In a virtual meeting, the Committee met to discuss the pronouncements the President had made during the State of the Nation Address (SONA), specifically focusing on the small, medium and micro enterprises’ (SMME’s) perspective. The Committee also adopted the amendments to its first quarter programme.
The presentation by the Committee researcher dealt with the four priority areas pronounced by the President in the SONA, which had a significant impact on the development of SMMEs and cooperatives. These priorities were:
- Infrastructure rollout throughout the country;
- Increase in local production;
- An employment stimulus to create jobs and support livelihoods; and
- Rapid expansion of South Africa’s energy generation capacity.
These priorities were analysed in the presentation and various recommendations were highlighted which the Committee could use to develop its strategic plan. The issue of extortion of small businesses, especially in the townships, was discussed and it was felt that this should be raised as a matter of national security. Members felt that the Department of Small Business Development (DSBD) was more visible in the urban areas than in the rural areas and townships, and because of this it needed to do road shows in order to assist the people on the ground and in so doing achieve its goals.
It was noted that the unemployment rate in South Africa was higher than the global average, and the DSBD needed to do more to ensure there were more employment opportunities. The under-spending on the relief packages was a major concern, and Members felt that the DSBD, the banks and National Treasury needed to be held accountable and should be approached to explain why the money was not spent and how they intended to correct the situation.
Although the Committee had an oversight role, it was felt that it should also come up with recommendations other than those mentioned in the presentation. It should then develop mechanisms to track these recommendations and ensure that they were being implemented.
The Chairperson opened the meeting by welcoming the Members and officials and indicated the purpose of the meeting was to be briefed on the analysis of the State of the Nation Address (SONA) 2021, from a Small, Medium and Micro Enterprise (SMME) perspective.
Four priorities had been announced by the President during his SONA, and the Committee had to be aware of them because of its oversight role. The presentation was an analysis of the pronouncements by the President and they were going to be briefed about the relief grant, the loan guarantee scheme and localisation, among other issues. It was good for the Committee to understand the implications of the priorities and the issues for consideration.
The Chairperson raised the following questions in her opening remarks: Were the priorities addressing the current situation? What were the Department of Small Business Development’s (DSBD’s) targets? What were the challenges being faced by the DSBD? What were the positive and negative impacts on the SMME’s? She asked Members to listen attentively to the analysis, and the Committee could then engage and use the analysis to develop a strategic plan based on those priorities.
The priorities would be a guideline for the DSBD to table its annual performance plan (APP) which would enable the Committee to compare and see whether the DSBD was addressing the pronouncements made by the President.
The Chairperson requested a roll call, and asked Mr King Kunene, the Committee Secretary, whether there were any apologies.
Mr Kunene said there were no apologies, but Mr J de Villiers (DA) indicated that he had another commitment and would leave the meeting at 11h00 and Mr G Hendricks (Al Jama-ah) would leave at 11h30 due to a meeting with the Minister of Finance.
Mr Kunene said he had received notice of a new Member joining the Committee, as Prof C Msimang (IFP) had been shifted to another Portfolio Committee. Mr N Luthuli (IFP) was the new Member joining the Committee.
The Chairperson wished Prof Msimang well in his new deployment and thanked him for his wisdom and discipline whilst part of the Committee, and welcomed Mr Luthuli.
Mr Luthuli thanked the Chairperson for her warm welcome and greeted everyone. He said that he was excited to work closely with the Committee.
The Chairperson introduced the proposed agenda which was subsequently adopted.
Amended 2021 Quarter 1 Committee programme
Mr Kunene took the Committee through the quarter 1 Committee programme, which had been adopted with some amendments in the meeting on 10 February. He said the current meeting was an analysis of the SONA from a small, medium and micro enterprise (SMME) perspective. That afternoon, Members would be in the House for the budget speech, which was a joint sitting.
On 3 March, the Committee would receive a briefing on the 2020/21 Quarter 2 performance reports of the DSBD, the Small Enterprise Finance Agency (SEFA) and the Small Enterprise Development Agency (SEDA).
On 10 March 2021, the Committee would receive a briefing on the 2020/21 Quarter 3 performance reports of the DSBD and the Small Enterprise Finance Agency (SEFA) and Small Enterprise Development Agency (SEDA).
