DSBD on: SMMEs in distress; COVID-19 intervention measures; funding for SMMEs; with Deputy Minister

Small Business Development

03 June 2020
Chairperson: Ms V Siwela (ANC); Mr M Rayi (ANC, Eastern Cape)
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Meeting Summary

Video: JM: PC on Small Business, SC on TDI, Tourism, Labour,3 June 2020
Audio: DSBD on: SMMEs in distress; COVID-19 intervention measures; funding for SMMEs 

The Department of Small Business Development (DSBD) briefed the joint Committees on the support provided by two of its entities – the Small Enterprise Finance Agency (SEFA) and Small Enterprise Development Agency (SEDA) -- to small businesses struggling to survive in the wake of Covid-19’s impact on the economy. It said the applications for financial relief were overwhelming, and funds were drying up. The DSBD was engaging with National Treasury, which had promised that the Department would be given more funds in order to respond to outstanding claims that were legitimate and met the criteria. Further opportunities were available for those businesses which had registered their employees with the Department of Employment and Labour (DEL).

The Department presented an update on their Covid-19 response interventions and lessons learned in minimising the negative effects on small businesses. The presentation described the SEFA administered interventions; the SEDA administered support; the number of applications received per province; the implementation status of small, medium and micro enterprise (SMME) debt relief; the payment holiday for SEFA funded clients; and the Spaza Shops Support Programme (SSSP).

Several Members related personal experiences involving small businesses in distress. One proposed that the DSBD start a suicide helpline to help small businesses that had gone under because of Covid-19. He knew of four small business owners who had already committed suicide, and other small business owners were also on the edge of committing suicide. The Department was asked how it could support more of the 100 000 spaza shops in the country; how to get commercial banks to be less stringent with their lending criteria; why sole proprietors of small businesses were being excluded; whether businesses that were not Broad-Based Black Economic Empowerment (BBBEE) compliant were eligible for support; and what could be done to focus more on women, rural areas, youth and townships, as this was where the traditional people were, who had been marginalised for the longest time.

The Committees agreed that there would be regular meetings to monitor the progress of the Department’s support programmes.

Meeting report

Chairperson Siwela indicated that she would start the meeting and thereafter Co-Chairperson Rayi would take over. She asked Chairperson Rayi if he would be present for the rest of the meeting.

Mr F Jacobs (ANC) that the Portfolio Committee had a meeting at 18h00.

Chairperson Siwela responded that the meeting would be finished by 18h00. She explained that she had a family funeral to attend the following morning, and would like the co-chairperson to take over.

Chairperson Rayi agreed.

Chairperson Siwela welcomed Members to the meeting and extended appreciation to those leaders from the National Council of Provinces (NCOP). She knew that Members were trying their best so that the Committee continued at all costs.

Chairperson Rayi expressed condolences to Chairperson Siwela and her family, on behalf of both Committees, during this difficult period. He said the meeting was about updating the Committees on the interventions employed by the Department of Small Business Development (DSBD) and the measures that they were taking in terms of the effects of Covid-19 on small businesses. On 28 April, the Committees had a briefing from the Department on what they were doing and the measures and interventions that they were embarking upon to minimise the negative effects on small businesses. Today, the Committees were receiving an update on what the Department was continuing to do in terms of those interventions.

Minister’s concerns

Ms Rosemary Capa, Deputy Minister of Small Business Development, said that disturbing phone calls might have been heard regarding what the Department had promised. This was in terms of responding to the expectation that, when government required society to remain home and stop business, there was an assurance that businesses would be assisted to stand up on their feet again. Processes had been put in place, such as funding for such claims through the Resilience Fund that the Minister had spoken about, or assistance through the Unemployment Insurance Fund (UIF) for those employers who were no longer able to employ their employees due to the fact that they had gone down financially as a result of non-operation during the lockdown. There was also the promise that issues like rental would be paid for, and that the Department would support these activities through the Small Enterprise Finance Agency (SEFA), supported by the Small Enterprise Development Agency (SEDA), who would be assisting people to access whatever they required in terms of communicating with the Department.

She was worried to say that the applications were overwhelming, and as they continued to come in, funds were drying up. To date, this matter had been referred to the National Treasury, which was being engaged by both Mr Lindokuhle Mkhumane, Acting Director-General, DSBD, and the Minister. The Department had been promised that they would be given more funds in order to respond to the outstanding claims. The outstanding claims were legitimate and compliant, as the individual small, medium and micro enterprises (SMMEs) had claimed before the closing date and qualified at all costs by submitting all documents required by them.

At the same time, there was another opportunity that had not been available before, for those who had registered their employees with the Department of Employment and Labour (DEL). Of late, even those businesses that had employees who were not registered with the Unemployment Insurance Fund (UIF) could go there and apply. Most of the details would be presented in the report, which was inclusive of SEFA, SEDA and the Department.

Update on Covid Response Interventions and Lessons Learnt

Mr Mkhumane explained that SEFA and SEDA had decided to combine their presentations, because they had worked together on delivering the interventions.

He presented on behalf of the Department, SEFA and SEDA. The presentation considered the SEFA administered interventions; SEDA administered support; the number of applications received per province; the implementation status of SMME debt relief; the payment holiday for SEFA funded clients; and the Spaza Shops Support Programme update.

The SEDA administered interventions, and key lessons learned included:

  • SMME Debt Relief Fund – The lockdown created cash flow challenges in many SMMEs. This resulted in SEFA receiving about 14 800 applications, compared to 250 applications per annum via its direct lending channel. This created capacity challenges with the timeous processing of applications.
  • Business Growth/Resilience Facility – Insistence on SMMEs registering their employees for the UIF was critical.
  • The Spaza Shops Support Programme (SSSP) – The SSSP was delivered through the effectiveness of public-private partnerships (PPP) involving the Department, commercial banks and wholesalers. With the grant allocation being the first phase of the programme, the government’s triple challenges were addressed by keeping the spaza shop owner in business. The co-ordination of the SSSP was assisted by the South African Local Government Association (SALGA), which allowed municipalities to issue trading permits to the spaza shops.
  • Payment holiday to SEFA-funded clients – To monitor the implementation of the payment holiday, SEFA was implementing a monthly business conditions survey to assess the business performance in terms turnover, employment and ongoing operational challenges. As per the sustainability of SEFA, the payment holiday to clients meant no cash would flow to SEFA during this period. This would negatively impact on SEFA operations, and SEFA would need to find alternative ways of increasing its revenue.
  • Tenants in SEFA-owned properties – The majority of SEFA-owned properties were in townships, so the support given contributed to the creation of jobs, reduction of poverty and addressing the prevailing inequality. To contain the spread of the coronavirus, only providers of essential services continued to trade, and proper health protocols were to be followed.

