Tag Archive | department of trade and industry

Funny business at the National State Lottery

………article 25 July 2020……..

NLC Commission finally to be investigated…

For both the years 2018/9 and 2019/2020, Parliament has been unable to obtain from the National Lotteries Commission (NLC) any official list of beneficiaries and any funding details by the State Lotteries Fund run by the secretive Prof. Alfred Nevhutanda, also chairman of its Fund.

No amount of parliamentary requests, annual reporting requirements, or encounters with investigative journalists have convinced the professor to break the veil of secrecy on projects run by the Fund.

With the doors closed to any form of questioning on beneficiaries, even to the department of trade and industry reporting to the minister concerned, it also appears just as important to Prof. Nevhutanda not to part with any information on how decisions are made on funding and what criteria is used. Again he remains silent when  asked by MPs.

Playing mum

After three years of harassing the NLC when it presents its annual returns to Parliament and briefs the Trade and Industry Portfolio Committee as required by the public management financial legislation, opposition MPs over this period have so far only managed to get the Fund to categorize outgoing funds into the types of grant it makes. In accounting terms this means absolutely nothing, of course.

In the last few weeks, however, matters at last might be coming to a head.  If things are as Parliament suspects, there is to yet to be another mighty crash for the reputation of public sector governance.

Fund income

The sale of lottery tickets to the public and disbursement of prizes are separated by law, such operations being run by a service provider, the names and addresses of winners being protected.   It is from the sale of these tickets that the Fund gets its percentage of revenue.

Every year, with the publishing of the NLC annual report, the professor has presented a picture of respectability with a special chapter devoted to the activities of the SL Fund.  2019/2020 was no different until it came to question time during the parliamentary briefing.

Extracting teeth

Professor Nevhutanda, (who was bestowed with his doctorate in Azerbaijan it appears) was asked this year by the same MPs the same questions.  Once again he quoted the necessity for privacy on the grounds of the Fund’s need for neutrality and to maintain the appearance of impartiality.    The same phrases were trotted out that the naming of projects would expose the Fund’s beneficiaries to all kinds of risks and accusations that the Fund favouring one NGO or beneficiary over another.

The professor also told parliamentarians this year that his enemies could include extortionists and spamming operators, even refusing to supply such a list to MPs “for their eyes only” which would have been subject to parliamentary rules. In the past, ANC MPs had nodded at these wise comments.

Enough is enough

For the last three years  at the same time but coming to a head this year, has been a parallel series of stories appearing in the Daily Maverick into the funding of the of SLF projects staring in the Northern Cape, more appearing in Free State, then Gauteng. Pressure this year was seriously put upon the Professor Nevhutanda to answer questions on the Funds’ activities.

In committee beforehand, ANC MPs have stood mute and never commenting, the EFF subsequently joining with the DA this year demanding answers.  It was a stormy meeting.

Turnabout

ANC MPs were finally convinced this year by Mat Cuthbert (DA) in a recent August meeting that it was in everybody’s interests that there be a court challenge on whether Parliament was constitutionally supreme in calling for oversight of all State Lotteries funding, unanimous vote being recorded to request such from experts.

Legal opinion has now come down in time for the most recent meeting with the NLC advising that, on this matter, the Constitution clearly indicates that Parliament can trump the State Lottery Fund Act in equal fashion to any other government institution and that all financial aspects of the Fund should be subject to disclosure and parliamentary oversight thus obtained.

The truth will out

Thanks therefore to the persistence of two DA MPs, Mat Cuthbert and Dave Macpherson, yet another castle of cards involving senior government officials is about collapse.

Looking back things had started to get hotfor Professor Nevhutanda when he was reported as suing a group of investigative journalists, known as Ground-up, for R600,000 in respect of defamation damages. This was an unusual incident in the life of the NLC, it seemed.

Rumblings

It also appeared at the time that the argument was all about reports run by the Daily Maverick, sourced by Ground-up, that in Kuruman, Northern Cape, there were three particular State Lottery projects, an old-age home, a drug rehabilitation centre and a library/museum, being built and all meant to celebrate the life and work of a sangoma, Credo Mutwa.

According to the Daily Maverick article some R60m was granted as far back as 2016/7 but by 2019 two were still “under construction”, having received funding two years before.  The third, a museum, had not single exhibit therein and the library’s shelves were empty”, said Ground-up, who had been to Kuruman to see for themselves.

