DSBD organogram update; SEDA 2022/23 Annual Performance Plan, with Minister

Small Business Development

19 April 2022
Chairperson: Ms V Siwela (ANC)
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Meeting Summary

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SEDA 2022/23 APP

In a virtual meeting, the Minister and Deputy Minister of Small Business Development and Deputy Minister of Public Service and Administration all expressed commitment to finalising the organogram of the Department of Small Business Development (DSBD) because of its importance to the mandate.

The Department of Public Service and Administration (DPSA) presented the progress of finalising the organogram. The presentation highlighted the engagements between the Department of Public Service and Administration and the Department of Small Business and the way forward to completing the organogram.

Members asked DSBD about the timelines for the completion of the organogram.

The Small Enterprise Development Agency (SEDA) briefed the Committee on its 2022/23 Strategic, Annual Performance and Budget Plans. SEDA highlighted its institutional performance plans and emphasised its collaboration with the Small Enterprise Finance Agency (SEFA).

Members asked for the percentage of SEDA clients funded by SEFA, if SEDA was doing any post-investment work in 2022/23, about its partnerships and if it was tapping into the corporate world.

Meeting report

The Chairperson remarked on the state disaster in KZN and the Western Cape and thanked the President and the provincial leadership for being proactive. She sympathised with the people in KZN who had lost loved ones. The number of lives lost was too high. She asked those that could assist in any way to do so. She noted that the DSBD organogram was long overdue and to get a briefing from SEDA on the annual performance and their audit outcomes 2022/23.

Ms B Mathulelwa (EFF) raised concern that the Minister usually missed the Committee meetings due to Cabinet meetings and asked about changing the meeting slot to accommodate the Minister.

Mr King Kunene, Committee secretary, replied that the Office of the Chief Whip and the House Chairperson determined the meeting slots. The Committee had been assigned Wednesdays, but they were meeting on Tuesday this week because the parliamentary programme had scheduled this as a committee week. The Committee had to apply to the House Chairperson if it were to meet outside the allocated hours. The slots were informed by the notion that Members were in more than one Committee, so this Committee could not meet at a time of its choosing. The other days had been scheduled for other committees and the afternoon was for National Assembly plenaries. The way forward was to talk to the Minister since she would have a cabinet meeting on Wednesdays.

The Chairperson said that it would be discussed with the relevant authorities and get back to the Committee on the way forward.

The Committee adopted the Committee programme for the second term with a few additions to include cooperatives.

Deputy Minister’s remarks
Dr Chana Pilane-Majake, Deputy Minister of Public Service and Administration, expressed her concern about the time it is taking to complete the DSBD organogram. However, they were doing their best to ensure that DSBD finalised its organisational structure because it was important in rolling out its mandate. DSBD had been operating on a startup organisational structure which was approved by the Minister of Public Service and Administration on 16 April 2015. DSBD was given the task of developing its organogram with input from this Portfolio Committee. This development meant including all functions transferred from the Ministry of Trade and Industry.

The former Minister of Small Business Development presented a consultation request to the Minister of Public Service and Administration on modifying the DSBD organisation structure in November 2018. Considering the Fifth Administration was nearing its five-year term end and the May 2019 national elections were approaching, it was decided to slow down the process. The Minister of Public Service and Administration advised that the changes be postponed until the Sixth Administration was in place to allow a new executive to put their creative minds on the DSBD configuration.

On 19 November 2020, the Department submitted a pre-consultation to the Department of Public Service and Administration (DPSA) on the proposed organisational structure. The findings highlighted that it had functional and establishment challenges that needed to be addressed before submitting a formal request for concurrence to the Minister of Public Service and Administration. These issues had not been finalised. The DPSA presentation would provide proposed solutions to the barriers to the matter's conclusion.

Department of Public Service and Administration (DPSA) briefing
Mr Oscar Tshivhase, Director: Organisational Design, DPSA, presented the progress towards finalising the organogram. He outlined the engagements between DPSA and DSBD and the way forward to complete the organogram (see document).

Discussion
The Chairperson acknowledged that the organogram was long overdue, and she hoped that they were going to speed up the process. She was eager to be given a timeline, but she understood that consultations took time due to considerations such as alignment with the budget and the new service delivery model.

Mr F Jacobs (ANC) said that the suggested two weeks were okay, but the Committee wanted clear-cut time frames, an implementation framework and a better progress report going forward. There was an urgency to build capacity, which was critical for delivering job creation and small business development. The large number of vacancies and underspending in DSBD were evidence of the need to finalise the organogram.