The SEDA administered interventions and lessons learned included:

  • Assisting applicants to the Debt Relief Fund with compliance. SEDA checked the gaps in the information that was submitted to SEFA, and re-submitted the applications with the required documents. There was a SEDA awareness drive to educate small businesses about the importance of submitting their annual returns to the Companies and Intellectual Property Commission (CIPC).
  • Assisting applicants to the Spaza & General Dealer Support Programme to meet the CIPC requirements. The same support would be available to the small businesses that would participate in the other informal sector programmes that had been launched by the Department. Some of the municipalities had been very supportive of the programme and were referring clients to SEDA to improve the uptake in their areas. Municipalities had a very important role to play as access points where the Dept and its agencies did not have a physical presence to bring services closer to the people.
  • Compiling and validating databases of SEDA clients and other stakeholders that produce essential products, and submitting them to the Department for inclusion as suppliers and in the various requests for information (RFI). There was a need for awareness programmes for the small suppliers on the importance of having their products certified and meeting product standards.
  • Assisting these small suppliers to meet compliance and standards. There were SEDA-supported incubators that served as testing stations. Providing training of the small suppliers on costing and pricing. Most of the suppliers needed to be assisted with lowering their production costs through assessments so that their pricing could be competitive. There was a need for awareness programmes for the small suppliers on the importance of having their products certified and meeting product standards.
  • Development and submission of proposals for the funding of unemployed graduates to the National Science Foundation (NSF) and the Sector Education and Training Authorities (SETAs). The aim was to utilise unemployed graduates as an extension of SEDA’s business advisors.

A total of 35 865 SMME Debt Relief Fund applications was received. 14 451 were complete applications (40% of total applications), and 21 414 were incomplete (60%) -- and referred to SEDA for assistance. 1 501 applications were approved, and 2 246 were SSSP applications. Most applications (12 640) were received from Gauteng. KwaZulu-Natal had 6 451 applications and the Western Cape had 4 755 applications. The fewest applications were received from the Northern Cape (932).

The implementation status as at 28 May was that out of the total of 1 501 approved applications, 21 580 jobs could be maintained, and a total of R530 million was being invested. R194 million was going to Gauteng (529 enterprises and 7 466 jobs), R97 million to KwaZulu-Natal (270 enterprises and 4 596 jobs), and R68 million to the Western Cape (199 enterprises and 3 088 jobs). In comparison, R11 million was going to both the Northern Cape (39 enterprises and 359 jobs) and the Free State (40 enterprises and 379 jobs).

With the payment holiday for SEFA-funded clients, there were two interventions:

  • Providing payment holiday/postponement of instalments of up to six months on both capital and interest; and
  • Debt restructuring (review of funding period, interest and funding instruments) and provision of additional funding to clients who were seeking relief during this period.

The facilities varied per funded SMME, depending on the entity’s cash flow needs. The debt repayments were sculpted to match the pattern of the cash flows. The additional funding would be offered at prime less 5%. There were 219 clients in the direct lending active book who would be eligible for a blanket payment holiday. These clients had total outstanding loan balances of R335 million. Under SEFA’s wholesale lending, there were four intermediaries that requested a payment holiday. Three of these entities were based in Gauteng, and one in Mpumalanga.

The SSSP update as at 27 May 2020 reflected a total of 2 246 applications. 1 197 applications were made by males and 1 049 by females. There were 702 approvals, 206 declines, 90 referrals to SEDA and 2 927 jobs maintained. Mapping of Spaza shops and wholesalers was being done to provide a spatial analysis of approved spaza shops and the nearest and participating wholesalers, to create a linkage between them and provide a beneficial value-chain.

Lessons had been learned on matching SMMEs with wholesalers. 13 SMMEs had been matched with wholesalers for market access. The SMMEs were used to selling their products to the informal and formal markets such as community, spaza shops, general dealers and retail stores, so the wholesale market was new for most, if not all, of them. Lessons learned included SMMEs needing to adjust from using a retail price to a wholesale price, given that they supply in bulk and had to offer discounts; they needed to market and promote their products using affordable methods, such as word of mouth, door to door selling and social media; and they needed to line up reliable and affordable suppliers of the raw material they used in production.

Regarding the Department’s interventions to assist SMMEs through SEDA, the Department was providing business development services (BDS) to SMMEs being matched to wholesalers, access to funding to those small enterprises that needed working capital for upscaling their production, and further investigating the use of e-commerce platforms to popularise, market and facilitate linkages and transactions between the SMMEs and the market.

Discussion

Mr G Hendricks (Al Jamah–ah) said that the Deputy Minister was heard saying how the UIF, SEFA, SEDA, municipalities and wholesalers had gone out of their way to assist with the Covid-19 challenges. However, she had not mentioned what the Department was doing, when nearly R2 million was budgeted for this Department. Was this wasteful expenditure, or had she forgotten to mention this because of time? What was the Department doing with regard to all the challenges?

100 000 spaza shops were being targeted, so the 183 applications from Gauteng was just not enough. Somehow there were no structures or systems in place to attract and inform them of the assistance. It would take a lot of pressure off of the UIF if these people could put bread on their own tables.

Mr H Kruger (DA) commented that over the last few months the DSBD had been very busy. His opinion of Covid-19 and small businesses was that it had failed small businesses. More than 90% of small businesses were not helped by the Department, so they needed to go back to the drawing board. He proposed that the DSBD start a suicide helpline with assistance from university students to help small businesses that had gone under because of Covid-19. He knew of four small business owners that had already committed suicide, and other small business owners were also on the edge of committing suicide. There were a lot of small business owners in stress, and helplines needed to be introduced for them.

There was a huge group of small businesses called the Informal Small Traders, and according to his knowledge, there were more than 6 000 of them in South Africa -- but there could be much more. However, the Informal Small Traders had been kept out of the loop this entire time. The Cape Town metro had been part of a court case the previous Friday so that the Informal Small Traders could start trading. There needed to be a programme and strategy to help the Informal Small Traders start trading.

He said there was a system of help for small businesses, where the National Treasury and the banks worked together to help small businesses with loans. Unfortunately, the banks were seeing these businesses as normal clients and were using their normal criteria. As a result, most of the small businesses that were already distressed were being declined by the banks. The Department needed to go back to the drawing board and talk to the banks, informing them that National Treasury would guarantee this money and that they should thus help these businesses, regardless of their history with the bank. At the moment, if there had been a small problem in the past, banks were just declining loans.

Sole proprietors could not register their businesses on the website. He proposed that sole proprietors be worked with so that their ID numbers were used as identification. Thereafter, all sole proprietors could be registered because they traded in the own names, either way, and their unique number was their ID number. Their ID numbers could thus be used to register them as formal sole proprietor businesses, so that they could also get help and the SA Revenue Service (SARS) could trace them. Everybody would benefit from this, and it was an easy process. The Department should speak to the CIPC to get these platforms off of the ground and help small businesses.

