SAWEN on objectives and programmes, Industrial Development Corporation briefing on Isivande Women’s Fund, in presence of Minister and Deputy Minister

Small Business Development

12 May 2015
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

The meeting was attended by both the Minister and Deputy Minister of Small Business Development. The South African Women Entrepreneurs Network (SAWEN) outlined its history and detailed the challenges facing women entrepreneurs. SAWEN had been launched in 2002, and registered as a Section 21 Company in 2004, with its fund manager at that time being Khula, later SEFA, and it ran from 2005 to 2010, when it faced uncertainty and closed. It was re-launched in 2011, and its funds were currently managed by Small Enterprise Development Agency (SEDA). Its objectives were to provide platforms for women entrepreneurs for access to business opportunities; to facilitate access to business resources, information and opportunities for women entrepreneurs; to provide a national vehicle to address the barriers faced by women; to lobby government and other stakeholders on barriers; to align with similar organisations to better leverage opportunities; and to profile, recognise and affirm women entrepreneurs. Its target market was women who were engaged in informal business but who wanted to grow these businesses to more formal entities, as well as cooperatives and individuals who needed help in starting and running their business. The criteria were that they must be self-employed and their companies registered. Its organisational challenges included its limited budget, inadequate organisational capacity, stagnant membership, relationships with the Gender and Women Empowerment Units and fund management. It was noted that Board members volunteered their time.

Members questioned why organisational challenges were being raised. They asked if SAWEN had many any attempt to raise own funds. A major criticism was the lack of alignment of strategic plans of SAWEN with the Department of Small Business Development (DSBD). It was felt that there was lack of strong leadership and the fact that it had never done a self-evaluation was problematic, as also the fact that it had not pushed strongly to be included in other arrangements for uplifting women under the Beijing Platform for Action, and was not vocal enough in addressing such issues as widows forced by families to stay in mourning, child-headed households, sex workers, street vendors and burial societies. The Chairperson said that the slogans ascribed to programmes did not clearly explain what the programmes were about and were unlikely to appeal to potential members to build the brand. Members asked whether it had investigated sharing offices, how it publicised its activities, whether there were partnerships for training, and how it related to the Department of Women. One Member made a comment about ABSA Bank's Women Empowerment Fund, and the Chairperson used this as an example of what the SAWEN should have been proactively doing. Members noted that certain challenges were common to all small business, but they questioned if SAWEN assisted people with small and short loans, and heard that it would merely notify its members of opportunities but leave it up to them to apply. The Committee asked that SAWEN must position itself to market more strongly, must scientifically evaluate inherited programmes, and must deal with the relationships with principals, and with the SEDA.

The Industrial Development Corporation (IDC) briefed the Committee on the Isivande Women's Fund (the Fund), which was introduced as a response to women running businesses but who had little access to finance. It was launched in 2007, but only really got off the ground in 2010, then under the direction of the Department of Trade and Industry (dti) who had entered into an agreement that IDC should be owner and facilitator of the Fund. Because the criteria, however, fell, below the IDC mandate, it was decided that management of the Fund would be outsourced to IDF Managers. The funding was initially R45 million, topped up with a later R20 million, and a management fee of 2% was charged by IDC on funds in the IDC account, with IDF charging 3% of the committed capital, paid annually, for 8 years, which would total R15.6 million. IWF would invest in businesses owned and managed by women, and try to promote and develop entrepreneurship, particularly in rural and peri-urban areas. It targeted achieving 0% nominal IRR, to avoid any loss of funds to inflation, but incentives were built in so that the fund manager would perform. Various funding criteria applied, such as investments of between The criteria were that they must be self-employed and their companies registered. Funding criteria had been set out. SAWEN could invest only in SMEs, with investments between R30 000 and R2 million per transaction. 50% plus one shareholding must be held by women, and 30% of management of supported enterprises must be women, with 80% at least of funding going to black-owned women business. Businesses must be commercially viable. 30% of funding must be invested in rural and peri-urban areas. IWF had funded 45 companies, created 155 jobs and sustained another 394 existing jobs.