Photographs of fences, a few walls and piles of bricks were included in various articles and in subsequent articles the construction companies had suspicious links to NLC officials, the Daily Maverick said.

Out of sight

The NLC has distributed on average around R1.6bn per annum in recent years before Covid 19 arrived.  For a good deal of the earlier years, Minister of Trade and Industry Rob Davies, has presided over the affairs of the NLC very much at arm’s length since his department has been at pains, it seems, not to get too involved in lottery matters to any great depth.

Similarly, the Chair of the Portfolio Committee on Trade and Industry for years, Joanna Fubbs, just asked for assurances every year that all funds went to good causes and were distributed particularly amongst the poor. She received such assurances.

Writing the rules

Prof Nevhutanda, always aware that the Lotteries Act demanded no political interference in its affairs, would talk little on what motivated decisions on his  grants. This was a tightly held process within the NLC, he said, and the tenets and principles behind the formulae for consideration of funding had been designed by no less than the professor himself, the annual report of the State Lotteries Commission stated., with the Professor as author.

Consequently, DTI presentations to Parliament on this portion of their responsibilities made to the Portfolio Committee of Trade and Industry have been less than sketchy, particularly on report backs on whether DTI inspectors of NLC staff ever visited project sites.

Grants were declared as annual totals simplistically broken down into projects falling into four categories, the arts, charities, sports and miscellaneous. No more.

 Build up

Meanwhile, Minister Patel has been playing difficult and not really helping obviously not wishing to get too involved in problems of an entity run for so many years by a predecessor.

 

The Auditor General over the years seems to have accepted that no follow through was necessary but last year, with a tightening up of the rules, has now flagged some of the  issues as “irregular”.

D-Day

The letter now sent from Parliament to Prof. Nevhutanda from Parliament demands that the NLC should submit within seven days of receipt of the letter the names of beneficiaries who had received funds from the NLC in respect of the Covid-19 pandemic as well as the amount received as  beneficiaries referred to in the 2018/9 annual report and which were required by the Lotteries Act.

It also calls for details of all the categories under which the grants were made, names of beneficiaries and the amounts involved.  A similar call is made for 2019/20 figures in the 2019/2020 annual report as required in law.

 In the past

To sit through a meeting with the National Lotteries Commission (NLC) has been an insult to the average person’s intelligence for some years now, but the last virtual meeting was short and quick.  Chair Duma Nkosi read from the Courts findings and all quickly sided with Opposition MPs that Parliament had to exercise its authority immediately.

In the most recent meeting, Cuthbert said he was “horrified” to see how many ANCs had suddenly decided to vote agreeing on the matter after three years of disagreement, only siding with the DA when the Courts opinion posed a threat to the blind-eye approach of the past.

Nevertheless, it was a total majority decision made that NLC be hauled before Parliament and explanations given.

Past bad apples

Prof Nevhutanda is not short of publicity either.  Two years ago, he stood accused when a company with the improbable name of the Makhaya Arts & Cultural Development Co, and which employed Prof Nevhutanda’s daughter, controversially received a massive R64m from the National State Lotteries Fund, a story covered by Mail & Guardian.

The charmed life of Prof Nevhutanda seems set to end very shortly. One hopes that endless SIU reports, NPA paralysis and blunted Hawks investigations are not to follow, as the State Lotteries Fund Pandora’s box opens up.  It would seem a question of who gets there first; the SIU or Parliament.

Posted in Justice, constitutional, Public utilities, Security,police,defence, Trade & Industry0 Comments

Draft Copyright Amendment Bill raises queries

Copyright Bill proposes revenues to state…

copyright graphicsent to clients 28 Oct….  Anomalies abound in the draft Copyright Amendment Bill, recently published for comment and now awaiting tabling in Parliament hopefully with a number of changes, say experts in the intellectual property industry.

The Bill primarily affects music, artistic and literary copyrights but the whole issue of patents, copyright and intellectual property rights are so intertwined that any changes will undoubtedly send up red flags up in various areas.

Government says in this instance it is trying to modernise the existing Copyright Act but as with any changes to established procedures that have existed for years, there are pros and cons that come with change it seems.

