Friday, 8 September 2017

Declaration in the House on the Portfolio Committee's reports on oversight visits, September 7th 2017

Speaker, a veil of tears has descended on this committee after it experienced profound sadness, frustration and disappointment on its oversight visits to KwaZulu Natal, Limpopo and Mpumalanga.

What we found left Members dispirited at government’s incapacity to do even the most basic things required to improve the lives of our people.

In KZN, the Department has supported a number of primary agricultural co-ops for over two years through its Cooperative Incentive Scheme. A technical partner provides training in business management and farming skills, access to markets through negotiated off-take agreements, and new technologies to improve productivity and vegetable quality.

But due to unclear terms of the agreements between the Department, the service provider and the co-ops, a shortfall in projected revenues, operational costs not being covered and other factors, these co-ops have largely failed to deliver on their promise and are struggling to survive.

On August 2nd the service provider wrote to Minister Zulu and the Department requesting clarity on its role, but nothing has materialised. He and the co-ops he is supporting, at his own cost, are crying for help, with no resolution in sight.

Our visit to Limpopo, back in February last year, brought us face to face with many small businesses and co-ops established with high hopes but now facing ruin. For example, Mr Shilowa, a member of the Ximbambani Construction Co-op in Mahlati village, pleaded for the Committee to intervene in its dispute with the province, which failed in its promise to give them contracts to supply bricks for RDP houses. They are crying.

After our four day visit we had a de-brief in the Polokwane offices of Capricorn district municipality. It became clear there was no cooperation between the Department, Seda, Sefa and the local municipalities, each spending money and resources which simply drained away or just ticked boxes. It makes you want to cry.

In Mpumalanga the Committee met 13 co-ops of which only one showed any signs of becoming a viable, sustainable business. The LED in the host municipalities either did not know about these co-ops or failed to provide basic utilities such as power, sanitation and water, making it very difficult for them to conduct business. They are crying.

The story of the four Mzanzi co-ops, also in Mpumalanga, is one of inexcusable mismanagement and waste. Even after a R20 million loan from Sefa to build four chicken houses, the co-ops were at the end of their tether, having not received any income from their supposed partner for months. They are crying.

It is no wonder, then, that a 2009 DTI study revealed that 88% of coops fail. Even so, the Department has spent over R120 million on grants to some 400 coops. Can this expenditure be justified?

In the DA’s view, money spent on primary co-ops should instead be spent on supporting secondary co-ops where better business skills and economies of scale are likely to lead to a higher success rate.

The Committee has initiated two investigations emanating from these oversight visits. The first is into possible corruption and collusion between staff in the Department, Sefa and Seda and service providers, who are often appointed by dubious means against the will of beneficiaries.

The second is into the conduct of Sefa, whose appalling lending record speaks for itself. In the last financial year, 47% of its loan book was written off and it is bleeding money. Sefa is embroiled in numerous legal disputes with non-paying clients, illustrating an urgent need to bulk up its post-loan support capacity.

In Committee yesterday the sense of despair and frustration was too much for our Chairperson, the Honourable Bhengu, who quietly shed her own tears. She, and Members, pondered the future of a Department which showed such promise at birth but, three years later, has dismally failed and should be put to a premature end as soon as possible.

It is with a great deal of sadness that the DA supports these reports. 

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