Department of Small Business Development & Small Enterprise Development Agency on 2nd Quarter 2015/16 performance

Meeting report

Presentation by DSBD on its second quarter performance

Prof Edith Vries, Director General: Department of Small Business Development (DSBD), apologised for the Minister’s absence, as she was abroad on a state visit. 

The DSBD had achieved 17 (54.8%) of its 26 second quarter performance indicators, and 14 (45.2%) of the 31 milestones. All of the invoices received had been paid within 30 days. Five agricultural cooperative projects had been supported, against a target of one, and the Department had identified eight more. 80 primary co-operatives had received funding and training, against a target of 53. 620 informal traders had been trained, against a target of 250. 223 craft enterprises had benefited from various market access initiatives, against a target of 150. The National Small Business Act was under review. No new incubators had been created, against a target of five.

The DSBD could do the ground work around incubators, but the Department of Trade and Industry (DTI) implemented the work. Implementation of the National Small Medium and Micro-sized Enterprises (SMMEs) and Cooperatives Framework was underway. Red tape reduction guidelines had been rolled out for 14 municipalities. The DSBD had a 22.9% vacancy rate. Expenditure was at R547.7 million, or 49% of the budget of R1 103.1 million. There had been an under-expenditure of R55.3 million. The staff turnover rate has been very low -- only 2%. The disability and vacancy rate targets had not been met. The number of women employed at the senior management level had been achieved, but the incubator target had not been met.

Two potential qualifying secondary co-ops had been identified in Upington and the Northern Cape. The task team meetings for co-operative development had not met as required, but they had produced a report. The approval of incentive guidelines for enterprise development and entrepreneurship had not been accomplished, but was at the draft stage.  Draft business plans had been submitted by six specified institutions, as per the target.  There had been a target of five new location points for small enterprise development agencies (SEDAs), but only three had been identified. The goal of increasing the number of youth enterprises and the upgrading of infrastructure through municipal partnerships had not been met. The development of the youth training programme and opening of a new graduate venture had also not been achieved due to the lack of a budget.  75 women had been trained on the Bavumile Skills development programme. 14 municipalities out of 20 had had a red tape reduction rollout.

The Department reported that expenditure had been R547 million, or 50.35% of the budget of R1 103 million. Under expenditure on programme 1 (Administration) had been due to the high vacancy rate. Programme 1 had had an expenditure of R24 million, against a budget of R64 million. Programme 2, dealing with cooperatives and development had spent R5 million against a budget of R15 million. Programme 3, dealing with enterprise development and entrepreneurship, had had an expenditure of R517 million against a budget of R1 023 million. There had been under-spending for the cooperatives’ incentive scheme and black business suppliers due to delays in the commencement of the application adjudication process. The transfer budget had been R935 million, and expenditure had been R485 million.

SEDA on its second quarter performance

Mr Lusapho Njenge, CEO: SEDA, said that 20 of the 29 indicators had been achieved in the second quarter, compared to 14 in the first quarter. The vacancy rate had been reduced to 9.6%. The SA Renewable Energy business incubator had been created. The client satisfaction percentage achieved for SEDA had been 98% against a target of 94%. The percentage of clients whose turnover had increased had been 75%, against a target of 54%. 36 clients had been supported in the supplier development programme and 53 clients had been supported with trade facilitation. No partnerships had been created. 217 clients had been trained on national and international standards, and eight had been supported with mentorship and coaching.

SEDA was working with 3 045 clients. 90% of them were in priority sectors and had been assisted with interventions. 59 clients had been assisted with interventions at the upper end of the SMME sector. Most of them came from the Western Cape, Eastern Cape and Gauteng. 58% of the businesses were in services and 14% were manufacturing. 81% were black-owned businesses, 49% were female-owned, 45% were youth-owned, and the disabled owned 1 %. Small and Medium Enterprises (SMEs), employing 21 to 200 employees, were found mostly in Mpumalanga, the Eastern Cape, the Western Cape and North West Province. 111 primary cooperatives had been established. 26 secondary marketing co-operatives had been supported. No clients had been supported through the basic entrepreneurial skills development programme, due to low uptake. SEDA had gathered 1 200 potential clients for this programme.

R1.4 million was the value of services covered by delivery partners. The percentage deviation of actual expenditure against the approved budget had been 16.38%. The percentage of programme-related funding allocated to clients at the upper end of the SMME sector had been 8%.  48 incubators had been supported and 610 jobs created from these incubators. Most of the jobs were in construction and agriculture/agro-processing. 2 286 clients had been supported against a target of 1 881, mostly in construction and agro-processing. 151 new SMEs had been created against a target of 82. 15 clients had been assisted with tech transfer incentives against a target of 30. 54 clients had been supported with conformity assessments and product testing, while 13 clients had been supported with systems implementation.

The challenges for SEDA included creating new incubators, funding constraints for technology transfers, delivery partners providing low funding support, and catching up with clients owing to under-performance from the previous financial year.

Discussion

No discussion took place due to the strike action by the parliamentary workers, who stormed into the room and demanded the meeting come to an end. They were singing and dancing and would not leave until those present had left the meeting.

The meeting was adjourned.