50 years after death

The draft Bill deals primarily with copyright of artistic, musical and literary work and most assume earphonesthat works of great composers such Brahms, Beethoven and Schubert are free of copyright, those geniuses having long since passed away. In fact under the existing Act, the author, composer or artist has copyright for life and then fifty years

The draft states both clearly and unambiguously that the ownership of all copyright held by individuals will automatically transfer to the state upon their death.

Until death do us part….

There is not the slightest indication of what body or entity is involved, other than the fact that the Bill is to be tabled by the Minister of Trade and Industry, meaning that DTI, or an entity controlled by it, would receive such, presumably the individual’s Estate being responsible for notifying DTI that they are heirs. The draft also states that government may never re-sell or pass on such copyrights.

The question to any casual observer is what happens to this money, at present collect by such bodies in doubtful manner by such bodies as SAMRO and passed to DTI? It is revenue and does it go to National Treasury, perhaps a fund for aged musicians, authors and artists even child education in the arts? On this the Bill is silent, no policy having been ever stated by any cabinet minister on such matters.

Another tribunal

In the absence of any new guides as promised on intellectual property in general, such having been promised by DTI in the form of a National IP Policy many months ago, more concerning is the establishment of an Intellectual Property Tribunal which is a case of “overkill” in dealing with this limited area of copyright and royalties.

Such a body may adjudicate on “on any application and on any legislation brought before it”, the draft supermarketstates.

On the whole, we have to assume that the majority of the draft Bill applies to individuals only, with the exception of the recording industry and literary reproduction industry, there also being certain clauses regarding End User Licence Agreements affecting software sales.

Criminalisation

Of concern though to many is the growing tendency to introduce criminalisation into legislation such as areas of BEE with fines normally reserved for more serious and harmful criminal police offences. In this case DTI have once again mentioned maximum jail and penalties of totally disproportionate periods and amounts.

To many, this Bill appears to have a lot more written in between the lines and prompts again many questions as to the direction DTI is taking with regard to international agreements, in this case the Agreement on Trade-related Aspects of Intellectual Property Rights.

It will be interesting to see what is finally tabled in Parliament for debate and what emerges from parliamentary public hearings

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25.1% is maximum BEE control, says DTI

DTI upbeat on implementation of BEE codes…..

lionel october 3

In a report to Parliament on the amended BEE Codes of Practice and their implementation as from 1 May 2015, Lionel October, Director General of Department of Trade and Industry (DTI) and his B-BBEE staff team, emphasised that the generic scorecard was aligned to government’s key priorities. He also said the State had no ambitions to take their target on black control beyond 25.1% of ownership.

Supplier Development is new title

DG October said the main emphasis of the codes had now switched to greater emphasis on what was previously termed procurement – now referred to as “supplier development”. This approach was more in alignment with the National Development Plan (NDP) objectives, DG October said, simply because that was the main direction needed to empower the development of black enterprises and build the economy on a stable growth path.

“In fact the German auto industry working with the German Chamber of Commerce had established a fund

BMW-Werk Südafrika

in South Africa”, he said, “for financing, training and building expertise in black businesses to supply the auto industry”.

There was considerable discussion on this by members and DG October said that there had been a general recognition in business and industry of the word “must” had replaced “may” in terms of B-BBEE requirements; that level four had to be reached for incentives and in general now “certainty” had been restored to the business environment on BEE issues, he felt.

Five “Elements”

The generic scorecard now had five elements, he said, which all companies, except those micro-exempted, had to comply with for recognition. All employment equity and management control had now been merged into one of those elements, now termed “management control”.    Sector codes were now to be aligned by 1 Nov. 2015, as set out in Code 003.

He said that “in response to public submissions” the import exclusion principle would be maintained and that the definition of an “empowering supplier” in the context of code alignment was a compliant entity which could demonstrate that its production and/or value adding activities were taking place in this country.”

DTI said that that “deviations of sector codes in terms of targets must be over and above those of generic codes and companies that derive more than 50% of revenue from sectors where there is already a sector code must be measured in terms of that sector code.”

DTI has no doubtful intentions

George Washington, having cut down the cherry tree, with his fatherIn general, DG October said in response to questions from MPs about the amendments, it had been his impression that business seemed to accept there were no political mala fides on the part of DTI; just a wish to get on with the planned NDP growth path which required the co-operation of business and industry on black empowerment.

