In a virtual meeting, the Department of Small Business Development (DSBD), the Small Enterprise Development Agency (SEDA), and the Small Enterprise Finance Agency (SEFA) reported on their third quarter performance.
The DSBD had met 19 of its 20 quarterly targets, missing only its plans to achieve below 10% vacancy rates in funded posts, which was nevertheless an improvement from previous quarters. The presentation addressed the output of SEDA and reasons for deviations, as well as corrective measures and comments. The Minister had pushed the target for products to be locally manufactured or supplied locally by small, medium and micro enterprises (SMMEs), from 200 to 1 000 by 2024. There had been 10 955 township and rural enterprises supported financially and non-financially due to the new District Development Model allowing for greater access to potential beneficiaries.
SEDA had underperformed on most its quarterly indicators. However, it had met and exceeded the target for incubations. Covid-19 had resulted in the underspending of SEDA on travel and accommodation, and had been a contributing factor for its underperformance because it had limited the number of face-to-face interactions and increased the demand for online services. SEDA acknowledged the need for technology during and post Covid-19, but access to connectivity and devices posed a challenge to its administrative workings, particularly in the rural areas.
SEFA had a similar narrative to its quarter two report, and had underperformed in most of the quarterly indicators. Total SEFA disbursements had been well below the target of R596 million for the period. The areas which were highlighted as a challenge were facilities disbursed to youth-owned enterprises (23%), people with disabilities (0.4%) and township-based enterprises (29%). Covid-19 had impacted these target areas, as there had been reduced economic activity.
Members had raised concerns about the reporting format produced by DSBS and their entities, saying that they were addressing issues which had already occurred, and oversight/intervention could not take place. The localisation policy framework, SEDAs footprint and digitisation in the face of Covid-19, were of concerns. The lack of support for the youth, the disabled, and for township and rural areas, was worrying and Members questioned how this could be improved upon. However, they agreed that Covid-19 could no longer be used an excuse for poor performance.
The meeting began with the apology of Mr J de Villiers (DA) who was on study leave. The quarter three agenda was adopted. The Committee minutes dated 3 March 2021 were adopted as a true reflection.
Ms Rosemary Capa, Deputy Minister of Small Business Development, welcomed the Committee, staff and the Chairperson. She handed over to the Acting Director-General (DG), Mr Lindokuhle Mkhumane, to present on behalf of the Department of Small Business Development (DSBD).
DSBD: Quarter three performance report
Mr Mkhumane said that the report reflected the progress made on the implementation of output indicators and annual targets set in respect of the 2020/21 quarter three (Q3) in the revised and re- tabled 2020/21 annual performance plan (APP). The report would address the actual output and reasons for deviations, as well as corrective measures and comments on the 2020/21 quarter three performance. The findings of the Auditor General (AG) would be discussed.
He apologised for information regarding the audit and risk committee not being present within the presentation. This would be the third attempt, but he was hopeful that by the end of this month there would be an appointed audit and risk committee.
The Department had met 19 of its 20 quarterly targets (95%), an improvement on previous quarters. The target of achieving a 10% vacancy rate in funded posts had not been met. This was because the recruitment process had been halted by a review of the organisational structure and the finalisation of the national macro organisation of government (NMOG) process. The recruitment process was under way, with 15 positions advertised and in various stages of recruitment.
All quarterly targets were met in Programme 2 (Sector Policy and Research), Programme 3 (Integrated Co-operatives Development) and Programme 4 (Enterprise Development and Entrepreneurship). Three programmes had underspent, but the enterprise development and entrepreneurship programme had overspent by R7.954 million.
Ms Semphete Oosterwyk, Chief Financial Officer (CFO), DSBD, reported that expenditure at the end of December 2020 was R2.067 billion (90.7%), against an adjusted allocation of R2.278 billion. The remaining budget for the year was R211.1 million (9.3%).
Transfers and subsidies over-performed by R2.7 million, largely due to vouchers received from the National Youth Development Agency (NYDA) amounting to R3.9 million, and under-performance by the Cooperative Incentive Scheme (CIS), the National Informal Business Upliftment Scheme (NIBUS) and the Craft Customised Sector Programme (CCSP) of R6.6 million, as a result of claims not being paid as projected.
