Article in Business Times - Unshackle entrepreneurs from barriers to growth

The business section of the Sunday Times published an edited version of my budget speech on August 4th. Here is the clipping in three sections:

 

Corruption and misgovernance at the SA Bureau of Standards

I recently received emails from a whistleblower at SABS revealing some startling and damning information about deeply embedded corruption at the highest level - involving the board of directors and executive management. Having corroborated these allegations with someone in the know, I wrote separate letters to Minister Tau and the Acting Director General urging them to launch investigations into the allegations.

Tau, as the executive authority, is the only person who can appoint board members, while as the accounting officer for the dtic and its entities, the ADG has to take responsibility for executive level issues.

I received an acknowledgement from the ADG's office but nothing from Minister Tau's office yet.

You can read the media statement I released here.

Shortly afterwards I was copied on emails from officials at the dtic who expressed their concerns that the SABS was in dire straits and needed urgent attention. I also received videos and photos of collapsing ceilings, flooded offices and piles of discarded equipment at the SABS premises in Pretoria.

This story has a long way to run.

Budget vote declaration in Parliament - or rather in the new National Assembly tent

Yesterday, the House sat from 10 am to 7:30 pm (with a 1-hour lunch break) to consider and vote for the Appropriations Bill and all 41 department budgets. We have to pass the budget before 31st July otherwise the financial markets will go into a tizzy, the rand will tank and SA's credit ratings will take a dive.

The National Assembly has been accommodated in a new temporary home on a parking lot a few minutes walk from Parliament - some call it a marquee, others a tent, but whatever it is, it's no substitute for the superbly designed NA building that was so callously set alight and destroyed three years ago.

Speaking of tents, FF+ MP Wouter Wessels was forced by House Chair Cedric Frolick to withdraw a comment he had made during the Presidency's budget vote debate, in which he described the antics of certain members (mostly EFF and MKP and other members of the "progressive caucus") as a circus. While most MPs had a good laugh, for circuses do take place in tents after all, Frolick deemed it disrespectful of the dignity of the house. MKP MP Visvin Reddy (who pitches up in military fatigues for all sittings) was also forced to withdraw his jibe at Wessels as he left the podium, calling him Mr Bean, regarded as insulting language unfit for Parliament.

In the past the DA, as the Official Opposition, has chosen to support some department's budgets and to oppose others. Now, as a member of the government of national unity (GNU), we have the responsibility of maintaining the integrity of the state so it would have been irresponsible to vote down the budget - and land SA in a big pickle financial.

So we decided to support the Appropriations Bill and all the department budgets (which are called budget votes in the lingo) - for the first time since 1994. 

Each spokesperson (I am the spokesperson on trade, industry and competition) decides whether to make a "declaration" on his or her budget vote and the caucus leadership (chief whip, deputy chief whip and leader) ration them out according to policy priorities and the time allotted to each party for their declarations. I was allocated a slot, along with 8 other spokespersons, each of us getting 90 seconds to make our declarations. 

The party line was to explain that we supported the budget but would engage with the ANC and other members of the GNU in the time leading up to the next budget so we could influence its content. Our rationale was that, in addition to keeping the ship of state afloat, this was not the GNU's budget but the last ANC government's budget, giving us the leeway to criticise it and make recommendations for future budgets and priorities.

       

                                        Photo courtesy of Dianne Kohler Barnard MP

This was my declaration - vote 39 of 41 so I had to wait until after 6pm to give it,

We acknowledge that this is a legacy budget and we support it in order to allow the GNU to continue with its work.

However, the DA will engage the ANC and other parties within the GNU on the following points towards the midterm and next budgets:

·         Fill critical vacancies at senior management levels both in the department and its entities to ensure focused and accountable governance
·         Loosen up the legislative, non-tariff and regulatory framework to ease the cost of doing business for all companies, large and small
·         Review and bulk up the incentives available to local business to build sustainable export markets, and to overseas companies investing in South Africa with the primary aim of boosting exports and entering global value chains
·         Identify and capacitate one or more special economic zones to test a package of reforms to attract investment and create jobs. These would include eliminating or reducing compliance requirements in triple BEE, preferential procurement, and selected labour laws and tariffs with a view to implementing these reforms more widely
·         Negotiate and finalise purchase, investment and management agreements for industrial parks, both in townships and former homeland areas, to re-invigorate existing tenants and attract new ones focusing on innovation and exports

The Deep Dive interview with Brooks Spector and more about Chance Brothers

This morning ChaiFM published the interview I recorded with Brooks Spector, a former US diplomat and now host on the radio station and associate editor of Daily Maverick.

