Bank Sector Education and Training Authority (Bank Seta): briefing

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Labour

18 October 2004
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Meeting report

LABOUR PORTFOLIO COMMITTEE
19 October 2004
BANK SECTOR EDUCATION AND TRAINING AUTHORITY (BANK SETA): BRIEFING

Chairperson
: Ms O Kasienyane (ANC)

Documents handed out
BANK SETA PowerPoint presentation on the Micro Finance Project
BANK SETA text presentation on the Micro Finance Project

SETA Websites

SUMMARY
The BANK Sector Education and Training Authority’s Micro-Finance Skills Project was presented to the Committee. The SETA pointed out that it had been very successful, although some assumptions about the sector had been wrong. Members emphasised that more people needed to be reached with these programmes since such skills were desperately needed.

MINUTES
The Chair noted that the topic of discussion was very important as many of the people in their constituencies did not know how the banking sector operated. She reminded all present that the Government’s priorities were to create jobs and fight poverty. The SETAs played an important part to achieve these goals by trying to match skills with the gaps in the market. She said that it was hoped that the programme that the BANK SETA had undertaken, would help to prevent many Small Micro and Medium Enterprises (SMMEs) from failing.

Mr F Groenewald, the CEO of the BANK SETA, addressed the Committee and said that they would be reporting on the progress of the Micro Finance Skills Project (MFSP). It was now coming to an end after eighteen months. The function of the project was skills development in the sector. He added that the one of the goals of the SETA was to create 5000 learnerships. The creation of all these skills was to alleviate poverty, support Black Economic Empowerment and Employment Equity. At the moment 800 learners were in jobs. The next group of learners were now being recruited. A voucher system had also been introduced for small businesses. Small businesses were now able to see the benefits of the SETA products and there had been an increase in the number of small businesses that were involved with the SETA.

Mr R Plant, the General Secretary of the BANK SETA, addressed the Committee on the Micro Finance Skills Project as in the presentations attached.

Discussion
Prince N Zulu (IFP) commented that the presentation was good and that it had answered many questions. The SETAs are seen as being inefficient, but from the presentation a different picture was given. He wanted to know where the BANK SETA’s offices were in KwaZulu-Natal. He also wanted to know why there was a discrepancy between the different race groups that had responded to the training offered by the SETA.

Mr Groenewald said that the capacity of the SETAs were only as good as its stakeholders allowed it to be. The BANK SETA was fortunate that it had a good relationship with its stakeholders. The main office of the SETA was in Gauteng. It did however work through various agencies in the provinces such as the Department of Labour advice centres. Mr Plant said that it was not easy to say why mainly Africans had made use of their services. They were not directly involved in the recruitment of people for the training courses. It was hoped that as they worked through the consumer affairs offices this would include all communities in future.

Ms S Rajbally (MF) said that she was concerned that about the borrowers. She asked if they were unemployed people or housewives and how well they understood the repayment system. She also wanted to know how well the SETA was known in the Coloured and Indian communities since they did not seem to be part of the training programmes.

Mr Plant said that all kinds people borrowed money. The training addressed the rights and responsibilities of borrowers and also looked at the setting up of budgets that had proved very popular. He said that they were initially unknown in the Coloured and Indian areas. It was hoped that as they worked through the intermediaries, they would become more known in these communities. He stressed that this was a long-term project and would take time to achieve reach in all communities.

Mr M Mzondeki (ANC) asked for clarity around the shift from the Business Development Support Service Centre (BDS) to a business network. He wanted to know how these sessions worked. Only five provinces seemed to have benefited from the project so far, he wanted to know what the plans were for the future for the other provinces. He also asked if those lenders known as “loan sharks” were part of the training and whether there were any plans to reach out to school leavers.

Mr Plant said that one of the purposes of the project was to professionalise and increase the skills in the micro-finance sector. A deliberate approach had been to only train the micro-lending businesses who were registered with the Microfinancing Regulatory Council. This was to encourage others to join the Council. There was an attempt by the Council to do this and they were succeeding to register more and more micro-lenders. He said that the third phase of the provinces had moved into the other three provinces. These provinces had benefited from the experience in the other provinces. They had not had any outreaches to schools as the focus was on the borrowers of micro-lenders. Mr Groenewald added they had identified consumer education as one of their strategic priorities for the next four to five years. These would probably be supported by the Finance Sector Charter. Mr Plant said that the BDS is a popular concept but it was flawed. The sustainability and the support provided was critical. The whole process was therefore rethought and a business network strategy was implemented. This is however more labour intensive and requires more time. Support was also being given to SMMEs so that they could complete the tender process.

Ms N Ngcengwane (ANC) said that she was impressed by the work done by the SETA. She was especially glad that there was such a high number of African women that had attended the training and also the training of communities to draw up budgets and business plans. She asked where the SETA’s offices were in Gauteng. She also suggested that the SETA use the parliamentary constituency offices as service provider support centres.

The Chair asked how the image of the micro-financing sector could be improved as the “loan sharks” had given it a bad name. She also suggested that the constituency offices be used to advertise tenders.

Mr Groenewald replied that tenders larger that R100 000 was placed in national newspapers and on their website. He said that they did not target Members of Parliament, but would consider using the constituency offices.

The Chair asked about rural areas where many people did not read newspapers. She suggested that community radio be used.

Mr Groenewald said that they had not thought about advertising tenders on radio. They would consider this perhaps for the future.

Ms Rajbally (MF) asked how borrowers paid back their money after their training. She also wanted to know why local newspapers were not used for advertisements.

