Question NW4022 to the Minister of Small Business Development

Reply:

I have been advised that:

a) In Encouraging entrepreneurship in township and villages:

The Department of Small Business Development (DSBD) has in place the Township and Rural Entrepreneurship Programme (TREP) which aims to assist informal, micro and small enterprises grow their businesses. The financial package is structured at a maximum value of R1 000 000 that consist of:

• Maximum of R1 000 000.00 towards working capital, cost of equipment, or any other CAPEX (paid directly to the supplier where applicable).
• The financial package will be offered in the form of a blended finance with 50% of the total approved amount being a grant i.e., a maximum grant amount of R 100 000.00.

TREP supports all small enterprises operating in townships and rural areas that meet the qualifying criteria including, but not limited to, the following:

• • Clothing and Textile
  • Bakeries and Confectionaries
  • Tshisanyama and Cooked Food
  • Retail (including restaurants, car washes, general dealers etc.)
  • Automotive
  • Personal Care
  • Artisans

Also, the Small Enterprise Development Agency (Seda) has a big network of offices in the country, with 53 branches and 52 co-location points. Our co-locations are specifically established to extend access to Seda services in underserviced and rural South Africa. It is also realised that there are still several areas where entrepreneurs and SMMEs still must travel far for them to access services. Seda has therefore established 80 service points or access points. Seda will continue to expand service delivery to rural communities through various modalities whilst striking a sound balance between community needs, budget availability and collaboration with ecosystem partners. Furthermore, the organisation has 110 incubators, of which 32 are based in rural areas.

The agency also employs alternative mechanisms for ensuring that services are available, like mobile offices. Information is provided through DSBD, Seda and the Small Enterprise Finance Agency (sefa) websites and contact centers. Where possible, Seda also provides virtual interaction with those clients that can attend, for example online training and webinars. To this end, 801 clients attended virtual sessions during the 2022/23 financial year, and 1 630 during the second semester of the current financial year (2023/24). Support includes, amongst others, Pitch for funding, Access to markets, including Pop-up markets, Digital skills development training, Inventory Management Training, etc.

b) Providing sustainable employment to township dwellers:

While the Township and Rural Entrepreneurship Programme (TREP) described in part (a) is aimed at the individual entrepreneur, the National Informal Business Upliftment Strategy (NIBUS) seeks to uplift informal businesses and micro enterprises through a systemic and institutional response collaborating with and supporting local chambers/business associations and municipal Local Economic Development offices to deliver and facilitate access to upliftment programmes aimed at providing sustainable employment to township and rural dwellers, targeting informal business entrepreneurs from designated groups, i.e., women, youth, and people with disabilities.

• 1. NIBUS has two Instruments under its enterprise development pillar, namely the Shared Economic Infrastructure Facility (SEIF) and the Informal and Micro Enterprise Development Programme (IMEDP).
  2. The Informal and Micro Enterprises Development Programme (IMEDP) is a 100% grant offered to informal and micro enterprises from a minimum grant amount of five hundred rand (R 500.00) up to a maximum of ten thousand rand (R10 000.00) to assist them in improving their competitiveness and sustainability.
  3. The key objective of this financial facility is to provide developmental support to informal and micro businesses that are operating in townships and rural areas of South Africa with an emphasis on support for designated groups, i.e., women, youth and persons with disabilities.
  4. The programme aims to develop and strengthen the capacity of credible informal and or micro enterprises to be sustainable through the provision of access to information, appropriate business development support and business infrastructure (machinery, tools, equipment, and stock) and excludes (working capital, conversions, clothing) for eligible applicants.
  5. Going forward, it is planned that Informal and micro enterprises are to be supported using the DSBD’s Informal and Micro Enterprise Development Programme (IMEDP) capped at R 30 000.00 for informal businesses and the Small Enterprise Development Agency (Seda) to support micro businesses with amounts above the R 30 000.00 threshold.
  6. The funding will be 100% grant for the informal sector and subject to availability of funds.

