The Department of Small Business Development addressed the Committee on the progress it had made in aligning functions that were still located in other departments.
At the outset of the meeting, the Chairperson said that it was unacceptable that the Department’s Director General was not present, having prioritised traveling overseas over accounting to the Committee, and said that the Committee’s discontent would be expressed in a letter to the Department.
The Department reported that it had established a national interdepartmental coordinating committee made up of representatives from 24 government departments. The main aim was to promote and support the growth and development of the small business and cooperatives sector through interdepartmental planning, co-ordination and reporting. The committee had engaged on many issues facing small businesses.
Former President Zuma had announced that 30% of the expenditure by the public sector would be directed to small businesses and cooperatives. National Treasury had been instructed to come up with the Procurement Bill to give effect to the 30% set-aside. The Procurement Regulations had become effective on 1 April 2017 while the Bill was being drafted to repeal the Preferential Public Procurement Framework Act. The regulations were a temporary measure to ensure that the 30% procurement policy was implemented.
The Department had also focused on informal businesses. Small businesses had raised issues over its red tape interventions. At the 2017 Local Economic Development Conference, one of the issues had been that by-laws needed to be simplified and that municipalities should consult with small businesses to address the challenges faced by the informal sector.
The Committee discussed the organisational structure of the Department at length. There were functions which still needed to be transferred from the Department of Trade and Industry, and the Department was advised to finalise its organisational structure.
The Department mentioned its partnership with National Treasury to identify challenges facing the Cooperative Development Bank, and to find solutions. One of the challenges was lack of participation in the National Payment System, and the proposed solution was to establish a banking platform project. Committee Members suggested an app-based bank. To fast track the establishment of a National Cooperative Bank, the Department suggested amending the Cooperative Banks Act; channeling government funding for small, medium and micro enterprises and cooperatives via Cooperative Financial Institutions; shifting the perception that cooperative banks were only for the poor; and supporting all cooperatives and not only those in the financial sector. The Department commented that the use of cooperative banks and cooperative financial institutions was limited, and suggested that the situation needed to be changed.
Committee members asked for clarification about the Department’s proposed organisational structure and when it would be finalised; why the National Interdepartmental Coordinating Committee did not include all government departments; what success the Department was achieving with its efforts to reduce red tape; when the Public Procurement Bill would be passed as an Act; how the 30% set-aside would help small businesses; and whether the Cooperative Banks Development Agency had considered an app-based facility for cooperatives.
The Chairperson commented that much had been said about small business development during the State of the Nation Address (SONA). President Ramaphosa had called on every South African to commit to bettering society with the slogan #Thuma Mina, which means “send me”. The Committee must change things to become more effective. She spoke about the Committee’s study tour to Kenya and Spain and mentioned that the trips needed to be postponed because they coincided with the Easter holidays, and in Kenya there was still political instability because a few departments had not been assigned ministers. That would change the Committee’s programme, but it would allow the Committee to follow up on many matters which formed part of the tracking tool, and issues raised by communities. For example, the Committee had received a letter from Abalimi wanting to know when the Department would implement the remedial action that had been agreed upon, and the Committee had had to conclude the forensic audit that it had agreed on.
Mr H Kruger (DA) asked that Committee Members be given the tracking tool, as requested the previous week.
The Chairperson said that the content advisor, Mr Sibusiso Gumede, was on leave and would attend to it on his return.
Mr S Mncwabe (ANC) asked that the Committee send its condolences to the five police officers who were killed at the Ngcobo police station on that morning. The Committee observed a moment of silence.
Mr Kruger asked whether Mr M Dirks (ANC) was still part of the Committee. He had assaulted a woman in public, and his behavior must be addressed in Parliament, as it was unacceptable.
Mr X Mabasa (ANC) said that Mr Dirks was merely an alternate in the Committee.
Mr Lindokuhle Mkhumane, Acting Deputy Director General, Department of Small Business Development (DSBD), apologised for the absence of the Director General, Ms Edith Vries. She was attending a meeting with the Organisation for Economic Co-operation and Development (OECD). It was a ministerial meeting which she had been sent to attend by the Minister.
The Chairperson said it was unacceptable that the Director General had prioritised traveling overseas over accounting to the Committee, and attending the Budget speech on that day to report to the Minister. Other Committee Members also expressed their disappointment at Ms Vries prioritising the overseas trip.
