SA Women's Entrepreneur's Network (SAWEN); Isivande Women's Fund: briefing by Deputy Minister

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Trade and Industry

25 July 2012
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

SA Women’s Entrepreneur’s Network (SAWEN)
The Deputy Minister of Trade and Industry said SAWEN had three offices, in Gauteng, Western Cape and KwaZulu Natal and was not represented in all nine provinces because of limited resources. She pointed out that the youth had a specific, fully fledged agency in the National Youth Development Agency (NYDA) and women needed a similar vehicle. She said the post of Chief Director responsible for SAWEN was still vacant after the transfer of the incumbent to Trade and Investment SA.

The Department said that the Industrial Development Corporation (IDC) managed the Isivande Fund on behalf of the Department. 58% of small businesses were owned by women while only 43% had access to financial services, the rest had to rely on non-banking services like relatives and stokvels and therefore dedicated programmes were needed to assist women. The Committee’s support was requested to increase the budget of SAWEN and Isivande. SAWEN targeted women owned and operated income generating activities and Small, Medium and Micro Enterprises (SMME) and its membership totalled 1101. It was hosting the first SAWEN Awards evening where prizes totalling R1m would be awarded to 30 entrepreneurs. The Small Enterprise Development Agency (SEDA) would take over the running of SAWEN until 2015, when the latter’s current contract with Khula ended. SAWEN’s risks were that it did not have a CEO, that the funding was inadequate and it needed its own back office. The budget allocation was R7.9m of which 25% was used for administration. The SEDA management fee was 5%. It proposed an additional budget of R5m to cover two extra provincial offices and staff including the post of CEO.

Members said it was a concern that SAWEN was in existence for 10 years, yet it was unable to fulfil its mission because of a lack of funding. Members felt that the administration costs were too high and that SAWEN should reduce these costs which could be reallocated to its core functions. Members said SAWEN needed to do something to improve its success. Members said the number of active women members appeared thin, considering it had been in existence for ten years. Members asked what the recruitment procedure was. Members were disturbed to hear that there was still legislation which was a stumbling block to women’s interests. Could it be identified? Members said the low membership numbers were not assisting SAWEN’s funding request as it appeared not to be productive enough. Members asked how it intended increasing membership. Members asked if the SEDA 5% payment was profit based and questioned the need to make this payment. Why did the Northern Cape have a big membership total?

Isivande Women’s Fund
The Deputy Minister said women struggled to get loans approved and therefore needed a dedicated Fund. The Department had approached the IDC to assist, as the Department did not have the capacity to operate such a facility. It had battled until 2009 to get a manager.

The Department said the Fund arose out of an initiative of the Deputy Minister and the Deputy President. The IDC operated the business but its stringent criteria were not suitable for SMMEs. A fund manager was employed to operate outside of the IDC structures. However the Fund had still rejected many applications. The Department was working to ensure that the Fund remained topped up and wanted the criteria to be sufficient to ensure that the applicants were serious about their business.
 
The IDC said the Fund had an initial capital of R50m and now stood at R65m of which R45m was capital for commitments. Challenges faced by the Fund were its marketing strategy, the need for simplified legal agreements, quicker turnaround times and the need for a separate investment committee for the Fund.

Members asked if the Fund had entities in the townships. Members said the Department was too casual dealing with women’s empowerment. If the fund manager was not suitable then the Department should consider developing in-house capacity. What was the turnaround time for applications? Members asked if a large amount of people were applying to the fund for loans. Members said it was a depressing presentation of money not being spent. Members asked if banks had been approached to manage the Fund as part of their social investment program.

Meeting report

SA Women’s Entrepreneur’s Network (SAWEN)
Ms Elizabeth Thabethe, Deputy Minister of Trade and Industry, said the post of Chief Director responsible for SAWEN was still vacant after the transfer of the incumbent to Trade and Investment SA. SAWEN had three offices, in Gauteng, Western Cape and KwaZulu Natal. It was not represented in all nine provinces because of the limited amount of resources. She said the youth had a specific fully fledged agency in NYDA and women needed a similar vehicle.

Mr Sipho Zikode, Deputy Director-General, said that the Industrial Development Corporation (IDC) managed the Isivande Fund on behalf of the Department. 58% of small businesses were owned by women while only 43% had access to financial services, the rest had to rely on non-banking services like relatives and stokvels and therefore dedicated programmes were needed to assist women. The Committee’s support was requested to increase the budget of SAWEN and Isivande.

Ms Ruth Masokoane, Acting CEO of SAWEN, said it had been launched in 2002 and registered as a section 21 company in 2004 following the Beijing Action Plan in which SA subscribed to women’s economic empowerment and women’s advocacy. SAWEN targeted women owned and operated income generating activities and Small, Medium and Micro Enterprises (SMME).

