Small Enterprise Development Agency on its 2015/16 Annual Report, in presence of Deputy Minister

Meeting report

Mr X Mabasa (ANC) was unanimously elected as Acting Chairperson. The Deputy Minister was present at the meeting.

Small Enterprise Development Agency (Seda) Annual Report 2015/16 briefing
Mrs Mandisa Tshikwatamba, Chief Executive Officer, Small Enterprise Development Agency, tabled and took Members through the 2015/16 Annual Report. She noted that the presentation was in three parts; the first outlined the strategic planning of the Small Enterprise Development Agency (Seda or he Agency), the second part set out the highlights of 2015/16 performance, and the third outlined a way forward for the Agency.

Ms Tshikwatamba noted that Seda looks at inclusive growth prioritising women, black, youth and people with disabilities. Its mission statement noted that it would strive to be a centre of excellence. It would achieve this by establishing new incubators in prioritised provinces as well as increasing co location points with identified partners.  

Mrs Tshikwatamba presented key highlights in relation to the performance of the Agency (see attached presentation for full details). She noted that Seda was proud to have achieved 99% client satisfaction levels, 74% of those assisted indicated an increase in their turnover. To date, 10 679 clients had been supported by the agency and 40 secondary cooperatives had been established and supported.

She described that Seda has long, medium and short term goals. The ultimate goal was increased contribution of small enterprises and cooperatives to the South African economy, and promotion of economic growth, job creation and equity. In the medium term, Seda was working on achieving an increase in turnover of assisted small enterprises and cooperatives, increased number of people employed in assisted small enterprises and cooperatives, and reduced mortality rate of assisted small enterprises and cooperatives. She then described how this would be done. Firstly, Seda would improve the sustainability of small enterprises and cooperatives. Secondly, it would increase its delivery network to reach under-serviced areas, and it would then also maximise support offered to Seda clients through stakeholder contribution.

She then described, in a chart, the type of offerings that Seda gave to each type of client, and the approximate numbers accessing this support (see slides 13 and 14).

Some of the highlights of the Annual Report were then set out. These included Successful hosting of the inaugural Southern African Business Incubation Conference (SABIC) in March 2016, launch of two new programmes, the National Gazelles and Finfind. It had found increased willingness to cooperative between private and public sectors. It was recognised that there was a need to increase Seda’s incubation footprint in under-serviced provinces such as Northern Cape, Free State, North West and Limpopo. There had been clarification and alignment of objectives between Seda and the Department of Small Business Development (DSBD). Reputational studies were done and there had been an inaugural Business Advisor Seminar to share best practices and improve the operating environment for Seda business advisors. Two members had been appointed to the Board. She was pleased to announce that Seda had now managed to achieve its eighth consecutive unqualified audit opinion, with no findings. The Auditor-General South Africa said that Seda was in robust financial health. There were, however, some internal control deficiencies in ICT to do with governance but these were receiving attention.

Work was being done to develop a framework on ideal numbers of business advisors and mix of skills in each of the Seda branches, and a programme had been introduced to retain and upskill the business advisors. More core and support processes were becoming automated. The Basic Entrepreneurial Skills Development (BESD) programme had been institutionalised, as part of the upliftment programme.

The financial statements were tabled, and in summary, Seda had revenue of R695.723 million and expenses of R742.663 million, which meant that it showed a deficit in this year, compared to the surplus in the last year.

A number of specific details under each programme were described and some of the key “success stories” where Seda had managed to increase its outreach and help its users achieve well were outlined (see attached presentation).

Mrs Tshikwatamba concluded that the focus areas for 2016/17 will be to the development of a framework on the ideal sourcing per branch as currently the agency has two advisors per province, and to develop strategies to ensure presence in under serviced areas.

Discussion
Mr H Kruger (DA) wanted to know more details on the strategic plan for business advisers to be located in poor rural communities. He was worried that the Agency had only two advisory functionaries per province. He asked if it was seeing any improvements and achievements in reducing red tape facing small business. He asked if the Agency had any plans to work with the Business Chambers.

