Department of Small Business Development & Small Enterprise Development Finance Agency Q3 2024/25 Performance; with Deputy Minister

Meeting report

Deputy Minister's opening remarks

Ms Jane Sithole, Deputy Minister of Small Business Development, acknowledged the importance of accountability in presenting the Department’s performance. She introduced the Deputy Director-General (DDG), the Chairperson of the Small Enterprise Development and Finance Agency (SEDFA), and the Chief Executive, who would elaborate on areas of underperformance and the corrective measures being implemented.

She said that while there were challenges, the Department had achieved 84% of its targets, an improvement from the previous year's 80% during the same period. The Department aimed to reach a 90% achievement rate by the end of the financial year and was currently at 85%, demonstrating steady progress. S DFA’s quarterly report reflected a combination of strong performance in certain areas and the need for improvement in others.

The Deputy Minister highlighted key milestones, including the approval of the Public Finance Management Act (PFMA) listing, and the launch of SEDFA’s new logo. The board was fully operational, and advancements had been made in human capital and system integration. She said that the merger of the Small Enterprise Finance Agency (SEFA) and the Small Enterprise Development Agency (SEDA) into a single major agency, SEDFA, would be fully operational in the next financial year.

SEDFA had already met its annual target by disbursing R2.4 billion to small enterprises, demonstrating its readiness for increased funding to support entrepreneurship further. In the third quarter, it had disbursed R979.2 million, significantly exceeding its target of R700 million, and had achieved 129% of its performance goals. The funds had been allocated to black-owned, women-owned, youth-owned, and township-based businesses, as well as rural enterprises.

Despite these successes, the Deputy Minister acknowledged areas requiring urgent attention. These included prolonged turnaround times for application processing, underperformance in loan collection, and challenges in cooperative development and product management. She recognised the Committee’s ongoing concerns about delays in funding approvals, and committed to addressing them.

The DDG and her team would provide further details on these challenges and the corrective measures in place. She welcomed feedback and recommendations from the Committee, emphasising the Department’s commitment to transparency and accountability in achieving its objectives.

She handed over to Ms Qinisile Delwa, Deputy Director-General (DDG): Enterprise Development and Entrepreneurship, Department of Small Business Development DSBD), who presented the Department's 2024/25 third quarter performance report, alongside Ms Semphete Oosterwyk, the Chief Financial Officer (CFO).

DSBD's 2024/25 third quarter performance report

The third quarter performance report of the DSBD provided an overview of progress in achieving quarterly targets, financial performance, and key initiatives to support small, medium and micro enterprises (SMMEs) and cooperatives. I  highlighted achievements in invoice payments, public engagement programmes, gender representation in senior management, and market access support for small businesses. Despite these successes, challenges remained in infrastructure development, financial disbursement, and governance compliance. The report detailed corrective measures and recommendations to enhance performance in the coming quarters.

Governance and compliance

The DSBD had adhered to all regulatory frameworks and compliance requirements, including the PFMA, Treasury regulations, and the revised framework for strategic and annual performance plans. It had successfully submitted its 2024/25 second quarter performance report to the Minister on 30 October 2024, and to the Department of Planning, Monitoring, and Evaluation (DPME) on 31 October. In addition, the draft 2025-30 strategic plan and the 2025/26 annual performance plan (APP) were submitted to DPME on the same date. On  16 October, the Department presented its 2023/24 annual report to the Portfolio Committee on Small Business Development. These submissions ensured transparency, accountability, and alignment with national development priorities.

Overall Performance Summary

The DSBD had 34 output indicators and 34 annual targets for the 2024/25 financial year, with 25 quarterly targets assessed in Q3. Performance highlights by programme:

• Administration: Seven out of eight targets achieved (87.5%);
• Sector policy and research (sector & market development): six out of seven targets achieved (85.7%);
• Integrated cooperatives and micro enterprise development (development finance): five out of six targets achieved (83.3%);
• Enterprise development, innovation and entrepreneurship: seven out of nine targets achieved (77.8%).

Key performance highlights

Financial and administrative achievements:

• 100% of invoices (3 387 invoices, R30.1m) paid within 30 days, ensuring supplier liquidity.
• 2m spent out of a projected R490m, with a 4.65% underspending variance.
• 6% female representation in senior management, exceeding the 50% target.

SMME & cooperative development

• 19 municipalities trained on red-tape reduction awareness programme (target: 10).
• 60 SMME products/services linked to domestic markets (target: 50).
• 54 SMMEs gained access to global markets (target: 50).
• 57 Cooperatives supported non-financially (target: 55).
• 12 Cooperatives received financial support (target: 10).
• 633 informal businesses supported through the Informal Micro Enterprises Development Programme IMEDP (target: 500).
• 3 588 youth start-ups supported financially/non-financially (target: 3 000).
• 16 858 competitive SMMEs and co-ops supported (target: 15 000).