Chairperson Rayi thought that the Select Committee could arrange a meeting with the CIPC, as it was an entity of the Department of Trade, Industry and Competition (DTIC). The Select Committee would allow the Portfolio Committee to be a part of the meeting to find out if registering sole proprietors was part of the CIPC mandate.

Mr M Dangor (ANC, Gauteng) asked Mr Mkhumane if he understood what the spread was between the original financer, wholesale financer and end user. Were the original funders observing fiduciary responsibility with the loans that they were making? During Covid-19, the Ministry had to work on a Community Reinvestment Act to compel wholesale funders to produce a certain amount of funding for emerging businesses that might require it. Were the wholesalers labelling the countries of origin of the goods that they were reselling, to ensure local produce? This was important so that South African products could be sold to South Africans.

Mr E Myeni (ANC) checked whether the Department could furnish the Committees with all of the approved applications. How much relief did each Spaza shop qualify for? Were there any relief funds being distributed or implemented via micro finance institutions (MFIs) and Retail Finance Intermediaries (RFIs)?

Mr T Brauteseth (DA, KwaZulu-Natal) referred to slide 6 of the presentation, which stated that sole proprietors had not been fully accommodated in the compliance requirements initially. This was completely unacceptable. This was the Department of Small Business Development, which meant that the majority, or a large proportion, of people worked with, were going to be sole proprietors who had small businesses. It was a symptom of someone who had done well in life to tell a sole proprietor that they just needed to register, but forgot about all of the burdens that came with registering as a (Pty) Ltd. Sole proprietors could not afford to have an annual audit from an audit firm, as well as all of the other costs that came with it. To work into the Covid-19 problem and just flippantly say that sole proprietors could not be helped was destroying the fabric of the country. For the Department to say that sole proprietors were not accommodated in a presentation was not good enough. It was not good enough to cut the legs off of people who provided essential services, but could not get a CIPC certificate in order to work. People had lost massive amounts of money. He asked that the Deputy Minister take this on board.

He had directed a question to the Minister on 22 May, which read: ‘How many applications were received from small, medium or micro enterprises since the opening of the Covid-19 debt relief process?’ He had received an answer to this question – that there were about 14 872 applications -- and was happy with this. However, he was unhappy with the second part of the question concerning how many SMME’s applications were rejected as a result of not meeting the broad-Based Black Economic Empowerment (BBBEE) criteria. The answer he had received was that none of the applications received from companies that did not meet the BBBEE had been rejected. The Department had said that all of the companies that had applied, but did not meet the BBBEE criteria, had not been rejected. However, a week or two before, the Minister had said that if companies were not BBBEE compliant, then they would not be able to qualify for funding. Thus, the two did not tally with each other, and this was a huge problem. The answer he received had referred him to an Annexure A, which stated: ‘Except for those people listed in Annexure A that were disqualified.’ Unfortunately, he had not received an Annexure A and could not work without this list of people who were disqualified from the Debt Relief Fund. Could Annexure A be provided? He was certain that the Committees would like to see this list.

Ms K Tlhomelang (ANC) appreciated the input made by the Deputy Minister on behalf of the Department, as it had been an eye-opener to Members. She appreciated the Department’s update, as it had been an issue raised in meetings that the Committees needed to be updated on the challenges and achievements made insofar as the Covid-19 pandemic and operations of the Department were concerned. She had learned through the presentation that there were 21 440 incomplete applications that had been referred to SEDA. How many reapplications were there and how many had qualified? Before the Covid-19 pandemic, had SEFA budgeted enough to cover the operation of its corporate plan? If the plan was affected, did SEFA have a recovery plan? It had to be agreed upon and acknowledged that the Portfolio Committee, the Department, SEFA and SEDA had been taken out of their stride because of the pandemic. However, Members did not need to be only hard on the Department, SEFA and SEDA, as both the challenges and achievements needed to be appreciated. She had also learned that 13 SMMEs had been matched with wholesalers for market access. She requested that the Department continue to do more, as this was an achievement but it was still little. Could the Committees be updated on a weekly basis about the achievements and applications?

Mr J Londt (DA, Western Cape) was glad that there had been a start to receiving joint presentations from SEFA and SEDA, as it would be remembered from Select Committee meetings that he had been suggesting this. Both entities agreed that they had started to work together and moved closer to one another, ensuring that they had a bigger footprint and were not duplicating too much work, staff and offices. He supported the need to look at current businesses. He understood that this fell under the DSBD, but added that the survival of current businesses also needed to be talked about. The majority of small businesses, in starting up, failed to get beyond two years. However, there were thousands of businesses across South Africa that had gone through the initial two-year period and, on their own, had struggled, survived and contributed to the economy. Using his own constituency as an example, in Mossel Bay alone there were 129 businesses that were under business rescue and struggling, and were likely to go under. If this was applied across the country, it meant that thousands and thousands of small businesses needed support. Why could more support not be given to those businesses that had already proven themselves in creating jobs, getting through the difficulty, and contributing to the economy? He was not saying do not expand, but the country was in a crisis situation now and support needed to be given to those businesses that had already proven themselves to add value to the economy.

The country was entering a new normal and a new way of needing to do business. The Department’s presentation had addressed what needed to be done from a technological aspect. Many of these established businesses also needed to access a market that they could not access on their own as they perhaps did not have the skills or access to people that could ensure that they competed in a new environment, where a lot of business was going to go online. He did not see the Department or entities speaking to this and helping to address it.

While the next issue fell under the DEL, it was something that the DSBD should take up. Reports were received on a daily basis of businesses that had applied for UIF etc. He had heard that there were a lot of people blaming one or two businesses who had received the money but were not handing it over to their staff, which should be addressed. However, there were hundreds of businesses that had applied and had not received the payment that they were due. These people were struggling to keep afloat and look after their families, and the families of those who worked for them. This was a big concern that needed to be addressed.

Mr M Mmoiemang (ANC, Northern Cape) appreciated the update and work that the Department was doing together with the entities to relieve the pressure visited upon SMMEs as a result of the pandemic. Referring to the incomplete applications, he asked if these had been attended to in order to ensure that SMMEs did not fall through the cracks. Had the DSBD attended to the applications on the basis of their commitment to assist SMMEs and ensure that they were able position themselves within the forthcoming six months, and ensure that the applicants, particularly those that came from vulnerable communities, were attended to? This was to be mindful of the fact that Mr Mkhumane had said that there were SMMEs that could be assisted through the UIF programme of the Department of Employment and Labour.