On 17 March 2021 there would be a virtual oversight meeting with beneficiaries of the Covid-19 relief fund.
This quarter was designed to conduct oversight, which had started with getting the reports on the performance of the DSBD and its entities.
The amended programme was adopted.
Mr Kunene presented the minutes of the meeting on 10 February. The minutes were duly adopted.
Analysis of the SONA 2021: SMME Perspective:
Ms Nwabisa Mbelekane, Committee Researcher, said the President had presented his SONA on 11 February against the background of the economic damages caused by the Covid-19 pandemic. Her presentation would focus on his pronouncements, which included two main themes -- the economic recovery from Covid-19 due to the 6% shrinkage in the economy, and the unemployment rate reaching the 30% mark.
She said the action plan to restore growth and create jobs was based on the economic reconstruction and recovery plan, and the President had mentioned that the SONA was a report back on that plan. The SONA had focused on four priority areas:
- Infrastructure rollout throughout the country;
- Increase in local production;
- An employment stimulus to create jobs and support livelihoods; and
- Rapid expansion of South Africa’s energy generation capacity.
The connection between the SONA, the DSBD and the Committee, was that the role or mission of the DSDB was the coordination, integration and mobilisation of efforts and resources towards the creation of an enabling environment for the growth and sustainability of small businesses and co-operatives.
The four priority areas had a significant impact on the development of SMMEs and co-operatives. The Committee had an oversight role to play to ensure that the actions of the DSBD were in line with the pronouncements made by the President.
Ms Mbelekane looked at the implications these four priority areas had on SMMEs and the Committee.
The first issue that was looked at was the Covid-19 relief measures. The President had made a pronouncement of the R1.3bn provided as support to small and medium-sized businesses, and R18.9bn in loans from the loan guarantee scheme. He had also announced that National Treasury would work with partners and stakeholders on improving the loan guarantee scheme.
When it came to debt relief measures, the focus would be on the debt relief fund and the support provided to SMMEs, as well as the progress made on the loan guarantee fund. The debt relief fund was meant to support SMMEs who were negatively affected by Covid-19.
SEFA, which administered the debt relief fund, had received 35 865 applications, of which 1 497 were approved. The entity reported that 14 451, or 40% of the applications, were completed. The amount disbursed to SMMEs was R316 million, or 62% of the R513 million.
The Minister of Small Business Development had stated that the reasons for the underperformance was the easing of the lockdown, resulting in businesses reopening, which meant that some businesses did not come back for the rest of the funds. The responsibility of the Committee was to invite the DSBD to discuss and expand on the implications of the lower-than-expected uptake of the SMMEs’ demand for financial assistance. The Committee should also ask the DSBD what would happen with the unspent funds and what the impact of the delays in the disbursement of the funds was.
The Loan Guarantee Scheme was a collaboration between government and commercial banks which was launched in May 2020 and was worth about R200bn to provide relief to businesses that were hit hard by Covid-19. About R18.9bn in loans were approved for 13 000 businesses. The Banking Association of South Africa (BASA) reported that the scheme had received 48 366 applications for loans, of which 27% were approved and taken-up by the applicants.
The underperformance of this scheme was firstly due to the restrictions on businesses under the adjusted level 3 lockdown regulations. Secondly, the weak economic outlook and inconsistent application of policies and regulations had hampered business owners’ ability to generate income in order to repay their loans. Thirdly, the scheme did not extend grants to non-Covid-19 related businesses in distress. It was noted that only the Reserve Bank and National Treasury were able to change the criteria of the scheme so that the rest of the funds could be disbursed to companies that were in need.
The Committee could ask the banks and BASA to brief it on the loan guarantee scheme, by indicating their concerns and the criteria used to provide assistance, as well as to expand on the inconsistent policy, regulations and bottlenecks they identified.
Issues for consideration
The President indicated that when reports surfaced on possible fraud and corruption in procurement, the Government had acted swiftly and decisively to address those issues. The Committee could ask the DSBD to indicate the extent to which the DSBD and its entities were affected by fraud and corruption in the procurement of Covid-19 related goods and services, and what measures or internal controls the DSBD had in place to prevent fraud and corruption.
The pronouncements made on the four priority areas identified in the SONA were:
- Infrastructure rollout.