Ms N Mthembu (ANC) said that was important for Ms Vries to attend Committee meetings as an accounting officer. She had been absent from several meetings in the past. Whenever she did not attend, she did not consider the Committee’s recommendations. She always left it to the person that she sends on her behalf to Committee meetings. Reasons were required.
Mr Mabasa said there were certain events that could not be missed in the country’s calendar, like the Budget speech. Whether the Minister gave Ms Vries permission was irrelevant -- she must be held accountable for her absence at the Committee meeting.
The Chairperson outlined the three arms of the state: the executive which accounts to Parliament, and Parliament and the judiciary to which the executive and Parliament account when they have violated their obligations and mandate. The executive did not account to other entities like the OECD that Ms Vries chose to attend to over being present at the Committee meeting. The Minister, Ms Lindiwe Zulu, and Ms Vries had undermined Parliament by not send a written apology to the Committee regarding Ms Vries’s absence. The behaviour disregarded Parliament’s role. At some point, the Committee was supposed to be given the Department’s strategic plan, but the Minister had chosen to attend an event hosted by the Member of the Executive Committee (MEC) in KwaZulu-Natal (KZN). In previous meetings, when the marketing access unit was being reviewed, the person presenting was not the one responsible for the unit. The person responsible had merely sat through the presentation without reporting to the Committee. There was no action from the Department in responding to the needs of small, medium and micro enterprises (SMMEs), and it did not report on implementation of policies and plans. It merely prepared reports to present before the Committee without doing much work on the ground. This Department was no longer new, and needed to show progress. She said that the Committee’s discontent would be expressed in a letter to the Department.
Mr Kruger said that Ms Vries had previously underperformed when she was Director General of the Department of Agriculture and Forestry. He questioned the process of selecting executives for such positions. If there had been a problem in that Department, it should have been sorted out. With that track record, why had the Department appointed her as the Director General?
The Chairperson said that Ms Vries had been on retirement after working in the Department of Agriculture and Forestry, and before joining the DSBD. The Department must prioritise reporting to the Committee over things like conferences. The Committee did not want it to send scapegoats to account on its behalf. Whoever was responsible for a project must account to the Committee on that project. Before presenting to the Committee, Department officials were asked to state whether they were the people responsible for the resolutions they were reporting on.
Mr Mkhumane said that he was the Acting Director General for the week while the Director General was away. was responsible for overseeing resolution 57. Ms Brigette Peterson, Chief Director of Corporate Services at the Department, would present on resolution 77 as she was responsible for the reallocation of functions from the Department of Trade and Industry (the DTI) to the DSBD. Mr Jeffrey Ndumo, Acting Deputy Director General, would present on the Cooperative Banks Development Agency (CBDA), as he had been overseeing its progress.
The Chairperson stressed the importance of the Department indicating which persons oversaw which functions and projects so that the right person could be held accountable.
DSBD on progress in aligning functions
Mr Mkhumane said that the Department had established a national interdepartmental coordinating committee which consisted of 24 departments which were listed in the presentation. The departments meet once a quarter, and the attendance had been good. The main aim was to promote and support the growth and development of the small business and cooperatives sector through interdepartmental planning, co-ordination and reporting. The Committee had engaged on many issues facing small businesses -- for example, it had engaged with the Construction Industry Development Board (CIDB) about aligning its Contractor Incubator Programme (CIP) with Small Enterprise Development Agency (SEDA) incubators. The Department of Public Works (DPW) had established a Public Works Academy which worked closely with SEDA construction incubators. This committee allowed the DSBD to work with other departments to achieve its goals of developing small businesses and cooperatives. Such work was new for most departments. For example, the Department of Human Settlements (DHS) had engaged with the Department about how it localised procurement opportunities, not only in the country, but in municipalities like Nelson Mandela Bay and Mgungundlovu. The departments had shared their experiences on how to use the Intergovernmental Relations Framework Act to coordinate with various spheres of government.
Mr Mkhumane referred to the National Interdepartment Coordinating Committee’s nine-point plan, which sets out its aspirations for 2019. The plan identifies challenges faced by SMMEs and cooperatives, and proposes ways of addressing the challenges. These were set out in the presentation. One of the challenges faced by small business was access to finance. For example, only 27.3% of qualifying SMMEs were funded by development finance institutions (DFIs), and the conditions were generally similar to those of commercial banks, and had high interest rates. To deal with this, an Enterprise Development Fund had to be established, and this was being discussed with National Treasury. DFIs must reduce the red tape requirement for the sector and create a seamless pipeline. For example, SEDA and the Small Enterprise Finance Agency (SEFA) should streamline processes.