The SSSP programme looked as though the Northern Cape was not doing that well, although a contributing factor could be the size of the population. Had there been an extra effort on the part of the Department to ensure that smaller provinces were not left behind in terms of the SMME Relief Fund and SSSP? The big city centres, probably because of the participants, complexity, readiness and how they were structured, were well assembled. City centres might be in a better position to make use of the opportunities presented by the Department and its entities. What was the Department specifically doing to pay attention to the rural provinces and rural municipalities to ensure that they were able to track and identify the small and informal businesses? There were various forms of business, and it was therefore challenging for him to see how a form of business could be a criterion that either included or excluded one from accessing the SMME Relief Fund. The Department and Committees should not find themselves discriminating against those shops owners in rural villages that had been in existence for the last 10 to 20 years, but could not be assisted by virtue of the fact that they had not incorporated themselves. This was an area that the Department needed to look into. More emphasis needed to be put on the profiling of those applicants that were not approved by virtue of the form of business that they were using, in terms of their enterprise.

Mr Z Mbhele (DA) raised an issue that had brought to his attention by a handful of small business applicants to the Relief Fund. He was aware that the Department had briefly addressed this on social media, but he was not sure that this had been fully explained. This concerned the issue of the multiple emails that were sent out to applicants that were often erroneous in indicating that the application either had outstanding documentation, or there was some non-compliance issue, even if that was not the case. One applicant told him that they had received the same email 23 times. There was clearly a sort of process, database or technology issue in terms of the communication system. Could the Department explain exactly what had gone wrong there? What was being done to address it? This would be appreciated so that he could also give feedback when receiving queries on the issue.

The next issue concerned the updates on the request for proposals (RFPs) that had been issued by the DSBD concerning funding opportunities for cloth masks and other personal protective equipment (PPE) production. The deadline for this had been extended to 31 May, so it had been a week and a half since the deadline had passed for small businesses to submit their proposals. His understanding was that the funding for working capital, equipment and other inputs that those RFPs were based on, was going to come from the Resilience Fund. However, the Resilience Fund had been put on hold and the allocated funds for that had then been lumped in with the Relief Fund. Without knowing any more, it seemed to him as though there had been requests for proposals on PPE and cloth masks production, but the funds allocated for that were no longer there because they had been redirected. Could an update be given on this situation? Was the Department waiting for National Treasury to come back about a funding top up, or were these proposals being directed to other entities such as the Industrial Development Corporation (IDC), which had a funding mechanism for PPE as well?

He made a suggestion to the Department, SEFA and SEDA for clear communication about how the funds had been managed, and how much had been committed as opposed to disbursed. He was sure the Department and state organs were aware of this, but small businesses spoke to each other and passed on what they had heard, what they had done, and what feedback they had received. Right now, there was a narrative circulating throughout parts of the small business ecosystem, based on what he assumed what was a misunderstanding because of unclear communication. This concerned the fact that the Department had communicated that all the funds available had been used up to assist the 1 500 beneficiaries that had been referred to in the presentation. What was happening was that those applicants who had not had their funding approved, were hearing that the beneficiaries had not been given their full required funding, but that it was being done monthly. They thus thought that there was still money within the Department and Relief Fund that they could still apply for. He had told them that he would assume that the funds had been committed, and even though there might still technically be money within the Relief Fund, it was being committed over a six-month timeframe and disbursed in monthly instalments to beneficiaries that had been finalised. This was the kind of detail that needed to be communicated, so that people did not think that there was still money available because the Department had disbursed only so much. The DSBD needed to be succinct in communicating this kind of progress and results.

Mr H April (ANC) wanted to find out what the limit of support spaza shops qualified for through the SSSP. Under SEFA’s wholesale lending programme, there were four intermediaries that had requested payment holidays. Three of these entities were based in Gauteng and one in Mpumalanga. Could a profile of those intermediaries be provided in terms of ownership etc, so that the Members knew who was being assisted in the SEFA-run programmes? Was the Business Growth or Resilience Fund on hold, or had it been phased out completely? Was the budget allocated to SEFA before Covid-19 sufficient? How had the use of this budget been rolled out?

Mr Jacobs said he had just received news that one of the health workers at an Athlone day hospital had passed on. Things were a bit difficult in Cape Town. As a Member of Parliament for the greater Athlone area, Athlone was in the epicentre of things. He extended sincere condolences to the health care worker and her family. In this pandemic there were a lot of crises, so Members were asking the Department to do more. The Committees were grateful that the Department had approved the 1 500 applicants, but were asking the President and National Treasury to give more money to the Department so that more people could be given opportunities. A lot of businesses were seen applying for business rescue, but there were also a lot of unscrupulous people in the rural areas. There was a notion of white empowerment in the Western Cape, where it was being said that only white businesses were being supported and bought from. People were thus not being given opportunities within the Western Cape. It was known that ownership patterns in big and small businesses were largely skewed towards a white constituency. He thought that the fight was not to be fought based on race any longer, as people were struggling and everyone was in the pandemic together.

Members applauded what the Department was doing, but he thought that more could be done to focus on women, rural areas, youth and townships, as this was where the traditional people were who had been marginalised for the longest time. He asked that the Department map the relief out more systematically and welcomed the initiative on the mapping of spaza shops. What was more important was that instead of waiting for applications to come, the Committees and Department needed to see where shops were needed in those rural areas that were exploiting communities. He liked the model that Mr Dangor had raised around empowerment lending schemes, so that small and micro businesses could be helped. There was obviously not a lot that could be received from national government, but the partnership was necessary. He called on the Department to take look at innovative financial models that would change the financial and economic landscape.

There were people who would complain about BBBEE, but they were ideologically in the minority. BBBEE was needed to help people and take them out of poverty – they did not just want to be workers, they wanted to benefit from the fruits of business, and be a part of ownership. He appealed to those businesses that were struggling to look at how they worked with their workers and find a joint outcome. He appealed to the Department to find out if there were ownership schemes with workers that could also provide funding in this manner.

He had visited a black-owned business in Philippi. It was owned by a black woman who was struggling and had PPE, but was not being given opportunities because there was no BBBEE procurement policy in the Western Cape. This woman thus had to send out a tender for outside areas, but not in the Western Cape. This was something that needed to be looked at.

He wanted a breakdown of the micro lending to spaza shops, and where this was. What were the limits for Spaza shops -- how much did they qualify for? With regard to the SSSP, was there a credit loan? What was the guarantee? How was this accessed?

The Committees appealed to the Department to keep up their work, stay with the constituency, and continue to communicate. It was known that the need was bigger than the demand. He appealed for the DSBD to be responsive to the communities’ needs. He commended the Deputy Minister, the Department and its entities, but added that there was room for improvement.

Ms B Mathevula (EFF, Limpopo) asked what action the Department was going to take regarding the SMMEs which had received money from the UIF to pay employees, and had not paid them. Out of approximately 14 800 applications, how many black SMMEs owned by women had been assisted so far? Of the 130 approved SMMEs the DSBD had assisted in Limpopo, how many rural SMMEs owned by women had been assisted so far?