Infrastructure development plays a key role in job creation and economic growth, which was why the President made this a priority one focus area. He said that an infrastructure investment project pipeline worth about R340bn in network industry such as energy, water, transport and telecommunications, had been developed.
The challenges for SMMEs in infrastructure development were identified by the DSBD in their 2020-25 strategic plan. They identified that rural and township SMMEs needed access to economic infrastructure in order to access information, financial support and markets in order to sell their goods and services and so grow and contribute meaningfully to the economy. One of the intervention measures that was identified by the DSBD was the establishment of 12 product markets over a period of three years (four per year), where small businesses could trade their products.
Firstly, the Committee could ask the DSBD to brief the Members on the strategy and role its entities were playing in ensuring that SMMEs were ready to take up the opportunity presented by the infrastructure investment of R340bn in all the sectors mentioned above. It should be noted that all the sectors in the economy would have an SMME component. It was important for the Committee to find out if the DSBD, as the coordinator and facilitator of the SMMEs, knew if they were prepared for this investment opportunity.
Secondly, the Committee should find out what the progress on the establishment of product markets and infrastructure development for SMMEs was. The DSBD could be asked to present the challenges they were confronted with in this regard. There was supposed to be at least three product markets, and the Committee needed to find out what the way forward in this regard was.
- Increase in Local Production
The President had said that government was creating a larger market for small businesses, and had designated 1 000 locally produced products that must be procured from SMMEs.
Cabinet would approve the SMME focused Localisation Policy Framework, which identified the 1 000 products.
Four master plans which were part of the social compact between labour, business, government and communities, had been completed and signed to date and had already had an impact on their respective industries. By looking at the SMME perspective, it should be ascertained where the SMMEs could play a role in the master plans.
Investment would be facilitated by increasing the ease of doing business by making it easier to start a business. In the past year, more than 125 000 new companies were registered through the BizPortal platform via the comfort of their homes or offices.
Mr Hendricks raised his hand to indicate that he would like to comment once the presentation was done. The Chairperson said she would prioritise Mr Hendricks since he had to leave early.
Other pronouncements on localisation
Ms Mbelekane continued that the President had said the opportunities presented by the African Continental Free Trade Area (AfCFTA) would be harnessed this year. The free trade area provided a platform for South African businesses to expand into markets across the continent and for South Africa to position itself as a gateway into the continent.
The President pronounced that in the automotive sector, the Ford Motor Company had announced a R16bn investment to expand the manufacturing facility in Tshwane. This investment would support the growth of around 12 small and medium enterprises in the automotive component manufacturing sector.
Nearly half of the procurement spent on construction of the bulk earthworks and top structures at the Tshwane special economic zone (SEZ) was expected to be allocated to SMMEs, and this equated to R1.7bn worth of procurement opportunities.
Challenges in the localisation sector
- It was difficult to verify the local content in products that were being procured.
- Lack of proper evaluation of bids/tenders in line with local content requirements by some organs of state.
- Manipulation of the bid price to meet local content requirements.
- Illicit importation of products which were supposed to be manufactured in South Africa, in line with localisation policies.
- The length of time it took to adjudicate tenders and place orders negatively affected the operation and profitability of local manufacturers.
- Complaints about non-manufacturing bidders who were given inflated prices by manufacturers, who also bid for the same tenders.
- The size of the local market was restrictive and too small when relied upon by local manufacturers.
- Competing with low-cost products from China and other Asian countries, based on price, presented a great challenge to local firms and would not be sustainable in the long run.
- Research conducted at universities was not commercially driven, and was aimed at publishing in academic journals.
- Small scale farmers did not have access to supermarket shelf space, and there was a lack of capabilities to supply the required volumes.
- Consistency was required when dealing with bigger supermarkets, and quality and cost of supplying through the supermarket chain was a challenge.
World Trade Organisation (WTO) commitments
South Africa was a member of the WTO, and in terms of WTO trade relations investment measures, South Africa could not impose localisation measures on the private sector. The government had to use other tools, like working with Proudly South Africa, the private sector and the manufacturing sector to engage them on implementation and to pursue more retailers to come on board when it came to localisation.
