BRIEFING TO THE PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT 05 AUGUST 2015

1. BRIEFING TO THE PORTFOLIO COMMITTEE ONSMALL BUSINESS DEVELOPMENT05 AUGUST 2015

2. OUTLINE OF PRESENTATION • Legislative Mandate • Strategic outcome oriented goals • Medium Term Strategic Framework • Departmental Budget allocations • Skills Development Programmes • Production Workshops and Agriculture • Market Delimitations • Market Opportunities: service providers • Skills Development Implementation Model • Skills Development Delivery Areas • Offender skills development in production workshops • Offender skills development in agriculture • Responses to issues raised by the Committee • Conclusion

3. Legislation Mandates and Other Policy Mandates A. Constitutional Mandate - The Constitution of the Republic South Africa (Act 108 of 1996), B. Legislative Mandates - Correctional Services Act 1998 (Act No. 111 of 1998), as amended - Correctional Matters Amendment Act (Act No.5 of 2011) - Criminal Procedure Act, 1997(No. 51 of 1977) - Child Justice Act (Act No. 75 of 2008) - The Promotion of Administrative Justice Act, (Act 3 of 2000) as amended - The Health Act (Act No. 61 of 2003) - The Mental Health Care Act (Act No. 17 of 2002) - Prevention and Combatting of Torture of Persons Act (Act No.13 of 2013) C. Other Policy Mandates - The White Paper on Corrections in South Africa - The White Paper on Remand Detention Management in South Africa - National Development Plan Vision 2030

4. STRATEGIC OUTCOME ORIENTED GOALS INDEPENDENCE INDEPENDENCE

5. MTSF 2014- 2019 INDICATORS

6. ENE 2015 ALLOCATIONS PER REGION AND PER PROGRAMME

7. ENE 2015 ALLOCATION PER REGION AND PER ECONOMIC CLASSIFICATION

8. SKILLS DEVELOPMENT PROGRAMMES The Department of Correctional Services offers skills development programmes and services that aim not only to equip offenders with marketable skills and knowledge but also to inculcate positive attributes and attitudes which would encourage offenders to jettison undesirable behaviour and embrace norms and morals acceptable in the society. Furthermore, to encourage the establishment of SMME’s by offenders once released rather than only focusing on securing employment.

9. PRODUCTION WORKSHOPS AND AGRICULTURE Mission- to support the Departmental mission through the provision of products and services for offenders’ development and to reduce government expenditure. Primary Mandate • To fulfil the purpose of the correctional system in terms of Correctional Services Act, Act No 111 of 1998, as amended, (Section 3(2)(b) ” The Department must as far as practicable, be self-sufficient and operate according to business principles”. The Department has the responsibility, to ensure that offenders are appropriately skilled in market-related skills. Furthermore, Paragraph 4.4.8 of the White Paper on Corrections (2005) states that “the department must strive to develop commercial viable enterprises”. • To supply products that are manufactured in the production workshops to other governments departments as regulated in Section 133 of the Correctional Services Act, Act No 111 of 1998, which states: “All government departments must, as far as practicable purchase articles and supplies manufactured by sentenced offender labour from the Department at fair and reasonable prices as may be determined by the Minister of Finance”.

10. PRODUCTION WORKSHOPS AND AGRICULTURE The objectives of production workshops and agriculture: • To enhance self-sufficiency and generate income/revenue for government. • To create work opportunities for offenders and skills utilization of offenders. • To contribute to the development of offenders, to use agriculture production and workshop manufacturing processes to impart skills and work ethics that will expose offenders to the norms and requirements/expectations of the workplace. • To promote self-employment of offenders upon their release. • There are 21 farms (mix farming – animal and plant production as well as 92 small sites (vegetable production). Furthermore, there are 19 textile, 10 wood and 10 steel workshops, 1 shoe factory as well as 6 bakeries.

