The Chairperson proposed an amendment to the initial oversight plan of the Committee. The change she was proposing was based on the Department of Small Business Development’s (DSBD’s) planned visit to KwaZulu-Natal. The Department had funded 12 cooperatives which were spread across five municipalities -- Umgungundlovu, Ugu, Sisonke, Ethekwini and Ilembe. The Committee would gain a better understanding of cooperatives, which would allow it to focus on a case study. The case study would then assist the Committee to comprehend why there was an 88% failure rate in the Department. Her proposal was accepted by the Committee.
A Member of the Committee made a presentation based on an invention that would lock a car to ensure that no one could steal it. One could break the windows and steal the car radio, but one would not be able to move the car due to the invention. He had brought the idea to the Committee so that the Small Enterprise Development Agency (SEDA) and the Small Enterprise Finance Agency (SEFA) could provide assistance, guided by the Committee, as the invention would be beneficial in creating jobs for the country.
Members were generally agreed that the invention seemed to be very good, but added that the Department should deploy an official to go and visit the inventor in person, in the event that the Committee had further questions.
The Department presented the first quarter performance report, highlighting its successes, but also drew attention to significant under-performance at both SEDA and SEFA.
Members expressed concern that most of the senior posts in the Department were not filled, and asked for the actual number of unfilled vacancies. They said that SEDA had a 40% rate of achievement, yet there had been over-expenditure, and wanted the Department to explain this. Another Member was worried about the disciplinary hearings, with one person being dismissed at SEDA. The Department was also asked if it had done any skills assessment for those occupying positions, and whether the skills matched the positions.
Oversight visit proposal
The Chairperson said the Committee was supposed to have an oversight visit to the Free State, but she proposed that it should plan on focused oversight visits, as opposed to mere visits to various provinces. The core visits would be conducted in support of the Department of Small Business Development’s (DSBD’s) role in developing small, medium and micro enterprises (SMME) and in line with the strategic plan and budget review process of the Committee.
The change she was proposing was based on the DSBD’s planned visit to KwaZulu-Natal. The Department had funded 12 cooperatives which were spread across five municipalities -- Umgungundlovu, Ugu, Sisonke, Ethekwini and Ilembe. The Committee would gain a better understanding of cooperatives, which would allow it to focus on a case study. The case study would then assist the Committee to comprehend why there was an 88% failure rate in the Department. This initiative would also provide an opportunity for the Committee to understand DSBD’s transversal agreement mandate and its relationship to the Integrated Development Plan (IDP) process of the different municipalities.
She proposed that the Committee should consider visiting KwaZulu-Natal, but that that the focus should be on three cooperatives that had been funded. The initiative should take a form of an initial visit, followed on the second day by a workshop which should include various stakeholders and relevant officials within the Department, with a senior person deployed as the project manager. The Committee and the Department should visit Umziwabantu in the Ugu district on 14 September, and host the workshop on 15 September. The visit would inform the strategy of the Committee.
Mr X Mabasa (ANC) said that the observations by the Chairperson made sense, and proposed that the Committee should consent to the proposed changes.
Ms Lindiwe Zulu, Minister: DSBD, said she supported the Chairperson’s proposal, and indicated that a priority of the Department to properly coordinate the DSBD and the three spheres of government.
Mr R Chance (DA) also supported the proposal, but asked about the logistics involved in travelling on 14 September. Was the Committee expecting stakeholders from national departments, as well as other government departments? He urged that the invited delegation to the workshop should be officials who had a significant role to play.
Mr S Mncwabe (NFP) supported the Chairperson’s proposal, and said he was worried that the Department had an 88% failure rate. Department has been in office for two years, but this failure rate begged the question as to what it had been doing for the past two years.
The Chairperson responded that key stakeholders, such as the Departments of Agriculture, Rural Development, and the Department of Water in KwaZulu-Natal, as well as chiefs, would play a significant role during the workshops.
Mr Hendrik Krüger, a DA Member of the Portfolio Committee, said that his presentation was based on an invention that would lock a car to ensure that no one could steal it. One could break the windows and steal the car radio, but one would not be able to move the car due to the invention. He had brought the idea to the Committee so that the Small Enterprise Development Agency (SEDA) and the Small Enterprise Finance Agency (SEFA) could provide assistance, guided by the Committee, as the invention would be beneficial in creating jobs for the country.
Ms N November (ANC) said the invention seemed to be very good, but added that the Department should deploy an official to go and visit the inventor.
Mr S Bekwa (ANC) said that even if the project was recommended, it would be best to see the inventor in person in the event that the Committee had further questions.
Mr S Mncwabe (NFP) agree that the initiative was wonderful, and added that the inventor should be visited by the Department in order to get the necessary assistance.
The Chairperson said that this has been done in the past, where both the Portfolio Committee and the Department had identified potential products requiring assistance. The Committee should follow up on the Department to ensure that sufficient assistance was given to the inventor.
Mr N Capa (ANC) said that it would assist Mr Krüger if the Committee would specify that a specific person should deal with the project, in order to ensure sufficient monitoring.