Members asked for the rationale to give fund management to the IDC, which had shown a poor track record in industrial parks. Once again, the lack of alignment between the IWF plans and the strategic plans of the DSBD was a major concern, and without that being clearly demonstrated, the Committee would have a problem in supporting the budget. It was of great concern that similar questions had been raised by the Committee to all the entities. She had expected that when the Committee first raised its concerns, the Minister should have immediately called all entities together under one roof to sort out the problems and align the plans and mandates. The timing was cited as problematic and the Minister was asked why the process of migrating away from IDC to the DSBD had not been started well before November, knowing of the unavailability of legal advice in November and December, and the pressing needs of the State of the Nation Address and budget issues in February and March. It was clear that management and staff were not in agreement on mandates and change, and other Members expressed concern that the DSBD had effectively been "strangled from birth", but also that the Fund was not visible in constituencies, and that the Fund management fee seemed inordinately high for a developmental fund, and that middlemen were being enriched, and the Chairperson cited particular case studies of concern. The Minister asked that the meeting be halted to allow her to take up the issues.

Meeting report

South African Women Entrepreneurs Network (SAWEN) briefing

Ms Ruth Masokoane, Acting Chief Executive Officer, SA Women Entrepreneurs Network, outlined the main challenges faced by women-owned cooperatives and small or medium enterprises (SMEs), as follows:

  • The majority of the population of South Africa are women yet their participation in the economy is poor.
  • Access to finance, information, technology and markets is limited
  • Women operate primarily in the informal sector.
  • Low levels of appropriate skills & education are apparent
  • Women have poor access to domestic and global markets
  • There are weak platforms for advocacy and recognition
  • There is poor coordination of women support interventions.
  • There are inadequate monitoring and evaluation mechanisms of women’s information
  • Uneven geographical spread of the programmes

She outlined the background to the SA Womens Empowerment Network (SAWEN). It was launched in 2002, and registered as a Section 21 Company in 2004. Its fund manager was  Khula (now SEFA) from 2004 to 2012. Offices were established and became operational in the years between 2005 and 2009 but it had faced uncertainty and closure of offices in 2009 to 2010. It was re-launched in 2011, re-established offices over the following two years, and rebuilt its capacity. Its fund manager has been the Small Enterprise Development Agency (SEDA) since 2012

SAWEN has the following objectives:
- To provide platforms for women entrepreneurs for access to business opportunities
- To facilitate access to business resources, information and opportunities for  women entrepreneurs
- To provide a national vehicle to address the barriers faced by women
- To lobby government and other stakeholders on identified issues/barriers affecting women entrepreneurs
- To align SAWEN with organisations of similar interests, locally, nationally and  internationally in order to leverage opportunities for the benefit of women entrepreneurs.
- To profile, affirm and recognise achievements of women entrepreneurs

  • SAWEN's target market is women who are engaged in informal income-generating activities but have aspirations to grow their enterprises and become formal entities in the future. It would include women who have an interest  in operating businesses and co-operatives but lack the “know-how” to start. In these cases, SAWEN will facilitate and make referrals to various partners, such as the Companies and Intellectual Property Commission (CIPC), SARS, Small Enterprise Development Agency (SEDA) and Small Enterprise Finance Agency (SEFA), and other women who own and operate SMEs and cooperatives (coops). Its members must be self-employed and their companies must be registered.

    SAWEN described its programmes as:
  • PhakamaConnecting and uplifting women entrepreneurs
  • Farisanani Leveraging and achieving through others
  • MenyetlaLinking opportunities to women entrepreneurs
  • ZabalazaShifting mindsets through advocacy
  • Halala! Recognising and celebrating excellence of women entrepreneurs

She described the membership profile. 39% of members are within 18-35 age group; 47% of members are in the informal sector; 41% of members reside in rural areas; 51% of members are township residents and 82% of members are African.

Organisational challenges included the SAWEN's limited budget since inception, inadequate organisational capacity, stagnant membership, relationship with the principal (the Gender and Women Empowerment Units) and fund management.