Click here to listen to the interview- (you need to scroll down on the page until you reach it)

We had a wide-ranging discussion covering the role of portfolio committees in Parliament, how the Department of Trade, Industry and Competition will influence policy over the next 5 years, the chances of the government of national unity succeeding, and ending on my family's contribution to industrialisation in 19th century Britain and the world through its leadership in glass manufacturing and lighthouse engineering. 

I really enjoyed the discussion, which I hope listeners found enlightening because so much of what happens in Parliament is behind closed doors and very obscure to the general public. 

At the end of our chat we spoke about the book I wrote with Peter Williams, Lighthouses: The race to illuminate the world, published by New Holland in 2008 - you can read more about it on my website www.tobychance.com

Coincidentally, this week also saw the release of David Encill's first volume on the history of Chance Brothers which he has been labouring over for 15 years - you can download it for free here https://www.chancebrothers.uk/. It's an amazing piece of work and follows on from two other books David wrote about some of the firm's glass products, which are available here https://www.chanceglass.net/

DTIC budget speech - Unshackle entrepreneurs from the constraints to growth

Who remembers 16th July 1969? It was the day Apollo 11 launched from NASA's Kennedy Space Centre on its journey to the moon where a few days later Neil Armstrong took his "one small step for man, one giant leap for mankind."

As a nine year-old I was glued to our crappy old black and white TV in England for the entire drama and remember getting up in the middle of the night to watch the landing and first steps.

Without wishing to over-dramatise the events of yesterday, I did have a sense of something significant happening in South Africa's body politic, the 55th anniversary of that momentous event. The Department of Trade, Industry and Competition budget debate took place in the Good Hope Chamber in Parliament. (This is the room designated as the National Assembly Chamber since fire gutted the former chamber three years ago.)

The debate marked a sea-change in all sorts of ways. A new minister - Parks Tau - takes the helm, replacing Ebrahim Patel, while two new deputy ministers - Andrew Whitfield from the DA and the ANC's Zuko Godlimpi - step into their respective roles. It is clear from the first meeting of the committee last Friday, where Minister Tau presented the department budget and annual performance plan, that things will be different in the 7th Parliament compared to its predecessor, Ebrahim Patel.

This is a manifestation of the government of national unity in practice - the first time in South Africa's history that a liberal-leaning party has a seat in government at the highest level. The committee has some colourful and controversial members - including Malusi Gigaba (ANC), Mbuyiseni Ndlozi (EFF), Duduzile Zuma-Sambudla (MKP) and Songezo Zibi (Rise SA).

You can watch the debate here https://www.youtube.com/watch?v=g8PTMgNlUwg&t=2666s - I appear at 37 mins 20 seconds.

My speech is reproduced below:

Toby Chance

Budget speech

Trade, Industry and Competition

16^th July

Unshackle entrepreneurs from the constraints to growth

Honourable house chair, former Deputy Finance Minister, Mcebisi Jonas, laid out his vision for a future South Africa in his book After Dawn, published in 2019, three years after leaving office.

South Africa was in the afterglow of recently-elected President Ramaphosa’s new dawn, which meant to usher in a new period of hope after years of state capture. Instead, we have seen further stagnation of our economy and a loss of confidence among business leaders that government has the courage to make the tough choices needed to rescue South Africa.

I mention Jonas’ book because in the introduction he analyses the political-economy deal of the early 1990s which, inadvertently, reveals the seeds of why our economy has not reached its full potential and millions of South Africans remain without work and live in poverty.

The deal he describes is negotiated between four groups with distinct vested interests:

- established, mainly white wealth, representing big business and accommodated through macro-economy policy stabilisation;

- the new, mainly black elite, accommodated through boardroom, BEE, public sector jobs and access to state-business patronage networks;

- organised labour, accommodated through supportive labour legislation and collective bargaining;

- and the poor and unemployed, accommodated through fiscal redistribution through a rapidly established welfare state.

