Impact of SONA on Small Business Sector; Committee Bill

Small Business Development

22 February 2023
Chairperson: Ms V Siwela (ANC)
Share this page:

Meeting Summary

Video

President Cyril Ramaphosa: 2023 State of the Nation Address (SONA)

The Portfolio Committee met virtually to consider and adopt the Committee Programme and the Memorandum seeking permission for a Committee Bill to amend and amplify the National Small Enterprise Act and to be briefed on the SONA 2023 implications for Small Business Development.

In adopting its Programme, the Committee noted the need for a study tour abroad to establish best practice as well as an oversight visit to North West plus have a digital meeting with Small Business Development beneficiaries in the other eight provinces to discuss successes and challenges of the DSBD programmes.

The Committee Content Advisor spoke to the Memorandum in terms of National Assembly Rule 273 for the submission of a legislation proposal. The presentation covered the particulars of the Bill which will not be a new Bill but will be the amendment of the National Small Enterprise Act of 1996. The functions of a proposed commission were explained. The Department feedback on the Portfolio Committee's Budget Review and Recommendations Report (BRRR) for 2022 and 2021 was also presented.

The Committee expressed its disappointment at the Department which had not provided a legislative framework for eight years since its inception. The Committee was doing what was supposed to be done by the Department. Members had expected the Acting Director General to engage and give strategic feedback on the Memorandum in this meeting.

The Committee Researcher's briefing on the State of the Nation Address 2023 implications for Small Business Development sector covered key concerns: access to finance; load shedding; unemployment and poverty; rising cost of living; crime and corruption and red tape reduction.

The Committee discussed how the SME Fund is not known to deal with legacy and transformation but rather focuses on the bottom line of cost recovery. It also discussed how the Red Tape Reduction Unit in the Presidency is not addressing red tape reduction for small business.

Meeting report

Opening Remarks by Chairperson
The Chairperson highlighted that the purpose of the meeting was to adopt the first term committee programme, consider the adoption of a Memorandum to the Speaker of Parliament and the issue of capacity building and deal with other issues of oversight, both locally and abroad. Invited the member’s constructive ideas into the meeting as usual and appreciated the support of the honourable members and officials.

She welcomed Mr Jeffery Ndumo from the Department of Small Businesses Development (DSBD) who was standing in for the Director General who was on leave.

A new Committee member Mr M Mabika (DA) was welcomed by the Chairperson who highlighted that the Committee is fighting for the poor and the Committee works as a collective, not as political parties. She hoped Mr H Kruger (DA) had already briefed Mr Mabika about the Committee and she said how proud the Committee was about Mr Kruger’s work.

Memorandum for permission for Committee to initiate legislation proposal
Committee Content Advisor, Mr Sibusiso Gumede, made a briefing on the Memorandum to the Speaker where the Committee requests permission to initiate a Committee Bill in terms of Section 273 of the National Assembly Rules.
 
The Bill seeks to strengthen the small business sector regarded across the world as the engine for economic development. The Committee intends to amend and amplify the National Small Enterprise Act of 1996 – it is not going to be a new Bill altogether. It will include a tribunal. The functions of the proposed commission will be:
• Provision of dispute resolution services for business-to-business / supplier-contractor disputes.
• Receipt and admission of complaints made by or on behalf of Small and Medium Enterprises
• Investigation of complaints and referring such complaints to another appropriate body.
• Making presentations or taking action on behalf of SMEs.
• Conducting investigations into the way SMEs are treated by other businesses or the government • Facilitating Department development of good practice by industry on SMEs sector issues.
• Considering complaints by SME suppliers about payment by larger businesses and state.

Department Feedback on Budget Review & Recommendations Report (BRRR)
Mr Sibusiso Gumede drew attention to the DSBD feedback document that included 2022 and 2021.

SONA 2023: Small Business Development (SBD) Perspective
Committee Researcher, Ms Nwabisa Mbelekane, made a presentation on the implications for the Small Business Development sector of the President’s State of the Nation Address (SONA).

Key focus areas the President mentioned:
• This year the emphasis is not on new plans but on those issues that mainly concern South Africa (load shedding, unemployment, poverty, rising cost of living, crime and corruption).
• For SMEs, the focus is on the energy crisis (load shedding).
• Unemployment.
• Access to finance (many SMEs face).
• Red Tape Reduction.