Ms Elizabeth Thabethe, Deputy Minister of Small Business Development, and patron for SAWEN, said that nine board members volunteered their services to see the success of women’s business. They even used their resources and services to empower women because they all understand poverty well and some of them have passed through various challenges in establishing their own businesses. Resources and capacity remain a major challenge for women businesses.


Mr R Chance (DA) asked if SAWEN had made any attempts to raise funds, beyond receiving funds from government. He pointed out that many other NGOs relied on lotteries and trust funding. He asked which sectors its members would work in, what products they would sell, the number of employees, turnover and the impact of SAWEN interventions.

Ms Gail Downing, Board Chairperson, SAWEN, replied that SAWEN was formed as a Not for Profit Organisation (NPO) in 2004, and it received funding from Absa and Old Mutual. It had drafted a marketing strategy in approaching corporates, as it wanted to be self-funded in the future.

Ms Masokoane added that it had members across all businesses, from those selling tomatoes on the streets, through to women working in construction and mining. It had not yet evaluated its impact from survivalist businesses to higher SMEs.

Ms N November (ANC) asked if SAWEN could partner to use SEDA offices throughout the country. There were many NGOs and women structures in the country with whom it may be able to partner. She asked if it was possible to partner also with other government departments in offering training to women.

Mr X Mabasa (ANC) appreciated women who volunteered their time, skills and resources to see other women succeed. He asked how the work of SAWEN related to the Department of Women and Disability, in functionality and budget form. He asked if SAWEN was linked to informal traders or was a middle class organisation, whether it was formed initially from women perhaps doing home cooking or selling produce. He asked if there was any strategy to make the work of SAWEN better known to rural communities. The need for liberation of women was a wide government problem and he asked if other departments also felt that SAWEN was a good vehicle to empower women.

Rev K Meshoe (ACDP) asked how effective the engagement between SAWEN and its principal was, and asked if it had made a case out for itself to be involved in the Memorandum of Understanding (MOU) between the Department of Small Business Development (DSBD) and SEDA.

Ms Masokoane replied it was looking at all of SEFA, SEDA, provincial and local departments for sharing of office space. At the moment, its limited budget does not allow it to have a national footprint, because of limited staff. It was currently using SAWEN offices only. It worked with women's organisations and some of its members were from such other organisations, and they would help spread the information about SAWEN. It had many partnerships with government departments and Sector Education and Training Authorities (SETAs), in offering training to women. It provided reports to the Department of Women and Disabilities when requested. She traversed the country, talking about SAWEN to street women and vendors, who promised to join, yet often did not join and some of them called when they had a problem. She also took opportunities to promote the work of SAWEN - such as talking to large gatherings, perhaps funerals or family celebrations - in townships.

The Chairperson said the strategic plan of SAWEN must be aligned to that of DSBD. She told the Deputy Minister that SAWEN and the Gender Unit must "sing from the same hymn book". The fact that SAWEN had not evaluated itself yet was an indication of lack of leadership; there was no need to wait for 12 years to evaluate itself. If institutions could not see a way to do this they would be unlikely to have their budget requests fully supported in Parliament.

Ms Masokoane thanked the Chairperson for imparting this wisdom. SAWEN was told that the MOU was a bilateral agreement between SEDA and DSBD.

The Chairperson asked if SAWEN and DSBD met under one roof to discuss the MOU, as well as whether the SAWEN strategy was aligned to that of the DSBD. She was present when the Beijing Platform for Action was launched, and knew of the mandate given to the delegation that was present, which would not in fact allow for organisations such as SAWEN to be excluded from such agreements.

Ms Masokoane replied that if organisations did not work together, the agenda of women would be compromised. In South Africa, women continued to be marginalised and the mechanisms designed to address this were not good.  SAWEN was regarded as a "step child" of the Department of Trade and Industry (dti) and it was told the MOU was none of its business as it was considered to be little more than a small NPO. SAWEN's Board members had been passionate about doing work for women, but at one time the Board had been disbanded. When it had fallen under the dti, it was given very little money and ended up having to shut down for a while. She was happy to hear that the Committee would be supporting it being given a stronger mandate and SAWEN would take a stronger stance.

