Overview of the Small Enterprise Amendment Act; Five-Year Review on Small Business Development; Public Participation/Involvement

Meeting report

The Committee Secretary began the meeting by providing the apologies of all Members who were absent, including both the Minister and Deputy Minister.

The Committee then moved to consider and adopt the meeting agenda, with Mr H Kruger (DA) and Mr C Malematja (ANC) both agreeing to its adoption.

During this process, Ms L Ngobeni (Action SA) raised a concern about the timing of the documents, explaining that receiving them late hampers the Committee’s ability to engage effectively. She requested that the documents be shared earlier.

Mr Kruger supported Ms Ngobeni's request, adding that documents should ideally be shared by the Friday before the meeting to give Members enough time for preparation.

In response, the Committee Secretary explained that his usual practice is to send the documents on the Monday before the meeting, but any delays are often due to waiting for the presentation documents. He also acknowledged responsibility for not attaching the issue of the minutes alongside the other documents.

The Chairperson emphasised the importance of sharing documents as early as possible to ensure that all Members can participate meaningfully in the discussions. She then announced that the adoption of the minutes would be postponed to the following week.

Before moving on, Mr Kruger enquired about when they would receive feedback regarding the ad hoc committee.

The Chairperson suggested that this matter be addressed in the meeting scheduled for the following week.

Briefing by the Public Participation Office on Improving Public Involvement in Bills Before Committees

Mr Brent Simons, Acting Section Manager: Public Participation, Parliament, provided the Committee with a comprehensive briefing on enhancing public involvement in the legislative process, particularly concerning Bills presented before Committees. He outlined several key factors that influence the level of public engagement and the decision on whether public hearings should be held.

One of the primary factors, Mr Simons explained, is the framework set by Parliament's rules. He referred to Joint Rule 12, which mandates that public participation must adhere to the Constitution, Parliament's Joint Rules, the Public Participation Model (PPM), and the Practice Note. This framework ensures that the process is both structured and transparent. He also highlighted that the nature and importance of the legislation play a significant role in determining the extent of public engagement. The more impactful the legislation, the more necessary it becomes to involve the public in meaningful ways.

Mr Simons also pointed out that the potential impact of legislation on the public is a critical consideration. If the legislation has far-reaching consequences, there is a greater responsibility to engage citizens and ensure their voices are heard. He acknowledged that time constraints and budgetary issues might influence the process, but he stressed that these factors should never be used as justifications for limiting public participation. He added that efficiency in the law-making process is essential, but it should not come at the expense of providing the public with adequate opportunities to be involved.

Regarding implementing the Public Participation Model, Mr Simons provided a detailed timeline and strategy. Two months before public hearings, a draft of the public participation plan is presented to the Committee for approval. This plan becomes operational six weeks before the hearings, focusing on identifying relevant districts for engagement and activating the District Communicators Forum, which is coordinated by the Government Communication and Information System (GCIS) alongside other stakeholders. Mr Simons emphasised the importance of targeting specific communities and identifying appropriate venues for educational workshops and public hearings. Additionally, to ensure that the public can fully engage with the content of the Bill, summaries of the Bill are produced in local languages, making it more accessible to all citizens.

Mr Simons also underscored the vital role that community radio plays in the public participation process. Through a strategic partnership with GCIS, community radio is used to keep citizens informed about the content of Bills and to provide platforms for engagement, consultation, and education. This medium is particularly valuable in providing feedback after public hearings or oversight visits, ensuring that citizens receive timely and relevant information about the legislative process.

Through these measures, Mr Simons highlighted Parliament's commitment to fostering a transparent and inclusive law-making process, one that actively involves the public and ensures their voices are heard at every stage.

See attached for full presentation

Discussion

Mr Kruger found the presentation insightful and agreed with the importance of prioritising public participation. He questioned when public participation became a standard part of the process and asked if a Bill could still become an Act if the public participation process was not followed. Additionally, he wanted to know how the success of public participation would be measured.

Ms Ngobeni shared similar concerns, particularly around the success factors of public participation. She questioned if the key measure of success was based on the number of people physically attending consultations. She also asked the Chairperson if it would be possible to submit written questions, as she preferred not to ask too many during one Committee meeting. The Chairperson confirmed that she could submit her questions in writing.

Ms L Sapo (ANC) raised the idea of finding creative ways to hold meetings beyond physical gatherings.