SEFA’s esponse

Mr Martin Mahosi, Chairperson: SEFA, referred to the input that had been made to alert SEFA to the challenges that were out there. A suggestion had been put directly to the Department. which Mr Mkhumane would respond to. SEFA understood the issue about the 4 000+ informal traders. The Department, at the right time, was going to be announcing other interventions that responded to the informal traders, and Mr Mkhumane would respond to this as well. This was equally the case for the question on small business development. The question asked on the issue of informal wholesalers involved in the schemes that the Department had initiated, was one that also resided mainly within the Department.

Regarding the request for the names of the approved applicants, this information had been released by SEFA and should reach his desk in due course. As to whether there would be any further relief for those applicants that had been excluded, there might be debt instruments that the Department would be announcing, some of which would be going through SEFA for implementation. As SEFA got back to normal business, it was always possible for them to deal with further interventions that may be required from SEFA as people applied.

At no point was SEFA arguing that they could not support sole proprietors. The issue was that the rules were such that SEFA was supposed to support enterprises that were duly registered. If the suggestion was that SEFA should support enterprises or sole proprietors that were not duly registered, it made it very difficult for SEFA to do so, because they would be going outside the framework in terms of the rules of implementation that guided them and that they were supposed to operate within. SEFA had funded sole proprietors. Of the applications that SEFA had dealt with, they estimated that the sole proprietors that had been dealt with were around 10% of the total applications. This detail could be provided.

A question had also been raised on those applications that were not BBBEE compliant and rejected. In the application of the rule and evaluation and processing of applicants, there was no point at which a decision had been taken that people be excluded because they were not BBBEE compliant, so SEFA had approved applicants who were not BBBEE compliant.

Mention had been made of the constraints on the availability of funding and whether the funding could match what it was supposed to fund in terms of the demand from enterprises. The reality was that even if people were compliant to be funded, SEFA had to stop upon reaching the point where the funds were no longer sufficient, otherwise it would contravene the provisions of the Public Finance Management Act (PFMA) by committing money that was not available for SEFA to finance to discharge its applications.

There was a basket of people that was far bigger than the number that had been approved, to which SEFA could not in fact allocate funding. This was relevant, because it was not BBBEE compliant applications that were excluded then. When making the point on BBBEE compliance, SEFA had said that, if they were dealing with a basket of applications, they would have to make sure that the distribution of that commitment did not negate the need for SEFA to appreciate the policy framework in which they operated. SEFA was saying that they needed to be alive to the fact that there was a BBBEE policy that they needed to respond to. This was an obligation and responsibility of SEFA.

In terms of the SEFA budget availability before Covid-19 as per the Corporate Plan, they were on safe ground. They had a budget that made it possible for them to operate systemically. Concerning whether SEFA had a recovery plan, they had tabled a new corporate plan for the new financial year. SEFA understood that there needed to be a balance between securing the sustainability of SEFA and responding to the pressures of the economy that SMMEs were facing. Covid-19 was not gone and there may be subsequent challenges SEFA would need to respond to. The Department would be pronouncing new interventions. SEFA was getting ready, as additional interventions were being made, so that they could respond appropriately. For the foreseeable future, they would be able to continue to discharge their responsibilities. SEFA understood this to be the recovery plan and further understood that, from government’s side, they were also going to be guided on the makeup and direction insofar as the new economy was concerned. SEFA had made inputs to the Department on propositions that had been made, based on their experience of what could be done. When the Department required input, it had done so accordingly.

There had been acknowledgment of the work that SEFA had done. It greatly appreciated this and was encouraged to continue to do the work that they did. The main point that he wanted to raise spoke to the survival of current businesses and the issue around adaptation in terms of technology. As a general response, if SEFA received applications for expansion at any given time during normal business and there was a justifiable case, in the case of each individual enterprise there was no reason why SEFA would not look at the application based on its merit and provide the funding as was required by that business. SEFA might not be able to lead that charge and say what enterprises should do to become technologically compliant – this was left to the entrepreneurs to propose.

The next question was whether SEFA had done a costing in terms of whether they could respond to everything, and what the shortfall would be that SEFA would need to respond to. The last estimate that SEFA had worked on was around R12 billion, which was quite a large amount. This would not be foreseeable in at least the short to medium term framework. There was going to be a diverse range of interventions that would assist the government and SEFA, and perhaps interventions from all of the other fronts of the ecosystem, in order to respond. One critical point that was raised, whether it be businesses falling through the cracks or talking to the issue of technological advancement, concerned how government traced the loan guarantee schemes that had been advanced to the banks. This could be quite handy in terms of plugging some of the gaps that were there.

It was indeed true that there had been a number of glitches regarding the email system. Without solely defending SEFA, it was common that these errors would occur when dealing with such a large number of transactions. SEFA was working on releasing a statement to the SMME community in this regard, to take ownership of the challenges that they had experienced. The arrangement was such that SEFA had agreed with the Department that they would approve applicants, but knew that it would be a bit irresponsible for them to disburse all of the funds at once. This was mostly because it needed to track that the funds were being used for what they had been applied for. During the course of its monitoring of the implementation, it would still be possible for them to find SMMEs that were not compliant. In this case, they would then decide if they would continue advancing payment. If an agreement was made, it needed to be complied with, as businesses were not to deviate from the funding agreement. SEFA was disbursing monthly, and appreciated the input. It was very alive to the fact that they needed to sharpen their communication and had previously acknowledged that their communication was a challenge. Of course, with Covid-19, communication became more complicated.

SEFA acknowledged Mr Jacobs’s points, and were open to all communities to assist where they could, especially those businesses that were on the periphery. It was more than willing to respond and, as had been indicated before, it should be possible for those who were on the ground to respond first and assist where there were challenges. Where SEFA may not be that effective was in securing the uptake for these enterprises. It knew that their responsibility had to be complemented by other agencies like SEDA. A suggestion was that, if indeed there were constraints in the Western Cape, it might be possible that those enterprises could get support through the national government departments. Where those particular people were able to pick up orders for their products in those areas where there was Covid-19, there was no reason why SEFA, SEDA and the Department should not be able to respond and assist under normal circumstances.

Mr Thakhani Makhuvha, CEO: SEFA, added that Mr Myeni could check the website of SEFA’s executive authority, the DSBD, where there would be publication of the approved applicants.

On the issue around the spaza shop limits, there were two facilities of R3 500 each, which worked out at R7 000. The first R3 500 was a grant given to spaza shop owners who would have qualified under the criteria that were there. Once this was exhausted, they could utilise the second R3 500 in the form of credit, which meant that they needed to pay this money back when going to a wholesaler and buying for the third time.