11. MARKET DELIMITATIONS • DCS receives first priority in the provision of products/items. Surplus products/items and/or capacities (not needed for self-sufficiency purposes) will be made available to produce/manufacture products/items for other government departments and their officials at a cost. • The market for DCS is restricted to: DCS- Self-sufficiency: (The aim is to supply all the needs of the Department of Correctional Services that can cost effectively be manufactured / supplied by the various workshops and farms), • Government Departments: (includes all the departments and administrations as listed in Annexure 1, column 1, of the Public Service Act no 111 of 1984), • Other (Clubs, Messes and personnel of DCS and other Government Departments) and • All Parastatals & institutions that are classed as boards of control (statutory institutions) under control of the above-mentioned Departments, forms part of the broader government. • The pricing of self-produced products/items are in accordance with a price and tariff structure as approved by National Treasury, from time to time.

12. MARKET OPPORTUNITIES FOR SMME’s • Supply of production inputs to the Department such as: • Agriculture: -animal feed, medicines, fertilizers, seeds, seedlings, agro-chemicals, machinery and equipment, etc.) • Wood, boards, steel, textile material, machinery and equipment, baking ingredients for bread, etc.) that are used in the production workshops and agriculture - procured externally, in accordance with SCM prescripts • Supply of goods and services to the Department such as: perishables, office supplies etc. • The procurement of most of these inputs are decentralized in regions, and management areas

13. EXISTING OPPORTUNITIES FOR SMME AS PARTNERS IN DCS FOR BENEFIT OF OFFENDERS & PAROLEES

14. INITIATIVES TO PROMOTE SMME FOR OFFENDERS • The Skills Development Directorate is planning to host an Exhibition & SMME Event whereby all relevant external stakeholders which include amongst others SEDA, DTI, QCTO, SETAs, Department of Small Business Development etc. will be invited to take part in the event. The purpose of the event is to : • market offender skills by showcasing artefacts/ items manufactured by them to potential business partners/ sponsors once released. • Partner with relevant business institutions who can assist with SMME development. • Support offenders to venture into SMMEs and Cooperatives upon their release. • Forge a partnership with Community Liaison in order to assist parolees to form cooperatives through government agencies like SEDA, Foundation of African Business and Consumer Services(FABCOS) etc. • Forge strong partnerships will all relevant business institutions and organizations to promote SMME and Cooperatives to assist offenders upon their release.

15. SKILLS DEVELOPMENT : IMPLEMENTATION MODEL Offender assessed and declared competent upon finishing the training programme. Issued with a trade certificate or certificate for completed skills programmes. Offenders enrol in Skills training programmes, i.e. Vocational Skills Training, Basic Occupational Skills Training Top up on Entrepreneurial programmes through accredited training providers, DHET or other relevant education and training institutions Offenders who meet entry requirements recruited for skills development programmes, i.e. NATED programs, skills programs & Unit Standards Offenders enrol in Technical Vocational Education and Training(TVET) College programmes, i.e. NATED & National Certificate Vocational Offender issued with National N Diploma upon completing two years practicals/ workplace experience or NQF Level 4 certificate This model encourages offenders to venture into entrepreneurship upon release, hence partnership with the newly formed Department of Small Business Department is essential

16. SKILLS DEVELOPMENT DELIVERY AREAS • BASIC OCCUPATIONAL SKILLS PROGRAMMES – short courses in consultation with SETAs • VOCATIONAL SKILLS PROGRAMMES – skills leading to attainment of artisan qualification • ENGINEERING STUDIES (NI – N6) in conjunction with DHET • BUSINESS STUDIES (N2 – N6) in conjunction with DHET • NATIONAL CERTIFICATE (VOCATIONAL) NCV L2 – L4 in conjunction with DHET • COMPUTER STUDIES – focus on hard skills including computer repairs • ENTREPRENEURIAL SKILLS TRAINING - short courses on how to start and run own business ventures. This programme is geared towards imparting business skills to offenders for self-employment. It includes amongst others, training on development of business plans, starting a business, financial management etc..

17. OFFENDER SKILLS DEVELOPMENT IN PRODUCTION WORKSHOPS • Carpentry • Upholstery • Cabinet making • Wood machining • Wood polisher / spray painting • Welders • Fitters and turners • Textile workers • Bakers (within DCS bakeries) • Shoe manufacturers

18. OFFENDER SKILLS DEVELOPMENT IN AGRICULTURE • Piggery, dairy, beef, broiler, layers (egg production), abattoir operation, vegetables, agronomy and Orchard/fruit production. • Tractor and equipment operation.