Issues for consideration
The Committee could ask the DSBD for a quarterly briefing on local content verification and enforcement in order to determine if people were abiding by localisation policies. The DSBD should also have an outcomes indicator in its plans, to assess the percentage of government departments and entities complying with procurement policies for SMMEs and co-operatives, as well as broad-based black economic empowerment (BBBEE) requirements. One of the DSBD’s key performance indicators was to develop an annual trend analysis on the 30% public procurement target.
Another issue for consideration was to ask Brand South Africa to give the Committee an update on the impact it had, as well as its successes and challenges.
The Committee could host a conference or symposium on the impact of the country’s localisation on SMMEs.
The Committee could ask the DSBD to give an update on challenges, progress and the way forward on the SMMEs with regard to infrastructure development and establishing product markets.
The Committee could hold a joint meeting with the Portfolio Committee on Trade and Industry, and ask the departments to brief the committees on the AfCFTA, as well as provide an SMME perspective on how they would benefit from the African Continental Free Trade Agreement and how the departments intended to support SMMEs in this regard.
The Committee could ask for a briefing on the BizPortal, which made it easier to register a business, and how the Companies and Intellectual Property Commission (CIPC), which was responsible for the BizPortal, was making it easier for the informal sector businesses in townships and rural areas to be registered, since some of them did not have access to the internet.
On the issue of skills development, the Committee could invite the select committees and the Portfolio Committee on Higher Education to discuss research and skills transfer in relation to SMMEs, and establish how SMMEs could benefit from research done at universities.
Finally, on the pronouncement on the automotive sector, the DSBD could see how to support the value chain opportunities presented by this investment. The DSBD could unpack the implications of this investment for SMMEs for the benefit of the Members.
- Employment stimulus
The President had pronounced that the National Youth Development Agency (NYDA) and the DSBD would provide grant funding and business support to 1 000 young entrepreneurs and provide government support to 15 000 start-ups by 2024.
This was one of the nine key initiative deliverables coordinated by the DSBD, together with the NYDA located in the SMME support plan’s District Development Model (DDM), which was part of the Sixth Administration’s priority areas.
The Committee could request a briefing from both the NYDA and the DSBD on the successes and lessons learnt from the grant funding and business support to the 1 000 young entrepreneurs.
The Committee could conduct virtual oversight of the grant funding. 58% of the grant funding went to young men and 42% went to females. Provincially, Gauteng received the bulk of the funding, with the North West and the Northern Cape receiving 2%. Although the Western Cape had one of the big cities, it received only 4% of the grant funding. The Committee could ask for a briefing on this funding with specific detail around racial spread et cetera.
- Rapidly Expand Energy Generation Capacity
The President had announced that the government would soon be initiating the procurement of an additional 11 800 megawatts of power from renewable energy, natural gas, battery storage and coal in line with the Integrated Resource Plan of 2019. The government would also issue a request for a proposal for 2 600 megawatts of wind solar energy as part of the fifth bid window.
According to the Council for Scientific and Industrial Research (CSIR), the formal renewable energy procurement programme, known as the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), had opportunities for local businesses such as SMMEs.
The REIPPPP’s economic development rules require Independent Power Producers (IPP’s) to commit a certain percentage of their revenue to enterprise development.
Challenges for SMMEs
Even though the REIPPPP offers opportunities to SMMEs to participate in the value chain, only a few were able to do that. The reason for this was that the smaller players did not have the capacity, and access to information and financial challenges were a barrier for them to enter the energy space.
The Committee could ask the DSBD, SEFA and SEDA to brief the Committee on the support being given to SMMEs and smaller IPPs by finding out how they were supporting them to prepare for the opening of the fifth window.
The Committee could also have a joint meeting with the Portfolio Committee on Minerals and Energy to scrutinise the support offered to smaller players, and see how black businesses and farmers were being supported to be able to benefit from renewable energy projects.
Support for black small-scale farmers was being stepped up, with a large beverage producer committing to expand its procurement policy. Programmes were being pursued to assist smallholder and emerging farmers with market access, to develop skills across the entire agricultural value chain and increase the number of commercial black farmers.
The President had pronounced that the process for the licensing of high demand spectrum was at an advanced stage. The mobile network was highly concentrated and was dominated by Vodacom, with a greater that 50% share, with MTN about 35% and Cell C about 12% of the market. This resulted in high prices. Telkom mobile and others comprised less than 3% of the market share. One of the priority areas of government was to open markets so that small players could also participate in the economy.