The Chairperson said that if part of the function of SAWEN was to lobby, the message of lobbying should have been taken from women. It was, she felt, too inward looking. She asked how it related to other women's structures, such as widows with powerful structures that were very articulate on issues affecting women. Some widows were being compelled by their families and communities to remain in mourning  for the whole year, and compelled to stay at home whilst their businesses were collapsing. Mourning clothes had been introduced by early Christians, to give food to the poor, but it was now being used to oppress women.

The Chairperson asked how SAWEN would relate to women headed households, women who were street vendors, and girl-children, some as young as thirteen years old, who were heading households of three to four siblings, none of them with birth certificates. One such girl that she met was close to becoming a sex worker. The children here survived by sharing out, between all siblings at home, the food that was given to one child at a National School Nutrition Scheme project. The Chairperson also wanted to know how SAWEN related to sex workers, pointing out that these were still women, forced by circumstances sometimes to service five men in one night. She also asked how it related to burial societies that operated mainly on the consumer side, which could possibly lead to the opening of a cooperative bank, as the money was currently not being used for investments, but consumer oriented.

Ms Thabethe replied she met with the Department of Women in the Presidency to discuss how the DSBD and the Presidency could work together. The Department of Women had the function to oversee women's issues being dealt with by other government departments. The relationship was good, but the two would have to agree on mechanisms for partnerships into the future. SAWEN should have done better, but its meagre budget was not conducive, and she asked that the Committee assist in coordinating the various women’s' lobby groups. SAWEN had only eight staff, and had a lot of work to do.

Mr Chance noted that he had had to leave the meeting for a short while, and he had just held discussions with ABSA Bank and found out that it had established a Women Empowerment Fund, but that only 4% of the R250 million was spent on loans to established women’s businesses.

The Chairperson commented that what Mr Chance had just reported on was the kind of work that SAWEN should be doing, instead of concentrating on paper work. SAWEN should have named one of its strategic objectives as linking with financial institutions. It there had been more strategic direction in DSBD, SAWEN should never have found itself in a predicament. If the SAWEN plan did not align to that of the DSBD, it would be in big trouble. The Chairperson noted that she was drawing on her experiences and training in programme design, management and evaluation.

Ms Lindiwe Zulu, Minister of Small Business Development, said it was very difficult to move a Department that was used to doing something in a certain way. SAWEN was speaking as if it did not have any options open to it. She pointed out that she had experience in the public sector and said that what was now happening in the Committee should be happening in relation to all other entities, to strengthen their institutional purposes. The past year had been a great experience, in which the DSBD and entities had learned about their strengths and weaknesses from the Committee's comments. The public purse must be spent in a good way. SAWEN should indeed look at signing transversal agreements with various organisations and the work must be coordinated to save resources. She added that she had met with ABSA and had held discussions on the ways in which the money in its Fund could have the necessary impact on the ground.

The Chairperson said there were common challenges to small business, such as access to finance.  She did not hear whether SAWEN assisted women who needed short loans, especially those in villages who perhaps just wanted to sell things during Easter holidays, but did not have a bank account and tax clearance. They might be able to count their money, but were not necessarily able to read or write. They might sell on some days, but could not continue on other days - including pay days when the business was likely to pick up, because it might be raining and prevent them putting out their stock. She commented that many of the SAWEN programmes - such as "halala" were slogans rather than real service indicators.

Ms Masokoane said access to funding was not in the strategy. Four years ago, SAWEN had wanted to establish  bridging funding for emerging business, but failed to secure funding to set up such a scheme. It had held meetings with all banks, but the problem was that once the banks partnered, they wanted exclusive access to the database. SAWEN would notify its members of any funding opportunities and it was up to them to apply for funding themselves. She commented that she had decided to write the information in slogans, because she was trying to be expedient in time, rather than providing huge amounts of information to Members to digest.

The Chairperson said that giving programmes slogans was wrong. She would have preferred to see names such as "SAWEN: Short Loan" or "Bridging Finance". When marketing and branding, the brand should be such to be an indicator of the business. Programmes must be indicative of skills and programmes offered. SAWEN must remember it was talking to an audience who may be largely illiterate, and they will not come forward because they did not see the need. Nobody needs "halala" as a service.