Mr H April (ANC) said that given its history, he was not confident that the organogram would be resolved in that short period as stated. He asked how it would align the old structure and merge SEDA and SEFA and the Cooperative Banks Development Agency (CBDA).
Deputy Minister Pilane-Majake replied that it was clear that they would conclude the process. DPSA would finalise the solution with DSBD. The problems identified in their communication would finally be dealt with to finalise the organogram. The two departments agreed to keep the Committee updated on progress.

The Chairperson agreed that the Committee would interact in a timely manner to monitor DSBD, so the challenges are resolved. The worry was if the matter was not concluded with speed, job creation would remain a dream and that clients would be assisted by SEDA but receive no assistance from SEFA. DPSA and DSBD were to check in with each other. She asked the Minister to assure the Committee of the two-week timeframe. The new service delivery model would assist DSBD. Working in isolation was a problem, but there was progress from the side of DSBD.

Minister’s remarks
Ms Stella Ndabeni-Abrahams, Minister of Small Business Development, expressed her commitment to finalising the organogram because of its importance to the DSBD mandate. At the center of the issue was alignment. She was glad that the Department had received some tips and they would fast-track this. One critical item was the name changes – it was important to look at the mandate and the functions. The Department would identify the gaps and add them to the organogram to ensure it did not leave anyone out, including informal traders. Various stakeholders would complain that the Department focused on certain components while leaving others out. This necessitated the review of the entire organisation and its functions.

The state agencies, especially SEDA, were prominent in the portfolio in their emphasis on business development support. There was a demand in the sector, especially from startups. To deal with unemployment, instruments like SEDA were there to divert dependency on jobs into self-sustaining business initiatives and other livelihood and income-generating activities. The resources from the agencies would support SMMEs to be sustainable in the broader context of the Economic Reconstruction and Recovery Plan adopted by government and the private sector. A perfect alignment of the activities was imperative; it would create the one-stop-shop value chain of support measures through coordination and holistic engagement with the sector.

The Ministry had engaged with international bodies such as the World Bank and local organisations to find collaborative opportunities to support small businesses. SEDA managed some of the partnerships, including interventions in the KZN and the Eastern Cape due to the floods. It would be grant-based using the blended finance model as SEFA would remain the critical agency responsible.

The Minister commented on changing the time of Committee meetings so she could be available. She asked if meetings could be changed to the afternoon. She emphasised that the Deputy Minister was present in her absence.

Small Enterprise Development Agency (SEDA) 2022/23 Annual Performance Plan
Mr Nkosikhona Mbatha, SEDA Acting CEO, spoke about its strategic focus and alignment with the Economic Reconstruction and Recovery Plan (ERRP) and the Minister’s contract. He highlighted the institutional performance plan and emphasised its collaboration with SEFA.

Discussion
The Chairperson said that she was glad that SEDA tried to close the gaps with the establishment of branches. Such strategies gave the Committee hope that it would achieve its goals.

Mr April said that he had taken three of his constituency members to SEDA in Kempton Park. The experience was terrible as they waited an hour and a half just to be assisted. Although the presentation highlighted investment in staff to ensure delivery of the work, it was questionable where those staff worked. The experience should have been different.

Mr April said it was important to find out the percentage of SEDA clients that SEFA funded. It was almost zero. Going forward, the people would not get any funding from SEFA. This pointed to the urgent need for the amalgamation of the two agencies for tangible results. It was a matter of grave concern and it had to be addressed immediately. Small businesses were suffering because even though they were made funding-ready, SEFA was not funding them. The Annual Performance Plan (APP) needed to show a concerted effort to work towards their merger.

SEDA needed to show its post-investment work in its APP as there was no evidence of the post-investment work. He asked if the Committee could propose that 50% of the SEFA funding go to SEDA clients. It would show the seriousness of the merger implementation that the two were working as a unit rather than as two separate entities within DSBD.

Mr April asked how SEDA was using corporate markets – given their deep budgets – for supply development. What legislation could the Committee put in place to ensure maximising small businesses in South Africa? What mechanisms were in place for this to find expression in the corporate budgets of JSE listed companies? There was a need for people who understood the corporate world to have a conversation with the state to propel transformation faster.

Mr April wanted to see SEDA and SEFA work together to assist even those at the lowest business levels. It could be done with officials committed to the bigger vision at hand. He raised concern that no person that came through his parliamentary constituency office (PCO) had been assisted by SEDA or SEFA. None of the Portfolio Committee members could point to what had been delivered by the two organisations.