Mr Mkhumane then discussed the Procurement Bill.
Former President Jacob Zuma had announced that 30% of the expenditure by the public sector would be directed to SMMEs and cooperatives. National Treasury had been instructed to come up with the Procurement Bill, to give effect to the 30% set-aside. The Procurement Regulations became effective on 1 April 2017 while the Bill was being drafted to repeal the Preferential Public Procurement Framework Act (PPPFA). The regulations were a temporary measure to ensure that the 30% procurement policy was implemented. The National Small Enterprise Act was being amended, and the Cooperative Development Act was being reviewed. In 2018, the Department intended to make much progress with the consultations about these Acts before the Procurement Bill was passed as an Act.
Mr Mkhumane discussed the provision of financial and non-financial support to small businesses. The Department of Performance, Monitoring and Evaluation (DPME) was reviewing incentives within government because the effectiveness of incentives needed to be checked to see what could be done to increase their accessibility to small businesses. The Department expected the draft results of the assessment in the fourth quarter of 2017/18. It was also working with the Department of Science and Technology (DST) on the Small Business and Innovation Fund. Other projects were listed in the presentation.
The DSBD was also focusing on informal businesses. Small businesses had raised issues over the Department’s red tape intervention. In the 2017 Local Economic Development Conference, one of the issues was that by-laws needed to be simplified and that municipalities must consult with small businesses to address challenges faced by the informal sector.
In August 2017, Cabinet had adopted a mandate paper which identified key priorities and focus areas for 2018/2019. Job creation and small business development had been prioritised by departments focusing on the 30% set aside, localisation, integrated community development and community-based work. Other focus areas included youth development and infrastructure spending.
Mr Mkhumane said the Department had engaged with National Treasury in relation to resolution 77. Ms Vries had started discussing the cession of contracts with the Director General of National Treasury, but the matter had not been finalised. SEFA had raised concerns about the cession of contracts by stating that they needed support, because they had difficulty in recovering money that they lent to small businesses.
Regarding the review of the PPPFA, the Preferential Procurement Regulations had helped the DSBD to make progress -- for example, it prescribed compulsory sub-contracting and pre-qualifications. One of the pre-qualifications was that township and rural enterprises must be prioritised in tender processes. The Public Procurement Bill was at an advanced stage. Once passed, it would serve as the single national regulatory framework for public procurement in the country.
National Treasury provided the DSBD with information on the implementation of the 30% set aside policy which was discussed at the National Interdepartmental Coordinating Committee meetings and at inter-provincial committee meetings. This allowed the Department to monitor the implementation of the 30% set aside policy. For example, Free State had a provincial structure that assessed all government tenders to ensure that the 30% set aside policy was implemented. The DSBD had discussed a memorandum of understanding with National Treasury about accessing information on the Central Supplier Database and tender award information, etc.
DSBD Organisational Structure
Mr Mkhumane then reported on the organisational structure of the Department.
There were functions which still needed to be moved from the DTI to the DSBD. The Department of Public Service and Administration (DPSA) acted a mediator between the departments. In 2017, the DTI had been supposed to transfer 189 posts to the Department. The 24 posts from the export development function and skills for the economy had been filled with about four posts in the Department, but the people had returned to the DTI. Some officials had asked to be transferred to the DSBD, but had later returned to the DTI. The officials had returned to the DTI, but the budget had remained with the DSBD. A total of 166 officials had been transferred from the DTI to the DSBD.
The two departments had agreed to develop a review of the services to be offered by them. The concern was that the transfer of functions would break the DTI’s business model. The DSBD had prioritised key Programme One posts, like that of the Chief Financial Officer and the Chief Director of Corporate Services. On 31 January, the Department had compiled a report indicating the posts that needed to be filled. The DPSA would make recommendations and the Directors General from the two departments would discuss filling the posts.
On the advice of the Committee at a previous meeting, the DSBD had finalised its service delivery model and was redesigning its organisational structure, which was aligned to its strategic plan and service delivery model. The proposed structure was set out in the presentation.
Briefing on the Cooperatives Banks Development Agency
Mr Jeffrey Ndumo, Acting Deputy Director General, DSBD, and Deputy Chairperson of the Cooperatives Bank Development Agency (CBDA), said he was the chairperson of the stabilisation fund committee which dealt with liquidity matters for cooperatives. He apologised for not attending a previous Committee meeting where the CBDA had presented, as he had been ill on the day.