Announcements that affect small businesses:
• The President declared an immediate national state of disaster to respond to the electricity crisis and its effects. The aim is to mitigate load shedding. "The state of disaster will enable us to provide practical measures that we need to take to support businesses in the food production, storage and retail supply chain, including for the roll-out of generators, solar panels and uninterrupted power supply".
• One of the key aspects of the National Strategic Plan is the economic empowerment of women.
• The National Skills Fund is going to train more entrepreneurs and unemployed graduates wishing to venture into businesses.

Ms Mbelekane stated that for this Portfolio Committee it is important to ensure that whatever sector or investment is presented takes into account plans for small businesses.

Committee programme
Committee secretary, Mr King Kunene, apologised for not introducing the new Committee member. Normally there is communication from the Office of the Chief Whip that an MP is being deployed to the Committee which did not happen. He went through the draft Committee programme:

22 February 2023: Consideration and adoption of Memorandum to the Office of the Speaker on the Committee Bill; Researcher briefing on capacity-building themes from SONA.

1 March 2023: Briefing by Constitutional and Legal Service Office (CLSO) Legislative Drafting Unit on the proposed Committee Bill. "The unit will be conversing with Members about what they should do and what is expected of them." DSBD briefing on implementation of 2022 BRRR recommendations and analysis of SONA.

8 March 2023: DSBD briefing on implementation of the Cooperatives Act as amended and regulations as well as update on ongoing discussions on the Apex body.

15 March 2023: DSBD progress on what it has consolidated and submitted to Red Tape Unit.

22 March 2023: Quarter 3 2022/23 performance reports from Department and entities.

28 – 31 March: Oversight Week. Mr Kunene stated that since the inception of the Department and the Portfolio Committee, the Committee has never been to North West Province. Unfortunately in the Fifth Parliament, the North West and the Northern Cape were not visited despite the commitment to visit all nine provinces. He suggested they visited the enterprises supported by the Department to conduct oversight. What informed that was looking at DSBD reports that state there have been low intake for support in that province. Should there be an opportunity again to conduct oversight, then it will be to the Northern Cape.

Discussion on Committee Programme
The Chairperson brought to the attention of the Committee that in January she fell and injured her arm and shoulder. She was not well yet and still undergoing some surgeries. This did not stop her from executing her duties and asked Members to pray for her speedy recovery.

The Chairperson invited input on the proposed programme, emphasising the oversight issues. COVID had disturbed the Committee's plans a lot and they must try and close gaps. She would not be proud as Chairperson to have failed the team without a visit abroad to go and benchmark before they leave the Sixth Parliament. Those who take over from this Committee must know what they found in other countries to be able to assist small businesses or the country. This is what they believe the next Committee can take forward. Oversight should not only be going to some countries such as Brazil and China. They must also liaise with the Department. The Acting DG was in their midst and they hope he will assist by informing the Committee of the Department plans so both the Portfolio Committee and Department can join hands. They can proceed to comment on the programme and adopt it. They will also invite the Acting DG to say something about the trip.

Mr F Jacobs (ANC) broadly agreed with the programme and supported its adoption. He extended a speedy recovery to the Chairperson who was still on duty and appreciated her commitment to the Portfolio Committee. There was an outstanding matter from last year as the Committee had wanted to do oversight where they get at least 5 to 10 beneficiaries from the nine provinces and hear their stories about the DSBD programme. The format would be to get a cross sample of Small Business Development beneficiaries to share both the successes and challenges. He supported the North West oversight but if they want to make more impact they should also consider this virtual tour that covers all the provinces.

The Chairperson replied that they will add the virtual tour. The Committee can package it for when it hands over to the Seventh Parliament Committee so it is clear about what it is saying.

Mr H Kruger (DA) seconded Mr Jacobs’ proposal and extended a speedy recovery to the Chairperson. He agreed that they will need to talk to small businesses who seek assistance from the Department. Previous experience has taught the Committee that the Department will give them information on small businesses but they only give them the top-of-the-top so that DSBD can look good. He suggested that they need to have a system where the Committee can select the small businesses itself so it knows that this is not managed by DSBD. However, they need help from the Department to do this. They also need to get small businesses that were unsuccessful and did not receive help from DSBD and hear both sides – the Department's story and the small business.

