheme refurbishment, fire prevention, forestry and water resources improvement projects in the nodes. In Sekhukhune, 187 projects have been initiated, creating 75 464 jobs, benefiting some 1 785 608 households (DWAF October 2006). When compared to 2006, it can be concluded that the number of households provided with electricity has increased in most of the nodal areas. What is most noticeable is the new effort by municipalities to provide alternative energy particularly solar energy.

The Department of Minerals and Energy reports that 37 531 connections were planned for the rural nodes for 2006/07 financial year. By September 2006, 10 977 (29%) connections had been made. Although the budget was allocated for these projects, projects related to upgrading of power stations and provision of lines has not been completed, as there is no backbone infrastructure. A report compiled by Department of Provincial and Local Government (DPLG) in October 2006 indicates that 87 4951 households receive free basic water in all the nodal areas. A total of 139 521 households from the areas where electricity is provided by the municipality receive free basic electricity and 155 955 from the areas where Eskom provides electricity receive free basic electricity. A total of 10 690 receive alternative energy.

Up to 30 September 2006 there were 75 housing projects in Sekhukhune comprising 26 429 planned units. The approved projects will benefit 17 069. The total project budget was R601 445 490. The school nutrition programme is feeding 298 323 learners in 801 urban ordinary schools and approximately 1 158 5460 learners in 6005 rural schools in Nodal areas respectively. Four provinces (Eastern Cape, KwaZulu-Natal, Northern Cape and North West) have reviewed their procurement model to increase opportunities for women co-operatives and local SMMEs to participate in this school nutrition programme. By end of September 2006 the programme reached 1 883 783 learners in 6806 schools in an average of 37 days at an average cost of R1.07 per day per learner. A total of 1 149 schools in the nodal areas have vegetable gardens.

In the Sekhukhune area in particular, there are 669 schools that benefit 221 110 learners. In all rural Nodes between October 2005 and September 2006, the number of people who receive social grants increased by 13% to 193 578 males and 1 052 589 females. The increase has kept pace with the need for social relief needed by our people in these disadvantaged communities.

Honourable member, you may be aware also that government has deployed Community Development Workers (CDWs) in all the nodes. On average, we have met our target of deploying 10 CDWs per municipality in the nodal areas.

With regard to the details of allocations made to projects in the Greater Sekhukhune region, I would like to table a document to this House containing this information. This should demonstrate how we have progressively increased investment in various areas through sector departments. Members are welcome to interact with the particular sector departments where clarity is sought of the document I am tabling.

4. Ms N S Ntwanambi:
Whether the Government has been involved in any exercise of verifying South African companies for their compliance with the Black Economic Empowerment (BEE) and employment equity policies; if not, why not; if so, (a) what is the level of compliance by companies and (b) what was the annual percentage increase and/or decrease in the participation of (i) black women, (ii) the youth and (iii) persons with disabilities in senior management structures in the past four years?

Reply:
The Department of Trade and Industry in conjunction with the Presidency and the Presidential Black Business Working Group (PBBWG) prepared a Broad Based Black Economic Empowerment (BBBEE) Progress report in 2007. This baseline national survey was designed to verify compliance with and implementation of, B-BBEE in the economy. The report is the first initiative by government for verification of B-BBEE compliance since the gazetting of the Codes of Good Practice in February 2007. The intention is that verification of B-BBEE compliance is carried out on an annual basis and will be located within the soon to be established Presidential BEE Advisory Council.

In terms of progress, the report shows a reasonable level of compliance with the ownership component of B-BBEE by many South African companies. That is compliance by companies range between 30 to 40 points out of a total of 100 points. Performance with regard to Employment Equity is less impressive.

According to the Department of Labour, the proportion of black people in senior, middle and junior management, stood at 36.7%. With respect to executive management (including white women), compliance was at 32.4%. Even more disappointing according to the Department of Labour's employment equity report for 2006/2007, black females at top management represents only 6.6%. At senior management, black females represent 8%, at middle management black females represent 13.8% and at lower management 46.1%. At top management disabled people represent 1.4%, at senior management it is 0.7%, and at middle management 0.5%.

Youth are assumed to be beneficiaries of middle and junior management development since these levels present entry and upward movement opportunities for younger members of the labour market. The numbers are however unknown because measurement by age group has not been done. Another study commissioned by The Presidency in 2006 showed that the private sector largely supports the development of youth and people with disabilities through employment equity and skills development. This trend is being monitored for growth and the quality of outcomes. The figures provided by the B-BBEE survey only cover the recent period: 2006/07. Most statistics reflecting the previous years are poor and unreliable. Hence, government intends to collect reliable and up to date information using the 2006-2007 survey as a baseline.

Honourable members, government is under no illusion that all is well on the black economic empowerment front. While there is a trend for ownership target of B-BBEE to be met, especially in some sectors, broad-based issues such skills development and support for black businesses through procurement has not achieved impressive levels of implementation. Such practices as fronting, tokenism and the locking of black investors into lifelong uncompetitive contracts should be addressed. We are also concerned that finance is increasingly becoming expensive for the majority of black investors as much as we are with tendencies in some sectors to downplay employment equity and skills development.

BEE must work for all South Africans, not just those with social networks to access big deals. That is why the three elements of procurement, skills development and employment equity should take precedence!

5. Ms N S Ntwanambi:
Whether the Presidency has been monitoring the implementation of the preferential procurement policy and legislation by all spheres of government in so far as it should benefit women, the youth and people with disabilities; if not why not; if so, what are the relevant details for the past financial year; whether she will make a statement on the matter?

Reply:
Chairperson, in 2000 government promulgated the Preferential Procurement Policy
Framework Act (No 5 of 2000). The Act gives effect to section 217(2) (b) of the Constitution which is intended to ensure that the procurement of goods and services by government leads to the protection and advancement of vulnerable and previously disadvantaged persons. The Act thus obligates all spheres of government to actively pursue empowerment of such persons through implementation of preferential procurement policies. The measures we have are not accurate to enable us to generate the reliable information the member seeks. It must also be stated that effective monitoring can only succeed once the disparate financial systems across national and provincial are integrated into a singly system.

There are some positive developments. For example, in 2004 the National Treasury developed an electronic reporting mechanism to capture details of all contracts in excess of R100 000 awarded by national departments. The information captured in the attached schedule has been extracted from the database for each of the last four financial years and provides the following:
Total value of contracts awarded; and total value of contracts awarded to black (African, Indian and Coloured) owned businesses.

It must be noted that:
- the information is based on un-audited figures provided by the national and provincial departments
- the values are in respect of contracts awarded and not actual expenditure on the contracts
- the statistics exclude ICT contracts awarded by the State Information Technology Agency (SITA) and
- the figures for the 2007/08 year for provincial departments are not available at this stage as some provinces are still in the process of obtaining outstanding data. The figures captured in the last column of what I am tabling relates to government departments only and not public institutions. If we were to add local government and public institutions, these numbers would sure rise.

Details regarding beneficiaries of government procurement in terms of income categories and large and small businesses can, unfortunately, not be provided as the Preferential Procurement Act and its Regulations make provisions for preference points for equity ownership by black persons and not for the different income and age categories. Government is however looking at innovative ways to promote and monitor the accrual of meaningful economic opportunities for all vulnerable groups in the context of preferential procurement and equity policy instruments.

I thank you.

Issued by: Presidency
19 March 2008

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