Committee Report on Department of Small Business Development 2019/20 Budget

Small Business Development

10 July 2019
Chairperson: Ms V Siwela (ANC)
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Meeting Summary

The Committee went through its Report on the Department Budget Vote. The Recommendations noted that there were a large number of legacy issues that remain unattended. Some had budgetary implications while others will hamper the speed with which the Department must execute its mandate. A deadline of 31 July 2019 was set for the Committee and Department to deliberate on these matters to ensure implementation.

One of these legacy matters was the suspension of nine DSBD officials and the Committee Report recommended an urgent meeting with the Auditor General before 31 July 2019 to table a formal report to the Sixth Parliament on the remedial action proposed for the corruption and fraud allegations exposed in DSBD and for the Department to brief the Committee on detailed plan of action and disciplinary measures it shall adopt in applying the Auditor General recommendations. 

Another recommendation was for DSBD to present its progress on the review of the National Small Enterprise Act as well as the rationale for excluding the definition of a small enterprise and the alternative dispute resolution mechanism. The DSBD position on the review of the Co-operatives Act must also be clarified. Likewise, reviews of the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises and the Integrated Strategy on the Development and Promotion of Cooperatives as these have been under policy initiatives for three consecutive years without a hint of what their statuses are.

The meeting date of 24 July 2019 before Parliament goes into recess was set for the meeting with the Auditor General and DSBD. The Committee then adopted its Report.

Meeting report

The Chairperson said that she would like to see the Committee as a disciplined team which will have a positive impact in Parliament and in society at large. Even though this might be seen as a small department, it is the key department for economic growth and job creation. She highlighted the importance of working together as a team in order to move towards the right direction to assist society. “Our interest is the interest of the society not of individuals”.

The Chairperson had to be excused from the meeting as she had been asked by the House Chairperson to preside over a plenary budget vote debate. Mr F Jacobs (ANC) took over as Acting Chairperson.

Committee Report on Department of Small Business Development 2019/20 Budget
Mr Sibusiso Gumede, Committee Content Advisor, took the Committee through the report going through its Observations and Recommendations. The Budget Vote document is a synthesis of what the Department of Small Business Development has recommended to its entities including Small Enterprise Development Agency (seda) and Small Enterprise Finance Agency (sefa).

The report also contained background on the budget vote process, an overview of the Department and its legislative and policy mandates, and programme structure: Administration; Sector Policy and Research; Integrated Cooperatives Development; Enterprise Development and Entrepreneurship.

On page six there is the previous expenditure analysis based on the Estimates of National Expenditure. The responsibility of the Committee is to ensure there is consistency to what was presented in 2018 to National Treasury. On page seven are the policy priorities that underpin the work of the Department - the National Development Plan is the vision for 2030 which is unlikely to change; the New Growth Path (NGP) is the government key programme to take the country to the higher growth trajectory. The Medium Term Strategic Framework 2014-2019 is now coming to an end. The new 2019-2024 MTSF is currently being developed and the strategic plan of the department will have to take a cue from this going forward.

Mr Gumede noted that during the State of the Nation Address the President had pronounced on the small enterprises sector.

On page eight are the Planned Policy Initiatives that DSBD will undertake even though it is not clear yet whether this is going to be only for the current financial year because the only policy initiative that it plans to take is the long outstanding review of the National Small Enterprises Act which has been on the agenda since 2015. Hopefully it will be done in the course of this year. DSBD plans for the Integrated Strategy on Promotion of Entrepreneurship and Small Enterprises and the Midterm Review of the Co-Operatives Strategy (2012-2022) were noted.

On page nine is the Budget Analysis presented by DSBD with a total MTEF budget of R8 billion. Programme 1 Administration is allocated R124 million for 2019/20 that will increase to R139 million. The entire budget for 2019 is R2.5 billion which is also made up of transfers to seda and sefa. For the first time, there will be transfers to sefa via budget vote 31 of R1 billion. DSBD will be left with R458 million after a transfer of R860 million to seda.

On page 11 is the breakdown of transfers in table 5 the total to sefa from DSBD is R1 billion. There is another allocation that will come through from the Economic Development Department (EDD) Budget Vote 25. EDD is now being collapsed into the Department of Trade and Industry which means that its vote will shift to DTI. The total allocation to seda of R867 million is for the technology programme; the capacity building programme; the Gazelles programme and the Enterprise Incubation Programme. Then there are the DSBD transfers for the Black Business Supplier Development Programme (BBSDP); Cooperatives Incentive Scheme; National Informal Business Upliftment Scheme (NIBUS); and Craft Customised Sector Programme. The total is R2.3 billion.

On page 12 onwards is the expenditure breakdown for each programme.

No additions or changes were made by the Committee.

Observations
Mr Gumede read through each of the observations. No amendments were made to these observations by the Committee.

Recommendations
Mr Gumede proceeded with the recommendations:

These started by noting that during the budget vote presentations it became apparent that there were a large number of legacy issues that remain unattended, some have budgetary implications while others are likely to hamper the speed with which the Department must execute its mandate. A deadline of 31 July 2019 was set for the Committee and Department to deliberate on these matters to ensure implementation.

One of these legacy matters was the suspension of nine DSBD officials and the Committee Report recommended an urgent meeting with the Auditor General before 31 July 2019 to table a formal report to the Sixth Parliament on the remedial action proposed for the corruption and fraud allegations exposed in DSBD and for the Department to brief the Committee on detailed plan of action and disciplinary measures it shall adopt in applying the Auditor General recommendations. 

Another recommendation was for a meeting with DSBD to present its progress on the review of the National Small Enterprise Act as well as the rationale for excluding the definition of a small enterprise and the alternative dispute resolution mechanism. In addition, DSBD position with respect to the review of the Co-operatives Act must be clarified. So are reviews of the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises and review of the Integrated Strategy on the Development and Promotion of Cooperatives (2012 - 2022). These have been under policy initiatives for three consecutive financial years without a hint of what their statuses are.

Mr H April (ANC) asked when DSBD is coming to provide the needed clarification.

Mr Gumede responded that there is one date before the end of this session on 31 July 2019 available for that particular meeting.

Ms K Tlhomelang (ANC) asked what the process is for the Auditor General to forward its report to the Sixth Parliament.

Mr Gumede responded that once the Portfolio Committee adopts this report, the deadline date of 31 July 2019 is binding. The Auditor General will be invited to present its formal report to the Portfolio Committee as per the recommendation. Then the Portfolio Committee must implement.

Mr Gumede said that the date that he is proposing is 24 July 2019 before Parliament goes into recess.

All committee members agreed to the 24 July 2019.

The Committee Report was adopted.

The Committee adopted minutes of the 2 and 3 July 2019 meetings.

The meeting was adjourned.


 

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