Ms M Mmolotsane (ANC) asked who would provide transportation for community members living 50-100km from the venue, and how information would be shared in areas lacking community radio stations.

Mr Malematja urged the Committee Members to seize the opportunity presented to them. He interpreted the presenter’s reluctance to take too many questions as a suggestion to utilise the provided template to avoid rejecting the application. He emphasised that the presenter would assist the Committee in engaging with the public and stressed the significance of the Committee’s role in the country’s economy.

The Chairperson clarified that she understood Mr Malematja’s suggestion to mean they should conclude, given the amount of information shared.

Ms B Mathulelwa (EFF) highlighted the need for better representation of communities, especially those who speak vernacular languages. She stressed that the presentation should not just look good on paper, but also be implemented effectively. Referring to the National Small Business Amendment Bill, Ms Mathulelwa pointed out that communities were not actively engaging in the workshops and questioned who was responsible for conducting these workshops in municipalities. She mentioned that, so far, she had only received invitations for public participation, with no mention of workshops.

Ms Mathulelwa also asked whose interests were being served by the workshops, noting that in the previous term’s discussions around the Bill, no legislative office had engaged with the Committee. She raised concerns that aspects of the Bill that was passed had not been fully deliberated by the Committee. She emphasised that Committee Members should be informed of any changes to a Bill before going to the public, as this would prevent repeated mistakes and unnecessary resource wastage.

Mr Kruger urged Committee Members to keep questioning matters, as it is essential for making well-informed decisions.

The Chairperson reminded Members that they have the right to speak their minds. She also questioned who was responsible for monitoring the PDOs and providing resources to these offices. She asked why PDOs had not been expanded to other provinces, aside from the three where they are currently operational. Finally, she enquired about the coordination between the Public Participation office and multimedia, and where these two offices are respectively located.

Response

Mr Simons responded that the Public Participation Office was only established in May 2024 and Parliament never had Public Participation offices before that. He indicated that he was supposed to report to public participation in November 2023 but due to technicalities, it was delayed until May 2024, when he became the Acting Section Manager for Public Participation.

Mr Simons stated that the current PP model has been around for years and that the Court has said that although there is a PP model that exists, Parliament is not implementing it. He added that they will have a training and briefing session with the officials that will be responsible for the workshops and the Department of Small Business Development (DSD), legal representatives of Parliament’s legal office will be present while the researcher, content advisor of the Committee, nine Deputy Provincial Directors from the Government Communication and Information System (GCIS) will be invited. Members will also be enabled to provide briefings at workshops if they are available.

Mr Simons stated that part of the approach is for local municipalities and ward councillors to always be informed when going to the relevant areas so that there could be more mobilisation locally. He added that the intention is not to invite people who live 50-100km away, which is why public education workshops will be taken to the people. They will target every ward around the identified public hearing venue.

Mr Simons identified that there are free avenues to exploit, and he made an example of having Parliament on 14 community radio programmes in the last month which reached approximately 1.3 million residents directly where they lived. He added that this was free and that they developed a partnership with GCIS which also developed a partnership with community radio stations. He also noted that Thusong Service Centres will be available for free for Parliament as long as GCIS remains a partner. If Parliament had to approach the Thusong Service Centre, they would have to pay.

Mr Simons noted the issue of interpreters and stated that interpreters must accompany the Committee to the public hearings and will be required to speak the local language.

Mr Simons stated that there are measures in place to assess the workshops through testing people using questionnaires before and after they were exposed to the Bill which will help in terms of gathering information about how many people were reached and attended the workshops.

Mr Simons stated that alternative measures have been tried, such as virtual public participation and having entire public hearings held virtually. The success of this will be highly dependent on stakeholders.

Mr Simons stated that he also approached the International Association for Public Participation to capacitate and train all practitioners. Public participation forums would also be added in each province, including legislatures.

Mr Simons stated that the Public Participation office is ensuring that the process is flawless in a technical and administrative sense, that will benefit the citizens that they serve. He added that when the workshops are being held, the Public Participation office would act as an extension of the Committee because the Committee are the owners of the content. Committee Members will be informed where the workshops will take place, and that they will not be stopped from attending these workshops.

