Development Finance Institutions (DFIs) workshop report; Fourth Term Committee Programme

Small Business Development

02 November 2016
Chairperson: Ms N Bhengu (ANC)
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Meeting Summary

Documents handed out
Adoption of the Fourth Term Committee Programme
Consideration and adoption of minutes
Consideration of the DFI’s workshop report
[All Committee Reports available under Tabled Committee Reports once published]

Members discussed the Fourth Term Committee programme and noted that there was insufficient time to embark on annual oversight visits. Members asked when the Red Tape Bill was likely to be brought before the Committee and a brief discussion was held on the process. Members also raised the point that right at the beginning of the Fifth Parliament, this Committee had discussed a change of name of the Department and the Committee itself, to reflect a growing emphasis also on cooperatives, and they discussed in principle whether it should pursue this point, or whether it might be sufficient just to ensure that cooperatives were actively considered when making decisions on all matters.

Members considered the draft report on the Development Finance Institutions Workshop report. Members asked what informed the capping of funding offered by the Small Enterprise Finance Agency (SEFA) and whether there might be any room for manoevre should a small business require more than this amount, as also whether there were specific processes. They noted that the systems seemed to be skewed in favour of the urban areas, and discussed the point that government did not seem to fully appreciate the vital part that local government played, particularly in the rural areas. One Member suggested that there seemed to be too many entities or departments dealing with business development and it made sense for this to be the sole mandate of the Department of Small Business Development. One problem seemed to be that SEFA may not fully understand whether it had primarily a commercial or a developmental focus. Points to be considered for adding into the report included a note that timeframes and responsibilities must be specifically set out, that there should be migration of the Business Development Cooperative Bank, Cooperative Bank agencies and the Cooperative Development Training Academy, that the Committee visit Mondragon Corporation, a prime example of cooperative development. One concern was that the very same people who had been responsible for the Department of Trade and Industry not achieving its objectives had now moved over to the role of progressing small business development. The Committee should also encourage delivery of education that spoke directly to the interests of small business development. Members decided to adopt the report in the following week.

Meeting report

Chairpersons Opening remarks

The Chairperson was pleased to be back with the Committee and appreciated all the messages she had received whilst away. She wished well to another Member who was ill.

Fourth Term Committee Programme

The Chairperson noted that because of difficulties in the Parliamentary schedule this year the Committee would not be able to do annual oversight. She tabled the Committee programme and speedy recovery wishes that she received and was pleased that the Committee had done excellent work while she was on sick leave. The Chairperson also wished a speedy recovery to Ms N November (ANC). In relation to the fourth term Committee report the Chairperson mentioned that due to the parliamentary schedule being shot, the Committee was not able to have an annual oversight. She asked if Members were happy to adopt the programme.

Mr H Kruger( DA) asked about the progress of the Red Tape Reduction Bill and advised that the Committee should use the remaining time in the Committee schedule to ensure that the Bill was introduced.


Mr King Kunene, Committee Secretary, explained the process of how a bill is introduced and said that the Committee should, as a first step, invite the initiator of the bill, then the Department of Small Business Development, then the legal team, and finally stakeholders to discuss the impact the Bill would have. Mr Kunene concluded that this Bill draft was still to be released.

The Chairperson added that the Parliamentary Management Committee sat on Monday 1 November 2016, and resolved that, based on the current timelines and the number of meetings still required,  it would be difficult to deal with the Bill now, as everything else would need to be shifted to accommodate it.

Mr X Mabaso (ANC) said that the Parliamentary Management Committee also looked at the possible length of time the Bill would take and suggested that the Bill rather be looked at in the following year.


Mr N Capa (ANC) wanted to know when the term was due to end and the Chairperson noted that it was 9 December 2016.

Mr Kruger proposed that the plan to have Cell C on 9 November 2016 should be moved to the Wednesday.

Mr R Chance (DA) requested that the Committee be given time to send proposals for the year and that the Committee should sit prior to the first quarter programme being agreed to and finalised.

The Chairperson said she was aware of the programme proposed to the Committee and said that the challenge this year was due to the local government elections. She asked that any proposals be sent through to the Committee Secretary in order for any proposals to be tabled at the Management Committee.

Members adopted the programme

Minute adoption
26 October 2016

Mr Kruger said that the Secretary of the Committee should acknowledge the receipt of the Red Tape Reduction Bill. He also suggested that on page 4, the Committee should add “We need a tracking record of the resolutions taken by the Committee prior to the end of the year”.

