Department of Small Business Development on its Annual Performance Plan, with Minister

Meeting report

Opening remarks by Minister of Small Business Development

Minister Lindiwe Zulu stated that the strength of the Department of Small Business Development (DSBD) depended upon there being a coordinated approach between the DSBD, provinces and local government to support small and medium enterprises. She was beginning to see a shift in thinking in her colleagues in the Executive on understanding small and medium enterprises. It all depended on the support that these enterprises received. The issue was about how much of the budget of government departments was to be spent on small and medium enterprises. The DSBD needed to push more for the support of small and medium enterprises. She pointed out that there were already good policies in place all that was needed was implementation. There was a need to respond to the needs of small and medium enterprises. In many countries the backbone of efforts in dealing with poverty and unemployment depended on the support that was given to small and medium enterprises.

During November 2016 the Department of Monitoring and Evaluation (DPME) and National Treasury had called for a change in approach of the DSBD. The DSBD had inherited programmes from the Department of Trade and Industry (DTI). The DSBD had revived some of the programmes and had discarded others. The DPME and National Treasury asked the DSBD to change its structure. As a consequence the DSBD reviewed its structure. Amongst the things that the DSBD was trying to do was to look at decisions taken by government. For example on the 30% procurement issue the DSBD had to ask the question what this meant for small business at local level. The DSBD came to the conclusion that information needed to be packaged for small businesses in order for them to take advantage of opportunities that were out there. How were Small, Medium and Micro Enterprises (SMMEs) going to access the 30% procurement opportunity? There was definitely a department like the DSBD needed to focus on support to SMMEs as well as the DSBD’s entities like the Small Enterprise Finance Agency (SEFA) and the Small Enterprise Development Agency (SEDA) that provided support. 

Briefing by the Department of Small Business Development (DSBD) on its 2017/18 Annual Performance Plan (APP)

The delegation comprised of Ms Edith Vries Director General: DSBD, Ms Brigette Petersen Chief Director: Corporate Services, DSBD, Ms Nosipho Khonkwane Executive Manager: SEDA and Mr Elias Maabane Senior Manager: SEDA.

Ms Vries kicked off the briefing. The DSBD had in the past planned its efforts separately from that of efforts of the SEDA and the SEFA. However from 2017 planning efforts were integrated and there was a collective vision between the DSBD and its implementing entities ie SEDA and SEFA. The three programmes of the DSBD were Administration, SMMEs & Cooperatives: Policy and Research and lastly SMMEs & Cooperatives: Programme Design and Support. Each of the Programmes was broken down into sub-programmes. For the 2017/18 APP the existing Programme and sub-programme structure would be retained but would be reviewed to better align the revised strategic posture of the DSBD during 2017/18 and to fully inform the 2018/19 APP. National Treasury and the DPME recommended a major focus for Programme 3 on Agency Oversight, Monitoring and Evaluation and on supporting intergovernmental relations. Provinces and municipalities also needed to be supported with implementation. The APP data presented reflected the new focus. For 2017/18 a total of R1.4bn had been allocated to the DSBD. Programme 3 used up most of the DSBD’s budget.

Programme 1: Administration

With the strategic objective being to ensure compliance and good governance the planned annual target for 2017/18 was to have an unqualified audit outcome for both financial and non-financial performance data. Another planned annual target 2017/18 was to have 100% payment of eligible creditors processed within 30 days. On the strategic objective to strengthen human resource capability and having a high performing organisation the planned annual targets for 2017/18 was to have 50% females at Senior Management Service (SMS) level, 2% disabled persons employed and to keep its vacancy rate under 10%. For 2017/18 the intention was also to have an employee satisfaction survey conducted.

Programme 2: SMMEs & Cooperatives: Policy and Research

With the strategic objective to reduce regulatory burdens and to have a conducive legislative and policy environment for SMMEs and cooperatives one of the planned annual targets for 2017/18 was to have eight municipalities assisted on the rollout of the SMMEs and Cooperatives Red Tape Reduction Programme. Further targets included to have four national and five local  business processes and procedures analysed and redesigned as well as to have the National Small Business Amendment Bill developed and submitted to the Minister of Small Business and Development for approval. With the strategic objective of having a comprehensive research agenda on key areas of support for SMMEs and cooperatives a planned annual target for 2017/18 was to have a National Incubation Policy Framework submitted to its Executive Committee (EXCO) for approval. Further annual targets were to have one differentiated plan for a district rural municipality developed and to have one regional pilot profile produced. The Committee was informed that 50% of the DSBD’s targets dealt with research.

Programme 3: SMMEs & Cooperatives: Programme Design and Support

A strategic objective was to have an integrated approach to planning, monitoring and evaluation of the SMMEs and cooperatives sector so as to have informed policy decision making. Bearing this in mind the planned annual targets for 2017/18 was to have two Director General Committees on government support to the 9 Point Plan initiatives convened per annum to report on other departments’ non-financial and financial support to SMMEs and cooperatives. There were also plans to have four stakeholder forums and four intergovernmental relations forums conducted. With the strategic objective of having oversight and coordination of the design and implementation of targeted financial support programmes to support new and existing SMMEs and cooperatives the planned annual targets for 2017/18 were to have six informal business infrastructure partnership agreements secured as well as supporting 641 black SMMEs through the Black Business Supplier Development Programme (BBSDP). 