Ms Masokoane responded that SAWEN had commissioned a marketing strategy document to assist in branding and marketing its position.

The Chairperson said she was once Mayor of Ugie, and her two major projects had been simply named: Ugie Produce Market and Ugie Sports Centre. These names actually sold the services offered.

The Chairperson noted that the Committee had raised critical points, appreciated that the strategic plan presented was work in progress, but asked that SAWEN must position itself in a way that it marketed itself. The budget was inadequate to deal with the challenges faced by women. All programmes inherited from dti must be evaluated scientifically. The relationships between SAWEN and the principals needed to be re-worked. SEDA was not a financial manager and DSBD was not a conduit whereby money goes to SEDA, to go to SAWEN, charging 5% to members before getting the service. There was no government department with a Chief Financial Officer that could not manage its own funds. This must be sorted out as it was a waste of resources, retarded progress and made it difficult to account. SAWEN must come back after it had sorted out its relationship with SEDA, dti, and the Industrial Development Corporation (IDC). Board Members of SAWEN should also be paid for their work in line with how other Boards were being treated. She reminded SAWEN that it should be acting on the critiques of the Committee.

Isivande Women’s Fund: Industrial Development Corporation briefing
Mr Billy Cobbinah, Senior Deal Maker, Industrial Development Corporation, noted that the Isivande Women's Fund (IWF) was introduced as a response to challenges faced by women who had limited access to finance, which then inhibited the establishment, growth, sustainability and profitability of their women’s enterprises. IWF was launched in 2007, but due to delays in implementation could not get off the ground smoothly until 2010. In May 2010, the dti entered into an Memorandum of Agreement (MoA) with IDC, who should be the owner and facilitator of the IWF, and should also provide technical support for an effective period of eight years.

IDC temporary took over the management (in a trial phase), but the IWF criteria fell mostly below IDC mandates. It was then decided, still in line with the MoA, to outsource the management of the IWF. A tender was made and won by the IDF Managers, who were then appointed to manage IWF, with an initial R45 million, under the supervision of the IDC.

The size of the Fund, and the management fees, amounted to an initial R45 million. An additional sum of R20 million was approved in December 2013, bringing the total funds under management to R65 million. The IDC charged a management fee of 2% on the aggregated sum of amounts standing to the credit of the IDC bank account in the relevant financial year. The Fund Manager’s fee of 3% of the committed capital was paid annually. Based on the IWF partnership agreement running for eight years, the total management fee would amount to R15.6 million over the eight years (3% x R65 000 000 x8). IDF Managers was established in March 2008 and currently managed funds for SEFA, Shell South Africa and Government (IWF) totalling R149 million. An 8-year period comprising of a four-year investment period and four-year disinvestment period was proposed for IWF.

The IWF objectives were to invest in businesses based in South Africa that were owned and managed by women. It would build and develop women-owned businesses, and promote and develop entrepreneurship in rural and peri-urban areas. It aimed to achieve the targeted portfolio returns of 0% nominal IRR, to ensure long term sustainability of the Fund - in other words a nominal return equal to inflation, and this meant that the fund manager was expected to achieve a portfolio return of at least 6% if the average inflation for the eight year period was also 6%.  In that case, the capital would not be dwindled by inflation and anything above inflation would be shared in the ratio of 35%:65% between the fund manager and the investor respectively. This was an incentive for the fund manager to perform and partake in the upside of the Fund.

The funding criteria were as follows:

  • Invest only in portfolio/investee companies that qualify as SMEs;
  • Invest between R30k and R2m per transaction;
  • 50% plus 1 of the ordinary share capital must be held by women;
  • 30% or more of the management positions shall be held by women;
  • At least 80% of the funds must go to black women owned businesses;
  • Businesses must be commercially viable;
  • At least 30% of the Fund is to be invested in rural and peri-urban areas;

The total number of companies funded since inception of the IWF was 45 (including 3 follow-on transactions). This had resulted in the creation of 155 new jobs and had sustained 394 existing jobs.