The funding of Sector Charter Councils was a “joint responsibility between government and the private sector and entities must report annually on their B-BBEE status to sector council who will in return reports to the BEE Commission”, DTI said.

New sectors in the sights

Sector codes were being considered for the tourism, which had reached the stage of gazetting for public comment; “alignment” was being reached in the construction, integrated transport, ICT, financial services and chartered accountancy sectors; the property and forestry sectors had reached gazetting stages and marketing, advertising and communication were with their appropriate ministries for approval.

DG October mentioned the fact that the manufacturing industry stood alone as there were so many different sectors but over a period, aspects would be dealt with such as the film industry and textile and clothing industry.

DTI concluded their input to the meeting by advising that a technical assistance guide to B-BBEE was in process and DTI were in the process of finalising the B-BBEE verification manual.

Recent faux pas

rob davies2Opposition members asked how it was that DTI went so wrong with the question of  downgrading the pointing system for employment schemes and why it was that the Minister of Trade and Industry, Dr Rob Davies, had to retract that portion of the amendments which were not gazetted for public comment.

Chairperson Joan Fubbs intervened at this point, noting the Minister had taken the blame, had apologised for the mistake and could do no more than admit that DTI had been wrong.

DG October added that at a DTI workshop on the subject with “some stakeholders” this direction had been considered as a good option for broader rather than narrow empowerment but it had now been recognised by DTI that “they had gone down the wrong route as far as investor confidence was concerned”.

DTI had now reversed everything with the promise that this would not occur on the agenda again.

Better ideas could come

It had also been realised that such a move could also destroy imaginative plans for black management control such as that pitched by Standard Bank where 40% shareholding went to staff who could have representation on the board; 40% went to recognised BEE shareholders and 20% went into community organisations and trusts.

In answer to direct questioning by MPs, DG October confirmed that by the term “black”, DTI translatedlionel october this as African, Coloured, Indian and Chinese. He also confirmed that all these groups, if foreign and not South African citizens, were excluded.

More than 25.1% “unrealistic”

DG October, when asked by ANC MPs whether the 25.1% target for black ownership was realistic and fair considering that the demographics in South Africa demonstrated a far larger proportion of black people, he said that 25.1% could be considered as a “basic critical mass to engender a solid forward movement”.  To go any further would be unrealistic, he added.

In Malaysia, he said, local ownership was considered fair at 30% and other African countries as high as 50%, but he felt that in South Africa, where the need for the transfer of skills and training from large to small companies, especially through supplier development by state utilities and large businesses, was essential, this was a fair percentage assumption and which called for co-operation and fairness between all parties, all bearing in mind “a pretty hideous past”.

Redress of the past in all preambles

joan fubbsAt this point, Chairperson Joan Fubbs referred to the South African Constitution, reading out the clauses which not only stated that all were equal despite race colour or creed but that discrimination was possible if it was fair and she reminded MPs that redress of the past was “fair”.

She asked for all “not to isolate clauses in the Codes to determine personalised interests but get on with job of re-aligning communities that had been excluded from ownership for over 300 years”.

One ANC MP asked that the focus on big businesses be less emphasised and that DTI rather spent considerably more time with the job of developing ownership of black small business, which he stated could be “the power house of South Africa”.

He called for legislation that enforced government and public utilities, “as custodians of state power” to set an example on supplier development since, he said, one could hardly expect the private sector to follow suit, if the SOEs did not lead the way on this issue.

Incentives needed, not law says DTI

DG October said such sort of things were “impractical in the real world” and said the main challenge was a phased process of change which now had the support of many in positions of power in business. He also emphasised that B-BBEE had to tie in business and industry with incentives rather than with the law.

When asked about his recent public statement that he had set DTI’s target to produce “100 black industrialists”, he was referring rather to 100 black industrial leaders “financed and supported by DTI initiatives”.

Other articles in this category or as background
BEE comes under media scrutiny – ParlyReportSA
Rumblings in labour circles on BEE – ParlyReport
B-BBEE Codes of Good Practice far more onerous – ParlyReportSA
One year to implement B-BBEE Codes – ParlyReportSA

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Small business gets R1bn incentive scheme

Tax relief and business incentives

The new small business development department (SBDD) has transferred from the department of trade and industry (DTI) the R1bn fund which covers both corporate incentives to develop small business and the Small  Enterprise Finance Agency (SEFA).