The Chairperson said that Mr Ndumo should have sent a representative on his behalf to that Committee meeting. Because he provided progress reports at meetings of Deputy Directors General, there must have been someone who could have presented his findings to the Committee. The findings of the CBDA needed to be understood in light of the Department’s understanding. It was unacceptable that what could have been done at that meeting had overlapped on the day’s meeting. The fact that the CBDA and the DSBS reported to the Committee on different days pointed to Ms Vries’s leadership and lack of alignment in the Department.
Mr Ndumo apologised for the inconvenience.
He referred to the partnership between the DSBD and National Treasury to identify challenges and find solutions. One of the challenges was the lack of participation in the National Payment System. The solution to this had been to establish a banking platform project. SEFA had contributed funds and the Department had invested R10 million in the project. It was a way of bringing Cooperative Financial Institutions (CFIs) and cooperative banks into the National Payment System. The National Payment System was a platform for cooperatives to make business transactions and for members of cooperative banks to have services similar to those of commercial banks, like accessing automated teller machines (ATMs).
Mr Ndumo discussed the Cooperative Banks Act, which had been passed in 2007. Some of its provisions were limiting for cooperatives, especially CFIs. For example, the Act provided that CFIs must save their funds with the four banks which had high charges, and this affected members of the CFIs. There was a need to amend the Act to allow CFIs to bank wherever they wanted to. The establishment of a National Cooperative Bank would charge them less and serve them better. National Treasury had started the process of amending aspects of the Act to address such issues.
Mr Ndumo said that the National Cooperatives Bank must be established by CFIs coming together through a secondary body. There were two existing banks, but their scale was not competitive in the cooperative space. The proposal was to combine the existing banks to form a national bank and for the government to provide financial support for its establishment. The national bank could provide banking services and loans to CFIs. Lessons could be learned from the National Cooperative Bank in Kenya, which the government had helped to establish.
He also proposed the establishment of a deposit insurance fund, which would insure the assets of the cooperative banks and the CFIs. National Treasury was researching ways of establishing such a fund. He was part of the Stabilisation Fund which assisted CFIs with liquidity problems. The government had given the fund R1.5 million, but that was not sufficient and should be increased to R5 million. Members of the Stabilisation Fund must pay a fee to contribute to the fund. SEFA had been approached to provide financial support to CFIs with liquidity problems. SEFA was in the CBDA committee for that reason.
Mr Ndumo identified ways of fast tracking the establishment of the National Cooperative Bank. These included amending the Cooperative Banks Act; channeling government funding for SMMEs and cooperatives via CFIs; shifting the perception that cooperative banks were for the poor; and supporting all cooperatives, and not only those in the financial sector. He noted the limited use of cooperative banks and CFIs, and suggested that the situation needed to be changed.
The CBDA previously had the following activities: capacity building, the regulation and registration of CFIs, and the implementation -- which included establishing a banking platform for CFIs. National Treasury had then moved the regulation function to the Reserve Bank. The CBDA was not allowed to provide funding to CFIs. This aspect of the Act would be amended. The DSBD had proposed a merger of the CBDA and the Cooperatives Development Agency (CDA) to National Treasury. The CBDA would provide financial support and the CDA would provide non-financial support.
Mr T Mulaudzi (EFF) asked why the National Interdepartmental Coordinating Committee consisted of only the 24 of the 35 departments. Why were some departments excluded? Was the DSBD not supposed to encourage other departments to include small business development in their budgets? Had it considered working with state-owned enterprises? Mr Mkhumane had said that there was limited intergovernmental cooperation and coordination, and fragmented planning in transversal and partnership agreements. The Department’s mandate was to reduce fragmentation between departmental agreements and it should work towards coordinating functions between departments. Mr Mkhumane’s presentation had indicated that existing transversal agreements, like the ones between BMW and Vodacom, had been concluded before 1 April 2017 had not provided for the 30% set-aside and localisation. How did the Department plan on making the private sector comply with the 30% set-aside? Mr Mkhumane had also indicated that the DSBD planned on intensifying local procurement by introducing local mottos on all government job adverts. Mr Mulaudzi said that there was nothing radical about changing the wording on adverts, because adverts could not empower SMMEs. Regarding land reform and agricultural development, what support would the Department give to SMMEs when land was expropriated? He also asked for clarity on the Department’s proposed organisational structure.