The Chairperson asked why issues that dealt with women were described as having capacity challenges. She asked why the funds were given to the IDC, given its track record, commenting that the industrial parks it was supposed to manage had deteriorated. She asked why it was presenting strategic plans that did not appear to be well aligned with those of the DSBD. She asked how the Committee would be able to support its budget, when it well understood the mandate of the Department and the problems in the marketplace.

Mr Cobbinah replied that he had understood that he was expected to give a presentation on the performance of the IWF since inception.

The Chairperson commented, to the Minister and her Deputy, that she had been raising similar questions to all the entities. It seemed that the DSBD was not calling in all the entities and sitting down with them to discuss the issues. SEFA had to withdraw the plans that it had presented because these were not aligned to the Department, and the Minister and Director General had apparently not bothered calling their entities for three weeks.

Mr Lindokuhle Mkhumane, Acting Director General, DSBD, replied that the understanding, in respect of the Isivande Women's Fund, was that it must move away from the IDC. The Department was working on that process to migrate the IWF from IDC to DSBD.

The Chairperson said that the timing was also a problem. The migration had been started in November, but the Department must have been aware that this was something that would need legal opinions, and should have been aware that most lawyers were unlikely to be available in December and January, and that its time would be taken up with other things in the February State of the Nation Address and March budget processes. Since inception of the National Development Plan, two years had passed. The Committee had identified instances where strategies were not aligned. Had she been the Minister, she would not have hesitated to immediately call all the entities together, in one room, to align all the objectives and strategies. She asked the Minister what had prevented her from starting the migration of IWF before November, when it was known that the process would have to be completed before the budget vote.

Ms Zulu replied that a communication was sent to all entities, calling upon them to align their objectives.

The Chairperson said that before the Committee could approve the budget, it would have to be satisfied that the DSBD was in order, and asked how it would meet the deadlines of Parliament.

Mr Mkhumane replied that the process of migration had been delayed by needing to cancel the MOU that existed with IDC. The political principals had been assisting with advice whether to locate IWF in SEFA or in the Department.

The Chairperson said the Department was already dealing with a backlog and with a staff that was resisting change; top management wanted one direction and others wanted to follow another.

Ms Zulu replied that she accepted her responsibility, and she thought that she was moving in the right direction although there were certain things that she had inherited. She had suggested to the Director General that if there were staff who wanted to remain in the Department of Trade and Industry, they should remain, and she would engage with the political principals of that Department. She did not want to bulldoze her way through, but there were institutional processes to be followed, which were delaying the migration process.

Mr Chance agreed there was institutional resistance. Last year, he had written a letter to current Minister in the Presidency, Mr Jeff Radebe, but never got a reply. This required Presidential intervention. The DSBD had been "strangled from birth".

Mr Chance said that a fund management fee of 25% was unheard of. He asked if IWF had any targets when the Fund was established, including a job creation ratio.

Mr Mabasa said it was frustrating to hear a report of this nature. The IWF was supposed to represent the poor in constituencies, but it was difficult to believe from what had been presented. Departments would visit constituencies, but he was not aware that IWF had ever given a presentation. He asked if the IWF had ever been to Soweto, and whether its target group was organised business, or any women-owned business. He suggested that Mr Chance must not write to the Presidency again, since the Committee was now handling the matter.

Mr Cobbinah replied that the management fee was 3% per annum, and that was the norm in the market.

The Chairperson pointed out that this was not commercial money, but for development.  Development Finance institutions in South Africa were charging higher than commercial banks, and the middle-men in fund management were getting richer. She said that the IWF must identify factors hindering money being awarded to people, and should not be attempting to "defend the indefendable".

Ms Zulu asked whether the meeting could be brought to a halt, and she promised to have a discussion with the CEO of IDC.

The Chairperson said she agreed with the Minister. She reiterated that it was a fact that middlemen were being enriched. She could cite people from Pietermaritzburg who had paid 320  000 for a consultant from dti to advise them on getting funding from dti. In another instance, ten cooperatives registered by a consultant paid R120  000 each, for what was little more than a cut and paste business plan. The strategic plan must be clear on how it would change the life of people. She repeated that the Committee would be making its decisions on budgets based on the strategic plans presented.

The meeting was adjourned. 

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