Mr Plant said that repayments were based on the relationship between the micro-lender and the borrower. Mr Groenewald added that part of the evaluation of the project would be to see what the impact of the training had been on the repayment loans. He said that local newspapers were used for local contracts.

Mr C Lowe (DA) referred to companies who paid levies to the SETA and wanted to know what percentage of these companies access grants and whether they submit workplace skills plans. He said that from the SETA’s 2003 Report it appeared that the companies with less than 150 employees, did not have access to the SETA. He asked if this had changed in 2004. He also wanted to know how many of the learners doing learnerships got jobs and what the links were with the education sector so that they could teach the skills which the SETA was now doing. He asked as well what the SETA had spent on consultants.

Mr Groenewald said that the number of SMMEs involved with the SETA had increased this year. It was not right though to judge the impact of training through the numbers that claim their grants back. Many companies did not claim back their grants for various reasons. In the past year 39% of small companies in the sector had made use of the SETA for training. The fact that they paid out 95% of grants back could be seen as good and bad. This could mean that all the large organisations were spending money to develop their people, but it would also mean that there was less money to continue training. There were some steps taken to consult with the Department of Education to include some financial literacy in its curriculum. It was not possible however to fix all this in a short time. On the issue of consultants, he said that the BNAK SETA did not have a call centre, finance department or IT department. These functions have therefore been outsourced. This had worked out cheaper and had probably caused the SETA to be as effective as it had been. Research done had shown that the saving had probably been in the region of R1 million. Where no other expertise was available, consultants were used.

Mr O Mogale (ANC) said that he was concerned at the under-spending which had taken place by the SETA. He also felt that the piloting period of three years for the project had been too long. He asked for clarity around the criteria for borrowers since many micro-lenders took the borrowers identity documents that were needed soon for local Government elections. He also wanted clarity around the 1200 SMME borrowers that were part of the project.

Mr Groenewald said that the perception was that there were lots of unspent funds. It was true that there was money in the bank, but these were earmarked for projects in the coming year. He said that the project was not a three year pilot project. The first year had been the pilot. The project was now at an end and there was no plans for the follow on. They had not asked the National Skills Fund for more money. The R32 million saving that had been done on the project was as a result of some of the assumptions about the sector being wrong. The SETA therefore had to adjust its plans that had led to the unspent funds. He accepted that it might have been bad planning. He added that informing the borrowers of their rights and responsibilities had been part of the package that had been taught.

Ms L Moss (ANC) asked how many service provider support centres there were and in which provinces they were. She suggested that they link up with the parliamentary constituency offices. Many times people approached Members about issues such as drawing up of business plans. It was therefore important that these links be there.

Mr Groenewald said that was a good idea to use the parliamentary constituency offices. He did however stressed that the service provider support centre was created for the project which was now coming to an end.

Mr N Godi (PAC) asked if the under-spending was linked to the capacity of the SETA or if it was a cautious approach that was being taken. He also asked if the profile of the borrowers were known, since the micro-lenders were part of the steering Committee of the project. He wanted to know what would be happening in the future since the project was ending. He felt that the type of media that was used was important to reach as many contractors as possible. He felt that the percentage given to SMMEs was still too low. He commented that he did not think it strange that the Africans had dominated as borrowers as this was where the poverty was. It would also be better if the SETA could roll out its program to the other provinces so that it could reach more people.

Mr Groenewald said that the fact that 76% of its contracts were given to SMMEs and HDIs was way beyond their expectations. He added that the finance charter had set a ten-year period to achieve equity and that they therefore felt they were doing well by having such a high percentage so early in the process. He agreed that much more needed to be done, but many small companies had been helped through the contracts given to them. He said the SETA reached all the provinces but only had one office in Midrand. There was not enough money to open other offices. All types of media was used to communicate with communities about the project. Mr Plant added that they had consulted thoroughly with the micro-financier before they did the training of borrowers. The training was very specific to the needs that were identified. Many companies had linked their improvement in their businesses to the training they had received.

Mr G Anthony (ANC) commended the SETA on it work and said that they were on the right track which was important for economic growth. He wanted to know if franchising could also be accommodated by the SETA. Communication to the rural areas was important, especially in the nodal points that had been identified by the President as priority. He emphasised that many people in these areas were not able to access the SETA’s services if only print and electronic media was used.

Mr Groenewald said that they would not equip someone to set up a franchise but would give the necessary skills if there was request to do this.

The Chair asked if there had been any involvement with the community banks.

Mr Groenewald said that the community banks were not part of their original plan. Their involvement with SACOB meant that they had worked with some of the clients of these banks. They had now identified them as an area that needed to be involved. Two projects had recently been approved that would look at corporate governance and financial literacy. This would include at co-operative and village banking.

The Chair thanked the BANK SETA and said that it had given valuable information. She asked that information about the SETA’s offices be given to the Committee.

Consideration of Committee Budget
The Committee was given a draft budget with unit costs for certain items.

Mr Anthony (ANC) proposed that the budgets of the last two years be made available so that they could see how the budget was structured.

Mr Lowe (DA) also suggested that the legislative program for the coming year also be made available so that they could decide on the number of meetings and public hearings, etc.

It was then decided that this would be done and that a small team from the Committee would work on the budget. Mr Lowe (DA), Mr Anthony (ANC), Mr Mzondike (ANC) and Ms Rajbally (MF) were then chosen to be part of this sub-committee, together with the Chair.

The meeting was then adjourned.


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