The other pronouncement was on crime and violence, which continued to undermine the sense of security and safety of people. Tackling crime was essential to the success of our recovery. Task teams had been set up in several provinces to deal with extortion and violence on sites of economic activity.
In 2020 there were media reports of business owners who were threatened to pay protection money in return for the safety of their businesses. This affected the poorest of the poor who were trying to survive but someone else was taking their money illegally for their own gain.
In 2018, SME South Africa reported that economic crimes in South Africa were above average compared to other countries. The global average of economic crimes was at 49%, and South Africa was above average at 77%, followed by Kenya in second place and France third.
The Committee could call on the South African Police Service (SAPS) and the DSBD to brief the Committee on the role that the two departments could play in creating a safe environment for SMMEs, especially those which were suffering from extortionists in the townships.
The Committee, together with the Select Committee and the Portfolio Committee on Communication and Digital Technology, could request a briefing by the DSBD and the Department of Communication and Digital Technology on the implication of spectrum licensing for small industry players, and urge the respective Departments to develop a coordinating strategy that would promote the entry of smaller players into the mobile network sector.
In conclusion, the DSBD had a vital role to play to ensure that SMMEs were not left behind or overlooked in the major investments in infrastructure, water, energy and telecommunication. The DSBD should be the glue that sticks the SMMEs and big businesses together to stimulate large scale job creation and accelerate economic growth.
In conducting oversight on the work done by the DSBD and its entities, the key focus areas could be based on the promotion of SMMEs and cooperatives. All the priorities had an SMME and a cooperative component to it. The role of the Committee was to make sure it exercises oversight over the DSBD, whose role it was to coordinate and facilitate opportunities and the growth of small, medium and micro enterprises and cooperatives. It was important for the DSBD to ensure that this sector was represented in all those key priority areas.
The Chairperson was satisfied that the analysis had come up with recommendations, especially having joint meetings with other relevant departments so that they could be monitored regarding small business issues. Small business should be the focus of everyone, and not just the Committee. The analysis helped to focus the Committee on priorities in order to develop its strategic plan.
When the DSBD did its strategic plan, it should focus on the priorities announced by the President. Many challenges had been highlighted, especially on the issue of access to finance and information. The Committee must assist the DSBD to meet its target by actualising the dreams of SMMEs.
The Chairperson commented that the unemployment rate had increased to 32.5%. She was interested to hear what the Minister of Finance would allocate to small businesses to close the gaps.
She thanked the Researcher for the good presentation, and opened the floor for comments.
Mr G Hendricks (Al Jama-ah) requested a list of the 1 000 products for localisation that the meeting had been informed about. He indicated that one of the products was Atchar, which had raised a lot of excitement in the areas where mangoes were grown.
He felt it was necessary to have an incubator that would enable people in the townships and on the Cape Flats to access the opportunities of the 1 000 products and to assist them to produce or sell the products and be on supermarket shelves.
He said that the chairperson of the SEDA Board had indicated that the Parliamentary constituency offices could be used to increase its footprint, since most of the SEDA offices were closed and the Parliamentary offices were open.
The Al-Jama-ah Party had written to other political parties about the idea of incubators. This had been done on a non-party political basis. He requested the support of the Committee to be able to approach the powers that be for an incubator specifically to teach and assist people to enter the new opportunities the President referred to in his SONA, since so much good work had already been done.
Secondly, the issue of extortion of small businesses was a matter of national security. In Khayelitsha, for example, sailors from the Simonstown Naval base who live in Khayelitsha had to pay 10% of their income as protection money, even though they were not wearing their uniforms. There was a report on the effectiveness of the police in Khayelitsha which had been conducted by the Western Cape Parliament, and there were grave concerns about law enforcement and the personal safety of people.
To do any business in the townships, especially in the Western Cape, one had to pay 10% protection money. It was a matter of national security, and he requested the Chairperson to get this matter recognised as a matter of national security. He was satisfied that the DSBD had been proactive in getting a meeting arranged between the Committee and the Police, because small businesses could not be promoted if they were extorted when they started up because as the businesses grew, the 10% also increased and went into the hands of criminals who were very well established, and who also had the cooperation and alleged support of the police and the security forces. This was such a serious issue that the liberation forces, such as uMkhonto we Sizwe (MK) and the Azanian People’s Liberation Army (APLA), should be revived to come to the assistance of the community.
