Question NW494 to the Minister of Small Business Development

Reply:

The work of the Department of Small Business Development (DSBD) is carried out as a portfolio in collaboration with its agencies, the Small Enterprise Finance Agency (sefa) and the Small Enterprise Development Agency (Seda) aiming to provide financial and non-financial support to SMMEs across the country. The National Development Plan, Vision 2030 (NDP) through its five-year implementation plan ascribes a critical role to small businesses, which includes increasing their contribution to GDP from 35% to 50% by the year 2024. The Department is expected to play a much more direct role in respect of Priority 2: Economic Transformation and Job Creation, with its expected outcomes being the creation of more decent jobs and inclusive economic growth.

Seda is mandated to implement government’s small business strategy, design and implement a standard and common national delivery network for the development of small enterprises. The main focus is on township, rural and informal business development. From the Seda allocation, Seda is meant to facilitate the roll out of the incubation and digital hubs programme, an approach intended to support start-up entry level enterprises to stabilise and provide linkages to other relevant delivery programs designed with the intention to accelerate small enterprise development. The intention is to support small enterprises, targeting those that promote inclusivity of designated groups, namely, women, youth, disabled people, township and rural enterprises. The new incubators will assist with the establishment of approximately 1 290 new enterprises that are expected to create at least 25 000 new jobs.

sefa exists to streamline access to finance to SMMEs. The agency functions as both a wholesale lender, capacitating SMME financial intermediaries, and as a direct lender to SMMEs and co-operatives, supporting government economic policy. The allocation to sefa will be channelled towards supporting the Small Enterprise Manufacturing Support Programme to enable SMME-focused Localisation Programme and the Township and Rural Entrepreneurship Programme.

Below are but the agglomeration and brief interventions as measures that support the small enterprise sector leveraging on an array of support from many of the ecosystem players:

SMME-FOCUSED LOCALISATION POLICY FRAMEWORK

The implementation of the localisation policy framework seeks to encourage more SMMEs and Co-operatives to break-out into manufacturing and agro-processing sectors. These sectors are well known for stimulating economic growth and job creation. It is also vital that the country reduces its dependency on imported products by supporting locally manufactured products. The DSBD and its agencies have established working relationships with large retailers and wholesalers across the country to list and purchase the products manufactured by SMMEs.

TOWNSHIP AND RURAL ENTREPRENEURSHIP PROGRAMME (TREP)

Through the TREP, the Department aims to support 24 000 township and rural enterprises in various sub-sectors. The programme is meant to support the following subsectors and operations amongst others: Spaza Shops and General Dealer Support Scheme, the Small-Scale Bakeries & Confectionaries Programme, the Small-Scale Clothing & Textile Programme and Open Air Food Outlets Support Scheme.  

MARKET ACCESS SUPPORT

The Department has begun international market linking activities for SMMEs and Co-operatives including on the African continent in the current fiscal year as a prelude to a comprehensive programme anticipated for the next fiscal year. While the epidemic has been contained, 2023 has witnessed a surge in the opening of international trade prospects and face-to-face engagements, to encourage investment and collaborations among small scale manufacturers on the continent and around the world, the Department plans to expose export-ready SMMEs and Co-operatives to international markets in the 2023–2024 fiscal year through trade exhibitions, business to business meetings, and trade missions. This will include inter alia, emerging manufacturers who benefit from the Small Enterprise Manufacturing Support Programme and women owned enterprises registered on the ShetradesZA programme are intended to benefit from this program's ability to support expansion.

The Department in partnership with Seda and International Trade Centre have supported just 2 400 women through the SheTrades programme since its inception in 2020/21. The programme offers women owned business as a unique opportunity to participate in local and global value chains and markets.  The platform targets supporting businesses in the agro-processing, manufacturing, renewable energy, clothing and textile, cosmetics, creative industries, pharmaceuticals, retail and wholesale, exporters and importers, logistics and payment systems. In this financial year, we hope to encourage at least 2 500 women own enterprises to register on the SheTradeZA platform. 

At a domestic level, the DSBD will continue to strengthen its partnership activities with the private sector in order to ensure that more opportunities are opened up by these large companies so that SMMEs and Co-operatives can take advantage of them. To enhance its partnership activities with the private sector, the Department has established a community of practice on Enterprise and Supplier Development (ESD) in collaboration with other government departments such as the Department of Agriculture, Land Reform and Rural Development (DALRRD), the Department of Trade, Industry and Competition (the dtic), and the National Treasury. The aim of this initiative is to engage all private sector organisations and State-owned Entities (SoEs) on issues of ESD and highlight the importance of transforming the economy through working together. The Minister of Small Business Development will launch this initiative in May 2023.

YOUTH ENTREPRENEURS

Through the youth entrepreneurs programme, the Department supports youth entrepreneurship, working together with sector departments and the private sector. The initiative entails supporting young entrepreneurs through: 

• Access to business skills training; 
• Access to funding; 
• Product or service quality; and 
• Market facilitation or market access. 

The Youth Challenge Fund (YCF) was developed as a key intervention to stimulate innovative businesses in response to youth unemployment, described as a major national challenge that needs urgent and coordinated response. The goal is to support young entrepreneurs with opportunities for self-employment and enable a generation of job creators.

POLICY

In the 2022/23 financial year ending in March, the focus of the Department has been on making funding accessible to small enterprises and in the process reduce the prevailing credit gap estimated to be R346 million. This will be further attained by finalising the maiden South African SMMEs and Co-operatives Funding Policy aimed at strengthening the provision of development finance by unlocking funding opportunities to the SMME sector, ensuring that there is a proper coordination of SMMEs funding programmes, enhancing development reach and impact and putting in place measures to monitor and evaluate the effectiveness and relevance of all funding programmes in South Africa.  

 

RED-TAPE REDUCTION

At a local level, the Department focuses on municipalities, which are key in servicing our communities and small businesses. Municipalities administer the laws of our land at a local level, with often poor administrative systems, skills deficits, resource constraints, high levels of corruption and agency, as well inadequate performance management systems and consequence management.  At the Provincial Level, we focus on creating a “community of practise”, through the Inter Provincial Task Team on Red Tape Reduction, that assists provincial authorities (Local Economic Development, Enterprise Development and Business Regulations Units), better support local municipalities in their efforts at reducing red tape and creating a business enabling environment conducive to local and regional economic development.

Furthermore, the Department will conduct an assessment review of SMME regulatory impediments to reform. With this assessment review, the Department aims to develop a more specific and intentional agenda for regulatory SMME reform through engagement with representatives from small enterprises and public officials. The DSBD also aim to clarify the approach to be followed in addressing both existing regulatory burdens and preventing additional ones from arising through new laws/regulations/by-laws. Furthermore, the DSBD will be working closely with other government departments/agencies at all levels of government that are already trying to impact positively on the regulatory environment in order to improve the Business Enabling Environment in South Africa.  Also, the DSBD will continue to work closely with the Red Tape Champion and his team based in the Presidency to further contribute to the commitment that was made in the SONA.

NISED STRATEGIC FRAMEWORK 

The Department of Small Business Development, in collaboration with all key role players in the small enterprise development ecosystem, have developed the draft National Integrated Small Enterprise Development (NISED) strategic framework. The draft NISED framework was presented and subsequently approved by Cabinet to be published in the gazette for public comments. The strategy was presented and approved by Cabinet. The Department and its agencies also embarked on conducting roadhsows across the country as a platform to engage with different stakeholders from different sectors on the framework. 

STELLA NDABENI-ABRAHAMS

MINISTER: DEPARTMENT OF SMALL BUSINESS DEVELOPMENT