There were currently programmes that were Covid-19 related to ensure that, amongst other things, jobs were saved by helping SMMEs. Due to the Covid-19 alert levels, such as Level 5, many SMMEs could not operate and this had meant that there was no income for those businesses. There was a need for the SMMEs to continue paying their employees, so there was a need to cover their payroll, rentals, and other business-related costs related to the alert levels. Now that the economy was opening up, there were a number of programmes that would be introduced which were geared towards economic recovery. Beyond where things currently were, there would be no need for SEFA to continue supporting businesses with payrolls, because the expectation was that they would go back and start operating. However, in terms of economic recovery, SEFA would continue to support SMMEs when it came to increasing capacity around those businesses that were manufacturing essential goods so that they could continue manufacturing, because there would be a continued need for cloth masks and sanitisers, as children and many workers went back to work.

Ms Tumi Sefolo, Executive Manager: Direct Lending, SEFA, added that the SSSP was an ongoing programme that SEFA was implementing. The limits were a maximum of R7 000 support per spaza shop, but the first R3 500 was non-repayable and the second part was a credit facility. This money was made available for spaza shops to access stock from wholesalers at a discounted price. It was envisaged that this programme would continue to expand as SEFA rejuvenated the space and supported the spaza shops operating within this space.

She made one correction in terms of the intermediaries, saying there were four intermediaries that had received support in the form of payment holidays. The Head Offices of two intermediaries were based in Gauteng, one was based in Limpopo and the other in Mpumalanga. Two of the intermediaries were operating within the taxi industry. These were intermediaries that SEFA had entered into loan agreements with many years ago, and offered financial support to the taxi owners within the taxi industry. The payment holidays that were passed on to them had then been passed on to the taxi owners to make sure that the benefit flowed through to the end users. The other two intermediaries were MFIs that were mainly supporting women operating in rural areas who could not trade in the Level 5 lockdown, and in the Level 4 lockdown to some extent. This benefit had then been passed on to the end user micro-enterprises, which were mainly in rural areas across approximately five provinces of women-owned micro-enterprises. SEFA would share the ownership profile of these intermediaries with the Committees in writing. However, the MFIs were non-profit organisations and therefore there were no shareholders who had benefited from the intervention. One of the two intermediaries in the taxi industry had the South African National Taxi Council (SANTACO) as a shareholder. SEFA would share the details of the ownership profile of the four intermediaries.

SEDA’s response

Dr Joy Ndlovu, Chairperson: SEDA, commented that most questions had been directed at the Department and SEFA.

Regarding the suggestions that had been made by Mr Kruger, particularly that concerning the suicide helpline, these were some of the things that SEDA could look into to see how they could assist. SEDA had already started doing something when it came to access to markets within the new challenging circumstances. It was looking at digitisation and had had webinars and training that spoke to the new state of being, and how entrepreneurs could look at accessing different markets.

SEDA was very much aware that they needed to be looking at rural provinces and municipalities and the fact that these communities should not be left behind. It had adopted a district municipal approach to ensure that rural provinces and municipalities were not left behind. When doing their mapping, it was looking at its service offerings in terms of each district so that they could determine where they were lacking and how they could assist.

Mr Jacob’s comments were heartfelt, and spoke exactly to what it was that SEDA was trying to address. They had a diverse range of offerings and had been reviewing their offerings based on informed engagements that they had been having with SMMEs. There were various surveys that SEDA had done during the Covid-19 period so that they could understand where there was a gap and how they could assist. On the issue of profiling the rejected applicants, SEDA was looking at all enterprises within the ecosystem.

Ms Ntokozo Majola, Acting CEO: SEDA, responded to the questions on the applicants that were assisted to reapply after they had initially not met the criteria. Of the total applications that did not meet the requirements or were incomplete, SEDA had received only about 13 000 from SEFA. The bulk of these had been received only in the fifth week of lockdown, around 6 May, because there were initially problems with the application process. The system was not coping with the volume of applications that had come through to SEFA. However, this had been sorted out after sourcing external assistance.

SEDA had sent back over 2 000 applications to SEFA. While still processing the applications, the budget had been exhausted as the applications had exceeded the budget allocated for the scheme. It would not have made sense for SEDA to continue processing those applications, because they had to be channelled to the UIF scheme, which had different requirements. SEDA’s role was to check if all of the applications returned by clients, after they had been informed that there were documents missing, had all of the required information. Some of the information was not required by the UIF, such as the CIPC registration, so it would not have made sense or added any value for SEDA to process the applications. SEFA had then sent out a communication to all outstanding applicants, informing them that they needed to apply directly to the UIF.

SEDA acknowledged that their virtual platforms were not ready for the situation that they had found themselves in. After they had developed training material and training programmes, it had rerouted their telephone systems and WhatsApp group to be able to assist clients remotely. This was not enough, because some of the platforms were reliant on clients having data. SEDA had indicated to the Department that this was a space that required the cooperation of municipalities to ensure that there were Wi-Fi zones in most areas, and that there were zero-rated platforms for clients who could not afford data to access government services. Currently, with the assistance of the ecosystem development of small enterprises, SEDA was working on a digitalisation strategy to address the current problem.

The Department had allocated the targets for spaza shops per province, so each province had been allocated a certain number of spaza shops that could be assisted. This was to give equal opportunity to all spaza shop owners who applied. There was thus a number allocated even in those provinces where applications were trickling in slowly. SEDA was working closely with municipalities in respect of drop off points, so that people did not have to travel too far in those instances where they were not close to SEDA branches, but had to submit applications.

Discussion

Chairperson Rayi cast doubt on whether it was a good strategy to include the issue of payrolls in the Debt Relief Fund. There were applications which had met all of the requirements, but were now channelled to the UIF because there was no money. The UIF was going to look only at the issue of payrolls and not the utility bills and rentals. If businesses were sent to the UIF, what about their utility bills and rentals? Perhaps payrolls should not be included, and the focus should be placed on utility bills and rental so that those SMMEs took the responsibility of initially applying for UIF themselves, rather than after their application had not been successful.

What was happening with the Resilience Fund, as it had been placed on hold? Out of the R300 million, about R16.7 million had been used, which meant that there was still around R280 million that had not yet been used for that particular facility. What was happening with the R280 million?

SEFA’s response

Mr Mahosi responded to the question concerning the black women-owned SMMEs, and said the entity did not have those numbers at this stage. The issue was that the applications were being processed through the two emails as previously mentioned. When SEFA operated under normal circumstances, there was an information technology (IT) system that they used when an application was loaded, which made it easier for it to extract information from the system when required. The Department had also requested SEFA to crystallise this information, but it was still trying to get as much as it could. It meant that SEFA had to upload the applications that were previously dealt with manually, into the system so that data could be generated. It was still trying to clear up this data to get the figures and they would hopefully be able to provide clearer information on the gender divide in the near future. However, it had information on most of the demographics.

On the issue of rural enterprises in Limpopo, the total number of extended approvals for rural applications in Limpopo was 38 out of a total of 130 applications.