Enterprise and market development

• Revised red-tape Reduction framework developed, based on stakeholder consultations.
• Sectoral value chain assessment reports produced for the cannabis, construction, and wholesale and retail industries.
• Two business infrastructure projects (product markets) refurbished or built.
• Incubation and digital hub support strategy implemented with a monitoring report approved.

Policy and strategy development

• Draft 2025-30 service delivery improvement plan completed.
• Inputs submitted for the medium-term development plan (MTDP) 2024-2029.
• Inter-provincial red tape and ease of doing business task team meeting hosted.
• Informal business associations support strategy drafted with advisory guidelines.
• Movable assets collateral registry (MACR) progress report finalised to aid small business financing.
• Stakeholder engagement forum (SEF) hosted in Mahikeng, North-West province.

Underachievements

• Compensation of employees: R53.6M spent vs R65.8M (81.4%) projected -- a shortfall of R12.3m due to a 21.2% vacancy rate.
• Transfer payments: Underperformance of R25.2m (6.5%).
• SMME and cooperative development challenges: Delayed implementation of SMME support programmes due to funding and administration issues. S ow uptake of digital business incubation strategies. Some municipalities struggled with red tape reduction programme implementation.
• Infrastructure development challenges: Delays in refurbishing/building business infrastructure due to budget constraints and regulatory issues.

Financial Report

Q3 expenditure vs projections

• Compensation of employees: R53.6M spent (81.4%), shortfall of R12.3m due to high vacancy rate.
• Goods and services: R48.3M spent -- R14.9m (144.5%) overspending due to consultancy services and administration fees.
• Transfer payments: R363.4m spent, an underperformance of R25.2m (93.5%) due to delays in some projects.
• Capital assets: R1.9m spent (94.7%), with a shortfall of R108 000.

2022/23 & 2023/24 audit findings

• Unresolved audit findings from 2022/23 were still impacting current performance.

Human resources (HR) report

Vacancy rate and staffing:

• Vacancy rate reduced by 5% over three quarters.
• 86 appointments made, but only 47 were permanent, affecting the vacancy rate.
• 77 terminations, but only 27 impacted the vacancy rate.

Women in senior management:

• Female representation at the senior management service (SMS) level remained above 50% -- 6% at the end of Q3.

Persons with disabilities:

• Increased representation, from 3.5% to 4.6% in three quarters.

The Portfolio Committee on Small Business Development was recommended to adopt the 2024/25 third quarter performance report.

See attached for full presentation

SEDFA third quarter performance report

Mr Nkosikhona Mbatha, Acting Chief Executive Officer (CEO), presented SEDFA’s 2024/25 third quarter performance report, alongside Ms Candice Williams, Acting CFO, and Ms Nonzuzo Makhanda, board chairperson.

The report reviewed Sedfa’s performance against the annual performance plan (APP), providing insights into economic conditions and organisational progress. During this period, South Africa’s gross domestic product (GDP) declined by 0.3%, primarily due to struggles in the agriculture, transport, and trade sectors, while manufacturing and mining experienced growth. T  counter the economic challenges, the Reserve Bank’s interest rate easing was expected to stimulate economic activity, benefiting Sedfa’s clients by improving their financial stability and loan repayment capacity.

Sedfa has made significant progress on the organisational front by completing its macrostructure, governance framework, information technology (IT) system integrations, and compliance registrations, strengthening its operational foundation for future growth and impact.

Performance against predetermined objectives

SEDFA tracks 44 indicators, with 40 measured in the third quarter:

• 65% (26 indicators) were achieved
• 7% (three indicators) performed between 75%-99%
• 28% (11 indicators) were below 75%.

The six main outcomes of SEDFA’s plan:

• Growth and sustainability of SMMEs and cooperatives.
• Enhanced access to finance for SMMEs and cooperatives.
• Increased access to cooperative financial services.
• Local market penetration by SMMEs.
• Integrated and coordinated support ecosystem.
• Agile and customer-centric organisation.

Underachievements

Performance indicators below target:

• 11 out of 40 indicators (28%) recorded performance below 75%.

Loan book challenges:

• High portfolio at risk (61.4%), amounting to R2.8 billion, indicating financial strain among SMMEs.
• Impairments remained high (60.3%) -- only a slight improvement from 60.7% in Q2.
• Economic downturn negatively impacted SMMEs’ ability to honour loan obligations.

Budget underspending:

• Business Development Programme: Only 77% (R193.3 million) of the allocated R251.9 million was spent.

Delays in projects such as Asset Assist, the Cooperatives' Development Support Programme (CDSP) and general dealer programmes had contributed to the underspending.