Mr Kruger noted for the study tour abroad that he was unsure if he was out of order but he would like to make a suggestion. They must also think about visiting countries that are far ahead in Red Tape Reduction for small businesses and how their government is handling that such as Netherlands, Belgium and Australia. In the Eastern bloc there are also a few countries that are experts on Red Tape Reduction.

The Chairperson said that Mr Kruger was in order as there is no slot for oversight and this is the only time where they can make suggestions for the Committee. She requested that Mr Kruger liaise with support staff on those proposals so that when they interact with the Department they can be able to make a decision. In addition she wanted them if possible to liaise with the Department so that they can join hands, but that will depend on the initiative. Mr Kruger's input was powerful and she appreciate it. She fully agreed that the Department assist with information on who has been a beneficiary, who has been successful and to what level and who has been disappointed forever. She suggested that they categorise the small businesses because they do not want to hear only success stories but also the disappointments as part of the oversight.

Mr J De Villiers (DA) said how sorry he was about the Chairperson's injury and assured her he had no intention of leaving the Small Businesses Committee. He will follow up with the Office of the Chief Whip to send confirmation that Mr Mabika is part of the DA team to be part of the Committee. They are very excited to have Mr Mabika as part of the team and he will be a great addition to the Committee and a good influence.

Mr De Villiers said he supports the planned oversight trips locally and internationally. He agreed with the previous speakers that they must get exposure to both the challenges as well as the successes of small businesses. There are lessons to be learnt from both. It was fantastic that they have opened the subject so that Members can have input. He will email some inputs to the Chairperson and Committee secretary. Brazil is an excellent choice with its emerging economy and it is also part of BRICS. It also has a lot of challenges in which small businesses have learnt to become resilient. It should be a very interesting trip to see the challenges that small businesses have had in Brazil with a similar type of economy to South Africa.

Mr D Mthenjane (EFF) wished the Chairperson a speedy recovery and they have noted the commitment from the Chairperson. He wished the Minister and the Deputy Minister can learn from the Chairperson. Perhaps the Chairperson can be nominated as Minister and he could welcome that. He welcomed the programme and it looked busy. He agreed with Mr Jacobs that the Committee also invite all provinces so they can tell them their side of the story. The story that Members have received is a negative story, different from the story that the Department is telling them. So rather these people can come who the Department claims it gave funding to. They can tell their story that indeed they received the funds and give feedback on what they are currently doing. Last year he forwarded to the Chairperson that there are people who are complaining about their funding applications. These people were not getting help instead they were getting rejected, being told to go back and they were asked funny questions. It very difficult for them to acquire such funding, yet the Department and entities come and tell the Committee different stories like they have helped so many people. They should let the people come and tell the Committee.

Mr Mthenjane did not support the international trip as it is just a waste of money. They cannot deal with the problems they have here, so why can they not take the little they have now and utilise it amongst the people who need the resources here; instead of wasting money going abroad and spending money that is not even there. He does not support trips abroad but supports oversight. They need to do more oversight visits to talk to and help more people because the people need them more and are waiting for the Committee's help. They need to go to the people and find out if indeed this portfolio is doing well for them.

Mr H April (ANC) wished the Chairperson a speedy recovery and expressed his condolences in absentia to the Director General on the loss of his father. He agreed to the programme. This was not the only Portfolio Committee affected by COVID but those committees still managed to go on oversight and study tours. They should make their best effort to ensure that these things happen. There are different budgets set aside for different things. The Committee should do its best to equip and serve the people better because there is no point in the Committee not having proper information. They can make better decisions based on how best practices in the world have worked. It is up to the Committee to bring better services to the people. He looked forward to working with everyone to better the people of South Africa.

Discussion on Committee Bill Memorandum
The Chairperson invited the Acting DG to comment on behalf of DSBD on the Memorandum and the Committee plans in order for the Committee to consider that when it finalises these. It is not a problem if he does not have information yet and has still to consult. The Committee will not mind.

Mr Jeffrey Ndumo, Acting DSBD Director General, replied that the information presented is a decision that must be made by the Department. He will relate this information to the Department, DG and the Minister. Then the decision will be communicated to Parliament on those items. Only then will he be in a position to articulate that.