The Chairperson said that in the past, black business people who invented products were overlooked and not assisted in protecting their invention through the Intellectual Property Act. It was the responsibility of the Members to ensure that they were protected and their inventions developed.
Mr Mabasa proposed that in the medium term, that the Committee should invite Intellectual Property officials to be part of the team.
Department of Small Business Development: First Quarter Report 2016/17
Ms Elize Koekemoer, Acting Deputy Director General, DSBD, said the Department’s performance indicators covered three branches -- Administration, Policy and Research, and Programme Design and Support. In Administration, 78% had been achieved, in Policy and Research 100%, and in Programme Design and Support, 85.7%.
On the organisational front, there were two vacant deputy director-general positions, with two members of the senior management acting in the positions. Most of the senior management posts, such as directors and chief directors, also remained unfilled and were currently also operating as acting positions.
As regards the financial performance, expenditure had been R304.3 million versus the projection of R377.7 million. The under-expenditure was due to the non-processing of transfers and the late interface of office accommodation. Indications by all branches of the Department were that the DSBD was severely under staffed and that they operated under severe human resource constraints. The SEDA achieved a 77% performance, SEDA technology achieved 60%, corporate services 100% and finance 108%.
The Department had had seven disciplinary hearings this quarter, resulting in one dismissal.
SEFA had achieved 88% in relation to its wholesale and direct lending portfolios, and 128% in relation to its disbursement to SMME's via all loan product channels. In terms of the number of jobs facilitated, 70% had been achieved.
In conclusion Ms Koekemoer said that the Department had started off on a good note in its performance as compared to the previous financial year. Both the SEDA and the SEFA had performed well and both had committed to address areas of under-achievement.
Mr T Khoza (ANC) said he was concerned that most of the senior posts in the Department were not filled, and asked for the actual number of unfilled vacancies. He said that SEDA had a 40% rate of achievement, yet there had been over-expenditure. He wanted the Department to explain this.
Mr Mncwabe asked why the two critical positions had not been filled and wanted to know how the Department was going to deal with the severely under-staffed branches.
Ms November said that she was worried about the disciplinary hearings and the one person being dismissed at SEDA.
Mr R Chance (DA) said that this performance report was long on quantitative aspects, but short on the qualitative side, which made it very difficult for the Committee to know the actual impact being made by the Department. He asked why the chief executive officer (CEO) of the SEDA was absent from the meeting.
Mr Capa asked the Department if they remembered anything that the Committee had advised them on.
Mr S Bekwa (ANC) said that judging by the report, it appeared that the budget committee had not been sitting, and he wanted to know the basis of the delay.
Mr Mabasa emphasised the need to fill the vacant posts urgently.
The Chairperson asked to whether the Department understood the red tape guidelines, particularly in the absence of transversal agreements. She continued probing as to whether the Department had done any skills assessment for those occupying positions, and whether the skills matched the positions.
Ms Koekemoer said that the CEO of SEDA was absent due to late communication between SEDA and the Department.
The Chairperson responded that SEDA and SEFA did not exist in isolation, and that they were an extension of the Department.
The Chairperson said that she had to be excused as there was a Chairpersons’ meeting that she had to attend, and opened for nominations for a Committee member who would continue to chair the meeting.
Mr Khoza proposed Mr Mabaso
Mr Bekwa seconded.
Ms Koekemoer detailed the dual process followed in dealing with the red tape issues at the Department.
In relation to the municipal guidelines, the DSBD had collaborated with the Department of Corporative Government and Traditional Affairs (COGTA). At this stage, the Department could not report on impact, as there were no monitoring and evaluation frameworks to guide it, but she concluded that this was a priority for the Department, particularly in quarter two, to ensure that a framework was put in place.
Ms Bridgette Petersen, Chief Director: Corporate Services, DSBD, said that the previous service delivery model structure was more aligned with the Department of Trade and Industry (DTI), and that the new structure would ensure that it spoke to the development of the DSBD. She added that as of June 2016, there had been 26 vacant posts.
Ms Semphete Oostewyk, Chief Financial Officer: DSBD alluded to changes that needed to be made to figures that needed to be altered in the presentation. She continued by saying that the invoices’ delay was due to the DTI, and that the Department should take cognisance that when it had commenced earlier this year, there had been no systems in place to ensure its smooth running. She concluded that a budget committee had been appointed.
Mr Lindokuhle Mkhumane, Acting Deputy Director General: DSBD, said that with regard to the adjudication committee, the key challenge was the unavailability of the panel, and predominantly quorum had not been met.
Mr Mzoxolo Maki, Chief Director: Strategy, DSBD said they would consider the reports that came from the Portfolio Committee, which would influence their planning as a department.
Mr Thakhani Makhuvha, Chief Executive Officer: SEFA, said that the agency over the past few years had approved loans without evaluating if the model worked. The Agency had now introduced a post-investment framework which had created a separation as to when it dealt with applications, as well as the approved and funded corporates.
Mr Sibongile Somdaka, Marketing and Stakeholder Relations: SEDA, confirmed that the Agency had received the comments of the Department, and assured the Committee that the Agency would respond in writing.
The meeting was adjourned.
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