Compensation of employees (CoE) and goods and services had under-spent by R2.2 million and R21 000 respectively due to vacancies and less spending than projected. The goods and services cash flow had had to be revised following a contribution amounting to R43.7 million to the fiscus during the adjustment budget process as required by National Treasury. Capital asset had under-performed by R82 000 due to outstanding invoices.
24 of the 33 (72.7%) the 2019/2020 audit findings had been resolved, with nine (27.3%) still in progress.
It was recommended that the Portfolio Committee adopt the 2020/21 quarter three performance report of the DSBD.
Small Enterprise Development Agency (SEDA): Quarter 2 performance
Dr Joy Ndlovu, acting Board Chairperson, SEDA, said that the Agency had performed well on 11 of its 23 indicators (48%). The following targeted numbers were not met:
- Districts where the facilitation model was implemented;
- Spaza shops supported;
- Small, medium and micro enterprises (SMMEs) participating in export development;
- SMMEs assisted with access to finance;
- SMMEs assisted through the information centre;
- Cooperatives supported through ecosystem partners
- SMMEs accessing business development support
- Tech start-up enterprises supported;
- SMMEs supported with conformity assessments;
- SMMEs accessing procurement opportunities in the government and corporate sectors;
- New jobs created and reported by eco-system partners supported; and
- Jobs sustained by eco-system partners supported.
Ms Ntokozo Majola, Acting Chief Executive Officer (CEO), SEDA, said that the Covid-19 restrictions and the limited uptake of on-line services by the clients had restricted face-to-face contact. Further problems for performance included:
- The Covid-19 second wave, with the new variant, had caused an increased opening and closing of offices due to the number of positive cases. There had been psycho-social strain on staff, and the trauma of seeing family and friends either infected or having passed on due to Covid-19.
- The reduced operating period of the quarter due to the Christmas holidays had further affected the performance of the organisation;
- Low staff morale due to remuneration matters;
- A threatening labour relations environment, which may impact on the fourth quarter performance.
However, SEDA had performed well with incubations, having achieved and exceeded the target. A total of 6 931 clients had received business development interventions from SEDA in quarter three, 58% were township businesses and 48% were rural businesses. A further demographic breakdown could be found on slide 12.
SEDA had reported on its governance and compliance and high impact projects. The human resource figures showed that there were 622 staff members within SEDA, with 175 being business advisors.
The administration expenditure was under-spent due to savings on travel, accommodation and other budget items restricted under lockdown. Lockdown had also affected programmes and projects and capital expenditure (see slide 23).
SEDA acknowledged the role technology would play going forward due to the pandemic. However, connectivity and devices within the rural areas and townships had to be addressed. Covid-19 may continue to pose administrative challenges, but SEDA was fully aware of these challenges and would ensure service continuity for the benefit of clients.
Small Enterprise Finance Agency (SEFA): Quarter 2 Performance
Mr Martin Mahosi, Board Chairperson, SEFA, started the report by saying that the narrative was similar to quarter two. He provided an overview of the report, and handed over to Mr Mxolisi Matshamba, Chief Executive Officer (CEO), SEFA.
Mr Matshamba said that on loan book approvals, SEFA had underperformed by achieving only R449 million of its R596 million quarterly target for direct and wholesale lending. The underperformance could be attributed to the low uptake of the township and rural enterprise programmes (micro and informal schemes), the delayed applications from the intermediaries after the lockdown of the economy, as well as the low demand conditions in the economy, as most businesses were partially operating under the COVID-19 pandemic restrictions
On development impact, SEFA had achieved 52% of its target for the number of jobs facilitated, as well as 73% of the SMMEs’ facilitated target. The micro-enterprise sector had contributed the most to these areas. Three areas were highlighted as points of concern -- facilities disbursed to youth-owned enterprises (23%), facilities to people with disabilities (0.4%), and disbursements to township-based enterprises (29%). Covid-19 had impacted these target areas, as there was partial activity and low economic activity. The majority of SEFA’s disbursements were to Gauteng, the Western Cape and Limpopo.