However, it will leave with DTI all matters relating to B-BBEE insofar as regulations are concerned.  Both the new minister, Lindiwe Zulu, and deputy minister, Elizabeth Thabethe, were present for a short departmental briefing by SBDD given to the new small business portfolio committee chaired by Ruth Bengu, who in the last parliamentary period served as chair of the transport committee.

Revised thinking

In an earlier portfolio committee meeting of trade and industry, a few days before under their chair, experienced ANC member Joan Fubbs, DTI had called for a rethink on small business policy.

They said they wanted to see a clearer policy on the SMME support role by national government with provincial and local government and to establish a programme for rolling out more small business “incubators”- something that opposition parties had been calling for over a long period of time.

Also DTI supported the call to review the small claims court system so that access to affordable justice was more affordable. They wanted this to be a further target of the new department.

Such recommendations came amidst a foray of criticism by commentators that the new department could become a diversion for unsolvable small business issues or alternatively the new department could become merely a point for start-up small business without any real muscle.

Less red tape

The new department in addressing MPs confirmed to them that its mandate was to focus on “enhanced business support” and they emphasised their support for women, people with disabilities and to provide mechanisms to access finance, business skills development.  They also said they were there to ease regulatory conditions; to help regulate better the SMME environment and to give leverage on public procurement.

It was important to recognise, SBDD said, that it was also there to encourage the development of cooperative entities, in which instance shareholders themselves were the members and entrepreneurs. Finally, the process of creating market access was an important task, they added. Nothing was new here.

But opposition ears pricked up when they said tax relief grants to corporates that invested in small business development were to be considered and incubation programmes and technology upliftment were priorities.  The immediate future, however, was all about configuring the new department; the “migration” of responsibilities from DTI; and transferring allocations for the establishment of support institutions.

Chair of the committee, Ruth Bhengu – previously chair of the parliamentary transport committee – then called for response from opposition members which mainly came from Toby Chance of the DA, whose questions were answered by both by the new minister and deputy minister.

Jobs or not

Chance said that whilst applauding the formation of this department, he wanted to know whether or not any success was to be measured in terms of jobs created,  which to him was the bottom line, he said. Also he wanted a clearer definition of what government actually meant by the term “small business”.

He said there were plenty of “gleaming new supermarkets in our townships but very little industrial developments, in fact some industrial parks were in a state of decay.” Chance said the DA was also worried that the impact of new labour legislation and labour regulations was immobilising small business and the amount of red tape currently being experienced was becoming “out of hand”.

Chance said he hoped the new department recognised the fact that that corporates and industry should focus on the development of small businesses to create the job growth called for by the NDP.   Partnerships with small business were the best way of achieving this, he noted.  He concluded that all “tax incentives should be re-visited” and that more emphasis should be laid on small manufacturing businesses.

In reply, minister Lindiwe Zulu agreed on the issue of red tape as a hindrance to small business and said her objective was to become like Rwanda where direct contact with national bodies that supported initiatives was far easier.

Compliance for all

However, she said that business had to understand that it had a role to play and a “culture of compliance” had to be encouraged in both small and large business and manufacturers or there would be anarchy.   Also large businesses and the state will have pay small business invoices on thirty days or risk penalties.

The minister said on the subject of labour regulations, dept of labour had its own targets and own agenda on decent work conditions and that was a separate issue. “The job of small business development was to work inside current conditions and for business to respect that.”

Chance replied that the governing party seemed to have “developed a track record of “attacking business persons when they criticised ANC economic policies or asked tough questions”, which statement prompted vehement denials from the minister and deputy minister.

Other articles in this category or as background
//parlyreportsa.co.za//trade-industry/licensing-of-businesses-bill-re-emerges/
//parlyreportsa.co.za//bee/minister-davies-gets-cooperatives-bill-approved/
//parlyreportsa.co.za//parlyreport-contacts/cabinet-ministers/ministry-small-business-development/

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All not well in the trucking industry

Call that corruption exists

trucksIn answer to a call made by the portfolio committee on transport on the state of the trucking industry in South Africa, it became evident from responses by the department of transport (DoT); from the Road Freight Association (RFA) and examples given by an independent small operator, that large truckers dominated in an industry in an unfair manner that was rife with corruption.