DSBD’s response

Mr Mkhumane responded to the question on informal traders, and said the Department was working on an intervention and also partnering with some stakeholders, as the budget was exhausted. It would be mobilising more funding from other stakeholders and would be announcing those interventions very soon, as they were very critical stakeholders. The Department understood that they might not be able to cover many people in this space, but would try to make sure that they did support them. The Department was having a discussion with the DTIC, and had noted that Chairperson Rayi had said that the Committees were also to engage with them in terms of the CIPC registration of sole proprietors. The Department was also having this discussion with the DTIC from their side, so that they could also accommodate the sole proprietors and informal businesses and make it easier for them to register.

The way in which the Department was working with the wholesalers was that it first interacted with the spaza shops, who indicated the basket of goods that they normally bought from the wholesalers. The Department then negotiated discounts with the wholesalers for the spaza shop owners so that the R3 500 that was advanced to them was able to cover as many goods as possible. Regarding the labelling of the goods, they were not marked and this was why the Department was bringing in local SMMEs to supply, as it believed that most of the goods could be locally supplied. There were many SMMEs producing these goods, and the DSBD wanted them to be the suppliers to the wholesalers. Some of the wholesalers were welcoming the Department, even though it was taking a bit longer to bring them on board because of labelling, branding and barcoding issues, but at least SMMEs were improving in this space.

The Department was working on a policy for wholesale funding and community investments, because there was currently no funding policy within the country. The policy had been delayed and the DSBD was pushing to finalise one as soon as possible, because it would assist them to locate other support instruments. The money that was sitting with government would never be able to cover all the SMMEs’ funding needs. Before Covid-19, research had been done by the SA SME Fund, in partnership with Finfind, which pointed out that R47 billion was needed by SMMEs just to financially support them. It was thus obvious that the Department would never be able to fund all of the SMMEs through the government interventions.

Regarding the question that Mr Brauteseth had sent to the Department, a response had just been retrieved. Mr Mahosi had explained this at the previous meeting. The applications that were rejected were those that did not meet the attached criteria for the applications. The Department had attached the criteria that were utilised for SMME debt relief, but would forward them to the Committees again, as it perhaps got lost in the system.

The Department was trying to provide updates to the public on a weekly or daily basis in terms of how many people had been paid. Unfortunately, the last time that they had put information on their website was on 22 May.

Key questions had been raised around what the Department was doing about economic recovery. The Department understood that they were implementing the SMME debt relief just to address the current crisis. Going forward, there was an instrument that was being developed by SEFA, SEDA and Business Viability that had almost been finalised. It was understood that the way of business had changed, SMMEs needed assistance to be able to adjust their technology, platforms, commercial viability etc. SMMEs needed to look at these things, because the technological aspect would be very important going forward. This initiative addressed the online platforms, of which there were already two being looked at. Unfortunately, one of the platforms was just a marketing platform. If a platform was needed for people to do business, certain security measures needed to be instituted because transactions would be conducted on these platforms. The Department needed to work on and improve these systems. It was also talking to the South African Post Office, because they also had a platform which they wanted to make available for SMMEs to conduct business online. There were thus quite a lot of instruments being looked at, and hopefully the DSBD would be able to finalise them so that SMMEs could start using them.

On 30 May, the DSBD had had a discussion with the regional managers of SEDA because they were also assisting the Department in administering the incentives, especially the SSSP. It needed to look at how they could support as many spaza shops as possible. The challenge with the Northern Cape in particular was the distance between the towns. Initially the Department was working with Nedbank, because they were willing to come on board, but the other banks were joining and the Department had recently started with Standard Bank. It was still negotiating with the South African Post Office, which had made a proposal to the Department. They were excited about the proposal and had sent it back, because it was believed that their reach would allow the Department to assist as many spaza shops as possible.

The Department had had an engagement with the Free State the previous day, because their uptake had been very low. They had agreed on what they were going to do going forward, and how they were going to be sharing information so that more SMMEs would be encouraged to come on board. The good thing was that the wholesalers in the Free State had now come on board, so spaza shops would have a wider choice in terms of choosing which wholesalers to work with.

The DSBD had started the issue of the requests for information (RFIs) because they had noticed that most of the government departments were panicking. This was understandable because of the crisis being faced. However, the Department felt that most of the SMMEs were being excluded from these opportunities. It had therefore issued the RFI so that they could assist SMMEs to start complying and being integrated into the Central Supplier Database (CSD). When RFIs were received on a daily basis, the Department assisted them to improve with the compliance requirements. It would then submit the information to the CSD, because this was where government departments got their suppliers from. That morning, the Department had had a discussion with the Director-General: Department of Basic Education (DBE), who said that because of the urgency they had looked at getting factories to assist them, as they needed 12 million masks. The DBE was now committed to the Department, and would be working with the DSBD to ensure that SMMEs were also benefiting from the procurement. Covid-19 was not going anywhere anytime soon, so there would be more opportunities, where the DBE would be focusing on getting SMMEs to supply, as they were pressed for time in terms of the opening the schools, and had to opt for those businesses that could produce the masks quickly.

Communication was a challenge. The Department disbursed the funding to businesses on a monthly basis, as the businesses had to report back on what they had done with the money they had been given, and would then get more funding in terms of their approval. Business Growth had been put on hold because the demand that the Department had was overwhelming for the SMME Debt Relief Fund, so the money had therefore been reallocated to that fund. The DSBD understood that both the National Empowerment Fund and the ITC had opened up funding instruments to assist people who wanted to supply PPEs. It was thus appropriate for the Department to redirect SMMEs there, as most were looking to SMME Debt Relief, rather than Business Growth, for support to produce PPEs. The Department now had approximately R500 million for debt relief.

Mr Jacobs had raised some critical questions. The DSBD was in serious discussion with National Treasury, and was also pushing for cooperation from the provinces. The only province that had really come up in terms of having a budget set aside had been Gauteng. To avoid double-dipping, Gauteng had been required to share their database so that people did not apply at SEFA and then later apply to the Gauteng Enterprise Propeller (GEP). The GEP had set aside R250 million that would assist those who did not qualify. North West had recently announced interventions, and had indicated to the Department that they had a budget of around R50 million that would also assist those who were coming from North West but were unable to get support from the Department. The Free State had said that they would soon be announcing what they were going to be doing. The Department was mobilising all of the provinces to play a role in this aspect as they had money that was supposed to support small business enterprises. Information would be provided in terms of the breakdown of entities that were supported in the Western Cape. The example that Mr Jacobs had given would be taken into consideration, as it was part of the SMME funding policy being developed. The Department was also talking to the corporate financial Institutions and had started engagements with the stokvels, as there was money sitting in the townships that could be mobilised for the interventions. There was quite a lot of work being done by the Department in order to get more money, rather than depend on the fiscus, which was very limited.