Mr H April (ANC) said that the recommendations put forward by the researcher were all-encompassing and wanted to support the recommendations as they were.
Mr De Villiers said that the presentation had a lot of information and recommendations, and he would like access to the presentation. He requested that the Committee be given a day or two to reply via email to the recommendations, which they supported.
The Chairperson indicated her satisfaction that the Members had enjoyed the presentation, and said she would appreciate Members coming up with other recommendations to empower the DSBD to develop their APP, and for the Committee to develop their strategic plan. She instructed the Researcher to send the presentation to all the Members.
Mr H Kruger (DA) indicated his appreciation for the presentation. He wanted to discuss the concept of the ease of doing business. He said only one part of the ease of doing business had been mentioned in the presentation, and that was the starting of a business.
In the World Bank Index, there were ten different issues that hindered small businesses from conducting their businesses. These were starting up the business, employing workers, dealing with construction permits, getting electricity, registering property, getting credit, minority investors, paying taxes, trading across borders, contracting with government, enforcing contracts and resolving insolvency. The ease of doing business was a much wider concept than just starting a business. One of the proposals on the table was the Private Members Bill, which had been tabled on 19 February in Parliament. He would like all Committee Members to read through the Bill which he said would help small businesses tremendously in the future.
The Private Members Bill was targeted at the Presidents’ office, because it was the duty of the Presidents’ office to make sure that the environment in which small businesses operate was as easy as possible. He urged Members to get hold of the Bill and to read it as it would be of help to small businesses in South Africa, as well as the Committee in its oversight role of small businesses.
Mr D Mthenjane (EFF) said that for the DSBD to achieve its goals, it needed to do road shows because some people did not know about the importance of farms. It was a serious problem, especially in the rural areas. The DSBD might be visible in the urban areas, funding the businesses of white people, but the people on the ground were not receiving any assistance at all. He thanked the Researcher for the report.
He noted the biggest challenge was access to funds, as this created more problems such as poor credit history. The DSBD did not have a plan to assist such people. Some people went to banks to borrow money, and due to various reasons, they could not sustain their businesses and were blacklisted because they could not pay back the loans. These people needed help. He said the DSBD was not considering or challenging these issues. Small businesses played a big role in the South African economy. About 30% of the gross domestic product (GDP) depended on small businesses. The mission was to coordinate, integrate and mobilise.
He noted that the researcher had said there were about 35 865 applications, of which only 1 497 had been approved. The other 34 368 applications were hanging somewhere, and no one knew what was happening to them. The distribution of the funds as far as gender was concerned, was males 578 and females 422. He wanted a further breakdown of these numbers in order to know if there were people with disabilities included. He wanted those with disabilities to receive more assistance.
Lastly, the rate of unemployment was too high in South Africa. He understood that about 11 million people were unemployed in the country. The DSBD was the main pillar of all the sectors in the country and the DSBD needed to employ more South Africans and do more for employment, but this is not happening.
Mr Kruger said this Committee was not the place to slam race. It was out of order to say that the DSBD only looked after white people. It was not accurate, and he wanted Mr Mthenjane to withdraw the comment, because business was for everybody.
The Chairperson said she had not heard the statement, but asked Mr Mthenjane that if he said it, he should withdraw the statement, because the priorities must be analysed as a collective and they must come up with recommendations as to how best to assist the entire society moving forward.
Mr Mthenjane confirmed that he did say that, but wanted clarity on how to withdraw “the truth.” He said that it was a fact that the DSBD catered mostly for privileged white people in urban areas. He wanted the Committee to speak the truth. Only poor black people were staying in the rural areas. He did not know why he should apologise if he was telling the truth.
The Chairperson said she wanted a withdrawal so that harmony could prevail in the Committee. She said it would be best to say that those who were benefiting were living in urban areas, but not to bring race into it.
Mr Kruger insisted that it was not the truth.
The Chairperson made a ruling that was binding on everyone, and did not want any further dialogue on the matter.
Mr Jacobs agreed with the Chairperson.