The Chairperson expressed sympathy about the sad news of the passing of the DG's father. She requested that the secretary send condolences to the DG on behalf of the Committee.

The Chairperson said the motion is adopted by the majority of Members that they need to take that trip. This means Mr Mthenjane will be outvoted by the majority.

The Chairperson stated that although the information the Committee received was that the Department is striving to draft legislation, this does not mean the Committee is competing with it.

The Chairperson emphasised that most important when you hand over to the next Parliament is you must take stock of what has been done and benchmarked, and what the recommendations are moving forward. It is necessary to move with speed so the institutional memory should continue to be utilised by the next Committee. Some of the current Committee members will be part of the next Committee and some will not, so they need to take that into cognisance. The programme has been duly adopted with those facts but they would still like to engage with the Department officials on the proposals and have it revert to the Committee. That should be done urgently for the issues involving provinces and oversight. They must be mindful that they are going towards the 2024 elections. Parliament might rise in the middle of the year so the Committee needs to do everything with speed. Virtual meeting are much easier than visiting those provinces physically. She would like the Committee support staff to work harder and faster to organise all that oversight with the people. By so doing the people will see that they are taking them seriously. The Committee needs to acknowledge where they have failed to be able to correct that.

Mr Kruger expressed his disappointment at the Department that it did not give the legislation background as the Committee has waited for over eight years. The DG was not present but the Department cannot even give feedback on the Committee legislative proposal for half an hour. Every year there is a new story and small businesses are suffering. He apologised for not trusting the Department anymore about this legislation. He does not think they should get guidance from the Department. The politicians, who are serious about small businesses development and looking after small business owners, must give the guidance.

The Chairperson stated the Committee has previously engaged with the Department on legislation and they ended up agreeing that the Committee will proceed to enrich that 1996 Act. She fully agreed with Mr Kruger as this is their baby as the Portfolio Committee.

Mr Jacobs disagreed with Mr Kruger. They wanted to hear the voice of the Acting DG in the meeting. It is not acceptable that the Acting DG will come back to provide feedback because the Department has failed to present a legislative framework. The Committee is doing the work that DSBD is meant to do. In the absence of moving on this, the Committee has decided that it will draft the legislation. It is unacceptable that when given the chance to give the Committee feedback, the Acting DG refers to a person not in the meeting. They want to see a level of accountability from the Acting DG on behalf of the DG and the Department. He expected the Acting DG to engage and give strategic feedback. This quarter the Committee wants to deal with issues at hand, not further delays. Not having the Department respond is unacceptable. The Committee wants to know where the process review is, how they will deal with this process, the technical aspects on what areas they disagree with and what areas they should add and engage on. Mr Kruger said they cannot engage if the Department is not even providing direction. The Acting DG should have come prepared because he was notified about the agenda. If the Department is not ready, they will need to reschedule.

Mr E Myeni (ANC) expressed his disappointment that the Department still cannot address how far it is after eight years. There is now a problem with South African Revenue Service (SARS) harassing small businesses and they do not know where to report that problem. He suggested that they need to deal with the SARS issue perhaps next.

The Chairperson stated that she does not want confusion in terms of the role the Committee is playing on legislation. The only way they can proceed is for the Committee to present the Memorandum to the Speaker on what they have decided because no one will account for the eight years they have lost. In government they chop and change and she suggested that to rescue the situation that the Committee Bill is the best move. The Portfolio Committee is "putting a rider on that – let the Department officials prepare a session to remind the Committee of who they are and what is their role so that it will come from them". The Chairperson requested that the Acting DG note the Committee’s sentiments. They expect the Department officials to work closely with those of the Portfolio Committee to ensure there are no glitches along the way. It had been brought to her attention that the Committee staff has been dealing with the Eskom issue for weeks which should have been dealt with sooner.

Mr Kruger stated that the Committee has the guidance of the Constitution which gives them the right to introduce a Committee or Member's Bill. They do not need to go far; they just need to see what the Constitution mandates them to do and they do that.

Committee members proposed adopting the Memorandum to the Speaker.

