Wednesday, 11 October 2017

ANC presidential hopeful Dr Nkosazana Dlamini-Zuma joins the PC on Small Business Development

Today, ANC presidential hopeful Dr Nkosazana Dlamini-Zuma sat for first time as a Member of the Portfolio Committee on Small Business Development.

Her appointment was published in the Announcements Tablings and Committee Parliamentary papers on Friday which elicited some media coverage but little commentary as to why she had chosen or had been deployed to this committee.

She arrived shortly before the meeting opened along with another new member, Mervyn Dirks, also from the ANC (he replaced the late Timothy Khoza who was tragically killed in a car accident while on an Education Committee oversight visit in Paarl in August).

Before the introductions I tabled a point of order relating to the increase in the number of ANC members to 7 from 6, taking the total Members on the Committee to 12. According to the Rules of Parliament, the Rules Committee has to approve a change to the number of Members on a Committee and if there are 7 ANC members, the DA is entitled to add a third Member, while a Member from one of the two minor parties must be removed. The Chair seemed not to be aware of this and said she would consult with the Rules Committee before coming back to us.

Thereafter Members and representatives from the Department introduced themselves and all was very civil.

The Committee was deliberating the Budget Review Recommendations Report for 2016/17. Our content advisor, Sbu Gumede, had done an excellent job so there was little need for a line-by-line edit. Instead he took us through the salient points then read out the Committee Observations and Recommendations, after which the Chair, Ruth Bhengu, asked for comments from Members.

I called for the Committee to recommend that the Department's forensic investigation into itself be supplanted by the Committee's investigation into the Department, once the House Chair had approved it using funds appropriated to Parliament in the Medium Term Financial Statement later this month. The Chair acceded to this.

Hon Xapa from the ANC made reference to the practice of Sefa lending out money to micro lenders which then on-lent to small businesses. The Committee has been critical of possible exploitation of small businesses who suffer from very high interest rates on these loans.

I reiterated this point and recommended that the Department initiate an enquiry into Sefa's lending practices, establishing where profits are made in the value chain and why interest rates are so high, as are loan default rates. I also made the point that many small businesses did not have the requisite financial management skills to be able to manage a loan or their cash flow, as we had discovered on our oversight visits this year.

Hon Dlamini-Zuma said businesses could not be expected to make a profit if they paid interest rates ranging from 40% to 110%. I think she was expecting me, as the DA, to be supporting these micro-lenders as this conforms to the ANC narrative that the DA is anti-poor. Unfortunately for her I agreed with her that these interest rates are too high.

I also made the point that Sefa's loan approval and disbursement targets have the unintended consequence of Sefa chasing loan volume rather than loan performance. This led to many loans being granted to businesses that were undeserving - they were unlikely to be able to repay the loan.

Hon Dlamini-Zuma took this to mean I was against support for small businesses, but I pointed out that many small businesses should be getting grants and equity finance rather than high interest loans which they could not afford, as well as more advice and training.

I am still puzzled why she has joined this Committee. The expectation was that she would be appointed to Cabinet to give her access to government resources (cars, protection services etc) which would come in handy during her campaign to become ANC President.

Another theory is that she is set to replace Hon Bhengu as the Chair. Hon Bhengu has been giving the Minister and Department a hard time recently, and the prospect of a forensic investigation is probably scaring them stiff. Hon Dlamini-Zuma as Chair could well dump the investigation idea, while Hon Bhengu could sail off into some ambassadorial posting to keep her quiet.

Whether an ordinary Member or as Chair, it is also possible Hon Dlamini-Zuma may exploit her membership of this committee in her campaigning using the pro-poor and pro-small business angle to win support for her candidacy.

With just over two months to go until the ANC elective conference, there is not much time to see how the cookie crumbles. I expect this to be two of the more interesting months in the life of this Parliament, at least where our Committee is concerned.

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