The post-investment monitoring was highlighted, and the “legacy loan book” effects on figures were addressed. On financial performance, the cost-to-income ratio achieved 90% of the target, while accumulated impairments sat at 34%, which was within the target range. The report addressed governance and the balanced scorecard from a customer and financial perspective.
Finally, SEFA provided an action plan for quarter four which included bi-weekly performance meetings to identify issues and address them. It would also include pro-active engagements with clients regarding account restructuring and business viability funding. SEFA’s brand visibility and outreach campaign, along with partnerships, would impact funding accessibility and awareness.
Mr M Hendricks (Al Jama-ah) said that the quarter three report was showing the business of the end September 2020. The Committee wanted “real time reports,” as they were unable to conduct oversight and act on issues which happened over six months ago. No further questions would be asked, as it would be a “waste of time”. He saw this as “unprofessional” across all three Departments. As the letter received from the President the previous week had said, professionalism was needed.
Mr D Mthenjane (EFF) agreed with Mr Hendricks’ comment about the report format. COVID-19 had created many disturbances and the pandemic issue “can just disappear and leave us alone” to allow for oversight. Oversight would determine if this report reflected reality. Although localisation was mentioned in the report, it was not enough. The business Department had to promote localisation, local products, capacitate small businesses and therefore create more jobs. There was a high rate of job loss in the country, and the Department and its entities must do more to resolve this issue. The country must be moving in “the right direction” and creating jobs at home, not only overseas. He urged that this be done practically, and create jobs to boost the economy.
Mr Mthenjane said that because of COVID-19, SEFA had moved their communications with clients online. Therefore, people living within the townships and rural areas were not helped. He said that “our people” were unfamiliar with these technologies and/or could not afford these “gadgets.” The Department must make use of television, radio, and road shows to be more accessible. He urged the Department to “take itself seriously” and be closer to the people.
The Chairperson praised Mr Mthenjane’s comments as “progressive,” and highlighted the importance of job creation, poverty alleviation and the growth of the economy. He thanked Mr Mthenjane for his contribution.
Mr H April (ANC) started by recognising that Members of Parliament were responsible for oversight. They contested elections and made promises to their constituents. A lack of oversight would cost the Members when they returned to their constituents and reported their progress. He welcomed the presentations and acknowledged that this was an area of success and that the recruitment for this section had been “extremely well done.”
He said that 23% of youth disbursements was “extremely disappointing,” as the youth made up the majority of the work force in South Africa. Why were youth disbursements so low? What would the Department do to address this issue?
Moreover, the disbursements for disability (0.4%) were disappointing. COVID-19 would continue to be around for the foreseeable future, and the Department and their entities must learn to “cope under the Covid.”
There was a lack of data on SMME procurement, and clients were hesitant to provide information. What would be done to effectively tackle this problem? This was important for measuring the Department’s performance. Moreover, how would the Department improve on the regulatory barriers -- the red tape of compliance -- which hindered the ease of doing of business?
Mr E Myeni (ANC) welcomed the presentations, and praised the Department for paying the SMMEs within 30 days.
He began to question the Department about the retail sector, but he became inaudible due to connectivity problems.
Ms B Mathulelwa (EFF) commended the presentations, but agreed with Mr Hendricks’s point on the report format. A data base, which would show who had received support from the Department and its entities, would improve accountability, as the reports were falling short. No data base had been received yet. The report procedure needed to change to reflect the current situations.
She asked what the new strategy would be to deal with small businesses under COVID-19. These problems had been around before COVID-19, but new strategies were needed to help going forward. The Committee must work towards creating spaces in malls or townships for local businesses to operate. There should be a building in town with reserved space which allowed for local businesses to sell fruit and vegetables in rural areas and townships. Online communication was useful, but it should not be the only tool, especially for rural areas and the townships.
