Question NW7 to the Minister of Small Business Development

Reply:

(1)(a)&(b) The Minister has been and continues to engage the Minister of Police to request and explore the interventions that the police service could provide to MSMEs and determine what support role could DSBD provide in this regard. Furthermore, the DSBD initiated stakeholder consultations on the development of a Township and Rural Economy Revitalisation Policy; the consultations will amongst other be facilitated through Local Economic Development Forums to be hosted in townships. The DSBD will also consult with business forums, faith-based organisations, and other community structures to ensure that every segment of the community is covered and engaged in finding solutions to this problem. The longitudinal study conducted by the Department over three waves covering the period 2020 to 2023 with the same cohort of small enterprises confirmed that around 30% of small enterprises experience challenges with crime. The stakeholder consultations for developing the Township Economy Revitalisation strategy will, amongst others, focus on gathering intelligence on the so-called protection fees and how best to deal with them.

2. South African-owned businesses that are law-abiding and tax-compliant benefit from a range of financial and non-financial support offered across the three spheres of government. The enforcement of compliance requirements is important to ensure an equitable trading environment making close collaboration with local authorities, local governments and law enforcement at a local government and district level imperative.

The Department is collaborating with the Department of Home Affairs (DHA), municipalities, and other departments to continue to develop, refine and implement various interventions that the DSBD identified at the DHA led Migration Workshop which was held in October 2023. These interventions not only include policy and legislative amendments but also the implementation of current legal provisions. The operation of businesses by illegal foreign nationals poses the greatest challenge and danger to MSMEs and the local economy. Foreign nationals operating without a business visa or refugee certificate are operating illegally. One of the identified interventions is geared at addressing this problem.

The Department of Small Business Development (DSBD) introduced to Parliament the National Small Enterprise Amendment Bill (NSEAB) which provides for the establishment of the office of Small Enterprise Ombudsman which will enable an equitable trading environment for small enterprises through the provision of affordable and effective access to justice. The Bill empowers the Minister to declare certain practices in relation to small enterprises to be prohibited as unfair trading practices.

In the draft National Business Licensing Policy, which was gazetted for public comments in March 2024, provision is made for preferential business licensing for citizens as well as a proposal for the reservation of trading in identified sectors for citizens. These provisions will also be codified in the Business Licensing Bill which is still to be presented to Cabinet for approval for gazetting for public comments.

During the 6^th Administration the Department of Cooperative Governance commenced with the process of drafting Standard By Laws to bring in new thinking and ideas with regards to the development and management of township economies while regulating business activities for the benefit of the public residing and carrying out business activities within municipalities, especially in economically depressed areas. Furthermore, the standard By-laws intends to introduce a standardised enabling framework to encourage municipal councils to designate business areas or sites to promote commercial and industrial activity in economically depressed areas and to promote inclusive growth.

3. The Department has developed a Sector-focused and Hybrid Incubation and Digital Hub Support Strategy (SHIDHSS) that aims to create high-growth MSMEs and Co-operatives, consolidate incubation ecosystems with an attempt to reduce differentiated performance and establish innovation-driven MSMEs and Co-operatives. The SHIDHSS is a deliberate intervention to forge alignment with different partners to consolidate the existing incubation offerings to ensure the efficiency, effectiveness and sustainability of incubation support within the ecosystem and deliver impactful services for the MSMEs and Co-operatives. The SHIDHSS has four key impact areas, namely, creating high-impact incubation centres; deployment of innovative solutions; network of knowledge sharing; and establishment of new incubators. The SHIDHSS implementation plan has been developed as informed by the strategic interventions and initiatives and will explicitly respond to the key impact areas as outlined and these interventions will encourage entrepreneurship and innovation.