Uneven spatial distribution of support:

• Northern Cape and Free State remained underserved, requiring increased marketing and outreach

Spaza shop training project delays:

• Insufficient response from service providers (SPs) led to procurement delays.
• Large wholesalers’ reluctance to register on the central supplier database (CSD) portal contributed to bottlenecks.
• Some beneficiaries lost interest or closed businesses, affecting programme impact.

Loan book and spatial distribution

• Loan book value: R4.8 billion, a 3.7% increase from the previous quarter.
• Impairments improved slightly to 60.3% (from 60.7% in Q2).
• Portfolio at risk: R2.8 billion (61.4%), indicating financial strain among SMMEs.
• Targeted support strategies: post-investment mentoring, restructuring, and market access assistance.
• Spatial distribution challenge: Northern Cape and Free State underserved, requiring increased outreach.

Financial performance

• Revenue increased by 11% (R44 million) compared to Q3 last year.
• Budget underspending: Only R193.3 million (77%) of the R251.9 million budgeted for the business development programme was utilised, mainly due to delays in specific projects.
• -99.6% of invoices were paid on time, with only two delays. No irregular expenditures were recorded.

Governance and stakeholder management

-Board and committees met quarterly to oversee strategic initiatives.

Stakeholder engagement:

• 170 leads generated in Q3.
• 20 national events attended, including sponsored and non-financial support programmes
• SEDFA logo launch increased brand visibility (60% index).

Ecosystem development initiatives:

• Seven business development standard (BDS) service agreements activated.
• R300 000 allocated to socio-economic development projects.

High impact projects:

• Manufacturing, Engineering and Related Sector Education and Training Authority (MerSETA) and National Skills Fund (NSF) programmes: Focus on accrediting electricians and solar installers.
• Enterprise coaching Programme: 10-month SMME mentorship programme, leading to 69 new jobs.
• Entrepreneurship in schools: 11 409 students participated.
• -Johannesburg Stock Exchange (JSE) business accelerator: 15 SMEs increased revenue by 22% (R97 million), creating 255 jobs.

Key provincial projects:

• Northern Cape: Boontjieskraal Adventure Tourism – 19 new jobs.
• Mpumalanga: Samkelisiwe Agricultural Co-op – Securing funding for cannabis production.

Selected client success stories

• Higenex (North West): Received R909 071 funding for sanitary towel manufacturing, creating nine new jobs.
• Hala Lisa (KZN): Restaurant business expanded with R256 891, maintaining 15 jobs.
• Mizpah Farming (Mpumalanga): Asset assist funding secured, increasing agricultural output.
• Aruzabiz (Eastern Cape): Business turnover increased by 7.1%; employment grew from 10 to 30.

Tourism equity fund and major investments

• Durban International Convention enterprise: 4 million investment; 65 jobs created.

See attached for full presentation.

Discussion

Mr H Kruger (DA) raised concerns about the misinterpretation of red tape reform and ease of doing business, stressing that while reducing red tape was important, it was not synonymous with improving the overall business environment. H  emphasised that ease of doing business was a broader issue that included systemic challenges, such as spaza shop permit processes, which were not just administrative hurdles but fundamental operational barriers for small businesses. A major contributing factor to this problem was the dysfunctionality of local governments, with approximately 90% of municipalities failing to deliver essential services effectively. As a result, many spaza shop owners struggled to obtain business permits, preventing them from operating legally. In addition, municipalities often lacked adequate by-law enforcement personnel, further complicating compliance. This situation led to significant economic hardship for business owners and their families, particularly those unfairly affected by past incidents despite not being involved in illegal trade practices.

Mr Kruger called for interdepartmental collaboration, urging the Minister of Small Business Development and the Minister of Cooperative Governance and Traditional Affairs (COGTA) to work together on a solution. H  stressed the urgency of resolving these challenges, as the inefficiencies in local government had escalated into a crisis that threatened small businesses and economic growth. He also highlighted that law enforcement agencies were affected by municipal dysfunction, leading to inconsistencies in enforcing business regulations.

Mr Kruger concluded by questioning the government’s plan and timeline for implementing reforms, emphasising that inaction directly impacts livelihoods, affecting not just small business owners but also their employees and families. Given the severity of the issue, he urged the government to take immediate steps to support small businesses and ensure a more efficient business environment.

Ms C Mafagane (MK) said that spaza shop registration remained a significant challenge, with more complications arising than initially expected. She highlighted that she had previously written to the Minister and Deputy Minister regarding this matter, but had yet to receive a response. She expressed concern over the delays in the registration process, and emphasised the need for an extension beyond the initial deadline. She said spaza shop owners were being unfairly penalised due to inefficiencies in the registration system. She raised the challenge of multiple registrations, explaining that some business owners with numerous shops were permitted to register only a limited number, forcing them to allocate ownership to family members or external parties. She argued that this creates unnecessary complications for business operations. She called on the DSBD to intervene and implement a solution that allows spaza shop owners to register all their businesses legitimately.