Mr V Zungula (ATM) said the presentation had been very clear and provided insight on various issues. Firstly, as a Committee, part of its work was to ensure all laws were adhered to in terms of small business development. He recommended that a law should be passed that non-South African citizens must invest a minimum of R5 million in order to trade in South Africa, and that their businesses must be registered with the South African Revenue Service (SARS) in order to pay tax. This was not a reality in South Africa because of the myriad of Chinese malls all over the country. He found it unfair that South African citizens were disadvantaged because they had to trade with the applicable permits and had to comply with the law to its fullest, but the application of the law was more lenient towards non-citizens, who in his opinion were exempt from the law. He requested that the Committee made this issue a priority, and urged the DSBD to make sure that the part of legislation that enforced non-citizens to trade within certain regulations was adhered to.
Secondly, he did not agree with the information that the WTO would not allow South Africa to impose localisation on the private sector. He felt that this legislation was backward and did not allow the government to be fully in control of the private sector operating in our country. This would prevent government from intervening when it came to assisting small scale farmers. There were young emerging farmers, and if the government was prevented from intervening, then it became problematic. This issue needed to be discussed and taken up with the respective Departments to ensure it was raised as a concern with the WTO as an impediment to the growth of local SMMEs.
Lastly, there needed to be a plan to improve the lives of small-scale traders. The poorest or most vulnerable people traded in the informal sector. One could not have older people trading in the streets. The Department must develop the businesses of these older people to move from trading in the street to a corner shop, for example. A programme needed to be developed to uplift South Africans, especially the poor majority who were trading in the informal sector.
Mr Jacobs shared the sentiment that every recommendation from the presentation needed to be implemented by the Committee. This would make the Committee more impactful and it would not only go through the motions of going through minutes, but would really make an impact and stand for small and informal businesses.
The one concrete recommendation he wanted to make was that there was an organisation called the South African Informal Traders Association (SAITA), which was a large body of all the older traders that Mr Zungula had referred to. This organisation was doing very good work, and the Committee needed to engage with it to see how they could come on board, because they were the real entrepreneurs on the ground who were facing difficulties. There was a disjuncture between the Department putting out a call for proposals and getting these organisations, which were meant to have the developmental impact, on board.
He wanted to comment on most of the points that were raised, starting with relief measures. The Committee needed to do oversight. If the statistics were correct, there had been 35 000 applications during lockdown and 14 000 were fully completed, but the DSBD spent only R315 million out of the R513 million for Covid-19 relief. This was a big indictment, because almost R200 million could have been spent on small businesses but was not. The DSBD needed to be held to account for the unspent money and understand why this money was not spent.
He said the banks, BASA and National Treasury had failed the people and the President. When the President made the pronouncement of the R200 billion relief package for small business, it could not be that people did not have money to repay the loans and therefore could not access these loans. It was correct that 80% of those who received the loans were white businesses which perpetuated inequality by ensuring that those who needed the loans the most did not get the loans. This was a big indictment, and the President had spoken about that.
He would also like to appeal to the Chairperson to call in the banks and National Treasury, and widen the criteria. If the four top banks could not provide loans, then the micro-lenders who had helped in the past must be approached because they could provide loans and the people were bankable. It was unfair that banks wanted to charge high interest rates, but they were not prepared to provide loans and real opportunities to help the poor, marginalised black township communities. Banks were prepared to give loans for houses, cars and consumables, but not for productive activities.
On the personal protective equipment (PPE) corruption, he said there were not big elements of this in the DSBD. However, the Committee needed to get a report on the internal controls that were required.
He complimented the Researcher, and said that he shared the sentiments that one should go through the presentation beforehand. He wanted the Department of Trade and Industry (DTI) and all the agencies to be called to look at the SMME BizPortal, to make it easier for small businesses to do business.
He was in favour of a symposium, which he suggested should be hosted by the Chairperson. He mentioned that the President was hosting a SMME symposium on 25 February, from 14h00–16h00, and wanted to encourage all small businesses to be on the platforms and engage the President and the Minister of Small Business to be part of the recovery.
