The Committee met in a virtual meeting to consider the 2023 Budgetary Review and Recommendation Report (BRRR) of the Department of Small Business Development and its entities.
Members focused on the observations and recommendations sections in the report and made a number of suggestions to improve the document.
They said all the medium and microfinance companies had to be registered with the Financial Services Conduct Authority and that the purpose of Micro Finance Institutions (MFI) and Regulated Financial Institutions (RFI) should be of a developmental nature, and not for profit and agreed on the recommendation to get quarterly reports on them to get a sense of how much they lending and to whom to assess their developmental impact and transformational impact. Members spoke to the lack of indicators regarding co-operatives and they needed a breakdown of the 300 co-operatives that were supported. Members noted their disappointment that the legislation they were supposed to have promulgated did not happen before the end of their term of office. Members noted the absence in the report about the creation of jobs within the small business sector. Also missing from it was a report on the President’s commitment that certain products would be ringfenced to be manufactured by small businesses only. In addition, a Member noted that the Minister had announced an energy relief package for small businesses which never materialised.
The report, with the incorporated points, was adopted.
The Committee will be embarking on provincial public hearings on the National Small Enterprises Amendment Bill and will receive a briefing on the proposed programme.
The Content Advisor said there was a window of opportunity to strengthen the bill relating to the non-payment of bills within 30 days where it could be stated explicitly that there would be consequences if bills were not paid within 30 days.
Members asked if adverts specific to a province could be sent to them for dissemination and when the adverts would be available. Members agreed that no public hearing arrangements be made during the voter registration weekend. Members requested that a session be scheduled to capacitate members on the public hearing process.
The Chairperson welcomed everyone to the meeting and explained the purpose of the meeting.
The Committee Secretary took the Committee through the roll call.
The meeting agenda – which consisted of two items – was adopted.
Small Business Development 2023 Budgetary Review and Recommendation Report (BRRR)
Mr Sibusiso Gumede, Committee Content Advisor, indicated that his presentation would focus on the observations and recommendations.
He noted that the document was circulated to Members the day before and they will have an opportunity to make input.
The Committee agreed with this approach.
Mr Gumede read through each observation and recommendation as contained in the draft report.
He spoke to the Department receiving a clean audit and that SEFA had regressed from a clean audit to an unqualified audit with findings and a loss of R122m due to increased impairments while SEDA had received an unqualified audit with material findings. The majority of underspending was attributable to CoE. The Department had met 14 out of 25 targets.
Mr H Kruger (DA) proposed an alteration to the point on red tape to reduce red tape as well as the addition of another point dealing with the non -non-compliance of municipalities to the 30-day payment rule. He said the number of outstanding payments by municipalities stood at R84b and a strategy was needed to stop the non-payment.
Mr F Jacobs (ANC) said the vacancy rate was a perennial problem. He was looking forward to the amalgamation of the structures as it should improve performance. The funding policy had to be finalised before the end of this financial year and the recommendations of the AG had to be implemented. He said all the medium and microfinance companies had to be registered with the Financial Services Conduct Authority. He said the purpose of Micro Finance Institutions (MFI) and Regulated Financial Institutions (RFI) should be of a developmental nature, not for profit, and agreed on the recommendation to get quarterly reports on them to get a sense of how much they are lending and to whom to assess their developmental impact and transformational impact. He spoke to the lack of indicators regarding co-operatives and they needed a breakdown of the 300 co-operatives that were supported.
Mr H April (ANC) called for the adoption of the BRRR.
Mr G Hendricks (Al Jama-ah) said he was disappointed that the legislation they were supposed to have promulgated did not happen before the end of their term of office. He said what was missing from the report was the reason why the Committee existed which was to create jobs within the small business sector. Also missing was that there was no report on the President’s commitment that certain products would be ringfenced to be manufactured by small businesses only. He said his party would not support the report.
Mr J De Villiers (DA) said the DA reserved its position on the report. A big disappointment was that the Minister had announced an energy relief package for small businesses which never materialised. All small businesses in the country had concerns over access to electricity. The most important program of the Department could have been this program to give relief packages for energy.
Ms M Lubengo (ANC) supported the report because it was a true reflection of what the Committee did and supported the additions to the recommendations proposed by Mr Jacobs.
Ms B Mathulelwa (EFF) said the EFF was not supporting this BRRR because it showed how incompetent the Minister was and it did not address the issues of small businesses that she had been raising especially around townships and rural areas. Budgets were being cut off year in and year out.