The Committee was provided with a provincial breakdown on delivery in terms of the BBSDP for 2016/17. Figures were provided on approvals, grant amounts as well as on permanent and temporary jobs created.

From the figures it seemed as though the highest number of services was provided to the Gauteng Province.

Members were provided with detail on the efforts of the SEFA in terms of its products, targeted ownership groups and sectoral involvement. Amongst its products were direct loans, business support and credit guarantees. Some of its targeted ownership groups were women, youth, township enterprises

and rural communities. The sectors it was involved in included manufacturing, agriculture, construction and mining. Figures were provided on provincial financial support for 2016/17. From a monetary perspective the highest support amounts were towards the Gauteng and Western Cape Provinces. The SEFA had in 2016 received R406m from the fiscus. For 2017 the amount had been reduced to R213m. The budget amount to be received by the SEFA for 2018 was R223m.

Ms Khonkwane continued with detail on the SEDA’s efforts. For survivalist and micro enterprises some of the SEDA’s service offerings included business start up training, business planning and business registrations. For small and medium enterprises service offerings included support for access to local markets, access to export opportunities, access to technology and business mentoring. For collectively owned enterprises there was support through cooperatives development and registration, access to local markets as well as some of the aforementioned products and services. For disabled persons the SEDA had programmes with DeafSA and the South African National Council for the Blind (SANCB) as well as providing all its relevant products and services. The Committee was given insight into the SEDA’s delivery network amongst provinces. The Western Cape seemed to have the highest concentration of the SEDA’s branches with the distribution amongst the rest of the provinces being more or less on par with each other. The total revenue budget for the SEDA for 2017/18 was R796.19m whilst the total expenditure budget also amounted to R796.19m.

Concluding remarks by Minister of Small Business Development

Minister Zulu concluded the briefing by speaking on the way forward. The DSBD intended to become more relevant to the felt needs of the sector. It would also demonstrate greater coherence with the portfolio and improve on service delivery. The DSBD would monitor and report on the MPAT public spend and on efforts in the SMME and cooperatives sector. There would furthermore be strengthened governance oversight over entities ie the SEDA and the SEFA as well as better collaboration with the three spheres of government.

Discussion

The Chairperson asked why the SEFA had not attended the meeting. The Committee would have to meet with the SEFA. He thanked the SEDA for attending the meeting. He noted that it may go a long way if Minister Zulu could make a commitment to provide the Committee with a list of projects on SMMEs and cooperatives in provinces for a period of six months as well as stating what the statuses of those projects were.

Minister Zulu responded that the SEFA had a board meeting that had taken place the same time as the present meeting. The SEFA was supposed to have sent a representative to attend the meeting. She noted that it was important to state that the DSBD should be able to answer questions on both the SEFA and the SEDA because of the integration that had taken place. On provincial support to SMMEs and cooperatives the DSBD could make a presentation. The Committee wished to see the impact of the DSBD’s work. The DSBD had decided to strengthen research and monitoring and evaluation.

Ms Vries agreed that the DSBD would provide the information that was requested. She confirmed that the SEFA had a board meeting. The Committee’s meeting date with the DSBD had changed to the present one but the SEFA board meeting had already been scheduled and could not be changed. The impact report would be prepared for the Committee. She asked whether there was there anything specific that the Committee wished to have included in the impact report.

The Chairperson said that the Committee needed data on projects/programmes on SMMEs in provinces for the last six months. The report should speak to the names of beneficiaries, where beneficiaries were located and what type of support was being provided. The information should be furnished to the Committee before its next meeting with the DSBD.

Mr S Mthimunye (ANC, Mpumalanga) was of the view that the war on triple challenges could be won or lost by the DSBD and its entities. He urged the DSBD to look at the Malaysian model on small business development as their model worked very well. The bulk of jobs needed to be created in this sector. Every government department should play its part in assisting small business.

Minister Zulu on addressing triple challenges considered the DSBD to be one of the most important departments. The DSBD did interact with informal business. She emphasised that strengthening of local government needed to take place. The regulatory environment also needed to be conducive. She stated that the DSBD was aware of the Malaysian model on small business. The DSBD was a new department but it did look at international best practise. The SEDA and the SEFA had bilaterals with other countries. The DSBD had transversal agreements with other government departments. It was therefore necessary for implementation to be strengthened. It was also about how the DSBD monitored itself. The challenge that the DSBD faced was that departments functioned in silos. The DSBD suggested a sectoral approach in terms of SMMEs and also that there be an inter-departmental approach. She said that there were plans to spend R9bn at Saldanha in the Western Cape. The DSBD brought Transnet, the Department of Public Enterprises and other departments to the table and asked what the benefits for SMMEs were at Saldanha. She said that departments were not responsible for SMMEs and hence did not indulge them. It was the responsibility of the DSBD to check if SMMEs were where opportunities were. The problem at Saldanha was that SMMEs could not take up opportunities because they lacked capacity. SMMEs were being frustrated. Big businesses moved in and took advantage. The 30% procurement requirement would assist SMMEs to gain something tangible. To address triple challenges small and medium enterprises as well as cooperatives were the way to go. SMMEs were big contributors to Gross Domestic Product. The DSBD also partnered with countries like the Netherlands to assist. The DSBD also used technology to advance the SMME working environment. There were thus positive and negative elements to consider.

