Update on Committee resolutions emanating from the oversight visits

Meeting report

SEFA presentation

Mr Mxolisi Matshamba, Chief Executive Officer (CEO), Small Enterprise Finance Agency (SEFA), said the presentation provided an update on progress made in the implementation of the recommendations the Committee made at its oversight visits in North West Province on the Spaza Shop Support Programme (SSSP), Intellimatch Financial Services (IFS), and the 5% interest rate on loans,.

(Please refer to the presentation document)

Discussion

Mr H Kruger (DA) sought clarity on how implementing the recommendations would benefit the SMMEs, especially the informal businesses.

Mr E Myeni (ANC) welcomed the report, but wanted to know whether the Department had a detailed profile of cooperatives and enterprises linked to the global market.

Ms N Muller (ANC) referred to the report that all clients in the North West who were selected for the oversight visit had received R3 500 between 2020 and 2021. She wanted SEFA to provide detailed information on why other clients did not receive the R7 000 top-up grant.

Mr H April (ANC) wanted to know what plans SEFA had that would provide opportunities to the vulnerable people in the North West and Northern Cape provinces, who lived in rural areas. He pointed to the impact of load shedding on the SMMEs. He wanted to know what SEFA planned to do about the SMMEs who could not service their loans due to their businesses being impacted by load-shedding.

Ms B Mathulelwa (EFF) expressed her delight at the implementation of the Small Enterprise Amendment Bill. She said that the Bill would address some of the Committee's concerns. She asked SEFA to provide a breakdown of some of the issues the Committee had raised during the oversight visits in the North West. She also asked SEFA to provide a report on all spaza shops that were given R3 000 instead of R10 000.

She wanted to know what had happened to the SEFA funds that were loaned to a farm that was not a local business, and whose owner could not be traced. She sought clarity on whether those funds had been recovered. She wanted the SEFA to provide a comprehensive list of all spaza shops by province, and the similarities they had with issues identified by the Committee in the North West province.  

Ms K Tlhomelang (ANC) was pleased with the progress made thus far in implementing the Committee's recommendations, but felt more needed to be done. She noted areas in the report that indicated where legal action had been taken, and that the recovery was based on each individual who had committed corruption. She expressed the view that the Committee should acknowledge the progress SEFA had made. All that was left was for SEFA to inform the Committee of the recovery plan, and to provide timelines for the finalisation of the matter of the approved business loan facility of R30 million to IFS, which was secured by a guarantee from Tautona Holdings. She wanted an explanation of what SEFA was going to do with people who were charged with misconduct.

She believed the only disadvantage was that the Committee was moving towards the end of the Sixth Parliament. If not, the Committee would want to get regular feedback on how far SEFA was in implementing the recommendations.

SEFA's response

Responding to Mr Kruger on how implementing the interventions would benefit the SMMEs and informal businesses, Mr Matshamba said that SEFA had seen the success of the micro-finance programme. He indicated that SEFA's intervention in the micro-finance programme had provided more than R60 000 in finance to rural women annually. This provided dignity to those women, as against the R350 grant, and gave them funding that had sustained their livelihoods. SEFA was beginning to see the impact of funding in the micro-finance space.

He referred to the new interventions that were put in place around the interest rates charged by intermediaries, where loan repayment terms interest rates had been fixed at 5%. He conceded that the oversight by the Committee had highlighted matters where SEFA had needed to make changes.

Regarding the SSSP beneficiaries who, during the oversight visit in the North West Province, were reported to have not yet received the R7 000 top-up grant, Mr Matshamba reported that all outstanding beneficiaries had been traced and had subsequently received their R7 000 additional grant through Nedbank. For those unaware of the additional funding, SEFA transferred those funds to Nedbank since they had a better footprint, and were more accessible to people in various parts of the country. The money was credited to their bank accounts because the bank had given them cards that they could use to procure goods and services from selected wholesalers.

Mr Matshamba also indicated that the challenge faced by the majority of these clients was that they changed their pay-as-you-go sim cards. This created a problem, in that when the bank sent notifications, such clients were no longer using those sim cards and could not receive those notifications. SEFA also tried to use emails, but the majority of clients had Gmail accounts because they had no resources to obtain personal email addresses. SEFA also noticed that some people have more than one email address. SEFA had had to advertise through the community radio station and local newspapers to alert people that their funds had been deposited in their bank accounts.

He indicated that the national figure of those who had spaza shops was 5 440, and only 58 applicants were yet to receive their grants. This amounted to a 99%disbursement rate. Efforts were ongoing to trace the remaining beneficiaries nationally. Funds for the untraceable applicants would be transferred to the new applicants, because SEFA could not spend two years tracing a grant applicant. That would deny those who would like to access funding. SEFA was closing the 58 applications at the end of March. The Small Enterprise Development Agency (SEDA) had already advertised the new programme they were doing together and that they would be processing new applications. 

In response to the question on how SEFA would assist people in rural areas, Mr Matshamba indicated that was covered in the response he gave on the intervention in the micro-finance, the Township and Rural Enterprise Programme (TREP), and the 5% interest rates they were providing to those end-users.

