Support to SMMEs and cooperatives: South African National Apex Tertiary Co-operative briefing

Small Business Development

27 August 2014
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The South African National Apex Tertiary Co-operative (SANACO) appeared before the Portfolio Committee on Small Business Development to bring it up to date on what it stands for, the work it is doing, its challenges and successes.

In her introductory remarks, the Chairperson said the main purpose of the session was to understand the nature of structures representing SMMEs and co-ops in order to enable the Department of Small Business Development to carry out its mandate.  It was important to know the services these structures have been offering and the support system the government had provided them over the years. The Committee would also like to know what these structures would like to see happening, as this would help Parliament to introduce new policies and amend the existing ones.  Input from these structures would have an influence on budget allocation and laws governing the SMMEs and co-operatives, because the government’s main focus now was on socio-economic development.   Work done previously would not be degraded, but an enabling environment should be provided so that these structures continued to create jobs and participate in the economy.

SANACO said the organisation was focusing its energies on increasing non-financial support services to co-operatives, especially those working with the Department and other stakeholders, and to increase the demand for the products and services of co-operatives, which could be achieved if government departments procured from them.   Another activity they were pursuing was co-operative education and training. This would ensure proper and qualitative employee training in the development of co-operatives.

Members commented that the presentation lacked detailed information.  They wanted to know if SANACO had a skills development plan, and enquired about the kind of cooperatives SANACO was targeting.  They wanted clarity on the difference between a youth co-operative and normal ones.  They asked if SANACO had a relationship with the Department of Trade and Industry, and what the organisation meant by “non-financial support.”

The National African Federated Chamber of Commerce (NAFCOC) did not present because of time constraints.   Members also debated the implications of inviting the different factions of NAFCOC to come and present to the Committee.  It was agreed that the factions should not be invited until the Committee had been advised by the legal unit of Parliament on the court order received by NAFCOC.

Meeting report

Briefing by South African National Apex Tertiary Co-operative (SANACO)
Mr Diteko Moreotsenye, General Manager: SANACO, introduced the organisation to the Committee as an autonomous association of secondary and tertiary cooperatives, united voluntarily to serve the socio-economic interests and aspirations of all co-operatives in the country. Its main objective was to advance and empower all member co-operatives and their businesses and to engage and lobby all organs of state, the private sector and stakeholders, on behalf of co-operatives.

SANACO intended to increase non-financial support services for co-operatives by working with various departments of state and other stakeholders, and to increase the demand for co-operative products and services by engaging government departments to procure from the co-operatives. SANACO would also like to see improvements in the sustainability of co-operatives by providing mentorship and monitoring them, and making sure there was an increase in financial support services to co-operatives, such as loans and grants.

SANACO has five key operational activities. First, it wants to see representation of the interests of co-operatives. This would be done through lobbying and advocacy, by having regular meeting with the government and sharing information on current developments within the co-operatives’ movement. Secondly, compliance is focused on auditing. This is carried out through financial statements and in all areas of the business, with the aim of supporting co-operatives.  Co-operatives in the foundation phase would also be audited.  Thirdly, it places emphasis on co-operative education and training. This is to ensure that proper co-operative training and education institutions are accredited.  From a human resource point of view, it would also ensure proper and qualitative employee training for the development of co-operatives. 

Fourthly, SANACO provides consulting services. It wants to ensure the provision of legal advice to co-operatives, to see to it that they are tax compliant, to create a platform for co-operatives to maintain constant interaction and co-operation, and to provide individual consulting with co-operatives.
Lastly, it looks at support for co-operatives. Co-operatives are allowed to exchange views and ideas on strategic challenges which face each of the co-operative sectors.  Regular briefings on new regulations affecting the development of co-operatives are provided, and support is provided to co-operatives that are in the foundation phase.

Among its achievements, SANACO boasts of having hosted a co-operative international event; establishing women and youth co-operative structures; increasing awareness about the co-operative concept; signing partnership agreements with government departments and international organisations; and making funding available to co-operatives hampered by challenges to accessing finance.

Mr Moreotsenye concluded that if all co-operatives in South Africa could plan strategically and back their plans with business and operational details, they would transform the economy of the country tremendously and communities would develop in many different ways.

Mr R Chance (DA) commented that the presentation was short on numbers.  For example, it said nothing about the number of co-operatives in the country.  He wanted to know how SANACO was sustaining itself and if it had a relationship with the Department of Trade and Industry (dti).