During the 2022/23 financial year, the Small Enterprise Development Agency (Seda) provided a total of 21 181 skills development and support interventions to township and rural businesses and 10 836 interventions during the second semester of the 2023-24 financial year. These interventions included amongst others Basic Business Skills, Business Start-Up 1, Cybercrimes, South African Revenue Service (SARS) Incentives, Costing & Pricing, Business Planning, Business Model Canvas, Financial Management training, Access to funding, Point of Sale Training, Access to Funding, Business Plans, Mentoring and various others.

Seda also has a dedicated programme, the Basic Entrepreneurship Skills Development (BESD) which was jointly developed by the Agency and German Federal Ministry for Economic Cooperation and Development via Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) since 2012. GIZ left the programme in December 2016 and since then the programme is funded by the National Skills Fund for an amount of R84 million. The BESD approach utilises coaching as an innovative methodology to facilitate and reinforce learning and development support to emerging entrepreneurs. A total of 2 038 Emerging Entrepreneurs were supported through the programme to date. All the project sites across the country were completed in 2019, we are currently utilising remnants of the budget to benefit more SMMEs.

Seda, through its Learning Academy, has also developed different training programmes. These programmes are credit bearing and accredited by the Services Seta. Quality training aims to assist organisations of all types to implement and operate the Quality Management System (QMS) to increase effectiveness, consistency, and customer satisfaction, explain the benefits of implementing QMS and understand the quality, management principles. Whilst Food safety introduces Food Safety, Understand Pre-Requisite programme, HACCP (Hazard Analysis, Critical, Control, Point) system and HACCP principles and Implementing a Food Safety Management System (SANS 22000:2019.).

Seda has also forged the following skills development partnerships namely:

• A 3-year partnership with the National Skills Fund (NSF) to benefit 14 000 beneficiaries for a total budget of R 592 275 000. The aim of the project is to recruit unemployed graduates with Accounting and Business Management qualifications to be trained on New Venture Creation, Coaching, and Mentorship Programme to enhance their skills to provide support to Micro Enterprises. Seda will use coaching as an innovative methodology to facilitate and reinforce learning and development support to Micro Enterprises and the unemployed graduates will be trained on new venture creation as well as business coaching to enable them to transfer skills and knowledge to Micro Enterprise owners.
• Seda and Wholesale and Retail Seta signed an agreement to support one thousand (1 000) Tuckshops, General Dealers to the value of R 9 975 000.
• In 2021, DSBD, Seda and Merseta signed Agreement for Merseta to release a discretionary grant to Seda to the value of R 50million. The funding will be provided in a phased approach over a 3-year period. The purpose is to train Small Enterprise in the Automotive Trade Sector as well as facilitate Artisan Recognition of Prior Learning (ARPL).
• A partnership between Seda, GIBBS and the Cherie Blair Foundation for Women was forged. The Cherie Blair Foundation has an award-winning Mobile App that offers women entrepreneurs essential business training and support on the go. It features a range of learning tracks on topics including launching a business, accessing finance, expanding market access, e-commerce, and mobile money.

During the first two quarters of the 2023/24 financial the Township and Rural Entrepreneurship Programme supported the sustaining and/or creation of 10 884 jobs, whilst 38 059 jobs were supported in the 2022/23 financial year.

Proposed future interventions will utilise a macroeconomic approach that combines the expertise of public and private sector partners to counteract resource and capacity constraints.

Furthermore, provision of sustainable employment to township dwellers the level of the social economy and community empowerment levels include through the Co-operatives Development and Support Programme (CDSP), for new and budding primary co-operatives.

1. There is a start-up grant of up to R1,5 million, up to R2.5 million for growing primary co-operatives and up to R5 million for secondary co-operatives.
2. All co-operatives to be funded are subjected to co-operative governance training so as to ensure that they understand what is expected from them in running a successful organisation.