Free State Premier Sisi Ntombela unveiled the new Free State Development Corporation (FDC) board to the media on Friday, 18 March 2022, in Bloemfontein. Premier Ntombela was flanked by her MEC for economic, small business development, tourism and environmental affairs (Destea), Makalo Mohale, the rest of the Free State executive council (exco) and key provincial government officials.
A new dawn for the FDC
The FDC is a frontline agency for economic development in the Free State, mandated with creating a thriving economic climate for business growth, facilitating exports and attracting direct investment to the province. The key economic sectors eyed by the FDC are agriculture and agro-processing, mining and mineral processing, chemicals, pharmaceuticals and plastics, tourism and real estate, transport & logistics as well as renewable energy.
The Free State provincial government is the sole shareholder of the FDC.
In recent years, the FDC’s woes have been widely reported in the news, with the most trending being its implication in the infamous money heist at the Vhembe Mutual Bank (VBS).
In addition to being named in a 2018 report by the Reserve Bank as having clocked R104-million from the now-defunct VBS, Auditor-General Tsakani Maluleke has also lashed the troubled agency with a disclaimer in her audit reports. A disclaimed opinion is the most adverse audit outcome as it effectively means there is no supporting documentation for the movement of money reported in its financial statements.
Moreover, Maluleke escalated the irregular financial management at the FDC to the Directorate for Priority Crime Investigation, nicknamed the Hawks, for investigation. It is against this backdrop of a sinking ship, compounded by the brutal impact of the Covid-19 pandemic on small businesses, that the appointment of the new board became the most important target for Mohale.
Mohale told the briefing that even when the FDC had hit rock bottom, the FSPG never hid itself from public accountability. “The Free State provincial government has never slept on the job; it has worked more harder when it comes to the FDC. We are a very honest government,” said the MEC.
The best brains for the job
Describing the day of the announcement of the new board as most exciting, Ntombela hailed the group of eight appointees as among the brightest young minds ever to be produced by the Free State.
Appointed approximately four months ago to take over from the former board that had been dissolved mid-2021, the fresh faces at the helm of the FDC are Dr David Mohale, Charlotte Khetha, Naledi Sithole, Zimkhitha Nhlapo, Thabang Motloi, Isaac March, Lucky Motsamai and ex-officio member, Thabo Lebelo, who is the current FDC chief executive officer (CEO).
Ntombela reminisced about the good old days of the FDC and challenged the new board to restore them.
“Once upon a time in the Free State, FDC was a tool we had to develop our province. It was very strong and very powerful. The FDC was a basket to be used effectively to change the lives of our people for better. Time has come, and an opportunity has presented itself again, to revive the FDC and make it what our people want it to be.
“We must make sure that the FDC returns to its former glory,” said a glimmering Ntombela, who went on to assure the new appointees that even though “it’s not going to be easy” to reroute the lost FDC to a prosperous path, the Free State exco was nevertheless confident that they are “the best people who will turn the FDC around”.
Again, she reminded the board appointees that the FDC remained the hope of the Free State youth, many of whom were poor and unemployed.
“All I can ask further is that let us move faster. Our children are suffering. Our youth are losing hope. Let’s move. Our economic development strategy must speak to the wishes of the masses,” she concluded.
All hands on deck
Chaired by Dr Mohale, whose governance profile includes serving in the Municipal Demarcation Board, the FDC board is not oblivious to the huge mountain it has to climb to renew public trust, strengthen governance and recover its multi-million rand debt.
Dr Mohale conceded that his team “inherited a challenging balance sheet”, and presented a number of necessary interventions aimed at resuscitating the FDC. Among others, he called for a synergy of energies across like-minded provincial and municipal institutions to avoid overlapping, the establishment of sub-committees to redistribute tasks and ensure efficiency, tightening governance systems and maintaining constant communications with the public.
According to Dr Mohale, the downfall of the once-mighty FDC has not been a doing only of incompetent management but also members of the public who dishonoured their loan repayment obligations, consequently paralysing the institution.
“The perception that government has got a bottomless purse is wrong. If you’ve been assisted before, you have advanced, even if you’re not in a position to pay 100% of the loan, do come, make arrangements, so that the board is able to generate income and help the other person,” pleaded the chairperson.
Though still new to their roles, the chairperson of the board said there had been some ice-breaker decisions to fast-track action. In the past, stated Dr Mohale could not “institute certain processes in order to raise revenue” because of how the entity’s governance systems were structured. This impediment, which often thrust the FDC in lawsuits, has been removed and the CEO is now empowered to knock on the doors of debtors.
Cautious not to over-promise too soon, considering that his team will only be in office for three years, Dr Mohale said they had “begun to identify low hanging fruits” that could be bagged within their tenure.
“Three years is too short a period to be moving mountains. We will solve issues that we can solve. The problems that can be solved in the next 36 months, we commit to solve them,” undertook the 36-year-old, who is also the director of Special Projects in the Office of the Vice-Chancellor and Principal at the Durban University of Technology.
Building sustainable businesses
For Destea MEC, Makalo Mohale, the success of the FDC and his department will not only be measured in the capital injected into businesses but also in the steps taken to ensure sustainability.
Answering a question by Sunday World on the need for capacity building and business mentorship for small, medium and micro enterprises (SMMEs), the MEC expressed concern that statistically many SMMEs died before even reaching their third year of operations.
“Part of the problems that we have encountered is that there has not been post-funding support. And I can indicate to everyone that at the level of the department, we have introduced business support, where we take businesses not only for a once-off training, but we have designed our programme to be between two and three years,” explained Mohale.
Furthermore, the MEC stated that contrary to the past when it could only be detected when funding beneficiaries submitted their reports that they had actually plundered the funds they received, there were now stricter control measures in place to hold businesses accountable and prevent wasteful expenditure.
The MEC revealed his department’s research-based approach to ensuring sustainable enterprises which focuses on technical support, saying, “We appreciate the dynamics of each and every sector. They are not easy, and [businesses] need expertise. Part of the failure of our people is the lack of industry knowledge.” As an example, Mohale cited agro-processing and the importance of having an in-depth understanding of how the entire industry works.
Agro-processing, according to the MEC, remains a crucial area of focus for the province.
“We have also as a department, together with the FDC, introduced among other programmes the incentive on manufacturing so as to give effect to this sector of Agro-Processing. Where we say: Free Staters, now the focus should be on producing. Consume what you produce.”
Despite the challenges faced by the ailing economic development corporation in South Africa’s second smallest province, the FDC’s new board chairperson still urged businesses to not stop sending funding applications, promising that his team will not rest until it had explored all legal and creative ideas to generate revenue.
The new youthful board is yet to have its much-needed strategic planning, after which more bold moves are expected to be taken to reclaim lost ground.
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