Mr Kruger asked for clarity on the Department’s efforts to reduce red tape, and the success rate of its efforts. He said that the DSBD could not propose plans for cooperatives without the Act governing them in place. He advised it to prioritise passing the Act.
Rev K Meshoe (ACDP) asked whether the DSBD had signed transversal agreements with the 24 departments in the National Interdepartmental Coordinating Committee. Regarding the stabilisation fund, what fee would cooperatives be expected to pay? Why had employees sent to the Department from the DTI returned to the DTI after six months in the DSBD?
Mr N Capa (ANC) asked when the Public Procurement Bill would be passed as an Act. He was not convinced by the Department’s proposed organisational structure -- what could be done to fast track the transition of the DSBD from the DTI? Were there obstacles that could be identified and addressed by the Committee? Would any of the Department’s proposals be implemented during the fifth Parliament, or was it not concerned about when implementation happened?
Mr Mncwabe asked how the two existing cooperative banks had been assisting cooperatives.
Mr S Bekwa (ANC) referred to President Ramaphosa’s SONA. Was the Department focusing on developing the lives of South Africans, as called upon by the President?
Ms Mthembu said that the Department was always presenting to the Committee, but there was little implementation of the proposals made. She welcomed the Southern African Development Community (SADC) simplified trade regime which would allow cross-border trading for SMMEs and cooperatives. Regarding the 30% set-aside, why was it that the provinces were not able to provide answers as to whether they adhered to the 30% set-aside? She suspected that answers were not provided because corruption was rife.
Mr Mabasa referred to the CBDA, and asked how adequate liquidity was going to be provided. Adequate funding would also be needed to address the challenges. Inadequate funding reduced confidence in the participants. Regarding the 30% set-aside, what support would small businesses be given to produce good products?
Mr R Chance (DA) asked when the organisational structure would be finalised. It was unacceptable that the DSBD permanently had ‘acting’ positions. Given that President Ramaphosa wanted to restructure the government and reduce the number of departments, where did the Department see itself in that structure? What was the solution to the overlapping of roles in DFIs? Why had the Department transferred skills only from the DTI? Money was being wasted, because there was a situation of money chasing cooperatives. Cooperative banks that were formed must not fall into the same trap. There was a problem with the top-down government-driven approach. There should be a bottom-up community-driven approach. The Department should adopt a holistic approach to finance that included grants, equity and loans. It must consider the Cooperatives Incentive Scheme. The merger between the CBDA and CDA did not make sense. There was a conflict of interest, because the CBDA was a supervisory body and not an implementing agency. The merger should be between the CDA and SEDA. This aligned with the Department’s mandate to have enterprises and cooperatives under one body. Had the CBDA considered the business model of Bank Zero, an app-based bank that was chaired by Michael Jordaan, former CEO of FNB. This could be a possible model for the cooperatives development bank, because we were in the era of the fourth industrial revolution and technological change. An app-based bank would reduce costs.
The Chairperson said that the unanswered questions would be responded to by the Department at another meeting with the CBDA. The CBDA could provide the legal and regulatory framework on how South Africa should develop a national cooperatives bank, but it could not implement such policies as they would be playing the role of both player and referee. Regarding the National Interdepartmental Coordination Committee, was there a national accord that compelled the identified departments to contribute to the development of small businesses?
The DSBD must identify what challenges it needed to respond to and the consequences of such challenges, which included poverty and unemployment. There were other departments that were responding to some of these challenges -- for example, the Department of Social Development intended spending R175 billion on social grants by 2020. If that was the case, the country would become bankrupt because it was spending on welfare instead of building a developmental state. The Department of Basic Education supported the national school nutrition programme to assist children from poor families with meals. Regarding the Department of Human Settlements, it was only South Africa that provided housing for its citizens. Providing housing was not a developmental intervention. The Department of Transport provided scholar transport. The abovementioned departments spend more on welfare than development. Therefore, it was up to the Department to prioritise development in the country. The budget should be shifted from the welfare to the developmental aspect of expenditure. The National Interdepartmental Coordination Committee should be used for this purpose.
In response to Mr Kruger’s question, Mr Mkhumane said that the Department was working toward reducing red tape. The Department had assessed whether there had been a red tape reduction in municipalities. The results had been mixed and showed that some municipalities struggled to follow the guidelines. The report on red tape reduction would be sent to the Committee secretary.