Dr Matshediso Ndlovu, SEDA Board Chairperson, replied about SEDA getting entrepreneurs ready for funding. SEDA and SEFA had moved closer than when the current SEDA Board had started their tenure three years ago. The Boards, CEOs, and the executive teams of SEDA and SEFA were working closer. The change was that they wanted the entrepreneurs that SEDA had helped to access SEFA funding as opposed to other funders outside the public sector. There were reports on the number of people made funding-ready and those that had accessed SEFA funding. Where entrepreneurs were not funded, SEDA would work with them to achieve future funding.

On partnerships, SEDA had had roadshows with the relevant Ministers, which had been reported widely by the media. They ensured the roadshows were responsive and relevant to what entrepreneurs needed. There were numerous partners; some were JSE listed or significant in the market. On the trip to Saudi Arabia, some big companies were invited. They worked on how to get entrepreneurs access to funding.

Mr Mbatha, SEDA Acting CEO, replied that some of the needs identified were the training of the workers about customer service to provide the right spirit so they understand that customers were the priority.

Mr Mbatha explained that the access points being created would take away the queues in some of the branches so they could ensure clients speedily receive service. The independent visits were informative in that they exposed the problems so SEDA could deal with them.

In post-investment work, SEDA had a set target for mentorship, training and coaching as part of its work plan. SEDA had targets on the quality improvement standards and compliance. These were all part of the post-investment work. SEFA-funded clients were brought into SEDA to be offered post-investment support. The challenge was that the Protection of Personal Information (POPI) Act prevented sharing information. They had to write to the SMMEs to allow SEDA access to the information. They were moving away from that because clients now had to agree to that before being funded. That made it easy for SEDA to support SEFA. There was some SMME relief SEFA-funded clients. They had clients on the business recovery programme that they had assisted after the July 2021 looting in KZN who got funding from SEFA. SEDA was now busy with the youth challenge fund. The clients that did not get funding from SEFA were referred to SEDA to assist them in meeting the requirements before being referred back to SEFA. They were building systems to help make this work seamless.

SEDA had a dialogue with the private sector on 25 March 2022 to ensure that the SMMEs could access what the private sector offers. There was another dialogue scheduled for May, which ABSA would lead. On 22 April, SEDA would have a dialogue with the community of practice dealing with the Enterprise Supplier Development (ESD) programme, culminating in an ESD conference to ensure that the work was moving forward as ecosystem enablers.

SEDA was working with SASOL, which had provided funding for 20 clients that would benefit by getting containers. It was also working with Pick n Pay, mostly in the Western Cape. SAPPI was doing some work with them in Mpumalanga, supporting SMMEs to access the value chains that SAPPI developed. SAPPI had trained them to ensure their services were of a high standard and quality. Anglo Platinum in Limpopo would be driving a big ESD programme through one of the SEFA-funded partners. They were also working with Columbus. They had started the conversation with the JSE CEO by looking at the SMME element. The unit worked on cooperation to ensure that the SMMEs get the required support on the ESD programme and the JSE platform to access more funding. There were continuing meetings with Clicks to ensure they continued to add more SMMEs.

The Chairperson expressed her satisfaction with the answers by the Acting CEO and said she had hope that the SEDA/SEFA merger would assist in many things, especially the job creation crisis.

Ms Mathulelwa highlighted that in Izingolweni township in KZN, seven businesses had been burnt to ashes during the July 2021 unrest. People were calling the EFF offices to log complaints about the empty promises of the relief fund that they did not receive. After the floods, they were now in a worse state of disaster. The SEDA and SEFA could not be trusted to help and the people were on their own. The two entities seemed not to deliver their promises, especially to the small businesses she mentioned (spoken in her vernacular). She was disappointed that SEDA and SEFA would be given money in the 2022/23 budget – the ruling party should be ashamed.

Mr April called a point of order saying that the Member was the one to be ashamed because she rarely attended meetings.

The Chairperson remarked that the Committee Members were expected to assist and guide SEDA on what it had presented. The purpose of the meeting was to critique the 2022/23 APP to give SEDA input on what it should improve on and what was it that was applauded. She believed that the merging of SEDA and SEFA would assist in reaching their targets and doing away with delays. The District Development Model was going to assist in relating to the other spheres of government because at the national level, they were working in silos. The most difficult thing was that DSBD could not be located at the provincial level. The key was that SEDA and SEFA come together to ensure that the dream was actualised.

Mr Mbatha’s response was unclear due to connectivity issues.

Deputy Minister of Small Business Development, Mr Sdumo Dlamini, said that they had heard the Committee input and were going to work on the areas that needed improving. He would ensure that there would be an improvement in those areas when they return.

The Committee noted the SEDA 2022/23 APP.

The minutes of 30 March 2022 were adopted; the minutes of 1 April 2022 were deferred.

The meeting was adjourned.



 

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