The one class conspicuously left out of this deal was the entrepreneurial class – representing the millions of formal and informal enterprises that strive to create wealth for themselves, their families, suppliers and employees, against all the odds. The rules of the game were imposed on them, with a take- it-or-leave-it attitude.

The vast majority of companies, in South Africa and the world over, are family owned. Established by ambitious, driven individuals with grit and determination. Every big business starts as a small business. But a structural weakness of our economy is that we don’t have enough businesses or self-employed people, a major cause of our astronomically high unemployment rate.

Expanding the incentives required to start and grow a business were ignored in the deal described by Jonas. And centuries of marginalization have prevented the black majority from building the inter-generational wealth that in most cases provides the start-up capital needed to get a new business off the ground. We are still living with the consequences of this tragedy.

It is one of the challenges this department and portfolio committee must devote itself to addressing during our five year term.

Minister Tau released a statement last week, indicating his intention to focus on, and I quote, “accelerating the implementation of the industrial policy and economic transformation.”

This is the industrial policy that has seen manufacturing’s contribution to GDP crash from 24% to 13% in twenty years. To stagnant growth averaging less than 1%, GDP per capita down 30% in US dollar terms in 10 years, and unemployment at record highs with 75% of people under 25 without a job. The consequences of the flawed deal made thirty years ago.

In today’s world, corporatization and financialisation of assets have blurred the link between entrepreneurship, innovation and wealth creation. And, honourable members, law-makers and regulators’ heavy-handed and over-zealous intervention in markets have hampered the daily pursuit of trade, industry and competitiveness by our country’s business leaders. And deterred the foreign direct investment we so desperately need.

Businesses are confronted with a dizzying array of rules, regulations and statutory requirements emanating from this department, which if they fail to comply puts them at a disadvantage. This is before considering the negative impact labour laws and a punitive tax regime have on job creation.

Another of our challenges is overcoming the barriers to township and informal businesses taking their rightful place in the economy and providing secure and well-paid jobs for the millions of unemployed, particularly the youth. Minister Tau has an opportunity to replicate the Gauteng Township Economic Development Act which he shepherded through the Gauteng legislature onto the national stage. And work with his counterpart Minister Ndabeni-Abrahams to re-build and then designate our dilapidated industrial parks as special economic zones to drive innovation and job creation.

Minister Tau has proven himself, when in office, to be a pragmatist, not an ideologue. We first met close to 20 years ago when he was the MMC for Economic Development at the City of Johannesburg and I was running one of the largest events in Gauteng, the Soweto Festival. We in the DA encourage him to chart a different course from the previous ANC minister by relaxing the shackles constraining enterprise. I am heartened by the open-mindedness he demonstrated in presenting the department’s annual performance plan to the committee last Friday.

A quick win would be to gazette regulations instructing ITAC to undertake a comprehensive review of tariffs across all industry and product sectors along with a cost-benefit analysis of their impact on growth and employment. Much of the committee’s deliberations on Friday focused on the thorny issue of tariffs and the DA would prefer a course of action built on evidence rather than dogma.

Honourable Members, there is cause for hope. As I speak, the flag of South African enterprise is being planted in African and global markets by a new generation of entrepreneurs. Three of the top ten African brands are South African – Bathu, Galxboy and Drip – all founded by young, black entrepreneurs – and none, I might add, are beneficiaries of DTIC’s much-trumpeted Black Industrialists Scheme. They are just starting out on their entrepreneurial journey and no doubt have ambitions to establish business dynasties. Galxboy’s brand promise says it all – Smart, African, Ambitious.

The DA is looking forward to scrutinizing the department’s legislative programme and budget in the coming months and working constructively with ministers, officials and members of the portfolio committee to ensure they deliver on their mandate. For our part, the DA will be resolute in pursuing our mission: to rescue South Africa from continuing economic decline by driving economic growth and unleashing enterprise and job creation. 

Help is at hand for SMMEs - letter in Business Day

The May 29th election was another milestone for me - I was re-elected to Parliament as a Democratic Alliance MP.

