Question NW3159 to the Minister of Small Business Development
08 January 2024 - NW3159
Luthuli, Mr BN to ask the Minister of Small Business Development
Whether the needs of any specific sector of the economy of the Republic that were reported to her office in the past financial year are receiving priority; if not, why not; if so, what are the relevant details?”
Reply:
I have been advised that:
The Department of Small Business Development (DSBD) has not assessed the sectoral needs of the small business development segment of the economy. However, there has been work around the challenges faced by SMMEs and Co-operatives. These challenges relate to excess red tape, access to finance, access to markets, a lack of inclusion of SMMEs in the value chains of big business, lack of access to information and a lack of skills and knowledge on entrepreneurship. To address some of these issues, the DSBD has formulated and executed several interventions aimed at ensuring the participation of MSMEs in the mainstream economy. These include, inter alia, increasing access to developmental funding, expanding support to township and rural enterprises, building access to markets, and improving the regulatory environment. These challenges remain prevalent in most of the sectors in which small businesses operate.
To demonstrate its commitment to the development of SMMEs in the various sectors of the economy, the DSBD established the Small Enterprise Manufacturing Support Programme (SEMSP), as one of the responses to the needs of the small enterprises operating within the manufacturing sector/industry. The programme is considered as one of the contributions to the localization strategy and supports manufacturing enterprises to increase the contribution of manufacturing within the Gross Domestic Product (GDP) of the South African economy.
The main intention of the Small Enterprise Manufacturing Support Programme (SEMSP) is to replace imports through locally manufactured goods thereby increasing small enterprises production capacity, growth, sustainability, and competitiveness. The support received by small enterprises through the SEMSP includes financial and non-financial to enhance technical skills, business infrastructure support (buildings and machinery) as well as market access. The programme prioritises various categories of manufacturing such as light consumer goods, hi-tech and industrial production which are associated with the sub-sectors such as furniture, basic iron and steel, petroleum and chemical, food and beverages (agro-processing), electrical, green technology etc.
Thus far, SEMSP performance overview for the past three financial years (i.e., 2020/21 to 2022/23) reflects approvals for all nine provinces at about R800M. The first year disbursements were at about R320M, second year being R237M and third year R274M as reflected below.
Figure 1: SEMSP approval 2020/21 to 2022/23
The DSBD has increased its involvement in the Cannabis industry. The aim of this involvement is to address some of the challenges faced by MSMEs in the sector. These challenges include, among others, regulatory environment, research, and development (Biomass quality, processing, and product quality), branding (markets), and financing.
The DSBD is working on a Cannabis Pilot Project with the Council for Scientific and Industrial Research (CSIR) to conduct research and gather information regarding the how we could create opportunities for the creation of small enterprises across the Cannabis value chains, as well as on establishing and increasing the manufacturing capacity of the South African Cannabis industry.
In the main, this initiative is aimed at the development of interventions that are informed by evidence; the promotion and advocacy for an enabling policy, legal and regulatory environment, especially advocacy for ease and accessible issuing of cannabis producing operating licenses for start-ups. It is also the intention of the Pilot Project to develop targeted instruments to support small enterprises (Business Development Services and Financial Support). The development of the Cannabis industry will require a collaborative effort from relevant stakeholders. It is for this reason that we encourage strategic partnerships (public and private) to be formed to advance an inclusive, sustainable, and globally competitive Cannabis industry in South Africa.
The DSBD has developed the Cannabis Small Enterprises Support Plan (CSESP), the aim of which is to develop an instrument for the support and promotion of small enterprises within cannabis industry value chains.
The DSBD–CSIR have also collaborated to establish an Incubation Programme that assists MSMEs to partake in the Cannabis industry. The intention of this programme is to conduct primary (not cultivation/harvesting), secondary, and downstream processing of Cannabis and Hemp biomass. Moreover, there is specific focus on the formulation and re-iteration of low THC cannabis/hemp product prototypes, as well as the upscaling and testing of the range of low THC cannabis-based products for the selected enterprises. The tail end of the process requires the partners to facilitate contract manufacturing of at least 100 market ready samples, at GMP facility, for each MSME to test the formal markets.
To respond to the needs of MSMEs operating in township and rural areas, the DSBD formulated the Township and Rural Entrepreneurship Programme (TREP). The Scheme is aimed at supporting small enterprises to participate in the rebuilding and restructuring of the economy in townships and rural areas, improve the quality and competitiveness of small enterprises for both domestic supply and export market, and seize the opportunities in the various sectors of the economy. The Scheme supports all small enterprises operating in townships and rural areas that meet the qualifying criteria including but not limited to sectors such as Clothing & Textile, Bakeries & Confectionaries, Tshisanyama and Cooked Food, Retail (including restaurants, car washes, general dealers, etc.), Automotive, Personal Care, and Artisans.
To penetrate various local and international markets, the DSBD is implementing a localisation programme with the intention of building the manufacturing capacity of SMMEs. It is anticipated that the increased capacity and capability of SMMEs will assist with market access opportunities for SMME manufactured products. Essentially, the DSBD and its agencies, the Small Enterprise Development Agency (Seda) and the Small Enterprise Finance Agency (sefa), provide support and preparation of SMMEs towards import replacement and export market penetration.
On the regulatory environment front, the DSBD continues to roll out the red tape reduction guidelines – working together with municipalities. Several municipalities have been covered across the country.