Further discussion

Ms Mathulelwa expressed surprise at learning that the Public Participation Office was only established in May 2024. She voiced concerns about the Bill related to cannabis commercial farming, citing a recent incident where a farmer in Bizana was unlawfully arrested. She noted that the police were unaware of the Bill that had been passed and emphasised the importance of involving other stakeholders and key actors in the workshops. She also questioned whether all law enforcement officers would need to attend workshops on the Bill concerning cannabis farming.

Mr Simons thanked Ms Mathulelwa for raising such critical points. He explained that after the initial content workshop, they would expand the training to include relevant stakeholders, depending on the nature of the Bill. He also mentioned that PDOs would be established in the remaining provinces, though they had to adopt a new approach due to financial constraints brought on by budget cuts. The Public Participation Office has reached out to provincial legislatures to explore the possibility of securing office spaces at a reduced cost.

The Chairperson agreed that expanding PDOs to other provinces would be beneficial. She thanked Mr Simons for his presentation and his time.

Briefing by the Department of Small Business Development on the National Small Enterprise Amendment Act, 2024 (Act 21 of 2024)

Ms Mosa Makhele, DDG: Sector Policy and Research, and Mr Bathandwa Mlambo, Parliamentary Officer, both from the Department of Small Business Development, briefed the Committee on the National Small Enterprise Amendment Act, 2024 (Act 21 of 2024). They outlined the purpose of the briefing, which was to provide an overview of the Small Enterprise Amendment Act and discuss the Department’s implementation plans regarding the amendments.

The briefing included a discussion on the Small Enterprise Development Finance Agency (SEDFA), which was created to offer integrated government support to small enterprises and cooperatives. The Agency’s vision is to promote economic transformation and inclusive growth by providing customised financial and non-financial support, as well as improving access to finance for SMMEs. SEDFA, a State-Owned Company, operates under the Public Finance Management Act (PFMA) and the Companies Act, with the Minister as the sole shareholder representative. The Amendment Act outlines the criteria and composition of SEDFA’s Board, as well as the requirement to establish board committees, such as an audit and risk committee and a nominations committee.

The rationale behind SEDFA’s establishment is to create a unified institution capable of providing a broad spectrum of services to small enterprises. Ms Makhele highlighted the key objectives, including expanding the reach of government support across the country, ensuring accessibility in all districts, and maximising development impact. By pooling resources, SEDFA would create a larger, more viable base for investment, streamline government operations, and rebuild trust with stakeholders. The institution is also expected to improve agility in identifying opportunities to grow its resources, ultimately enhancing its ability to support small businesses sustainably.

The briefing also covered the establishment of the Office of the Small Enterprise Ombud Service. The Amendment Act seeks to address the lack of affordable and effective justice mechanisms for small enterprises, particularly in resolving business disputes and issues of late or non-payment of invoices. As a juristic person, the Ombud's role will be to provide fair resolution mechanisms for small enterprises, which often face financial and procedural disadvantages when engaging in litigation. The Office will be accountable to both the Minister and Parliament, with provisions for regional offices and deputies when necessary.

In terms of unfair trading practices, the Act aims to safeguard the rights of small enterprises by ensuring their ability to trade freely, receive prompt payments, and access relevant business information. The Act stipulates that any trading practices deemed to harm the sustainability or competitiveness of small businesses, deceive them, or unfairly affect their operations, could be declared unfair. The Ombud and the Minister are tasked with assessing these practices before making such declarations.

Ms Makhele also updated the Committee on the proclamation process for the National Small Enterprise Amendment Act. Most sections of the Act are set to come into effect on 1 October 2024, except for certain provisions such as Section 5, which relates to the establishment of the Ombud. The Department is in the process of finalising the structure, budget, and remuneration for the Ombud’s office, and is working to establish a case management system. Section 8, which deals with the repeal of the schedule and the determination of size categories for small enterprises, is also pending further data from National Treasury and a consultation process. Additionally, the disestablishment of the Small Enterprise Development Agency (Seda) is scheduled for 1 December 2024, pending audit compliance.

See attached for full presentation

Briefing on the Five-Year Review on Small Business Development and the Key Perspectives and Oversight Implications (2019/20-2023/24)

Ms Nwabisa Mbelekane, Committee Researcher, briefed the Committee on the Five-Year Review (2019/20–2023/24) of Small Business Development, discussing key perspectives and oversight implications.