Ms Mafagane addressed broader economic and gender-related concerns. She acknowledged the increase in female representation in senior management positions within the DSBD, but questioned how this progress translated into effective policymaking that genuinely supports women entrepreneurs in an economy that remains biased against them. She further noted that despite the DSBD exceeding its targets for SME support and market access, systemic barriers continued to prevent many businesses in economically disadvantaged communities from achieving sustainable growth.

She also expressed concern over the 60% impairment rate in the loan book, questioning whether SEDFA’s current lending strategy was sustainable. She urged the Department to explore innovative measures to reduce portfolio risk while ensuring equitable access to finance for SMMEs, particularly those in underserved communities.

Ms L Sapo (ANC) said she appreciated the fact that the Minister’s delegation was smaller than usual, as large delegations had previously been overwhelming. She raised concerns about the Department's performance and spending, questioning how achieving only 84% performance was possible despite a 95% spending rate. This discrepancy would not make sense to an ordinary citizen, and she requested a clear justification. She emphasised the importance of ensuring that no funds were returned to the national fiscus, urging the Department to make a commitment in this regard.

She addressed the underperformance in Programmes 2 and 4, particularly regarding a research report that had previously faced issues due to a lack of alignment between the methodology and literature review. Now, with further extensions being requested, she wanted clarification on what specific elements were being challenged, how much the project was costing the Department, and what the implications of these delays would be. She expressed frustration, arguing that for an ordinary person, it was difficult to understand why a report would require multiple corrections and extensions without a clear resolution.

Ms Sapo raised concerns about the high number of terminations within the Department, acknowledging that not all terminations affected the vacancy rate, but emphasising that 50 terminations seemed excessive. She sought clarification on the reasons behind the terminations that did impact the vacancy rate.

She addressed the underperformance in youth support programs, highlighting the National Youth Development Agency (NYDA) as a key player in assisting young people. However, she noted that the Department and NYDA were struggling to finalise partnerships, leading to delays in providing necessary support to unemployed youth. She urged both entities to resolve their differences quickly, as continued inefficiencies would exacerbate youth unemployment.

She also pointed out disparities in provincial support, particularly the Northern Cape, which had received only 1% of allocated resources compared to other provinces. She observed a significant gap between support in the Western Cape and Limpopo, and questioned what factors contributed to this inequality. Ms Sapo reminded the Department that it had previously promised to address these regional imbalances, yet no significant progress had been made. She insisted that a serious discussion about the Northern Cape should take place, along with a detailed report on how the Department planned to rectify these disparities moving forward.

Ms S Singh (DA) said that the Department's presentation needed revision, emphasising that the Committee did not adopt reports, but merely notes them. She expressed concern over the lack of consequence management, particularly regarding the non-payment of creditors within 30 days and the severe underperformance in meeting targets, especially within the entity. While one instance of consequence management was mentioned, there was no clear explanation of how broader accountability for underachievement was being enforced. The research project had been previously discussed by Ms Sapo, and Ms Singh requested specific details on the disagreement and misalignment that had led to delays, to gain a clearer understanding. She further questioned the persistently high vacancy rate, which remained almost double the 10% norm despite some reduction. Noting that an official had stated that vacancies could not be filled due to the pending finalisation of the microstructure, she asked for a definitive timeline on when this would be completed.

Ms Singh raised concerns over an audit finding related to supply chain management, asking for clarity on the timeline to resolve the issue and close the finding. She stressed that job creation and economic growth should be at the core of the Department’s priorities, commenting that the goal of nine million jobs by 2030 seemed unrealistic, given the current trajectory. She said that if the Department was not actively facilitating economic growth, it might as well cease operations altogether.

She questioned why only R568 million out of the allocated R841 million had been approved for loans, and whether the issue lay in insufficient uptake of programmes or a backlog of unapproved loans. She sought clear definitions for the metrics on jobs created and sustained, stressing the need for proper tracking mechanisms to avoid misleading figures that did not align with national unemployment statistics. She inquired about the cost per job created and sustained, asking how these costs compared to international norms and whether the Department was in line with optimal resource utilisation.

Referring to slide 41, she raised concerns about SEDFA's dual role of both assisting with business plans and acting as a lender, questioning what measures were in place to ensure a separation of duties and to prevent conflicts of interest. She compared this to when SEDFA was responsible for business plans separately, asking how the new structure ensured fairness and transparency. Turning to Slide 39, Ms Singh commended the partnership with the JSC, noting that the 15 companies involved had created an average of 17 jobs each. She suggested that similar models should be expanded to maximise job creation. However, she pointed out a discrepancy in job figures, stating that while the entity had financially assisted 164 138 entities and provided non-financial support to 54 773 entities, totalling 218 911 businesses assisted, only 193 099 jobs had been facilitated. She argued that this discrepancy needed further examination, as it implied that fewer jobs were created than the number of businesses supported.

Ms Singh raised potential conflicts of interest regarding the Buen Quis Crow Adventure Tourism and Incubation Centre, which the Committee had visited during its oversight in the Northern Cape. She described it as one of the most impressive visits, but voiced concern over the ownership structures. She recalled that the incubator had proposed a large-scale broiler house and hatchery project, which she had initially understood to be an incubator-run facility. However, it now appeared that these projects were becoming part of a private business owned by the property owner, raising questions about whether the entity was paying rent to a private owner while also allowing that owner to conduct business on the premises. She requested clarification on this issue.

Regarding slide 43, she sought details on who the clients of the cooperative were and how purchase orders functioned. Lastly, she questioned the involvement of the Department in the Durban Ice Arena and the Tourism Equity Fund project, as outlined in slide 50. She noted that the Durban Ice Arena appeared to be a Tourism Equity Fund initiative, but the images suggested a connection to the old Durban Ice Rink rather than the uShaka Marine World. She asked whether this was merely a buyout to a black-owned entity, or if there were additional equity considerations that needed further explanation.

Ms B Mathulelwa (EFF) raised concerns about government policies restricting the cannabis industry, particularly the provisional Health Act signed on 7 March, which she believed hinders exports, job creation, and the green economy. She criticised the Department for not having a clear position on cannabis trade and for failing to provide information to farmers. She also criticised delays in turnaround times for trade lending and credit guarantees, asking about their impact on achieving strategic goals, especially in supporting cooperatives. She called for corrective measures and specific timelines to address these inefficiencies.

She also called for detailed reports on Departmental support in rural areas and townships, emphasising the need for transparency in fund allocation and business support across different provinces. She highlighted the exclusion of the taxi industry from DSBD programmes, arguing that Uber and Bolt were foreign-owned and contributed little to the economy, while local taxi businesses remained unsupported. Despite its classification as a small business, she questioned why the Department did not subsidise the taxi sector. Lastly, she criticised the lack of support for small-scale property entrepreneurs, particularly those who own rental flats and backroom units, urging the Department to create a programme specifically tailored to this sector.

Ms K Bilankulu (ANC) raised several concerns. First, she inquired about the financial impact of the number of people accompanying Members to Committee meetings, questioning whether the Department was satisfied with only a small number of participants, as only a few individuals (typically three to five) actively engaged in the discussions. She asked if more could have been done to increase the representation of cooperatives at South African events, and what strategies the Department had to improve broader participation in the future, considering the challenges and constraints they face.

Secondly, she sought clarity on the partnership agreements between the public and private sectors to support SMMEs and cooperatives, particularly the key agreements in progress for the 2024/25 financial year. She asked about the expected impact of these agreements and the measures being taken to ensure their successful implementation. She addressed the 40% achievement rate for the direct lending turnaround time in quarter three, questioning whether external factors such as economic conditions or regulatory requirements had influenced the performance. Lastly, she raised concerns about the underspending in the quarter three report, asking if there were any strategies in place to correct issues with underspending or overspending.

Ms M Mmolotsane (ANC) raised several concerns and questions about the Departmental programmes and initiatives. She first highlighted that the information communication technology (ICT) steering committee did not meet in quarter three, despite being institutionalised according to the approved terms of reference. She inquired whether there were plans to ensure that the Committee functions smoothly going forward. She questioned the tangible results from the training of 19 municipalities on the red tape reduction awareness programme, while noting that Free State municipalities were not reflected in the report and should be included if they were omitted. She emphasised the need for greater support for women, youth, and people with disabilities, urging the Department to take concrete steps to ensure their inclusion.

On spaza shop training, she requested that the report provide a breakdown by municipality rather than a general number for the Free State, to enable follow-ups and assistance where there may be challenges with registration or documentation. Lastly, she questioned why there were no recorded achievements in both the Asset Assist Support Programme and the General Dealer Support Programme for township and rural SMMEs. She sought clarification on whether the delays were due to specific challenges, resource constraints, or other factors. She requested information on what measures were being implemented to address these issues in the upcoming quarters.

Mr M Montwedi (EFF) raised several concerns about financial planning, loan book performance, and reporting mechanisms. He highlighted that in the Deputy Minister's opening remarks, there was a detailed analysis of the year's performance, particularly around the 10% shortfall. He questioned how the Department had planned for 100% but achieved only 90%. He referred to the Chairperson’s remarks on business development support impacting the loan book, and emphasised that proper pre-funding support was crucial for businesses. He acknowledged that the entity had identified lack of capacity among funded businesses as a contributing factor to loan repayment challenges and asked how the Department planned to address this issue.

Expressing concerns about loan applications and budget constraints, he sought clarification on the number of applications received compared to the allocated budget, and requested insights into possible shortfalls. H  further questioned the percentage of the loan book that was struggling, differentiating between direct lending and wholesale lending, and asked which of the two was facing more difficulties. H  raised concerns about funds disbursed to intermediaries to run programmes, questioning whether the Department was experiencing challenges with repayment from these intermediaries and how their performance compared to internal lending programmes. H  suggested that the loan book struggles might necessitate a review and consideration of a blended lending approach to mitigate risks associated with direct and wholesale lending.

Lastly, he directed a question to the CFO regarding the reporting process for funds given to intermediaries, asking whether the Department reported on the funds upon disbursement, or only after the intermediaries provided proof.

Mr C Malematja (ANC) acknowledged the high public engagement performance of the DSBD, expressing appreciation for the 84% achievement in quarter three, but questioned how it correlates with the 96% expenditure. H  emphasised the importance of effective turnaround strategies, particularly regarding delayed payments affecting businesses' survival. W ile recognising the Department’s good performance in several programmes, he raised concerns about the low level of loan approvals, attributing the shortfall in lending to challenges in approvals. He stressed the need to identify barriers preventing businesses from qualifying for loans, especially red tape issues, and suggested improving assistance for businesses struggling with compliance and form completion.

He inquired about the number of crafters supported through the crafter customised sector programme, seeking clarity on how the Department planned to implement catch-up plans requested from agencies and hubs effectively. He questioned the verification process's impact on the accuracy of the annual performance report. A other key issue was the support for township and rural enterprises, both financially and non-financially. He asked about challenges or inefficiencies identified in this programme, and the key improvements or changes expected to streamline the process.

Mr Malematja commended the DSBD’s training and mentoring programmes, acknowledging their success in productivity improvement and quality enhancement. H wever, he requested assurance regarding the sustainability of job creation initiatives, particularly in response to the President's call for employment generation. H  further emphasised accountability, advocating disciplinary processes for entities failing to meet their obligations.

Lastly, he questioned the zero achievement in quarter three for the cooperative development support programme, asking about the reasons for this shortfall. To conclude, he sought clarity on plans and strategies to improve the turnaround time for wholesale lending and credit guarantees in quarter three, ensuring these expenditure initiatives were more effective moving forward.

The Chairperson acknowledged that Members had covered a wide range of questions and expressed hope that the Department would provide thorough responses. A key concern raised was the sustainability of the 82 635 jobs that the Department had reported as created. She requested a detailed breakdown of these jobs, including how many individuals were currently employed and working daily. Additionally, there was a concern about the lack of prioritisation of Limpopo and Northern Cape in the Department’s programmes, asking for clarity on why these provinces were seemingly overlooked.

Another issue was the allocation and utilisation of funds. The Chairperson emphasised that the Department and its agencies should avoid returning unspent funds to the national fiscus, as doing so would be a missed opportunity to assist those in need. The Chairperson urged the Department to ensure efficient budget utilisation to maximise its impact.

On the cannabis industry, she noted that the Department had produced a draft value chain assessment report. She highlighted concerns about regulations prohibiting the sale, importation, and manufacture of cannabis-infused food products. Four specific questions have been raised regarding this issue:

• What were the findings and recommendations of the cannabis industry assessment?
• Was the Department fully aware of existing regulations, and what informed these regulatory decisions?
• What coordination exists between the DSBD and the Department of Health (DoH) to balance regulations with the needs of SMMEs and cooperatives in the emerging cannabis industry?
• How did these regulations impact small businesses in the cannabis and hemp sector, and what role was the Department playing in addressing concerns raised by Members?

The Chairperson concluded by affirming that these concerns had been clearly articulated by the Members, making it unnecessary to further emphasise them.

Responses

Deputy Minister Sithole addressed several key issues concerning the registration and regulation of small businesses, particularly in municipalities that lack electronic systems. She said approximately 60% of municipalities still relied on manual registration processes, which had resulted in delays and inefficiencies. To address this, government has allocated R500 million, with R150 million from the DSBD and R350 million from another source, to support both municipalities and businesses in the registration process. The registration deadline was 28 November, but challenges remained, particularly with enforcement. She emphasised that no business should be prevented from operating due to registration delays, urging affected individuals to report any harassment by the authorities.

The Department was working towards a National Business Licensing Bill, which was now before Cabinet. Once enacted, this would streamline the registration process across the country, reducing bureaucratic burdens at the municipal level.

In addition, the Township and Rural Economic Programme (TREP) was being implemented to uplift rural and township businesses, ensuring integration into the broader economic ecosystem. The Committee had raised concerns about representation gaps, noting that more efforts were needed to support women-owned, youth-owned, and businesses run by people with disabilities.

Regarding overall Departmental performance, the Deputy Minister noted an 88% achievement rate for the year, an improvement from the previous year's 85%. The Department was striving to meet its 90% target, with the Deputy Director-General tasked with accelerating performance in the remaining period. Further details on multiple business registrations and related issues would be provided in writing.

DDG Delwa addressed the Department’s mandate concerning business licensing, emphasising its role as a champion for small businesses. The Department acknowledged that some municipal by-laws imposed requirements that small businesses could not meet, making it necessary for the DSBD to advocate more accessible licensing processes. The Department was also responsible for identifying and recommending changes to reduce red tape that hinders business operations. H wever, she highlighted the need to balance support with enforcement, as business licensing was a legal requirement in South Africa. Government had to ensure compliance, and while an opportunity had been given for businesses to register, enforcement would be ramped up. Municipalities had been given four months to process applications, with the possibility of reviewing this timeframe if necessary.

Concerning the support for women entrepreneurs, Ms Delwa clarified that it was not solely dependent on the number of women in the Department, but was instead aligned with a broader strategy that included youth and persons with disabilities.

The Department was working to streamline its research agenda to ensure higher quality and reliability. The DDG acknowledged past challenges with outsourcing research to private companies, where quality was inconsistent. To improve this, the Department would manage research processes more effectively by working with expert panels and academic institutions.

She explained that most contract terminations were due to the natural conclusion of contracts, with some employees moving on due to career progression. The red tape reduction was discussed, with the DDG reaffirming that minimising bureaucratic hurdles was essential for improving the ease of doing business. The Department fully supported this initiative, and was taking steps to ensure that red tape reduction was properly conceptualised and implemented.

Addressing concerns about the Department’s engagement with small businesses, Ms Delwa clarified that participation in certain events, such as the upcoming Buy Local Summit, depended on space limitations. For example, only ten SMMEs could be accommodated at the upcoming event. However, this did not reflect a lack of commitment to supporting small businesses. The Department continued to work towards increasing the number of SMMEs that obtained the Proudly South African certification.

The DDG provided updates on the TREP, stating that a review process had been completed and approved for implementation in the new financial year. Changes included removing unnecessary qualifying criteria and adjusting the relationship between Asset Assist and TREP. N tably, loans below R250 000 would be converted into grants rather than loans, ensuring better support for entrepreneurs. Other structural adjustments had been made to improve efficiency and impact.

On financial performance, the DDG explained the relationship between the Department’s 84% performance and the 95% target. The underperformance was linked to programmes implemented through transfers to provincial governments, which required further monitoring to ensure targets were met by the end of the financial year. The Department remained committed to meeting the 30 000 business support target through TREP. Similarly, programmes implemented via provincial agencies were under review to enhance their effectiveness.

Referring to research and partnerships, the DDG noted that financial expenditure in these areas remained limited unless formal partnerships were signed, and funds were committed. Until agreements were finalised, expenses were mostly related to human resources involved in negotiations and planning. The Department was actively pursuing several partnerships, and further details would be provided in writing. She concluded by reaffirming the Department’s commitment to addressing challenges, improving support structures, and ensuring the effective implementation of its programmes.

Ms Williams outlined the Department’s strategy following the merger, emphasising a holistic approach to funding small businesses. T is strategy covered the entire value chain, from pre-investment to lending and post-investment support. T e primary goal was to ensure that the funds provided were effectively managed, allowing for reinvestment into new businesses. To achieve this, two units --business development and support, and lending -- were now working collaboratively. The CFO said that unlike in the past, when different entities operated independently, these units now coordinated efforts to ensure that businesses received appropriate funding and support in a structured manner. This approach ensured continuity, where the process of business development aligns seamlessly with funding decisions, enhancing efficiency and accountability.

Ms Williams addressed the inefficiencies in the lending process, particularly the lengthy turnaround time from application to disbursement. Many processes remained manual, which delayed operations. The Department was actively working to automate and streamline procedures to expedite funding while maintaining due diligence. H wever, she stressed the importance of responsible lending. The Department must avoid reckless lending practices that result in beneficiaries receiving credit they  cannot afford to repay. To  prevent this, thorough assessments would be conducted to evaluate business viability before funds were allocated. She reiterated that the Department prioritises support for youth, women, and persons with disabilities. The youth fund is currently under review to enhance its capacity and impact. The funding amounts, previously considered insufficient given the country’s economic challenges, would be adjusted to ensure the Department provides meaningful support to young entrepreneurs.

In response to concerns about consequence management, Ms Williams gave an assurance that the board was committed to maintaining high performance standards. Poor performance was not tolerated, and management was held accountable to enforce corrective measures. The board was actively implementing consequence management strategies to ensure that all personnel contribute effectively to the Department’s objectives.

The Chairperson raised concerns about the Department’s continued reliance on manual processes, despite acknowledging its inefficiencies. In both the presentation and responses, the CFO highlighted the delays caused by manual operations, which slow down the lending process and impact service delivery. The Chairperson questioned why, given the availability of funds being returned to the fiscal system, the Department had not prioritised investing in digital tools and systems to improve efficiency. By allocating these resources to technological upgrades, the Department could significantly streamline operations, reduce turnaround times, and enhance overall productivity. She emphasised the need for proactive decision-making to ensure that available funds were utilised effectively for modernisation, rather than being returned unused.

DDG Delwa responded to the Chairperson’s concerns by explaining the constraints surrounding the funds being returned to the fiscal system. She clarified that the money was allocated for specific programmes and was bound by strict regulations. I  the funds were not spent within the designated programme, they must be returned to the Department, which ultimately redirects them to the National Revenue Fund. As a result, the agency did not have full autonomy to repurpose these funds without Departmental approval. Given these limitations, the agency was working within its available resources while exploring alternative ways to strengthen its financial position. E forts were being made to secure additional funding and external support to address existing challenges. The DDG highlighted the difficulties posed by the recent merger, stating that, unlike typical mergers that receive a financial injection to facilitate the transition, this process had not been accompanied by additional funding. This had forced the agency to operate within its existing financial constraints while trying to stabilise operations and improve efficiency.

The Chairperson responded by advising the agency not to hesitate to engage with the Department about the reallocation of funds. The SEDFA emphasised the importance of proactively requesting the necessary financial resources to acquire the required technological tools. The Chairperson suggested that instead of accepting the financial constraints as a limitation, the agency should return to the Department and make a strong case for securing the funds. By doing so, it could ensure that the organisation was equipped with the necessary gadgets to improve efficiency and reduce reliance on manual processes.

Mr Lwandiso Makupula, Chief Information Officer (CIO), SEDFA, provided a comprehensive response addressing multiple issues, including co-ops, direct lending, turnaround times, and the integration of SMEs into sectoral ecosystems. He explained that co-op programmes were run on a cyclical basis to maintain transparency, with calls for proposals being opened and processed in different quarters. The agency acknowledged the low performance in direct lending due to economic conditions and operational disruptions, particularly the National Credit Regulator (NCR) registration process and other programme-related management challenges. However, he assured the Committee that these issues were being resolved.

To improve efficiency, the agency segmented its business into commercial and development sectors. C commercial transactions, which were easier to process, had a turnaround time of three weeks, while development-focused transactions, due to their complexity, took approximately two months.

The CIO emphasised the agency's structured approach to consequence management, including training and performance improvement plans, ensuring that underperformance was addressed systematically. The sustainable lending highlighted that the merger was aimed at providing both financial and non-financial support. Efforts were being made to de-risk transactions by bringing in co-funders and developing new IT platforms.

Mr Makupula said the discussion on the Northern Cape had revealed a shift towards integrating SMEs into the dominant economic sectors in the region, particularly mining and tourism. He acknowledged past inefficiencies, stating that businesses were previously funded in isolation but were now being integrated into relevant economic ecosystems. H  also spoke about specific projects such as the Devon Ice Rink relocation, which was moving from an old site plagued by crime to a tourism hub.

He referred to investments in shared infrastructure, such as the acquisition of equipment for incubators rather than individual owners. The asset assist programme was mentioned, with ongoing assessments of applicants and efforts to secure additional funding to bridge financial gaps. The co-op programme had recently closed with R61 million allocated, and final figures were still being processed due to applications being submitted via email. r ther than the automated system. In closing, he assured the Committee that any outstanding responses or additional information would be provided in writing within two weeks.

Changes to Committee schedule

The Chairperson said the Committee had recently received a response from the Office of the House Chairperson indicating changes in the parliamentary programme, which affected the scheduling of the planned oversight visit to Limpopo. Initially, the Committee had scheduled the visit for the week of 1 April, between 31 March and 4 April. However, due to adjustments in the parliamentary calendar, the House Chairperson had advised that the oversight visit should instead take place during the week of 24 March to 28. This change had been communicated to Committee Members through WhatsApp by the Committee assistant, and arrangements were being made to confirm Members' availability for the revised dates.

As a result of this adjustment, the Committee needed to reschedule the interviews for the appointment of the Ombudsperson. It was agreed that the interviews would now be conducted on Tuesday, 2 April, as a full-day session, followed by deliberations and the finalisation of recommendations on Wednesday, 3 April. This scheduling ensured that there would be no conflict between the oversight visit and the interview process. To avoid any confusion, the Secretary would formally confirm these changes in writing and circulate them via email to all Committee Members.

In addition, the Deputy Minister and relevant officials had been requested to engage with the Minister and Director-General to ensure that additional representatives could participate in the oversight visit. Members were urged to provide written confirmation regarding their availability for both the oversight visit and the interviews. These adjustments had been made to ensure the Committee’s work proceeds efficiently, balancing both oversight responsibilities and the Ombudsperson appointment process.

The meeting was adjourned.