Apart from the Youth Challenge Fund (YCF) that is specifically aimed at young entrepreneurs, support to small enterprises across the different support programmes offered by the Department and its agencies (the Small Enterprise Development Agency [Seda] and the Small Enterprise Finance Agency [sefa]), that is, amongst others the Township and Rural Entrepreneurship Programme (TREP) and the Small Enterprise Manufacturing Programme Support (SEMSP) are based on the different targeted groups. The primary objective of the youth challenge fund is to provide support to youth Start-Up enterprises which are formally registered to increase capacity and enhance the competitiveness by supporting access to finance for youth-owned start-ups and enterprises improving their overall survival rate. The enterprises are prioritised and supported to enable their meaningful participation and contribution to the economy through employment creation, poverty alleviation and reduced inequality

The DSBD has entered into a range of partnerships with Institutions of Higher Learning such as Universities, Universities of Technology and TVET Colleges in an effort to accelerate entrepreneurship amongst the youth of South Africa. An example of this collaboration is the creation of Centres of Entrepreneurship for Rapid Incubation (CfERI) housed at the TVET Colleges and aimed at promoting and developing young entrepreneurs. Added to this is the DSBDs partnership with the National Youth Development Agency that aims to support youth business to access the DSBDs range of support programmes.

On encouraging entrepreneurship, Seda carries out entrepreneurship awareness sessions which seek to encourage and promote entrepreneurship by providing information and guidance to those interested in starting and managing a business. Seda also hosted several events focusing on youth, most of these were organised during the youth month. Furthermore, Seda has an Entrepreneurship in Schools Programme that encourages learners to consider entrepreneurship as an alternative career to employment. The Entrepreneurship in Schools programme is a partnership that involves a lot of private sector stakeholders. The owner and custodian of the programme is PrimeStars, the CSI arm of Prime Media.

4. The DSBD is assisting MSMEs and Co-operatives with Business Development Support in order to make them financially ready. DSBD is implementing various financial support initiatives for formal and informal MSMEs. The Department is finalising the SMMEs and Co-operatives Funding Policy. The Funding Policy proposes a variety of interventions aimed at deepening access to finance for MSMEs and Cooperative sectors.

The National Informal Business Upliftment Strategy (NIBUS) seeks to uplift informal businesses and micro enterprises; and to further render support to local chambers/business associations and municipal Local Economic Development offices to deliver and facilitate access to upliftment programmes. The priority is mainly for informal business entrepreneurs from designated groups, i.e., women, youth, and people with disabilities, predominantly in township and rural areas of South Africa.

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) which the department implements. The two programme aims to develop and strengthen the capacity of credible formal and informal and or micro enterprises to be sustainable through the provision of access to information, appropriate business development support and business infrastructure (machinery, building, tools, equipment and stock) and excludes (working capital, conversions, clothing) for eligible applicants.

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 (R500) up to a maximum of thirty thousand rand (R30 000) to assist them in improving their competitiveness and sustainability.

The Khula Credit Guarantee Scheme, operated by sefa operates an indemnity scheme aimed at assisting MSMEs to obtain financing from financial institutions to enable them to establish, expand or acquire new or existing businesses in circumstances where they would not, without support of an indemnity cover, qualify for such financing in terms of the participating financial institutions MSME lending criteria. The objective of the scheme is to issue partial credit guarantees to lenders for MSME borrowers, whose access to finance is impeded by the lack of collateral required by lenders.

5. The National Integrated Small Enterprise (NISED) Strategic Framework (SF), proclaimed in February 2023 as the National Small Enterprise Support strategy for small enterprises, aims to guide and provide leadership towards a well-coordinated and collective ecosystem approach with shared responsibilities, commitments and mutual benefits. Through the NISED SF and the development of the Township Economy Revitalisation Policy that will also consider rural development, the objective is to tackle the challenges faced by small enterprises through a cluster approach that facilitates private sector investments in rural under-served areas supported through financial and non-financial support offerings at national and provincial government level and effective services through local government support interventions.

(5)(a)&(b) The DSBD Intends to set up product markets in different provinces. This entails the setting up of infrastructure in the form of premises that will be made “fit for purpose” through refurbishments and revamps in order for MSMEs to occupy them and start trading. These will be in various sectors aligned to the integrated development plans in the various provinces. Over and above the physical structure, these will be powered with alternative energy so that they will be able to operate during times when there is no supply of electricity.

In addition to the Product markets the Shared Economic Infrastructure Facility programme, in collaboration with partners at municipal level, aims to leverage public and private sector investment to create an enabling environment for entrepreneurs to maximize business benefits. This programme establishes shared infrastructure for independent businesses. The infrastructure is inclusive of supplying alternative sources of energy.