He mentioned that his “bugbear” was the 30% localisation, and the compliance monitoring of this. He believed there was an assault on poor people, and black people were not given business. The City of Cape Town (CoCT) was not providing opportunities for black and coloured people. They had failed to implement BBBEE compliance. The Western Cape Provincial Government had failed to implement government policy on BBBEE in favour of white privilege. The DSBD needed to ensure there was compliance in the CoCT and the Western Cape, because there was still a lot of baasskap happening, and he was keen for the Committee to have 50% compliance on BBBEE in the entire Western Cape and elsewhere. Only by measuring BBBEE could one ensure that black people were getting opportunities. Quotas must be put in place to ensure opportunities, because if there was no measurement then apartheid and white privilege would be perpetuated. It was the responsibility of the Committee to do this oversight.
Lastly, he shared the stimulus ideas on employment. Job creation was a big issue, and a breakdown was required of the opportunities being created in all townships. The Cape Flats also wanted to have its share. If there were 1 000 youth entrepreneurs across the country, then the Members would like to know what the share was for the Western Cape, as well as for the rural areas and townships.
He was in favour of energy generation and safety and security around small independent power producers. The DSBD must get a share of all the big opportunities that the government had outlined. The President had announced great things in the SONA, but it would do nothing if the same people got these opportunities again. The Committee’s job was to ensure that small business was everyone’s business and to make it possible for small businesses in the communities, townships and dorpies to access all the opportunities available. The Committee must unite to do oversight properly.
The Chairperson thanked all the Members and expressed her satisfaction that the Committee was speaking with one voice, and noted that the issue of inequality came up strongly.
She asked the researchers to analyse and give a breakdown of all the priorities and targets.
Since the quarterly reports from the DSBD and its entities were forthcoming, the Chairperson requested the analysis before receiving the reports. This analysis would also assist with the strategic plans.
Although the Committee’s role was to do oversight, it must also come up with recommendations and track the recommendations to ensure they are being implemented by the DSBD. The Chairperson was satisfied that many issues had been touched on.
She reminded the researcher to send the presentation to all the Members.
On the issue of BASA, she agreed that if the Committee was not being heard by the banks, then they would have to move to micro-lenders, and this would be a recommendation. The inconsistent application of policies was depriving the people, especially the poorest of the poor, who were not receiving any assistance.
She supported the issue raised by Mr Zungula on the WTO, because the people, especially small scale farmers, must grow. She requested that the Researcher include agriculture in the presentation.
The Chairperson wanted each department to indicate to the Committee what they were doing to address these matters. She joined the other Members in saying that she was satisfied with the presentation. It was a start, and those Members who still had issues could raise them, but only in line with the analysis of the priorities mentioned by the President. The strategic plan would be developed based on the priorities announced by the President. The DSBD was going to develop its APP based on these priorities. The Committee had to check whether those areas of concern in the analysis were being addressed. It could then be said that the Committee was on course.
Ms B Mathulelwa (EFF) said that her network was not stable and was breaking up.
The Chairperson asked Ms Mathulelwa to write down her issues, and to send it to Mr Kunene.
Mr Mthenjane requested copies of the reports that would be dealt with two or three days before a meeting so that they could go through them and better contribute during the meetings. Getting reports the night before a meeting was not satisfactory.
The Chairperson agreed with Mr Mthenjane’s request. She would continue requesting that the researchers analyse the documents beforehand in order to be ready so the Committee to speak with one voice when they met with the DSBD. It would also assist the Committee to be focused, because the essence of having an APP was to ensure that the DSBD did not move outside the scope of the particular document which would be adopted by the Committee. Only the priorities announced at SONA must be addressed.
President’s engagement with SMMEs
The Chairperson asked Mr Kunene to brief the Members on the engagement between the President and SMMEs.
The Committee was informed that the President would be meeting with entrepreneurs and SMMEs on 25 February, between 14h00 and16h00. The engagement would be televised on all major networks, like eNCA, News Africa and SABC News. It would also be on the government Facebook page, Twitter and YouTube. Most of the engagement would, however, happen via Facebook live, where the entrepreneurs would be able to pose questions.
The Chairperson requested those Members who were able to, to listen to the President’s engagement, in order to be empowered.
The Committee researcher informed the Members that the documents had been circulated. There was the presentation, and a document that supported the presentation. The information, especially on the ease of doing business, would also be there.
The meeting was adjourned.
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