The Portfolio Committee met to consider and adopt the first quarter Committee programme, and also to get a briefing on the revised 2019/20 annual performance plan of the Department of Small Business Development.
The Members adopted the first quarter programme, but raised concerns over the fact that the responsible Minister was not in attendance and that she had not attended any of the Committee's meetings. They agreed that the Chairperson of the Committee should engage with the Minister on the matter, and give feedback at the next meeting. The Committee also agreed to invite three big businesses to find out what they were doing to help small businesses.
The Department gave the Committee details of its revised annual performance plan. The report indicated the changes that had been made, which included the creation of a single database, the formulation of the National Small Enterprise bill, the development of a small, medium and micro enterprises (SMMEs) measurement framework, and the movement of the one-stop SMME platform from the DSBD to the Small Enterprise Finance Agency (SEFA) and the Small Enterprise Development Agency (SEDA).
Members welcomed the revised version, but raised concerns over the lack of control by the DSBD which was indicated by the continuous delegation of their work to SEDA and SEFA. Members also wanted to know why the Treasury had reprioritised R300 million which had originally been included in the Department’s R1 billion Small Business Innovation Fund budget. They were told it was being used to assist the Treasury to deal with the situation at Eskom and South African Airways (SAA).
Committee’s First Quarter Programme
The Chairperson requested the Members to go through the quarter one Committee programme, and consider it for adoption. The Members adopted the programme, but raised concern over the absence of the Minister at their meetings. They asserted that the Minister was not taking the Committee seriously. The Chairperson promised she would engage with the Minister and raise the Committee’s concerns, and agree on the next step.
The Committee also agreed to invite three big businesses, such as Pick and Pay or Woolworths, and ask them what they were doing to help small businesses.
Revised Annual Performance Plan of Department of Small Business Development
The Committee received a briefing on the 2019/20 revised annual performance plan of the Department of Small Business Development (DSBD).
Mr Lindokuhle Mkumane, Acting Director-General, said the Small Enterprise Finance Agency (SEFA) had initially been allocated R1 billion by the National Treasury, but Treasury had reprioritised R300 million and as a result, when they reported at the end of the year, they would be reporting based on R700 million they got from the Treasury, and not R1 billion.
He said that in their 2018/19 plan, they had indicated that they were going to conduct two information communication technology (ICT) system projects defined in the DSBD’s ICT plan, but they had now amended that by designing a Phase 1 project. This Phase 1 project was the launching of a small. medium and micro enterprises (SMMEs) and co-operatives database which they had designed and implemented. From this database, they would derive information which varied from the sectors involved -- the names of the people in these sectors, their services, etc.
He conceded that in their initial plan they had been over-ambitious when they claimed that they would create an ombudsman office in their Department. However, they were now sure that they would not be able to have that office by the end of their financial year, and as a result they had scratched that target.
Mr Mkumane said that on 4th March, the DSBD would present the finalised consolidated proposed amendment of the National Small Enterprise Bill in Parliament. In the bill, there was a clause on unfair business to business enterprises, which would then go out for the public to comment on it.
He told the Committee that the Department had also amended the SMME index that had been developed. They would not have the index by the end of the financial year in March, but would now have a measurement framework for the SMME index. Furthermore, in their initial tabled plan for 2019/20 they had tabled that they would have an informal sector register per trade, category, location, and ownership, but they had moved this programme to form part of their Phase 1 project, which had the SMME and co-operatives database which had already been designed. The reasons for this move were because of the need of the Department to have a consolidated database that would have all the information in one, and one could filter the search to whatever one wanted.
Mr Mkumane said the Department had assigned SEFA to now conduct the yearly report on the implementation of the business turnaround and retention, and the DSBD would play only an oversight role. In their initial plan, they had tabled 15 enterprises that were to access designated products and services, but in their revised targets they had now removed that from the annual performance plan because of the comprehensive work the Department was doing on the 1 000 designated products.
The DSBD would have four product markets rolled out in a plan for SMMEs and cooperatives developed by year-end. Furthermore, there were 20 SMMEs and co-ops whose product quality had been tested and improved. The Department had made a change in the language used in the initial plan, where they had indicated they were to have a master plan on SMMEs, but now they had changed it to guidelines on SMMEs and cooperatives contracting. They had also moved reports on the roll-out of the credit guarantee schemes to SEFA, and the partnership accord with industry bodies had also been moved to the operational plan of the Department.
Mr H Kruger (DA) asked if the DSBD was not going to review the funding model of their Department.
Mr Mkumane responded that where “Not Applicable” appeared in their plan, it indicated the issues or plans they were not going to change.
Ms K Tlhomelang (ANC) asked what would happen to the new SMMEs that were emerging, and how the new system would incorporate them.
Mr Mkumane replied that the system would be configured on all platforms at the following organisations: the Companies and Intellectual Property Commission (CIPC), the DSBD, the South African Revenue Service (SARS), and National Treasury. As a result of this integration, a client would have a unique number that would apply to everyone, and this would cut down on red tape. The Department would also make sure that it was accessible, and it would utilise all municipalities to increase access and ease the process.
Mr H April (ANC) stressed that he was worried by the figures in the budget which seemed to indicate that half of the DSBD budget was being spent on administrative work, and was not getting down to the intended beneficiaries.
He and Mr T Langa (EFF) also sought clarity on the R300 million reprioritised by National Treasury.
Mr Mkumane responded that National Treasury had the power to give them money and take it away, and the Department did not have the power to say anything about it. The National Treasury had said the reason they were taking R300 million from them was that they wanted to deal with Eskom and South African Airways (SAA) issues.
Regarding the budget, he contended that it was not true that most of the money went to administrative work. In fact, 90% of the budget was channelled to the work on SMMEs.
Mr M Hendricks (Al Jama-Ah) said his view was that SEFA and the Small Enterprise Development Agency (SEDA) were useless departments, and the DSBD needed to show that they were in control and not giving everything to SEFA and SEDA. He questioned how the Department could do their oversight work on these entities when there was a middleman in the whole set up. He argued that the two agencies should be integrated. The DSBD should be in control, and the Committee should show leadership on this matter.
The Chairperson adjourned the meeting.
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