Mr R Chance (DA) asked if Seda was BEE accredited. He asked if it had any discussions with Catalyst for Growth and asked what its attitude was in relation to public / private partnerships.

Mr Chance noted that Seda had mentioned the need for a strategy to retain business advisors, and asked what the main reason was for business advisors leaving the Agency. He suggested that it should be working on a strategy where its existence was based on demand and where it could show that it was creating revenue for government.

Mr N Kwankwa (UDM) said that he was worried about the mortality rate of businesses supported by Seda. He wanted also to know how many of the businesses are owned by the youth. He wondered if Seda had a strategy to develop youth internships and youth employment within the Agency itself. Speaking to the student protests that had been occurring across the country, he believed that significant numbers of youth would find themselves unemployed and with no option to study.

Mr T Khoza (ANC) asked about the staff retention strategy of Seda. He wanted to know more specific timeframes as to when it planned to increase its services to the rural areas.  He advised the Agency to emphasise why the grant from government should increase by proving exactly what impact it was making on the ground.

The Acting Chairperson asked for more details on the Board, asking which of the members of the Board were eligible to receive remuneration. He also commented on the proportionate spread of the staff, asking for an explanation why  45% of the staff were at National office and 55% were disbursed across the different provinces. He asked for an indication whether Seda felt it was really making an impact in the rural communities.

Mrs Elizabeth Thabethe, Deputy Minister, Department of Small Business Development, said that the Department of Small Business Development's budget might be cut and that Seda should not use money on outsourcing and calling on support from outside advisors but should seek to use the experience of its board members properly. The Deputy Minister agreed that there were some very serious issues around the students who would not be able to write examinations, and this would have an effect on many other departments also.

The Deputy Minister asserted that the ANC-led government is aware that there is a need for alternative education such as vocational training. The Deputy Minister said that dealing with the apartheid legacy cannot take 22 years. The entire Department of Small Business Development had been working with the National Youth Development Agency (NYDA) and had advised Seda to initiate a relationship with the NYDA.

Dr Ivor Zwane, Board Chairperson, Small Enterprise Development Agency, said that he appreciates the dialogue to bridge the gap on job creation. It would be impossible for the Agency to work in isolation. He agreed that Seda would be able to work on providing a value-for-money analysis.

Mrs Tshikwatamba noted that the two regional facilitators were working with the provincial departments dealing with local economic development in their respective provinces. Seda was aware of the Catalyst for Growth

Mr Alex Thandikhaya Qunta, Provincial Manager, Western Cape, Small Enterprise Development Agency said that in the Western Cape the Agency had three branches and this had been hard on the productivity of the agency. Seda had received support from the Western Cape Provincial Government through providing satellite offices. However he asserted that this was not enough and that the Agency still faced a struggle in spreading its net wider across the provinces.

Mr Lusapho Njenge, Chief Strategy and Information Officer, Small Enterprise Development Agency said that the Agency had supported numerous youth businesses. It was, however only able to set up one incubator each year.
 

Mr Norman Mzizi, Chief Financial Officer, Small Enterprise Development Agency noted that Seda was working continuously on a strategy to try to reduce red tape. He also noted that Seda had introduced incentives to attract staff and currently was offering an increased remuneration and additional annual leave days for staff who have been working for the Agency for more than five years

Mr Chance repeated that Seda should look at and analyse the total rand value added through Seda.

Mr Kwankwa asserted that if government agreed on the set target for job creation in line with the National Development Plan, then government should provide the necessary resources to ensure such objectives are met.

The Deputy Minister concluded that the key frustration was that the Department overall has budgetary constraints and that the Department needs to consider how it can do more with less funding.

Dr Zwane asserted that the Agency was going to improve in the future.

The Acting Chairperson said that he was sorry to hear of the problems and challenges but the Committee would offer its full support to Seda.

The meeting was adjourned.