Mr Ndumo said that it was not necessary to wait until the Cooperatives Act was finalised. The plans could be used to influence the amendment of the Act. Regarding Mr Chance’s question on the CBDA being the supervisory body, Mr Ndumo said that the CBDA had been established to regulate aspects of registering and supporting CFIs. The regulatory function had then been moved to the Reserve Bank. Only the capacity building aspects remained with the CBDA. He did not agree with the proposal to merge the CDA and SEDA.
The Chairperson asked how the Department intended using funds from other departments when it could not properly use the funds originally allocated to it.
Mr Mkhumane responded that the Department had capacity problems, and that this would be addressed. The European Union (EU) would be giving the Department technical support to help with capacity problems. The Department planned on improving on its expenditure in 2018.
Not all the departments in the National Interdepartmental Coordination Committee had signed transversal agreements. Some of the departments had not signed the transversal agreements with the DSBD because they had focused on their own priorities. For example, the Department of Human Settlement had wanted the agreement to be signed at the ministerial level, but after much engagement the directors general of the two departments had signed the agreements.
The Chairperson said that the Department should be guided by the Committee’s strategic plan. Four things needed to be addressed:
- The Department’s performance would be monitored in relation to its adherence to the Intergovernmental Relations Framework Act, because the Act defined the Department’s mandate on transversal agreements.
- The Department’s performance would be monitored in relation to its understanding of the integrated developmental planning process at the municipal level.
- The National Spatial Developmental Perspective was not going to yield any result to fund SMMEs that were not involved in the Perspective. Investors were not attracted to such SMMEs.
- The local economic development strategy of municipalities.
Mr Mkhumane said that the DSBD would prioritise putting any national accord to the National Interdepartmental Coordination Committee.
Regarding the transfer of skills from the DTI to the DSBD, people who had been transferred to the DSBD had returned to the DTI when their chief officer had returned. Other employees felt that working in the DSBD was too pressurising, as the Department was always in the spotlight to achieving its mandate of developing small businesses.
The Public Procurement Bill was being finalised by National Yreasury and being worked on by the state law advisor. The plan was to table the Bill in parliament in 2018.
Regarding the organisational structure and the transfer of skills between the DTI and the DSBD, Ms Peterson commented that the DSBD had a low turnover rate of between 3-5%.
The Chairperson said that the turnover rate was irrelevant, because Mr Mkhumane had already admitted that working in the Department was pressurizing, compared to the DTI. The Chairperson was disappointed that the Department had been established in July 2014, but still did not have an organogram. She asked when the organogram would be finalised. The Department could learn from the Department of Economic Development, which had established an organisational structure. Many bodies in the Department had still not been established, like the small business advisory council which was supposed to have been established in 2015, according to legislation. The CBDA and CDA had also not been established. This meant that the Department was violating the government policies and Acts directing it to do so. The DSBD was advised to finalise the appointment of officials, like the deputy director general, as these were still acting positions.
Ms Peterson said that the organisational structure would be approved by the end of March 2018. Two deputy director general posts had been advertised in 2017. Interviews had been conducted and the posts would shortly be finalised.
Mr Ndumo said that two cooperative banks existed in South Africa -- in Oranje and the North West -- and they were showing progress. However, the Department had not figured out how to establish a national bank from the two banks.
The Chairperson said that developing a national bank would defeat the purpose of a cooperative bank, which was aimed at allowing members of a group to provide a service for themselves. The national bank established by the Department would have to provide services to different sectors. The DSBD could not use Oranje as an example, because it had different values and principles, and served only the needs of Afrikaner people who even had their own currency. That did not mean that Oranje was a bad example of how to facilitate sustainable socio-economic development.
Mr Ndumo said that in developing the banking platform, the DSBD had taken a bottom-up approach by engaging with cooperatives. He admitted that disagreements between the Department and cooperatives had not been handled well, and therefore it seemed as though a top-down approach had been used.
In respect of the stabilisation fund, the CBDA had not agreed on the fees to be charged to cooperatives. The CBDA planned to get funds from the government and cooperatives. In response to Mr Chance’s question, he said that the CBDA had not considered an app-based bank.
The Chairperson said that the Department could not talk about the digital and fourth industrial revolution without considering an app-based bank. The strongest country in cooperative banking was Canada, but it did not have a national cooperative bank. However, Kenya had a national cooperative bank. The type of cooperative bank established would depend on the structure of different communities in South Africa. Cooperatives banks needed to respond to the problems faced in South Africa.
The meeting was adjourned.
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