Regarding the SMMES that could not service their loans due to the impact of load-shedding on their businesses, he responded that SEFA was restructuring those loans. Some clients had been provided with generators so that they could be covered during load-shedding. SEFA had picked up that the cost of fuel was a disincentive to them to run those generators. SEFA was looking at interventions that would enable those SMMEs to sustain their businesses. One of the interventions was to restructure the debt and give them a longer repayment period so that the repayment amounts could be less until they were able to give them a guaranteed supply of energy.

In response to a question by Ms Mathulelwa on the number of beneficiaries nationally, he indicated that, as mentioned earlier, the number of beneficiaries was 5 400. SEFA would provide the Committee with the names and the identity numbers of these beneficiaries.

Mr Matshamba responded to Ms Tlhomelang’s question on the legal processes, and commented that SEFA had limited control once a matter went to court. However, it would provide the Committee with the court's judgment on the matter. He mentioned that SEFA had prioritised the recovery of the R30 million against IFS and Tautona, and they were therefore looking at attaching the assets of the implicated directors. SEFA had appealed to the Hawks to prioritise those cases.  

Mr Thembinkosi Bonakele, SEFA Board Chairperson, referred to the issue of spaza shops, and informed the Committee about the report they had produced when he was at the Competitions Commission on how the spaza shops could be empowered. He reported that the board had asked the management to come up with a comprehensive and sustainable spaza shop support programme. In addition, they wanted a product that would make local spaza shops competitive and sustainable against the foreign-owned working communities.

He indicated that SEFA did not want a once-off transaction with the spaza shops. Instead, they wanted the spaza shops to have an incentive to register with SEFA, because that would enable them to get sustainable support. He wanted each spaza shop to have a SEFA card that would enable them to have access to discounts that wholesalers would have funded. In addition, the board would like the spaza shops to be organised as a single buyer group. Once they were in the SEFA group, they would be assisted in bargaining and buying as a single group. The board was also looking at the spaza shops that had the same distribution centres that would be able to supply them.

Mr Bonakele agreed with Mr Mtshamba about the observation of the proliferation of fly-by-night intermediaries. He was of the view that the answer was not to prevent new intermediaries from coming in, because there were new intermediaries, mainly black, that were coming into the picture. He also referred to a discussion they had recently on how those intermediaries could be assisted without exposing them to corruption. He also suggested that there may be a need to create capacity within SEFA by establishing a unit specifically looking at supporting the intermediaries. That would help them to be sustainable.

He indicated that SEFA wanted to develop a package for those SMMEs that were globally connected. They had, however, observed that the available insurance products were expensive. He also touched on the fact that trade missions tended to target large incumbents, and there was not much thinking about incorporating SMMEs.

DSBD's input

Ms Thulisile Manzini, Director-General (DG), Department of Small Business Development (DSBD), assured the Committee that the Department would continuously monitor what was reported and ensure that all commitments were implemented.

On the issue of cooperatives and incentives for them to be exposed globally, she indicated that for the 2024/25 financial year, 200 SMMEs had been targeted to be exposed globally. Currently, 187 were already targeted, which was below 200. The Department would submit the list of those SMMEs and cooperatives to the Committee.

Further discussion

Ms Mathulelwa expressed unhappiness on the issue of intermediaries. She wanted to know if the Department could not establish an internal unit that would deal specifically with what the intermediaries were doing.  

The Chairperson acknowledged the importance of the role of the Committee through its interventions as a collective, and that through its recommendations, there had been some policy shifts in the Department. He said that generally, the Committee was happy with the progress made. He also noted the report on what had been done thus far in empowering spaza shops across the country, and welcomed the idea of the distribution centres. He also acknowledged the steps taken to recover money thus far, and reiterated the need for zero-tolerance on corruption. He said that the Committee would watch the progress of the microfinance programme, and welcomed the involvement of the Department in the 5% interest rate on loans provided to SMMEs. He expressed the need for South Africans to be encouraged to repay the loans. He expressed the view that the Committee wanted to ensure that all spaza shops were owned by South Africans.

First draft of the Committee's Legacy Report

Mr Sibusiso Gumede, Committee Content Adviser, briefed the Committee on its preliminary Legacy Report. He indicated that the current draft did not include the latest report which the Committee had just received from SEFA. He added that the only outstanding information that still needed to be incorporated in the report was the master attendance list of Members. He indicated that the Committee had done well overall, although some key deliverables had not been met.

Discussion

Mr Kruger welcomed the report and suggested an addition of the word ‘illegal immigrants.’ He also suggested that the report include concern about the absence of the Minister of Small Business Development during Committee meetings.

Mr J de Villiers (DA) welcomed the preliminary report. He suggested that Members should make submissions on the report. He endorsed the concern about the absence of the Minister in the Committee meetings. He suggested that the report should include an addition that during the Seventh Parliament, no executive bill should compete with the Committee bill.

Ms Mathulelwa appreciated the report as a true reflection of issues covered by the Committee during the Sixth Parliament. She commended the good work done by the Secretariat who drafted the preliminary report. She supported the addition of the word ‘illegal immigrants.’

The Chairperson commented that women’s entrepreneurial activities were not much covered by the Committee. He supported the idea to ensure the coordination of small business development. He agreed that written submissions on the preliminary report should be submitted by the close of business on Friday, 22 March.

Adoption of minutes

The Committee adopted the draft minutes of 28 February and 6 March.

The meeting was adjourned.