Membership totalled 1101. It was hosting the first SAWEN Awards evening where prizes totalling R1m would be awarded to 30 entrepreneurs. SAWEN assisted women to get a tax clearance when doing international trade fairs. It wanted to expand to the other six provinces and institute an advice desk. Extra funding and staff would be required for it to fulfil its mandate to monitor women’s empowerment. The Small Enterprise Development Agency (SEDA) would take over the running of SAWEN until 2015 when the latter’s current contract with Khula ended. SAWEN’s risks were that it did not have a CEO, that the funding was inadequate and it needed its own back office.

The budget allocation was R7.9m of which 25% was for administration. The SEDA management fee was 5%. It proposed an additional budget of R5m to cover two extra provincial offices and staff including the post of CEO.

Discussion
Mr X Mabasa (ANC) asked if co-operatives were less appreciated by SAWEN.

Mr G Selau (ANC) said it was a concern that SAWEN was in existence for 10 years, yet it was unable to fulfill its mission because of a lack of funding.

Mr G Hill-Lewis (DA) felt that the administration costs were too high and that SAWEN should reduce these costs which could be reallocated to its core functions.

Mr G McKintosh (COPE) said SAWEN needed to do something to improve its success. Did SAWEN co-operate with Shoprite-Checkers in its Women of the Year awards?

Mr N Gcwabaza (ANC) said the number of active women members appeared thin, considering it had been in existence for ten years.
 
Mr B Radebe (ANC) asked what the recruitment procedure was. He was disturbed to hear that there was still legislation which was a stumbling block to women’s interest. Could it be identified?

Ms Masokoane said that initially it had been a programme within the Gender Unit after which it became a project within the Department and had only been relaunched in 2011, starting with no membership.

Regarding co-operatives, she said that SAWEN was in the process of repositioning itself after a two year hiatus.

Regarding the Shoprite awards, she said some ladies had participated in it.

She said that SAWEN was a non sectoral organisation. It wanted to categorise members according to their needs but many members had more than one business.

She said the membership numbers would be addressed but the small budget would have an impact.

She said the budget was spent on a leveraged basis.

Regarding recruitment policies, she said that it piggy backed on the Department’s outreach programme.

Mr C Huang (COPE) said the low membership numbers were not assisting SAWEN’s funding request as it appeared not to be productive enough.

Mr Selau asked how it intended increasing membership. Where was the head office situated?

Ms Masokoane said it had not been able to monitor legislation in the procurement spending of government budgets.

She was confident that there would be a significant increase in the membership total.

The national office shared office space with the Gauteng Province in Braamfontein and co-ordinated the activities of the other six provinces.

Mr Zikode said that the 30 day payment cycle was still a challenge to women entrepreneurs and he had written to heads of departments to inform them of that.

Ms Thabethe said SAWEN was open to co-operatives as individual members

The Chairperson asked if the SEDA 5% payment was profit based and questioned the need to make this payment. She wanted to know why the Northern Cape had a big membership total.

Ms Masokoane said the Northern Cape membership total was because of the strengthening of the provincial executive. Networking costs were expensive and therefore there was an urban bias in SAWEN's work. She said the management fees had been 10% with Khula and should, in fact, be pro bono.

Isivande Women’s Fund
Deputy Minister Thabethe said women struggled to get loans approved and therefore needed a dedicated Fund. The Department had approached the IDC to assist, as the Department did not have the capacity to operate such a facility. It had battled until 2009 to get a manager.

Mr Zikode said the Fund arose out of an initiative of the Deputy Minister and the Deputy President. The IDC operated the business but it had assessed loans with criteria too stringent for SMMEs, resulting in most applications being rejected. It decided therefore to employ someone through the IDC to operate outside of the IDC structures. The Fund Manager would administer the project targeting rural and peri urban areas. However the Fund Manager they had employed, had wanted to ensure that the Fund remained sustainable and also rejected many applications. The Department was working to ensure that the Fund remained topped up and wanted the criteria to be sufficient to ensure that the applicants were serious about their business.
 
Ms Meryl Mamathuba, IDC's Head of Development Finance, said the Fund had an initial capital of R50m and now stood at R65m of which R45m was capital for commitments. Challenges faced by the Fund were its marketing strategy, the need for simplified legal agreements, quicker turnaround times and the need for a separate investment committee for the Fund.

Discussion
Mr Mabasa asked if the Fund had entities in the townships.

Mr Radebe said the Department was too casual dealing with women’s empowerment. If the Fund Manager was not suitable then the Department should consider developing in-house capacity. What was the turnaround time for applications?
 
Mr Huang asked if a large number of people were applying to the Fund for loans.

Mr McKintosh said it was a depressing presentation of money not being spent. He asked if banks had been approached to manage the Fund as part of their social investment program.

Ms Mamathuba that Gauteng was not a problem as far as the townships were concerned but the other provinces posed a challenge.

Regarding the Fund Manager, she said that capacity development was the solution, as the commercial banks were not suitable because it cost too much to use them. The Fund needed a manager versed in microfinance. She hoped that with the introduction of
Small Enterprise Finance Agency (SEFA), it would take it over.

She said turnaround times were longer than with banks as the Fund had to assist the applicants in the application procedure. It aimed to do a larger portion of loans for smaller amounts. The interest rate should be reviewed


The meeting was adjourned.

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