She highlighted the National Development Plan (NDP) recommendations, which stress the importance of accelerating economic growth by fostering linkages to the domestic economy. Small- and Medium-Sized Enterprises (SMMEs) are viewed as pivotal for employment creation. To support SMMEs, the NDP suggests better coordination between agencies, development finance institutions, and incubators. Ms Mbelekane emphasised the need for strengthened financial services to lower costs and improve access for small businesses, alongside improved access to both debt and equity finance for SMMEs. She also outlined the importance of simplifying the regulatory environment, consolidating support services, and reviewing regulations to reduce burdens on small enterprises. The plan encourages raising employment in rural areas by focusing on agricultural output, providing basic services, supporting small farmers, and investing in infrastructure like water and transport. Additionally, rural economies could benefit from stimulating small-scale agriculture, tourism, and mining. Security of tenure for communal farmers, especially women, was also identified as crucial. Moreover, she called for reviewing Agency mandates to prevent duplication and ensure clear demarcation of functions.

Ms Mbelekane then provided background on the High-Level Panel established in December 2015 by the Speakers’ Forum, led by former President Kgalema Motlanthe. The panel was mandated to review the effectiveness of legislation passed since 1994 in addressing poverty, inequality, unemployment, and land reform. Its findings were tabled at the Speakers’ Forum in November 2017.

She also touched on the Zondo Commission of Inquiry into State Capture, which primarily investigated large-scale corruption but also examined the detrimental effects of state capture on SMMEs. Ms Mbelekane explained that state capture disproportionately affected small businesses reliant on government contracts, with corruption and favouritism in procurement processes often excluding legitimate small enterprises. This led to the loss of key resources and market opportunities, particularly for businesses without political connections. The Preferential Procurement Policy, designed to uplift small and disadvantaged businesses, was manipulated during this period, further sidelining deserving SMMEs in favour of politically connected individuals. The delays in payments to small businesses that had secured contracts also exacerbated financial strain, caused by inefficiencies and corruption in the system.

Regarding the Zondo Commission’s recommendations, Ms Mbelekane underscored the call for procurement reform to prevent exploitation and manipulation, ensuring fair competition for SMMEs in government tenders. The commission also recommended stricter enforcement of transparency and accountability measures and urged structural reforms to promote genuine economic transformation, with particular focus on creating opportunities for previously disadvantaged small business owners.

See attached for full presentation

Discussion

The Chairperson stated that when looking at recommendations, there is still no notable progress being made, and there is no timeframe available to determine when this issue will be dealt with. She also requested that when presentations occur, the Members will need to know when they plan to deal with the resolutions still in progress.

The Chairperson noted in the presentation that 80% of the work is being done and stated that 20% is too much and that tangible information is needed to assist the Committee Members and citizens of South Africa.

Ms N Webster (Bosa) said there is nothing regarding the commitments that she could look at and state that it was done or delivered by the various stakeholders involved. She added that this poses a challenge to the Committee when it comes to holding the Department accountable for commitments made towards small businesses are adhered to.

Ms Webster stated that with the unemployment level in South Africa and Small, Medium and Micro Enterprises (SMMEs) being well-placed as a sector to create employment, there is a need to make the SMMEs an output of the Department to create jobs.

Ms Webster stated that her last comment was linked to market access, and that market access should also be looked at beyond government to sustain small businesses and what are the measures that are in place to ensure market access with private sector through programmes and partnerships.

The Chairperson enabled Members to raise points that concern them or where clarification is needed. She added that she does not like to limit Members when it comes to time, but due to the meeting running late, she requested that Members raise their questions timeously.

Ms Mathulelwa asked the Department to unpack the cooperative bank as she was concerned about how the Department would deal with it. She had a second question regarding the implementation date, and what is going to happen. She had another question regarding the role of the researcher when a policy takes longer than it is supposed, and how she will assist the Portfolio Committee.

Ms Mathulelwa was concerned with the Department not redirecting funds and taking the same reduced budget back to the treasury. 

Ms Mmolotsane questioned recommendation 2.8. and whether it strictly spoke to municipalities. She added that they will need to capacitate the municipalities so that the issuing of permits no longer remains a problem for SMMEs.