More on that in a later blog post.

For now, I am reproducing a letter I wrote to Business Day which they kindly published today. It follows my appointment to the Portfolio Committee on Trade, Industry and Competition by DA Leader John Steenhuisen and our new Chief Whip, George Makalakis. 

It's a great opportunity to have a significant impact on SA's economic trajectory. With my colleague Mlondi Mdluli I will be working closely with Deputy Minister and DA MP Andrew Whitfield to put the DA case for necessary reforms as outlined in our economic policy.

Follow the link here or read it below.

Sir

Ian Ferguson makes an impassioned plea for formal political, organised labour and big business structures to understand the requirements of small, medium and micro enterprises (SMMEs) to start, survive and grow. (Ask small business owners about jobs, 4th July).

I have some good news for him. The DA has appointed a former Shadow Minister of Small Business Development (me) and a brilliant young economist, Mlondi Mdluli, to the Portfolio Committee on Trade, Industry and Competition. We will engage the DTIC, organised labour, big business and other ministries in the economic cluster to encourage a conducive environment for the entire economy to thrive, including SMMEs.

The DA's economic policy document, released in April, has a laser focus on growing the economy, unleashing enterprise and creating jobs. We will lobby for the implementation thereof in the interest of small businesses and job creation. No longer will the voices of SMMEs be lost in the wilderness.

Yours
Toby Chance DA MP

DA media statement - DA welcomes Minister Ntshavheni’s commitment to long-overdue Small Enterprise Ombudsman

Today my former colleague, Henro Kruger, issued a media statement that gave me a warm feeling, though I have to admit with a hint of schadenfreude. I give credit to the Department of Small Business Development for not allowing the issue of finding an alternate dispute resolution mechanism for small businesses to die with my private member's bill, which the ANC effectively killed in October 2018. Now, the (relatively) new Minister has nailed her colours to the mast by honouring my bill, though more in the breach than the observance. But I hope the ANC members who sat with us on the portfolio committee for five years squirm in shame as they realise they condemned small businesses, who they were meant to represent, to two years of unnecessary pain. The acting chair of the committee at the time issued a media statement disingenuously claiming the bill was rejected not because of its contents but because it duplicated work the Department was already doing to amend the National Small Business Act. Needless to say, this amendment has not seen the light of day. 30 July 2020 Release: Immediate The Democratic Alliance (DA) welcomes the Minister of Small Business Development, Khumbudzo Ntshavheni’s reaffirmation to her commitment, first made over a year ago, to table a Small Enterprise Ombudsman Services Bill in Parliament, in her budget speech before the National Council of Provinces (NCOP) on Tuesday. The DA team in the Small Business Development Committee has for the past six years been advocating for the necessity of such a bill and the establishment of a Small Enterprises Ombudsman in order to tackle the problem of late payments of invoices of small, medium and micro enterprises (SMMEs) and the unnecessary bullying by Government and big business. In May 2018, after four years of research and inputs from small businesses, the then DA Shadow Minister of Small Business Development, Toby Chance, tabled an identically named bill after the portfolio committee was bombarded with complaints from small businesses and pleas for action. Mr Chance took the initiative, wrote and published the bill and, after consultations and submissions from the public, presented it to the committee. The fact is that an Ombud service could have already been operating had the ANC members in committee not rejected the DA’s private member’s bill as “undesirable”. The Department of Small Business Development has now seen the sense of such a bill and will hopefully keep the flame burning. Minister Ntshavheni was quick to see its relevance to small business stakeholders after taking office in May 2019 and the Department conducted several consultative workshops later in the year where support for such a bill was overwhelming. The DA looks forward to reading the new bill when it is published, and hopes that the Government will not remain talkers in this regard, but become doers like the DA. We have long believed that small businesses too often find themselves on the receiving end of bullying by Government and big business, not just in late payments but in contractual negotiations, terms of trade and other matters where their bargaining power puts them at a disadvantage. An Ombud service which looks after their interests will go a long way to leveling the playing field and creating the conditions for small businesses to be treated fairly and aiding post-Covid-19 economic revitalization through mass job creation. Media Enquiries Henry Kruger MP DA Deputy Shadow Minister of Small Business Development 083 258 5734