Mr Lawrence Bale, President of SANACO, replied that SANACO did have a relationship with dti, but that it had come to an end this year. The dti had been providing funding to the tune of R3,5m yearly through the Small Enterprise Development Agency (SEDA).   SANACO was sustaining itself through co-operatives paying an affiliation fee of R500 per annum.  With regard to statistics, he indicated there were ten secondary co-operatives affiliated to SANACO, and other information could be found in the website of the organisation.

The Chairperson intervened to say that SANACO had to provide legislators with figures, and not refer them to a website.

Mr H Kruger (DA) enquired if SANACO could provide details of a skills development plan.  He asked what they meant when they said they wanted to increase non-financial support.

On the issue of a skills development plan, Mr Bale stated co-operatives, as part of training, were linked to markets and taken to exhibitions. SANACO had already trained 105 learners through the Water & Energy Sector Education and Training Authority (SETA).  650 members of co-operatives had been trained and would be linked to municipalities.   Most of the people trained were from rural areas, and that figure had risen to 6 000.   SANACO planned to have a relationship with SETAs in order to train all co-operatives in South Africa at all levels. They had drafted a skills development plan which would be discussed in the strategic plan of the organisation this year.  Regarding non-financial support, he said they were referring to training by, and involvement of, the private sector to help co-operatives, and that government departments should procure from co-operatives.

Mr T Ramakhoase (ANC) asked about the kind of co-operatives SANACO was targeting, and if it had set targets for this year.

Mr Bale indicated they were targeting primary co-operatives.   Their target for the next five years was to increase multi-sectoral membership by at least 20.

Mr B Mkongi (ANC) wanted clarity on the difference between youth co-operatives and normal ones. He also asked about the influence of SANACO in rural areas.

Mr Bale said youth co-operatives focused on information technology (IT), as that was what the young were interested in.   With regard to influence in rural areas, he maintained that structures such as primary and secondary co-operatives were in place to focus on rural areas. These structures were at provincial and local levels.

The Chairperson commented that it was important for the Committee to understand the vision of SANACO, so that the Department could understand what these structures were about.  SANACO was not giving the Committee full information about what it was doing and providing figures that were detailing the successes and failures of co-operatives.   It was clear SANACO did not have a skills development plan, because the draft was still to be discussed later in the year.  SANACO appeared to be both a co-operative structure and a co-operative council.

Mr Bale explained that SANACO was registered as a co-operative, but they also did lobbying on behalf of co-operatives in every geographical area.

Ms Pumla Ncaphayi, Acting Director General: Department of Small Business Development, stated that SANACO had been configured before the amendment of certain Acts, and that was why it was appearing like this.

Mr Mkongi pointed out that while SANACO really needed assistance, it would be difficult for them to get it, as there were many areas that were unclear to the Committee.   He suggested the Committee to engage with SANACO at another time.

The Committee decided not to allow National African Federated Chamber of Commerce (NAFCOC) to present because of time constraints.

Mr Chance commented that the Committee had overloaded its agenda, and it was unfair for NAFCOC to have been invited to come and present. He suggested the Committee should meet regularly and invite one entity per session.

Chairperson agreed, saying that instead of meeting twice a week, the Committee could also use Fridays. She then suggested NAFCOC to come on 3 November.

A member from NAFCOC accepted the postponement, but indicated that the suggested date not suitable for them because they had an executive meeting, and a court order which they needed to address.

Mr Chance suggested there must be different presentations from the different factions of NAFCOC, because some had confidential matters that must not be heard by others.

Mr S Mncwabe (NFP) stated that NAFCOC should not be invited until the court case is finalised. Both factions should not be invited.

Ms Ncaphayi indicated that both factions of NAFCOC should be invited to engage with the Committee.

Chairperson said it was not a question of who was legitimate. The Committee wanted to know and hear what NAFCOC represented and what the organisation had been doing over the years.

Mr Chance stated the Committee was dealing with a two-headed animal -- but it did not know which mouth to feed. The Committee must not disregard the court order.

Mr X Mabasa (ANC) proposed that the Committee, through the Managerial Committee, should consult the legal division of Parliament to look into the matter of the court order.

Mr Ramakhoase supported the Chairperson, and suggested it was important the Committee received information from both NAFCOC factions.

Mr T Mulaudzi (EFF) agreed with Mr Mabasa, saying the Committee needed to know the details of the court order.

Ms N November (ANC) suggested the two factions should not to be invited until the Committee had been given full advice by the legal unit of Parliament on the steps to be taken.

The Chairperson agreed with Ms November.

The meeting was adjourned.


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