Mawethu Vilana, deputy director-general DoT, said that going back to 2002/3, the department had begun an exercise to look at how to provide opportunities and also broaden the space for participation by smaller operators in the road freight sector. It became clear that smaller entrants lacked finance; that an “unscrupulous broking sector was part of the industry” and generally there was a lack of skills and know-how in the trucking industry generally due to poor provision of training facilities and an industry which was undercapitalised except but a few large operators.

DOT not playing proper role

Vilana admitted that when it came to black empowerment opportunities, the main player was the department of trade and industrydot logo (DTI) and not DoT, DTI having the BEE verification control system in their court, DoT playing virtually no part in either reform of the industry or the development of SMME’s.

On the subject of crime, little could be done about bribery and corruption, Vilana admitted under questioning by parliamentarians, unless legislation was beefed up with proper powers and a full, properly constituted investigation carried out into the industry.

Road users must pay

roadsHe also admitted that permit fees were high because of the principle of “user pays” which had been adopted by government “since road truckers caused great damage to the road system.”

Gavin Kelly, RFA said his association had 385 members, with 109 affiliates and 40 associates representing different levels of possible enforcement and ability to develop skills and training but complained of massive permit fees (the last being 412%); large levels of corruption amongst government officers and no value being added by the government’s road agency to the industry in general.

RFA also stated that there appeared to be no proper government road freight strategy and single government officials determined policy without ministerial approval.    Kelly said “no real consultation exists between the state road agency and the industry” and it was the RFA view that DoT “was just going through the motions.”

Trucking group says market closed

One medium sized operator, Tramarco, said that despite heavy investment in trucks and bearing in mind the “ever rising price of

tramarco site

tramarco site

fuel”, it was almost impossible to break into the transport business to obtain long-term “tangible” contracts from major mining groups and state utilities.   They appeared to feel “safer” using old contacts and larger companies and quite clearly favours were being granted, they said.

Their spokesman said that the entire industry was dominated by a number of large trucking groups and smaller entrants were effectively “locked out” of the industry because the industry was either not regulated properly.

AARTO somewhat dubious

They also said the licensing AARTO system was not working properly; there was a lack of legislative enforcement; too many corrupt officials had too much power and there appeared a lack of interest by large companies generally to uplift smaller operators, little interest in encouraging training and building the trucking job market.

Tramarco said that no favours or finance was called for by the medium and small sized companies but merely a fair chance to compete for tenders.   They called on government to provide leverage within its own government departments, state utilities and with industry to break up monopolistic habits and encourage more black empowerment opportunities.

“Large groups and utilities make lots of statements on freeing up the market but nothing happens”, Tramarco said.

MPs demand better skills development

MPs demanded of DoT that concrete steps be taken to assist small entrepreneurs and to provide proof of a record in the area of skills development. “It was clear that little had been done by the DoT in this area”, said one ANC member.

Opposition members said they were convinced that DoT “had no meaningful understanding of what the situation was on the ground.” One MP said the City of Cape Town had provided a solution by cutting the bigger contracts into smaller parts, supplying smaller quantities and increasing the number of entrants slowly. He called on DoT to start thinking of similar solutions on a national scale.

Roads to nowhere

Ruth BhenguChairperson Ruth Bhengu told DoT that the meeting had been called because an examples had been given to parliamentarians whereby “large companies gave small companies short-term contracts and rates that would not take them anywhere and businesses that were desperate could not only pay for their trucks but could not maintain them, the business going ‘broke’ as a result”.

There was also an immoral business broking sector emerging, she felt.

Vilana of DoT said there was nothing government could do to protect such entrepreneurs and that this was the nature of the industry which was high capital risk with a road system that was deteriorating.

The committee found this all very unsatisfactory and called for further meetings with DoT stating that these matters had to be resolved and that the challenges facing the trucking industry were to be investigated further. Also cross-parliamentary meetings with public enterprises and trade and industry committees were to be called. DoT was told it would be re-called for further reports.

Further archived references

//parlyreportsa.co.za//public-utilities/aarto-amendment-bill-gives-back-up-to-road-law/

//parlyreportsa.co.za//finance-economic/transport-laws-bill-on-e-tolling-amended/

Posted in Finance, economic, Mining, beneficiation, Public utilities, Security,police,defence, Transport0 Comments


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