Discussion on SONA implications
Mr Kruger said that when they discuss red tape reduction for small businesses, the President of South Africa’s solution is Mr Sipho Nkosi and the Red Tape Unit in his Office. If they read the Sunday Times, there were two pages on Mr Sipho Nkosi but small businesses were absent from it. Even when looking at the presentation it looks as if red tape is encountered by mining companies rather than small business. There seems to be a misunderstanding on the impact of red tape on small businesses. He suggested that with the permission of the Chairperson, they need to have a long discussion about the impact of red tape on small businesses.

Mr Jacobs thanked the Committee Researcher for the comprehensive presentation on the SONA. If they had the presentation before the Committee programme briefing, it would have informed them on what to do this quarter. Access to finance has been a big issue and it has not just been raised but long on the table. There is an SME Fund where they will put government money into a private fund hoping to get R10 billion in total. R3 billion from government money and R7 to 8 billion from private is to be welcomed. They need to acknowledge that they need all hands on deck to deal with access to finance. They need to get the CEO or the board to present to the Portfolio Committee how they are going to use the SME Fund to ensure they do both, especially for disadvantaged black entrepreneurs. The SME Fund is not known to deal with legacy and transformation but rather focuses on the bottom line of cost recovery. Mr April mentioned that they do not have enough money but they want them to engage most effectively. They need to get an entrepreneur culture going rather than how things are in South Africa, with people waiting for SASSA grants. Rather government must make it easier for businesses to start. The informality must be simplified and everybody formalised. This is a good capacity building session and they must build a case for tax incentives. They must encourage South African businesses to employ more young people by getting tax rebates. This incentive is a win for everyone because productivity and work are created, and at the same time a young person is getting experience and also dignity in that process.

The challenges they have experienced when they get big targets is how do they track SME development so that next year they do not say people are making big promises and they have not delivered and how do they keep government officials accountable for the delivery. Mr April mentioned that there must also be consequences. The Department must come and mention that they do have the capacity to do that and the Committee will see how they get that capacity. The financial sector is still a problem, there is still nothing interesting or innovative from the sector. They are just interested in profit. All the banks are just wiping profits off the backs of people and are not prepared to plough back for the people.

He suggested that they need to do the "bounce-back" scheme and they need to listen to the communities. It is easier for a bank to approve a hire purchase of a car instead of a truck. Banks must also be kept accountable. He suggested that they must call in the banks with the Finance Standing Committee and regulate finance for small businesses. They see the same reports repeated, with nothing stating what they have done so far. He endorsed the presentation as a good presentation.

The Chairperson stated that this is going to be a process and thanked the Committee Researcher for the detailed presentation, which will also assist the Committee in the budget debate. The role of the Committee is to liaise with the Department and other stakeholders.

Mr Mthenjane said they should keep their fingers crossed as the President promises but never delivers anything. He called the President "that man" and "Mr Phala Phala".

Mr April said that the Mr Mthenjane was out of order to call the President “Mr Phala Phala” . That was not how they speak in Parliament. They are trying to help the lives of people not for Mr Mthenjane to come with his cheap politics.

The Chairperson appealed to the Members to please be more smart and decent in the House. They had started very well and there will be time for those discussions when the Sixth Parliament rise and every one of them will have to prove him/herself in the elections.
The Chairperson asked Mr Mthenjane to withdraw that which is not parliamentary language and urged Members to stick to the rules.

Mr Mthenjane withdrew calling the President "Mr Phala Phala" but raised that Mr April also called him a man and he needs to be respected.

The Chairperson asked Mr April to withdraw calling Mr Mthenjane “that man” and he complied.

The Chairperson said the presentation is in front of them and assists them in moving forward.

Closing remarks
The Chairperson expressed her appreciation for the session, encouraged everyone to pull up their socks, and stated that she believes that administration officials will try their best to do exactly what the Committee has requested them to do. She mentioned that this includes officials from the Department.

The Chairperson reminded the Acting DG that she had said earlier he was not bound to say something he was not mandated to say. However, the tone is that Members are saying they will need progress on the initiatives that the Department has started, which is part of the Committee's oversight. This is the message the Acting DG can carry to the DG and they will have a session with the DG. The Chairperson thanked the Acting DG for coming to represent the Department.

The meeting was adjourned.

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: