Department of Small Business Development BRRR; Committee Programme

Meeting report

The Committee Content Advisor went through the Budgetary Review and Recommendations Report (BRRR) for the Department of Small Business Development (DSBD) and entities, giving an overview of the financial and non-financial performance and focusing on the Observations and Recommendations contained in the BRRR. The report noted and welcomed the clean audit of the Department and also the weak performance of the SEFA in attaining only 60% of its targets. The Department had also not referred the National Small Enterprise Amendment Bill and the Business Amendment bills to Parliament. It noted that the SMME credit gap was in excess of R350 billion and that not one cooperative benefited from the SEFA funding. The Committee recommended that the Department take a segmented approach to the review of the National Small Enterprise Amendment Bill and that the Small Enterprise Ombudsman Services Bill be referred to Parliament or establish the Office as a juristic person and that the SMME and the Cooperatives Funding Policy be accelerated and completed. (See BRRR)

Discussion
Mr H Kruger (DA) proposed that in the observations, there be added the concern that the merging of the Small Enterprise Finance Agency (SEFA) and the Small Enterprise Development Agency (SEDA) was of no benefit. Another big concern was that nothing was happening for a whole year concerning the reduction of red tape that small businesses encountered. He said he could not remember the point made in Recommendation 7.2 that the Committee had decided to rescind a decision to table a Committee Bill. He said the Committee in the 5th Parliament had decided to have a Bill on the Ombudsman. He recommended that the Committee table an Ombudsman Bill to serve SMMEs. He said a proposal should be added that the SEFA and the SEDA merge as soon as possible.

Mr D Mthenjane (EFF) said the Department was wasting money as there were no results from it. There were no solutions, only planning and wasting money, while the purpose of the Department was to provide services to the people. He recommended that the Department must merge back into the Department of Trade, Industry and Competition.

Mr H April (ANC) said that since the 6th Administration, the Committee had never done proper oversight over the Department, except at the time of looting in KZN, yet the Department kept going overseas on trips while nothing was happening in terms of service to the people. He said the BRRR did not highlight this fact.

Ms B Mathulelwa (EFF) said the Department was doing everything without the Committee’s knowledge and undermining the Portfolio Committee Members and there was no oversight of the budget of the Department, except for the unrest in Gauteng and KZN. The Department had an obligation to visit all the victims. The Department had to go back to the Department of Trade and Industry as the Department was doing nothing and the SEDA and the SEFA only did presentations but did nothing to change people’s lives in small businesses.

Mr J De Villiers (DA) said the BRRR report was sent to Members late; it needed to be sent to them earlier. He supported the previous speakers on the problems of holding virtual meetings and that the Committee could not function at the proper level in virtual meetings. Physical meetings must take place as soon as possible. The Committee needed to ensure oversight over beneficiaries of Covid Relief schemes and the bounce-back schemes. It was difficult to do oversight if information on millions of Rands in relief funding was never explained to the Committee. It was not private information as taxpayer money was being used. The DA reserved its position on the BRRR.

Mr V Zungula (ATM) recommended that the Committee not have virtual meetings. There should be oversight of the Department and the people on the ground, so the Committee should not rely only on the Department’s reports. There should be oversight in each term of the year. Members were limited in their understanding because of the limits in their engagement with people. On point 6.9, he said the issue of foreign nationals should not be confined to the issue of spaza shops only. Hair salons were rarely South African owned as were cell phone shops in malls. One could not be insensitive to the plight of South Africans as South Africans were getting displaced based on a lack of enforcement of laws by government. The majority of black people lacked education and so ended up in the informal economy. He proposed that Ghana and Kenya be looked at to see how they dealt with the issue. Government had to be compelled to spend on SMMEs and not on big business. The Department was not doing enough on late payments to SMMES and this should be a key concern of the Committee.

Mr F Jacobs (ANC) said he shared the sentiment that the Ombudsman Bill was delayed far too long and the Bill could be taken through the processes. He said the Committee made recommendations every year. He wanted an account of whether the recommendations were implemented in the past. He said the Department had failed the Committee on the legislative framework, but the Committee also had not done enough oversight over the process. He said he did not share the sentiment on black-on-black hatred; the real elephant in the room was the poor communities fighting over the scraps of the economy while cartels and monopoly capital were fighting over the biggest portion of the economy. He asked why the funding policy took so long to complete as funding and access to markets remained the biggest challenges to SMMEs. He thought the financial points in the report needed to be clearer and more specific on the financial framework that was needed.

He said the Financial and Fiscal Commission’s (FFC) comments also reflected that there was no coordination on the funding that was needed. He said loan sharks were still rife and banks charged exorbitant rates for funding. He supported all the recommendations. He recommended that local areas sit and cooperate with Somalis and Bangladeshis in a cooperative framework to create mutual understanding rather than stop them from investing and working in the country. Would the country be racist and stop Africans but Germans, for example, would not be stopped? South Africans needed to get a hand up into the economy, not a handout. A framework was needed to get business back into the townships. The question was how to get big capital to be accountable. He urged the Department and the Ministry to be more responsive to the BRRR.

The Chairperson said the Committee had wanted to visit China but could not do so because of Covid-19. She supported that the process of visiting China be restarted.

Mr Kruger clarified that the Bill he was pushing for was his proposal to table the Ombudsman Bill which should be taken out of the Amendment Bill and be processed as a Committee Bill.

The Committee Content Advisor noted all contributions that would be incorporated into the BRRR. He added however that there were issues beyond the scope of the Committee. These issues were that oversight was a concern across all committees. Oversight was not happening when virtual meetings were being used.

He said forming an ad hoc committee on red tape was an issue beyond the realm of the Committee and that it should be raised with the political parties. He said two members of the Office of the President would be appearing before the Committee soon.

On having physical instead of virtual meetings, he said Members should take it up with the Speaker.

On the SEFA being concerned about its merger of the three agencies, he said he did not know on what basis the SEFA was raising that concern as it, being an agency of the Department, should have raised concerns with the Department. If anything, the Department should have raised that issue with the Committee. He had not heard of any reservations from the Department on the merger. Concerns by the Department or the SEFA should be raised with the Minister, who would bring them to the Committee for attention.

On physical oversights, he said the BRRR was a report of the Committee and it made recommendations to the Minister who then responded to the recommendations. It was not a case of making recommendations to the Committee.

On the question of late payments, he said the Department was doing extremely well in making payments well before the due dates. The issue was with municipalities, provincial and national departments that were not paying on time. Treasury had been invited to brief the Committee on what was being done to expedite payments.

On the Amendment Bill, he said the Department seemed to come up with excuses not to refer the National Small Enterprise Act (NSEA) to Parliament. There were various reasons offered which kept on changing all the time. He said the referral of the Ombudsman Bill, which was supposed to be a separate bill, never happened and the Department said it would incorporate it in the NSEA as a chapter. The Bill in any case would not be referred to Parliament any time soon as the Department wanted to incorporate a charter that dealt with the majors. He was not optimistic that the Bill would be dealt with in this 6th Parliament. He recommended a segmented approach starting with the Ombudsman Bill proposed by Mr Kruger.

The Committee Secretary reported that the BRRR must be completed by Friday, 21 October 2022.

The Committee Content Advisor said the BRRR could be adopted with the incorporation of the amendments.

Mr Kruger proposed a meeting on Friday, 21 October, to deal with the amendments included in the BRRRRR for consideration and approval. On the comment on SEFA’S concern that a merger would not be good for small businesses, he said the content advisor should listen to the presentation.

Mr Mthenjane clarified that he recommended that the Department be returned to its original Department of Trade and Industry.

Ms K Tlhomelang (ANC) said the Committee should adopt the BRRR with the inclusion of all the inputs of the Members.

The BRRR was adopted with amendments.

Committee Business
The Committee Secretary said the Committee had gone through the fourth term Committee programme. He pointed out that the meetings should be virtual. If the Committee wanted physical meetings, it needed to apply to the various forums.

On the issue of oversight that was raised at a meeting to beef up the Committee’s programme, he said the programme was drawn from the parliamentary programme and the House Chairperson’s directives who gave Committee’s focus areas for the term. This dictated the meetings and oversight of the Committee. Hence the oversight visits to KZN.

The Committee’s programme for the fourth term was adopted.

The Committee Content Advisor noted that the issues the Committee Members were most occupied with around the BRRR were the great concern of SMMEs and their lack of access to finance; to markets; the amount of red tape; and the lack of infrastructure and that therefore these were the areas the Committee needed to beef up legislation and /or policy.

The minutes of the meetings held on 11 October 2022 and 12 October 2022 were adopted.

The meeting was adjourned.