What the Department had tried to do from the beginning was to attempt to negotiate with the UIF. The Department had suggested that the UIF needed to take applications directly from people approaching the Department and applying for salaries. The DSBD had negotiated for more than a month, but unfortunately the UIF had indicated that in terms of the regulations that had been issued, only people registered before 15 March 2020 and were paying UIF would be considered. The UIF was thus not willing to register further SMMEs, or support those that were not part of the UIF, not contributing to it or that had outstanding UIF debts. The DSBD was encouraged by a statement made by the Minister of Labour the previous week, indicating that the UIF was now open and was considering people who were not registered. As they had agreed only now, this had delayed the Department quite a bit, as it would have addressed the matter by now, because most of the money that people were applying for were for salaries and wages.

Regarding the question concerning the UIF, it was an entity of the DEL. The Minister of Labour had indicated that the DEL would pursue those SMMEs who had received money but were not paying their employees. Tabs would be kept on this. However, he suggested that the Committees should also keep tabs to ensure that those SMMEs who had received UIF payments but were not paying their employees, were prosecuted.

Deputy Minister Capa responded to the suggestion of a helpline for SMMEs that were developing suicidal tendencies. It was fortunate that Covid-19 had taught new lessons on how to do things as a collective. The DSBD was working with the Department of Social Development (DSD) and would ensure that when they received such communications, that they directed them to the DSD to communicate with those SMMEs. The Department would not develop that skill today, because professionals were required to deal with those conditions. However, the Department appreciated the constructive criticism from the Committees, and their wisdom of assisting the Department to understand their clients better. She thanked Mr Kruger, because the Department would take the matter that he had raised very seriously. Recently, someone had said that their business was sinking and that they had made an application, but understood that they were not going to receive an approval. The wife had therefore not been able to inform the husband that there was a horrible crisis coming to them as a team or family. This confirmed Mr Kruger’s statement that the Department could not physically deal with people, and had to be holistic. In the cluster arrangement, the Department would be communicating so that suicide hotlines were able to be attended to.

She thought that Mr Hendricks was correct. While having the assistance of other entities, agencies and partners, the Department remained accountable because it was its duty to take responsibility of where the successes were, and to capitalise them. The Department was also willing to acknowledge any weaknesses that occurred in their operations, and sought to attend to them to the extent of actually apologising for where they had gone wrong.

On the issue of failing small businesses, the Department was responsible and could not say that the small businesses had not been failed. The fact was that Covid-19 had failed all small and big businesses -- small businesses were no exception. The Department needed to say that this was unfortunate and that everyone was in this together. It would have an arrangement that was collectively responsive to small and big businesses and the social aspect of communities. The DSD had also become central to this, because whilst the economy was going down, social problems were increasing – whether it was unemployed youth, or those who could not pay for university.

The Department wanted to invite all of the Members of the Committees to have the strength to work with them and have confidence that the Department would admit when they were wrong. It accepted that there would be many mortalities insofar as businesses were concerned. This was why the whole country was approaching several banks inside and outside of the country. The Department was a part of this, and the Minister was participating in the forum. She remembered the Minister saying that Members had to understand the Department’s situational environment. There were two countries in one. There were those who knew what to do and had actually changed their business – for example, businesses from the construction or grocery industries had switched to the more needed type of trade, such as the production of masks. However, other businesses did not have anything – for example, even if they were in the clothing and sewing industries, they were not able to shift to the production of masks immediately as they did not have the cloth to do so. Business concerned competition, as seen in those businesses who were in other industries but were able to quickly switch to the relevant industries that had become a priority. There was thus unequal access to resources. Other businesses were still in the basket of those who were poor.

Deputy Minister Capa agreed that the Department should support those businesses that were survivors so that they could grow. At no stage would the Department forget that they still had to include others in business. Regarding the informal traders, the disparities between provinces was very glaring nowadays, as the rural traders were worse if one went to the peri-urban areas, such as Khayelitsha and Gugulethu, which were very far from town, as if they were not in the Western Cape. It was clear that SEDA and SEFA actually helped the DSBD to reach more people than they would have as a department. The meeting had also taught the Department more lessons, such as when they came to the Committees, their departmental report needed to be very clear, as well as make referrals to entities so that their reports were not mixed. This would allow them to respond to what the departmental mandate was and ensure that those who were there had all of the required skills for the Department to deliver on their mandate.

The Minister had said that she never knew that when speaking of business, it meant that some businesses would still need to be ‘babysat,’ as they had never been in business before. However, the numbers were increasing, and the Department needed to start pulling some out of social grants and ensure that they graduated to informal and then formal businesses so that all businesses could have inclusive growth.

The Department appreciated the patience of the Committees, which had to go through its reports and ask as many questions as possible. As the Department left the meeting, they would try to come together, review the questions and how they had responded, and make things happen as the Committees had advised.

Chairperson’s concluding remarks

Chairperson Rayi thanked the Department, SEFA and SEDA for coming, making a presentation and responding to the questions from Members. There was a proposal that the Committees should perhaps receive regular updates, which they needed. The Committees’ main concern was the fact that the Department was able to give money to only 1 500 applicants when there were a lot of other applicants who had met the requirements. Unfortunately, there was no money to do so.

Mr Mahosi and Mr Mkhumane had spoken about the new window that would perhaps be opened. The Committees needed an update on this, which was why another meeting was necessary. This was also so that the Committees could get an update on the issue of graduates assisting the spaza shops. What was the extent of this process? Members had not received an update as to how far this process was. On 28 May, there had even been numbers on these graduates per province. How far was this process?

In the report of 28 May, there had also been a list of other sectors that were going to be assisted. He had seen something with regard to assistance for the automotive sector. The Committees needed to quantify the amount, as they had quantified the R200 million that was going to go to the Debt Relief Fund, and the Business Growth amount of R300 million that had been redirected towards them. The Committees needed to find out how much had been allocated to the automotive scheme in terms of bakeries, trade smiths etc. There was a long list of sectors that were going to be assisted, such as informal clothing, hairdressers, general workers, professional business services, small skill manufacturers etc.

Members needed an update as to how far the Department and its entities were with regard to assisting, as the Department had said that they were finalising how they were going to assist these sectors on 28 May. These updates would be needed from time to time so that they would be able to inform their constituencies about the developments, and how the Department and its entities were assisting those affected by Covid-19. The chairpersons and whips of the Committees would meet so that they could decide when the update meetings would take place.

The Committees would continue to express their condolences to those who had died from Covid-19. Mr Jacobs had just indicated that one of the members in his constituency had also died due to Covid-19. In the future the Committees needed to have a moment of silence before continuing with the meetings, because the pandemic was going to continue until a vaccine was found.

If Members had follow-up questions that they had not had the opportunity to raise, they could be raised at the next meeting, as there would continue to be meetings so that the Committees remained updated on a regular basis.

The meeting was adjourned.

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