Minister Ebrahim Patel. Picture: FREDDY MAVUNDA
Minister Ebrahim Patel. Picture: FREDDY MAVUNDA

Trade, industry and competition minister Ebrahim Patel insists that government funding polices are not race based, although historical disadvantage is taken into account.

“If you look at the work of the IDC [Industrial Development Corporation], they do not support only designated groups,” Patel told MPs after his department presented its revised budget and performance plans for the 2020/2021 financial year.

The IDC is a key national development finance institution set up to promote economic growth and industrial development. It recently told parliament that its relief measures to support distressed firms during the Covid-19 lockdown and beyond will not necessarily be driven by BEE considerations.

BEE is a controversial issue in SA with the country’s main opposition party, the DA rejecting it in its current form, saying it is being used by the ruling ANC to enrich only a few politically connected elite at the cost of job creation.

Recently, tourism minister Mmamoloko Kubayi-Ngubane faced sharp criticism when she said that support to distressed firms and establishments in the sector will be based on broad-based BEE (B-BBEE) codes. Small-business development minister Khumbudzo Ntshavheni said in April that her department would also consider BEE in its relief programme, though she had earlier dismissed suggestions that such an approach would be adopted.

Union Solidarity and lobby group AfriForum subsequently launched a court bid to challenge the BEE considerations. However, in April, the North Gauteng High Court ruled that the department of tourism’s decision to consider empowerment codes as criteria for assisting companies was not unlawful.

ACDP MP Wayne Thring said race based policies “must go” especially as the economy faces collapse due to the Covid-19 crisis.

“We need all hands on deck irrespective of colour or class,” Thring said.

Patel said government policies “do not say only black people can access public funds”.

However, “we identify the importance of ensuring that designated groups do get support.”

“Our programmes take into account historical disadvantage,” he said.

The department of trade and industry and its entities is tasked with, among others, driving economic transformation, competition policy, and protecting consumers, workers and enterprises.

Patel said the budget adjustment means the department has to scale back on some of its programmes, with incentives and industrial financing among the hardest hit (20% cut).

At the February budget, the department was allocated R11bn. This was adjusted downwards to about R9bn during the emergency budget tabled by finance minister Tito Mboweni in June necessitated by the Covid-19 crisis. About 59% or R5.52bn will be disbursed to companies across the various incentive programmes.

“[The budget adjustment] is more than a haircut; it has taken flesh and bone. We need to see where we can enhance of our work. We are looking at rebalancing our toolkit. Part of we seeking to do is to release more resources for critical programmes, and bring down overheads cost the department and entities face,” Patel said.


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