Members adopted the minutes, subject to these amendments.

Department and Committee name
Members raised the point that the name of the Department and therefore also of the Committee remained unchanged, despite being two years into the Fifth Parliament. This had been discussed at the very first meeting but nothing had been done.

The Chairperson said that the Committee would need to check initially with the President, to find out when the Presidency might consider the proposal of the name change.

Mr Capa said that he was convinced that there was not sufficient desire, outside of the Committee, to effect that change, and he pointed to the comments about the lengthy legal processes to do so; it could take more than a year and there seemed to be a lack of urgency. He concluded that perhaps the Committee should rather have a common understanding and strive always to include references to cooperatives in discussions.

Mr Mabaso cautioned that the Committee, through the Chairperson and Committee Secretary, should look into the legal implications.

Mr S Mncwabe (NFP) said that he was concerned that the Presidency had proclaimed a name and it was not up to the Portfolio Committee to say something else. However, he could not see anything wrong with the change in principle.

Mr Capa asserted that he was not trying to counter anything that the Presidency was doing, merely suggesting that as cooperatives were effectively part of the small business sector, they must be actively considered during Committee discussions. He did not think that the name had to change to do that.

The Chairperson then proposed that the Committee hosts an extended workshop with the Department of Small Business Development. There did not seem to be full understanding about this issue.

Development Finance Institutions Workshop Report: adoption

The Committee's report on the workshop was tabled. Mr Capa requested clarity as to why the amounts set for capping of funding by the Department of Trade and Industry (dti ) and Small Enterprise Finance Agency (SEFA) were chosen. He particularly thought that there should be the ability to make a referral by way of a set process, if an entity were to require more than R5 million.

The Chairperson said that the Committee needed to evaluate what informed the SEFA decision to fund only up to R5 million.


Mr N Gumede, Committee Content Advisor, said that SEFA carried on the mandate and strategies as had the dti in the past, and that included the carry-over of the R5 million cap, as he did not think this had been reconsidered since the original decision.

The Chairperson reiterated that the Committee should check the position. She asked what would happen, and if there was any system to refer matters on, if cooperatives or small enterprises required more than the R5 million.

Mr Kruger said that it seemed that there were too many departments that worked with business development and suggested that this Committee should advocate that key relevant issues should be the sole mandate of the Department of Small Business Development.

Mr Chance added that the problem, in line with observation 13, was that SEFA was not sure whether it was supposed to have a commercial or a developmental focus. SEFA had lost over 67% of its funding. He concluded that that the Committee should take a stand on the issues raised by Mr Kruger and that all government entities should follow these guidelines.

The Chairperson said that municipalities had records even in areas where there were no official addresses, as there was likely to be councillors and Ward committees. The Chairperson said that it would be better to interact with the Local Economic Development Offices, rather than intermediaries. Most systems were talking to urban and not rural areas. She agreed that there were some systems that government was overlooking, and that government did not seem to appreciate that the link to communities was local government.

Mr Kruger added that the Committee should also look at the Post Offices, and reminded Members that previously, it used to offer financial services, as Post Bank.

The Chairperson emphasised that it would be better if SEFA and local government were to work together. She suggested that the Committee should recommend that processes should be made available through local government.

The Chairperson added that the report was not specific as to who would be responsible for the implementation of the recommendations, nor did it provide specific timeframes.

The Chairperson went on to make the following additional recommendations

- The migration of the Business Development Cooperative Bank, Cooperative Bank agencies and the Cooperative Development Training Academy. This would provide an analysis as to what the Department is saying in relation to these entities. She noted that there had been a 82% departmental failure and 12% success rate
- A visit to Mondragon Corporation, Spain, which was seen as the premier global example of cooperative development.
- The issue is that the same officials from the dti who produced the 82% failure rate are the very same officials who had now been given the role of progressing small business development.

Mr Mabaso said that the Training Academy was more of interest to this Committee than it was to the Department of Higher Education and Training. He concluded that the Committee should be vigorous in encouraging that department to deliver in the interests of small business development.

The Chairperson asked if Members were happy to adopt the report.

Mr Chance suggested that Members should have some time to consider the report and recommendations and asked that the adoption of the report be postponed to the following week.

The meeting was adjourned. 


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