The Committee on Small Business Development met to consider and adopt the Draft Budget Vote Report for 2020.
The Chairperson observed that the meeting was just a formality, as they would ask the Department to go and review the Report after the Minister had tabled it in Parliament, as there would be many budget cuts as a result of the Covid-19 pandemic.
The majority of the Members adopted the budget, with the EFF rejecting it because of the Department's perennial failure to collect loans. A major recommendation advocated by the Members was the amalgamation of the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (Sefa), and the quick finalisation and filling of senior management vacancies in the Department.
2020 Budget Vote Report
Mr Sibusiso Gumede, Content Advisor: Portfolio Committee of Small Business Development, presented the Draft Report, noting it was based on the Annual Performance Plan and the new Strategic Plan of the Department. The new Strategic Plan was yet to be presented to the Committee. The Report also outlined the Portfolio Committee process which had been followed, but the Small Enterprise Development Agency (Seda), which used to be included in the budget, could not be included this time, as the budget adoption was needed today.
There was a special adjustment budget in the Report which acknowledged the impact of the Covid-19 pandemic. The overview of the Department, which included its mandate, vision, mission and values, had been reviewed so it was in line with the new Strategic Plan of the Department. The Report had also looked at the legislative and policy mandates, and in that section nothing much had been changed. The programme structure had also been aligned with the new Strategic Plan.
Focusing on the policy priority for 2021, Mr Gumede advised there was now a mid-term strategic framework that was anchored on three pillars which seek to enhance the work of the Department. He alluded to the fact that the report also focused on the State of the Nation Address (SONA), paying particular attention to the issues the President had addressed concerning small business development.
Mr Gumede said they had not included a separate chapter on the budget Estimates of National Expenditure, as the initial figures presented to National Treasury had been reconfigured, and the Department had been allocated R129 million. The Report had made a slight change, indicating the DSBD was seeking to enhance entrepreneurship development.
The mandate and legislative framework of the State Enterprise Finance Agency (Sefa), and its financial considerations, had been looked at, as its allocation had declined by almost R24 million. However, the Report did not change Sefa’s programme overview.
The Chairperson commented that the Committee should add a recommendation which stated that it was aware of the disruptions caused by Covid-19, and that it would negatively impact on the budget. However, they were appealing that whatever the Department did under these difficult circumstances, they should try by all means to make sure they assisted small businesses to survive in these tough times, especially those in the rural areas. She commented that the Department should speed up the finalisation of organograms, as there was a lot the Department could do. The Committee should write to the Department, requesting them to report back on this matter, and if there was anyone who was frustrating them from going ahead with this, it should inform the Committee.
Mr T Langa (EFF) said he was under the impression that Sefa was an entity of the DSBD, but the presentation stated that its allocations came from the Department of Trade and Industry (Dti), which was not under the Committee's purview. He therefore asked on what grounds was the Committee supposed to adopt a budget of an entity which was being allocated money by a department which was not under its jurisdiction. The draft report indicated that Sefa was struggling to collect outstanding loans, yet the Committee was continuously being made to pass the budget when nothing was coming back. Instead of passing the budget, why did they not try and fix the issues that were affecting the Department and hampering its efforts to help small businesses? He commented that in KwaZulu-Natal (KZN) there were fewer than five people who had been supported by the Department, so there was no need to pass the budget when the money was not even reaching the intended beneficiaries.
Mr Gumede responded that Sefa got its Medium Term Expenditure Framework (MTEF) via the Economic Development Department (EDD), and they had not received any new information to suggest that Sefa would officially be relocated to the DSBD. The presumption currently was that since the EDD had been collapsed under the Dti, Sefa would therefore move with the Industrial Development Corporation (IDC) to Trade and Industry. There was a recommendation around this particular matter, which was connected to the issue of an amalgamation of Sefa and Seda.
Regarding Sefa’s financial performance, they were making a clear recommendation to say they needed a dedicated session where Sefa should provide a clear understanding as to what was happening.
Ms K Tlhomelang (ANC) agreed with the Chairperson that the Committee should acknowledge the impact of Covid-19 on the budget, and appreciate what the Department was doing during this time. A few years back, the Committee had agreed that Sefa and Seda should be put together, so this issue of amalgamation of the two was in the public domain. She emphasised that the Department should speed up the amalgamation process. The Committee could not let the Department continue to function without accountability. Furthermore, the report indicated that there were still vacancies in the Department for all senior management posts. She insisted that the Department should come and give a report on whether they had filled those positions or not, and brief the Committee on the progress.
Mr Gumede said he would craft the recommendation around Covid-19 and the speeding up of the appointments, and would bring it back before the report was sent.
Mr F Jacobs (ANC) accepted the budget, and appreciated the DSBD’s efforts in trying to assist small businesses during this difficult time. He said that last year the Minister had focused on youth employment and entrepreneurship, which targeted on producing 1 000 products locally. A few days ago, he had visited a factory that was making masks and the owner had told him that when the mask was imported, it cost R3, but if they were produced locally it would cost R12. He advised the Committee that if they urged these small businesses to invest in machinery, that R12 would create jobs and many opportunities for the country's youth. He argued that more must be done to encourage innovation, and the Committee should put pressure on the Department to give loans to these small businesses.
Mr Gumede said that these observations had been captured in the SONA section of the draft report, and there was a need to see how these issues had been addressed to date.
Mr Langa requested further elaboration on the financial wing of the Department. He said that if the Department was failing to collect loans it was very difficult for the Department to function, and the situation would get worse because of Covid-19, so he rejected the budget.
The Chairperson responded that the Department had been recommended to come up with a turnaround strategy, and the Committee had requested a report which would spell out on how best it was going to stabilise this issue.
The Chairperson announced that the Committee would indicate that the majority had adopted the Report, except for Mr Langa, who had indicated his rejection.
The meeting was adjourned.
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