Mr Gumede clarified the differences between the BRRR and the budget vote report. The BRRR arose from looking at the financial and performance indicators of the Department as expressed in the Annual Report and making observations and recommendations. It does not look at all the indicators but just a selection of them just like the AG does. He said Mr Hendricks was right to touch on the products that were earmarked to be solely for small businesses to manufacture and this was an indicator. Similarly, for Mr De Villiers on the energy relief package as well as Mr Kruger on the red tape. Mr Hendricks could add a point under observation and craft a recommendation on his point. He said members could not disown the report as it was their report. If there were gaps in the report the members should fill those gaps.
The Chairperson noted the views of other honourable members.
Mr Kruger said it was not on red tape but on the 30-day payment non-compliance.
Mr Hendricks noted the Content Advisor had indicated that not all indicators were covered and said that issues raised by members should be selected and should be raised in the report and then he would support the report. He did not want an ANC report. The issues he had raised were top priority issues, being the creation of jobs and the localisation programme.
The Chairperson said the observations and recommendations would be incorporated in the report. Referring to it as an ANC report was uncalled for as the Member could raise his observations and recommendations for incorporation into reports.
Mr Jacobs said all points raised by members would be accommodated. The points raised were not partisan points and the issues were not a party position. He therefore moved for the adoption of the report with amendments noted.
Ms Lubengo seconded the motion.
Mr De Villiers wanted confirmation that the energy relief fund point would also be added.
The Chairperson said Mr De Villiers should write the clause for incorporation and copies of the final draft would be sent to members before the report was sent to Parliament.
The report, with the incorporated points, was adopted.
Progress on Preparations for Provincial Public Hearings
The Committee Secretary presented the programme on the planned provincial public hearings relating to the National Small Enterprises Amendment Bill. He indicated they were still waiting for approval of the programme from the Chief Whip for the public hearings scheduled to run from 26 October to 19 November. The Committee would be split into two groups to cover the hearings in Mpumalanga and Limpopo and in Northern Cape and Free State, after which it would do Western Cape, Eastern Cape and KZN, North West and Gauteng.
The House Chairperson said the Committee needed to consider voter registration dates on 18 and 19 November.
Members were reminded to return funding application forms.
He then spoke to the adverts that would be flighted, the letters to be sent to municipalities, and the legislatures. They were still in talks with the Parliament’s Public Education Unit. He said that it would be a packed programme.
Mr Kruger asked if Mr King could send an advert specific to the province to be used on WhatsApp groups.
Mr Jacobs agreed with Mr Kruger on the adverts to mobilise stakeholders. He agreed that no public hearing arrangements be made during the voter registration weekend.
The Chairperson said the Committee would respect the voter registration weekend. She wanted to know when the adverts would be available.
Mr King said the adverts would be finalised by that day and he would circulate it and a summary of the bill for circulation. He said the dates of the programme should be reflected but all the venues were not finalised yet. He said local radio stations would be used to popularise the program.
Mr Gumede said the Committee had started with the process and developed a memo on the objects of the bill. Some of the objects were issues raised by Mr Kruger on the non-payment of bills within 30 days. The issue of payment was contained in the bill but it was not stated explicitly. There was a window of opportunity to strengthen the bill to indicate that there would be consequences if bills were not paid within 30 days. He had looked at jurisprudence in the US and UK on the matter. In the UK the ombud can issue non-binding recommendations. He did not agree with this and recommended that the ombud’s recommendations should be binding like the Public Protector. In US jurisdictions a commissioner dealt with issues over and above being an alternative dispute resolution mechanism.
Mr Kruger said he did not think this meeting would solve the issues raised and comments on the bill should be kept to when the bill is discussed.
Mr Jacobs appreciated what the content advisor said and added that he would appreciate input on the protocols of the public hearings process. There was a need to understand the content before going on the road and called for a session to be scheduled to capacitate members on the public hearing process.
The Chairperson said the bill would be translated into all languages as part of public education on the bill. She agreed to have the session suggested by Mr Jacobs.
Mr Kruger asked that interpretation services be available when public participation hearings took place as its absence would mean missing a lot of input from the community.
Mr King said public hearings were like an extension of the House, so all assistance was catered for like communication, dissemination, safety, and language services.
The meeting was adjourned.
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