Mr B Luthuli (IFP) directed his questions to SEDA and SEFA about offices in local municipalities. Were there offices in local municipalities or in Durban? How could the people of the rural areas gain access to these offices if they did not have data or did not know the location of these offices? KwaZulu-Natal (KZN) was a large province, spanning from the Umuziwabantu municipality in the east to the Umhlabuyalingana municipality in the North. How would SEDA and SEFA promote their work and increase their presence so that people knew where to get help?
Mr H Kruger (DA) said that the footprint of SEDA was not present within the townships and rural areas. He pointed out that the SEDA offices in his own town in Mpumalanga were in the “richest suburbs, many miles away from the townships.” How had they planned this? Why were they “sitting in air-conditioned offices while the people were suffering?” He urged SEDA to increase their footprint and always have one desk in each municipality.
He highlighted a solution to Mr April’s comment on the ease of doing business. He had put forward the Ease of Doing Business Bill in a private Members Bill in Parliament two weeks ago. It was currently on the President’s table. The Department of Trade, Industry and Competition (DTIC), as well as the DSBD, had been unable to solve this problem for over 15 years. Therefore, this issue must be resolved within the President’s office, and particularly in the Department of Planning, Monitoring and Evaluation (DPME).
He said that access to electricity and road maintenance posed a problem to small businesses and their access to the market. Access to electricity and road maintenance fell under the “ease of doing business,” and was listed within the proposed Bill. These obstacles must be eliminated for small businesses to succeed, and there was no better person to monitor this than the President. The government gazette had further details on the proposed Bill.
Mr F Jacobs (ANC) appreciated the reports, and said they were much better than those for quarter two. The DSBD, as part of their indicators, had an annual target of 200 SMME-produced products. How would this be achieved? Moreover, how would the youth benefit from the vouchers mentioned by the CFO of the Department?
He praised SheTrades as an online trading platform for women, and the empowerment of women, but asked for clarification on the demographics of the women using the platform. This platform should be popularised, but more information was needed to understand the tangible registration process.
Covid-19 could no longer be used as an excuse going forward, particularly in terms of spaza shops’ imports and exports. What innovations were there going to be in this area? He said that the audit and risk committee issue needed to be addressed as soon as possible.
The President had introduced the District Development Model (DDM) last year, and with SEDA having 80 offices, why was it a challenge for each office to have a district presence? SEDA had a target of nine district agreements. Why could this target not be higher? SEDA currently had two district agreements, with which districts were these agreements?
Business development support was a core function of SEDA, but only R14 000 -- less than 50% of the R38 000 target – had been distributed for SMME support. Why was it so low and what would be done to improve on this?
Mr Jacobs praised SEFA and said they had made great progress. The geographical race and gender spread was useful. Although improvements could be made in the areas of disability and gender, there was a clear path forward. He said that by measuring this, there was a way of achieving it. He looked forward to the quarter four report to see the progress.
Finally, he asked if the business advisors within SEDA were separate from the permanent staff. The go-slow had apparently not affected performance, but what was the approach within management to cope with the go-slow?
The Chairperson said that the issues of the footprint of SEDA, technologies and the DDM were critical factors. She asked the Deputy Minister what the strategies were. The pandemic would persist, but what would be done to rectify the slow pace of job creation?
[Mr Jacobs took over as acting Chairperson]
Deputy Minister Capa said that a major concern was that all three entities were presenting separate reports. She proposed that these reports should be integrated before coming before the Portfolio Committee, as this would allow for further clarity.
She responded to the issue of the length of time between the reports. This was the national format -- a very simple and orderly layout, and it did not allow for the background information and the issue of impact to be addressed. She had listened to Members, and proposed integrating reports to clearly demonstrate the impact which Members were looking for.
This report format was a “strong weakness,” and she asked the Committee Secretary, Mr King Kunene, and the Committee for a time slot to report on issues, which was not a quarterly report setting, that would deal with the impact and background information the Committee Members were wanting.
She said that if capacity existed in terms of knowing where to go, being able to apply and how to do it, it may not be reflected in the report. The Ruth Mompati and Sara Baartman districts had both received zero in the report, although their potential was “extremely high”. The Minister had said that every member of the Department, according to their roles, must be campaigning in a province.
On the issue of spaza shops, she said that people had reached a point of “desperation”. She had visited Mahlungulu to address these concerns, but the traditional leaders had said no spaza shops existed in that area. With more information given to the traditional leaders, there would be a possibility for people to gather and discuss these matters.
She addressed the issue of the hindrances, not only with regard to time, but also the report format itself. Within a township there were urban, rural and township areas. She used an example of a spaza shop in Hermanus -- how much would a person pay to a wholesaler? How much was the taxi fare? Would they make a profit? The report style had been limiting, but she said that they were ready to comply and offer more details.
Deputy Minister Cape responded to Ms Mathulelwa about allocated spaces in shopping centres for local businesses. She said that the Department, with assistance from the President and the Minister, had worked with the Competition Commission to allow for local businesses to sell goods outside big stores within shopping centers, whereas previously not even sweets were allowed to be sold. Moreover, the Minister had been given the authority to “regulate business.”
She said that sometimes things were “given on a plate, but we lose them.” School nutrition was meant for local entities, but due to strict conditions such as having a warehouse or your own bakery to sell bread, compliance was an issue. Shoprite, as an example, had taken over this opportunity and were “invading the spaces of rural women and children.” A large school could pay up to R70 000 to R80 000 a month, but the Minister was working to take “that power back.”
The Department should not only fund small businesses, but should act as “activists” to develop a work ethic among the people and assist them with having accounts, being compliant, and not allow for geographical location to negatively affect that opportunity.
The Department had partnered with local municipalities to improve infrastructure and boost local products into the market. However, the unintended consequence was that when municipalities did not have 50%, people would travel to places which have the 50%. What if they could not pay their employees? How did they benefit from this?
The Department was not working with wholesalers, but prioritised local products and created trading hubs to increase bargain opportunities for competition. She said that the Minister must use the policy to ensure that shopping centres could be erected in any location -- a paddock or plantation -- and that the activity would attract private doctors and/or pharmacies. The Department could be a catalyst for infrastructural improvement, by bringing access to water to areas and having a direct or indirect impact on the communities. She was not being “stubborn”, but in a democracy it was necessary to ensure that the format of the reports worked in a political setting to address these intersecting concerns.
Finally, she replied to Mr Jacobs’ comment on the District Development Model. Within the Department, there were district champions present in each of the nine provinces. The district champion would coordinate with the municipal manager and local municipality. It would allow for accurate reporting and information to given to the Department, SEDA and SEFA. She said this was not only limited to the DSBD, but included the Department of Water and Sanitation, or the Department of Education. Each would have a district champion to act as members at the ground level. This may not be performing as it should because “we are a whole country,” but it was taking time. She urged that there should be a space to collectivise the separate entities reporting, and not provide “stale” information. She suggested that one or two Members should go to a project and provide a “practical” portfolio of evidence that the project was there.
The Deputy Minister said that she had dealt with the political matters, and handed over to SEDA and SEFA to address the administrative matters. The need for a change in the report format would be taken to the Minister, primarily to ease the concerns of the constituents.
Mr Kruger thanked the Deputy Minister. He said that her response showed the need for the Committee to get together and organise a strategic plan. The mandate had changed, and Covid-19 had played a role.
Mr April raised a point of order, and said that Mr Kruger could not respond to the Deputy Minister’s response. Mr Kruger should write that response to the Committee.
Mr Kruger said that he was not responding to the Deputy Minister.
The Chairperson said that he noted that, although responses were not usually allowed, he acknowledged Mr Kruger’s point about creating a strategic plan for the way forward. He invited the different Departments to continue with their responses.
Mr Kruger said that a date was needed, as this was not the first call for a meeting and it was not on the programme.
The Chairperson said that the Portfolio Committee officials should think about one or two dates for a meeting. He handed over to the DG and his team.
Mr Mkhumane said that the reporting style was in line the legislature. The localisation framework which Cabinet had adopted October 2020, agreed with Mr Mthenjane’s comment, as it aimed to increase the capacity of SMMEs. The small enterprise manufacturing scheme ensured, through SEFA as well as SEDA, that SMME products were certified and met the standards. This was something they were working on.
Responding to Mr April, he said that the Department was expected to provide support of 30% to the youth, and 7% to people with disabilities. However, they had been struggling with the disability target for a number of years. They were increasing their data base to contact people with disabilities and had partnered with organisations through the Departments of Social Development and Labour to get this information. They were “pushing” for the 30% target for the youth, and had aligned with the NYDA for assistance.
Regulatory barriers were noted as a concern. The Ministry’s “Red Tape Barrier Programme,” as well as Operation Vulindlela, chaired by the Deputy Minister of Finance, Dr Masondo, was aiming at ing down these barriers. The amendment to the National Small Enterprise Act dealt with the protection of SMMEs and the instances where the government changed contractual terms without consulting SMMEs.
He commented that Mr Myeni’s connection had not been clear. He had heard Mr Myeni speak about spaza shop owners and their reluctance to integrate the Department’s interventions. They intervened in both financial and non-financial means. It was important that there was assistance with business development support and that the records were in order. This would allow for self-reliance and the building of credit for the future.
He said that the Department had revised their support. The amounts provided had been increased, as some provinces were receiving larger amounts. The intervention within townships and rural areas, within enterprise development, were long term and aimed to build a relationship with the enterprises during Covid-19 and beyond. He said long-term interventions meant that more support could be provided, as grants could run out or the government may not have the funds.
Mr Mkhumane said that their report had been submitted on 2 September 2020 and had been audited by the office of the Auditor- General.
Regarding support for businesses under Covid-19, the Business Liability Program was assisting with the adjustment of working with Covid-19. Technology improvement and business processes were covered under the Business Liability Scheme, and would ensure that small businesses survived Covid-19. The Manufacturing Scheme was another intervention for small businesses.
He responded to Ms Mathulelwa’s question of allocated areas for local businesses to operate. He said they were refurbishing municipal and provincial buildings for that purpose. This would be a target for the next financial year.
Regarding Mr Jacobs’ question on the district model, the aim of the Department was to work with local municipalities. The municipalities should be the first point of call and should be able to direct small businesses in the right direction. He said that they aimed to have a desk set up in each municipal office to ensure accessibility.
The target of 200 SMME products was the target for this financial year, and they were already over 100 and hoped to meet this target. Retailers decided whether to stock SMME products, and there were sometimes long procedures to follow before stocking SMME products. The CFO would provide further information on SheTrades and the vouchers.
Ms Oosterwyk said that the DSBD had entered a Memorandum of Understanding (MOU) with the NYDA to allow for youth entrepreneurs to have access to vouchers. The entrepreneurs were not paid in cash, but the suppliers instead were paid directly. In the 2019/20 financial year, R15 million had been advanced to the NYDA for these vouchers. The youth entrepreneurs would apply through the NYDA, which would make an assessment and then the vouchers would be processed. She said that in her presentation she had been mistaken -- they had not received vouchers in the 2020/21 financial year, but had rather received evidence of clearing the expenses of the R15 million in vouchers for NYDA in the 2019/20 financial year.
Dr Ndlovu said she was aware of the shortcomings of the District Development Model. Measures had been put in place to ensure that people in the rural areas and townships were aware of SEDA, what they did and where they were.
She did not want to sound repetitive or make excuses, but there were 2.5 million SMMEs in South Africa. Prior to Covid-19, many of the SMMEs were coping and did not require the assistance of SEFA, but Covid-19 had caused an increased stress on these bodies.
Dr Ndlovu said that the capacity of SEDA, with their resources alone, could support around 200 000 on an annual basis. However, 2.5 million was a “big stretch.” The demand was huge and therefore they had to use partners within the ecosystem on a municipal, provincial, national and international level to ensure these SMMEs were supported.
A presentation would be held next week to address their amended APP, and it would be made clear that they had increased their number of core locations and districts to secure help for all 52 districts in South Africa.
On the issue of visibility, she said that they had partnered with Proudly South African, women’s and other entrepreneurial associations, radio, and private entities to increase their exposure.
Although there were many shortcomings, she emphasised that there were positives. SEDA had targeted to train 132 business development support providers and practitioners, but had trained 166. Incubation had been targeted at 96, but had achieved 106. Therefore, 48% was regrettable in the third quarter, but there would be a change in the fourth quarter. 48% had been a slight change from the 45% recorded in quarter two.
Dr Ndlovu responded to Mr Jacobs’ question on the go-slow. Business advisors were permanent employees. The employees were unhappy that they had not received an annual salary increase or bonuses. This issue had been taken to the Ministry and to this Portfolio Committee. A close eye was being kept on the impact, and they would implement disciplinary action if needed. The workers had the right to go on a go-slow and had received a certificate from the CCMA. They were exercising their right to inform workers who partake in the go-slow that it would be “no work, no pay.” They had not really gone on a go-slow, but they were not working outside of their contracted work as there were no reimbursements to do so.
Ms Ndlovu’s line was disrupted, and Ms Majola continued the response.
Ms Majola responded to Mr Mthenjane, and said that he was correct in saying that awareness and road shows were important. Last year they had an intensive campaign alongside the Government Communication and Information System (GCIS) across all community radio stations. Covid-19 had halted their outreach programmes, but they still had a target to distribute information about their Agency.
Ms Majola referred to Mr Myeni’s question on spaza shops. She said that among the difficulties, spaza shops were not willing to formalise their businesses and they were required to have trading licences. However, in some municipalities this was a tedious process. The Free State did not issue trading licences. The Department was addressing this and was allowing for licences to be processed and looked at from the finance side of the application process. The Western Cape and Gauteng had more attractive support programmes which had larger budgets and less stringent requirements. Their support programmes were being amended to tackle these challenges.
The digitisation of the delivery model was being looked at, and the e-services portal had been improved upon, and this should lead to continuous growth. These were the areas of focus within the SEDA-SEFA partnership, together with the removal of the pay point for small businesses.
SEDA had engaged with the Department of Cooperative Governance and Traditional Affairs (CoGTA) and almost all provincial CoGTAs and municipalities regarding the district ecosystem facilitation model, which supported the District Development Model. However, it required great teamwork with municipalities, because SEDA could not introduce parallel structures to what CoGTA had implemented, which were the district hubs and the district steering committees. The structures which the district ecosystem facilitation model would rely on were not currently in place. SEDA had sent out MOUs, but had not received them back from the municipalities.
She said that more branches could not continue to be created because that would require more people to run the branches, but with the limited financial availability, this would be impossible. Instead, further networking with private and other partners of the ecosystem was necessary. The district management information system support programme, funded by the European Union (EU), would enable the branches to be linked.
Three pop-up markets, which were postponed from January 2021 due to the second wave of Covid-19, would open to increase access to the market. There had been an increase in supplier and enterprise development with private companies, involving Sappi in Mpumalanga, and Woolworths, Clicks and Pick ‘n Pay in the Western Cape, as well as Spar in many provinces. On the virtual market side, SEDA had partnered with Take-A lot and was discussing partnerships with Proudly South African.
Ms Majola said that SEDA was taking over the SEDA eThekwini office. The recruitment process was almost concluded, and it would use the satellite offices with interns working in the office. There were core location offices in northern KZN -- Jozini, Richards Bay, and Dundee -- but the district ecosystem facilitation model should allow for business to occur without SEDA business advisors having to physically travel from their core location point to district offices. This travel limited the number of clients which SEDA could support.
Referring to Mr Krugers’ question, she said that besides the district office in Witbank, there were eight core location points in the Nkangala district. Five offices were from the provincial Department of CoGTA…
Deputy Minister Capa requested that Ms Majola go no further, as the Department and entities should consolidate their response and not take up any further time. She said this was an important topic which required a coordinated approach.
The Chairperson asked Ms Majola to round up her responses, and allow SEFA to have an opportunity to respond.
Ms Majola concluded that on the matter of visibility, all matters of branding had been put on hold after the announcement of the merger. This had been done to limit unnecessary spending.
Mr Mahosi said they were aware of the limitations of technology and digitisation of SEFA. However, a dual approach should occur to ensure that the youth were able to be reached through these digital means.
Last year, SEFA had appointed an agency through the GCIS to promote visibility. Many talk radio programmes had happened in the last month, with interviews with the CEO of SEFA, to promote the entity and they challenges people had raised. However, the SEFA call centres and its website still existed, and would be spoken about at a later point.
He went into detail on the key development indicators, such as youth, disability and women and children, and said they had been areas of constant struggle. He welcomed any support the Committee could provide. He agreed that 23% for youth as well as 0.4% for disability had been disappointing for the quarter. The output of SEFA was important, and although it was not part of the report, he gave a “quick synopsis” to highlight the context in which these figures existed.
In terms of youth, in 2019 the number was 15 494 SMMEs, involving R200 million, in 2020 was 18 193 SMMEs, with R212 million, and in 2021 it was 13 101, with R223 million. There had been a marginal difference between 2019 and 2021, notwithstanding Covid-19.
With disabilities, he commented that it had been “extremely disturbing”, with spending taking a big dip. In 2019, R2.3 million had been spent, 2020 had seen R2.63 million spent, but only R1.5 million in 2021. As guided by the Committee, SEFA had to go to agencies and create connections. Accessibility was a key concern and they needed to get access to more numbers, as they were not coming through. The numbers were “difficult to defend,” but there were issues with access. Targeted interactions were needed to identity the communities which needed support.
Township approvals for 2019 was R107 million, 2020 was R125 million, and 2021 was R197 million. He noted this as an improvement, and although the percentage may not reflect that, the rand value did.
In terms of women, in 2019 there were 72 288 enterprises with R481 million, in 2020 there were 73 952 enterprises and R446 million, but 2021 saw a drop to 57 280 enterprises, with R497 million. Rural investments in 2019 involved 47 635 enterprises, with R522 million, in 2020 it was 70 297 with R616 million, and 2021 had shown a drop to R446 million.
Third parties, in the way of intermediaries, alleviated the issue of connectivity and technology in reaching the rural areas. These intermediaries increased SEFA’s reach, and they aimed to have more black-owned intermediaries. The 2021 figures for women were mainly representing rural women, and the intermediaries had helped in that regard.
Regarding SEFA’s footprint in KZN, there was an office in Durban, as well as core locations with SEDA across the country. He commented that where SEDA existed, SEFA could perform a service. SEDA had “jumped on” the District Development Model through “pitch for funding” programmes, and four had been completed prior to Covid-19. This had allowed for the youth and rural people to directly pitch an idea to SEFA and access funding for their businesses. There was room for improvement, but support from the Committee was necessary. A re-commitment was made that SEFA would make their staff members available to support and communicate with Parliament.
The Covid-19 excuse could no longer be used. However, the technology option should not be ignored, with or without Covid-19 in mind. Applications must be simple and quick to cut down the turn-around time and increase efficiency.
30% of the population in South Africa was the youth, and they were “more digitally inclined.” The only difference between rural and urban youths was the point of access to connectivity. Collaboration with municipalities was necessary, and would allow for greater success to be achieved. He proposed that different centres could be used to engage with youths from different demographics, and engage electronically. This would require collaboration across the board.
Finally, he praised the Deputy Minister’s points on “complementary support” regarding oversight. Her presence within these discussions and the points raised would allow for tangible change to happen. He agreed that there had been a “slump” in the report.
The Chairperson thanked the Deputy Minister and Director-General for their contributions, as well as the presentations and engaging conversation.
He announced that next week there would be a virtual oversight meeting, where beneficiaries would provide the Portfolio Committee with “direct feedback” on the DSBD and agencies. The correct officials should be present for this meeting, and acknowledged the learning curve involved with technologies. He called on the DG and the Portfolio Committee to engage with people from the rural areas to take part in this meeting.
He said that data should not be a problem, and that the “gogo” in the rural villages should be able to communicate without limitations about how the Department, SEDA and SEFA had helped these communities.
Finally, he asked for an exact date to given by the officials for a strategic meeting. He said that credit had been given where it was due, but the meeting had also raised challenges where the Department could improve.
The meeting was adjourned.
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