The Chairperson said that further interaction with the DSBD was needed. Committee researchers would also do some research on how small business development could go forward. There was a great deal of factual statistical data that the Committee needed to get. A follow up meeting with the DSBD was needed as there were many issues that needed discussing.   

Mr L Magwebu (DA, Eastern Cape) was aware of the SEDA’s offices in the Eastern Cape but not many locals were aware of it. He felt that more needed to be done and that advocacy efforts were weak. People needed to know what was on offer. On coherence between stakeholders there was a need to work with speed. He asked whether the DSBD had a database of all the work that it had done. Such a database could speak to efforts of the SEDA and the SEFA on assisting people. The DSBD was a critical department and the Committee needed to know what its deliverables were. Members needed to have information on what the DSBD and its entities had done for a particular period. The database conversely could also shed light on failures that had taken place.

Minister Zulu said that she had instructed the DSBD to deploy mobile units to rural areas. The support of rural people was of utmost importance. The mobile unit should have persons from the SEDA, the SEFA, the DSBD and even from the South African Revenue Services (SARS) on board. A coordinated approach was needed to support small and medium enterprises. The DSBD was improving its research capability and she agreed that monitoring and evaluation was important. The DSBD worked had in hand with academic institutions as they were sometimes better equipped than the DSBD. The DSBD worked with the International Labour Organisation (ILO). There was ample amount of policies in place all that was needed was implementation. 

Ms M Dikgale (ANC, Limpopo) was interested to know what projects the SEDA had in the Limpopo Province. She was concerned that most of the funding would go to projects in the Gauteng, Western Cape and KwaZulu-Natal Provinces.

Minister Zulu said that members should provide the DSBD with information specific to their provinces so that the DSBD could do follow ups. The entire value chain needed to be taken into consideration when it came to small business.

Mr M Chabangu (EFF, Free State) asked whether there was monitoring and evaluation of projects at municipal level. He pointed out that in QuaQua there were industrial areas that had run down and that people in surrounding areas were suffering. On the Black Business Supplier Development Programme he asked why approvals for the Northern Cape and Free State Provinces were so low compared to other provinces.

Minister Zulu said that at QuaQua she had seen the dilapidated factories. The issue had been raised with the DTI and progress was being made. The DSBD tried to bring jobs closer to people. There were old industrial structures all over SA and money needed to be pumped into them. Greater investment needed to take place at local level. The DSBD was working with traditional leaders in the North West and Mpumalanga Provinces to revive old industrial structures. She pointed out that on the issue of municipalities there was one government and a coordinated approach was needed. The DSBD had attended the Local Economic Development (LED) Summit. Budgets at local level were unfortunately miserable. More resources needed to be allocated to local level.

Ms Vries said that the DSBD had also observed that approval figures for the Northern Cape and Free State Provinces were low. The DSBD did put interventions in place. Perhaps a LED Summit was needed in these provinces. Figures reflected those who had approached the DSBD for service.

The Acting Chairperson said that the briefing had spoken about impairments. He was concerned about the impairments being of high value. He asked what action the DSBD was taking to reduce impairments to prevent matters from reaching crisis level. The Committee appreciated that the DSBD had transversal agreements in place to better intergovernmental relations. He was aware that members wished to engage more with the DSBD but unfortunately time did not allow for it. He said that the DSBD could respond to his question on impairments in writing. The Committee also expected a written explanation from the SEFA why it had not attended the meeting.

The Minister and the DSBD was released from the meeting as the Committee wished to deal with administrative matters.

The Committee engaged briefly on how best to deal with time constraints during meetings.

The Acting Chairperson asked if members wished to start its meetings at 9:30am rather than 10:00am.

Mr Magwebu responded that it was not necessary to start meetings at 9:30am as members had other work to do. What he did suggest was that if members read briefing documents before the meetings then when the meeting started members could go directly into asking questions.

The Acting Chairperson said that it would be difficult to go directly to questions as not all members read the briefing documents beforehand.

Mr Magwebu alternatively suggested that each member be limited to five minutes within which to ask questions.

The Acting Chairperson said that the time allocation limit was a good suggestion. How much time did members feel was appropriate per member?

Mr B Nthebe (ANC, North West) pointed out that presenters themselves needed to be very specific. They did not have to waste time. As matters stood not all members were able to ask questions in the present meeting.

The Committee Content Adviser Mr Sishuba Ludumo suggested that when the Committee invited presenters to a meeting they should be informed that there was a 30 minute limit within which to do presentations.

Mr J Londt (DA, Western Cape) suggested that the Committee use video conferencing facilities.

The Acting Chairperson said that he had brought up video conferencing with the Chairperson of the National Council of Provinces (NCOP) but unfortunately Parliament did not have the facilities for it.

The meeting was adjourned.