19. RESPONSES TO MATTERS RAISED BY THE COMMITTEE

20. STEPS TAKEN TO ACHIEVE THE TARGET OF 70% LOCAL PROCUREMENT • Regulations 9(1) and 9(3) of the Preferential Procurement Regulations, 2011 makes provision to promote local production and content. • The Department of Trade and Industry designates the sectors as contemplated in Regulation 9(1). • DCS invite bids for textiles, clothing, leather and footwear with a specific condition that only locally produced goods will be considered.

21. STEPS TAKEN TO ACHIEVE THE TARGET OF 30% PROCUREMENT FROM SMMEs AND COOPERATIVES • According to the Preferential Procurement Regulations and in terms of the Generic Codes of Good Practice, an enterprise including a sole propriety with an annual total revenue of R5 million or less qualifies as an Exempted Micro Enterprises (EME). • To stimulate the participation of SMMEs within public sector procurement DCS has a list of prospective suppliers at each Supply Chain Management Unit which would include SMMEs for requirements that need not be advertised in the Government Tender Bulletin in accordance with general delegated powers. • To establish a list of prospective suppliers, Supply Chain Management Units must annually advertise in local representative newspapers or by any other means to invite prospective suppliers to apply for listing as a supplier.

22. STEPS TAKEN TO ACHIEVE THE TARGET OF 30% PROCUREMENT FROM SMMEs AND COOPERATIVES • Bidders are required to submit original and valid B-BBEE Status Level Verification Certificates or certified copies thereof together with their bids, to substantiate their B-BBEE rating claims. • EMEs are deemed to have a B-BBEE status of “level four (4) contributor” and can claim 12 points in accordance with the 80/20-principle and 5 points in accordance with the 90/10-principle. • In instances where EMEs are more than 50% owned by black people, such EMEs qualify as “B-BBEE status level three (3) contributors”.

23. STEPS TAKEN TO ACHIEVE THE TARGET OF 30% PROCUREMENT FROM SMMEs AND COOPERATIVES • Bidders are required to submit original and valid B-BBEE Status Level Verification Certificates or certified copies thereof together with their bids, to substantiate their B-BBEE rating claims. • EMEs are deemed to have a B-BBEE status of “level four (4) contributor” and can claim 12 points in accordance with the 80/20-principle and 5 points in accordance with the 90/10-principle. • In instances where EMEs are more than 50% owned by black people, such EMEs qualify as “B-BBEE status level three (3) contributors”. • The department needs to develop a policy that would regulate the engagement of big companies to use their Corporate Social responsibility budget to assist underdevelopment areas. • Currently the department does not have dedicated capacity with knowledge and understanding in order to support cooperatives.

24. STEPS TAKEN TO ACHIEVE THE TARGET OF 30% PROCUREMENT FROM SMMEs AND COOPERATIVES • For 2014/15-financial year 1,957 contracts to the value of R289,222,780.19 were awarded. The number of contracts awarded to SMMEs (levels 3 and 4 contributors) and the value thereof are as follows: • Level 4 252 contracts (12.88%) R 27,410,967-64 • Level 3 846 contracts (43.23%) R129,845,834-22 • The Preferential Procurement Regulations is currently being reviewed by National Treasury and the matter with regard to supporting SMMEs, persons with disability, females and Local Economic Development is already incorporated in the draft Regulations (50/50-principle applicable to cases to the value up to R10 million per case)

25. STATUS OF PAYMENTS MADE AFTER 30 DAYS – APRIL TO JUNE 2015

26. CONCLUSION • The Department of Correctional Services is committed to the development and growth of small businesses through public sector procurement. • The Department shall cooperate with the Department of Small Business Development as well as the private sector to ensure mutual cooperation that will benefit small businesses and co-operatives. • Resolution 6 of the Ex-Offender Workshop: That government departments, in partnership with civil society, shall implement appropriate strategies and programs that will empower ex-offenders to become economically active (to be employable and to start their own businesses/cooperatives) • Engagements with the Department of Small Business Development will be crucial going forward, to ensure that the Department of Correctional Services aligns its policies so as to contribute towards inclusive and shared economic growth and job creation