Ms Ngobeni suggested that the Committee make use of an activity tracker to help the Committee be more critical of the implementation timeline. She stated that she would submit written questions and requested that the Department provide written answers as to not discuss the same things repeatedly. She stated that the presentation lacked information about the Ombuds and operational bottlenecks. She added that there is no talk about the mechanisms that will be utilised to evaluate the success of merging the entities and how they will benchmark key performance indicators (KPIs). She noted issues of budgeting and resource allocation and that there is no information regarding this and the operation of the Ombuds.

Ms Ngobeni stated that Committee needs a more thorough explanation regarding how it will monitor the issue of unfair trading, particularly in areas with big oversight. She questioned what measures will be put in place to protect people in these areas.

Mr Malematja raised concerns regarding the issue of the merger and whether there were casualties as it created a high unemployment rate. He addressed the scope of the Small Enterprise Development Finance Agency (SEDFA) in terms of the requirements when dealing with red tape. He stated that the Ombud should be clarified.

Ms K Bilankulu (ANC) questioned whether the Department of Basic Education (DBE) is aware of the integration of entrepreneurship into the curriculum. She stated that there are other issues linked to the sustainability of small businesses and whether they are being helped. She questioned who crafted the national treasury criteria that determine whether small businesses meet the requirements for how they should operate.

The Chairperson noted the importance of resolving the issues related to the timeframes.

Responses

Ms Makhele responded to the issue of market access and said that procurement does not reflect market access. She added that they have a strong Enterprise Supplier and Development (ESD) programme which is one of the strongest market access tools where the suppliers are developed so that they can gain access to the value chain of the retail owners of the wholesalers. The bigger funding model is also focused on driving access to finances and the market using ESD. Regarding jobs, they are reporting based on what is labelled as targets; there is no check-entry system to see once support has been given to an entity to trace what happens. There are things missing within the Department, but they have started implementing an integrated monitoring and evaluation system that will assist in the current strategic period. They have concluded the assessment of local, provincial, and national government pieces of legislation that affect small businesses, and she indicated that there are 29, and three of them are affiliated with the Department.

Ms Makhele stated that the DSBD were also looking at how they can deal with the other 26 pieces of legislation that come from government, and implementation plans only refer to those pieces of legislation. The DSBD is also looking at industry-specific legislation so that they can identify problems with it. She also noted the issue of the permits and said that they were still a work in progress. In terms of municipalities and renting reduction, the DSBD has conducted a number of training sessions with municipalities, and they have concluded that part of the training. The DSBD wants to deploy the development of a smart licensing system, which will be fully automated.

Ms Qinisile Delwa, Deputy Director-General: Enterprise Development and Entrepreneurship, Department of Small Business Development, addressed issues related to the process which the DSBD is undertaking to implement the Act, and this becomes very bureaucratic because they are establishing an entity in terms of setting up legislation which is the requirement of the Public Finance Management Act, 1999 (PFMA). On 1 October, SEDFA will be proclaimed, which means the board of SEDFA comes into force. This will enable the board to operationalise the entity itself and allow the Department to play an oversight role. The responsibility of the Department is to ensure that all the legislature and the processes are aligned so that by the time the date is proclaimed, the board will come into play that will make use of a framework linked to staffing.

Ms Delwa noted that the numbers at the executive level will be reduced due to the merger. What remains with the Department in terms of the Act is the office of the Ombud because the Ombuds are required to remain independent. She also addressed the issue surrounding the State of the Nation Address (SONA) commitments. She noted that one important thing to clarify is that nothing goes into SONA that has not already been in the Department's Annual Performance Plan (APP).

Ms Delwa noted the stringent requirements for access to funding. She stated that it is a link to the legislative environment in which the development finance institutions (DFIs) operate because there are rules that apply to them that need to be reviewed from a National Credit Act perspective and indicated that there is a difficulty in creating a balance between making finance accessible and being compliant with the prevailing legislation that guides how DFIs operate. She addressed the issue of the budgets in the programmes and stated that there is an attempt to not redirect funds, but it varies within particular legislative requirements with treasury. She stated that the Department is developing a national entrepreneurship strategy along with the DBE as there is a specific area in the strategy where the DBE will be rolling out entrepreneurship education at a basic education level, while the Department of Higher Education and Training (DHET) will also ensure that it is implemented.

Closing remarks

The Chairperson thanked the Department for their responses and requested that the researcher respond to the Committee Members in writing.

The Chairperson thanked the Committee and the Department for their participation.

The meeting was adjourned.