Hansard: EPC: Debate on Vote No 31 – Small Business Development
House: National Assembly
Date of Meeting: 20 May 2015
No summary available.
EPC – NATIONAL ASSEMBLY CHAMBER
Wednesday, 20 May 2015 Take: 19
WEDNESDAY, 20 MAY 2015
PROCEEDINGS OF EXTENDED PUBLIC COMMITTEE – NATIONAL ASSEMBLY CHAMBER
Members of the Extended Public Committee met in the National Assembly Chamber at 17:25.
House Chairperson Ms M G Boroto, as Chairperson, took the Chair and requested members to observe a moment of silence for prayer or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS – see col 000.
The MINISTER OF SMALL BUSINESS DEVELOPMENT
Start of Day
Debate on Vote No 31 – Small Business Development:
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, Deputy Speaker, Deputy Minister Thabethe, Ministers and Deputy Ministers present here today, Chairperson of the Portfolio Committee on Small Business Development hon Ruth Bhengu, members of the Portfolio Committee on Small Business Development on both sides of the House, chairpersons of the Small Enterprise Development Agency, Seda, and the Small Enterprise Finance Agency, Sefa, chief executive officers of Seda and Sefa,
acting director-general Lindokuhle Mkhumane, hon members,
distinguished guests, ladies and gentlemen, if you look up to the gallery, I can assure you there is nothing small about those people sitting there. Watch this space. [Applause.]
I join my comrades in paying tribute to Mme Ruth Mompati as we prepare for her last journey. She was a combatant and heroine of our liberation struggle and a proud member of the ANC until her death. Like many, I am a product of her discipline, the liberation of South Africa and the empowerment of women.
After a year in office, we are confident that we have a fuller grasp and better understanding of our mandate. We shall lead and be the commanding voice for small business and co-operatives within government. Our hawkish eyes will search for and grab every opportunity presenting itself in support of the growth and sustainability of small, medium and micro enterprises, SMMEs and co-operatives. We await the approval of the inclusion of “co-operatives” in the name of the department to give confidence that co-operatives are also at the centre of our work. We stand before you as radical economic cadres of a nation at work, determined to transform the economic landscape of South Africa. We have no illusions about the enormity of the challenges that lie ahead. However, given the base from where we started and the support we have enjoyed since inception, we have no reason to fail. Twenty years after attaining our freedom, we are ready to give expression to clause three of the Freedom Charter: “The people shall share in the country’s wealth”.
Twenty years since our freedom, the participation of black people in the country’s economy still leaves much to be desired. Radical economic transformation is about turning this ugly picture on its head. We must intensify our efforts aimed at broadening participation in the mainstream economy. We see the development of small businesses and co-operatives as a catalyst for economic growth and job creation. We are utilising small businesses and co-operatives as vehicles for the redistribution of the country’s wealth. We are reversing an economic injustice of almost four centuries. Collectively, we must promote the understanding that the economic empowerment of black people is not synonymous with less economic efficiency and lower returns on investment. I reiterate my view that, over time, we must engender the understanding that it is natural that an economy of any African country, as with South Africa, should, in its ownership, management and skills, reflect the active and meaningful participation of Africans, in particular, and black people in general.
Despite the existing sources that point to the upward trend in the number of SMMEs registered since 2000, there is growing consensus that South Africa’s business activity rate, growth and sustainability are declining. South Africa still lags behind its Brics peers. In his state of the nation address, President Zuma declared that “small business is big business”. For the economic cluster in particular and government in general, this statement must serve as a clarion call to action and a bold assertion about the critical importance of small businesses and co-operatives in economic transformation, job creation and economic inclusion. The significant role of small businesses is underlined by the National Development Plan, NDP, which envisages that the small business sector will create 90% of the expected 11 million jobs by 2030. By our calculations, small businesses will have to contribute roughly 800 000 jobs per year until 2030. The chairperson and the portfolio committee keep reminding us of these figures. As government, the private sector and other relevant stakeholders, we carry a responsibility to stimulate and support the growth and sustainability of co-operatives and the small business sector. Together, we must address the lack of business opportunities in both the public and private sectors.
With regard to the role of the private sector, which we regard as important, let us also confront this unpalatable truth: Big companies have, for a long time, managed to crowd out small businesses through their financial muscle, cash reserves and economies of scale. For example, it is much easier for big companies to sell products at lower prices and, in the process, squeeze out small businesses when competing for government procurement opportunities, especially because government considers the lowest price over development considerations when procuring goods. We must proceed from the premise that supporting small businesses and co-operatives is not a philanthropic gesture on the part of big business. In fact, it is in their interest to help grow and sustain small businesses. They are tied to small businesses in a symbiotic relationship.
The diversification of supply chains assists big business to have a wider choice of suppliers from SMMEs and promotes innovation within the value chain. The growth and sustainability of big business therefore depend on a strong smaller business sector, both as consumers and suppliers. An inclusive economy that benefits all is also a guarantee for the social stability that is required for business to stabilise and flourish. We are therefore encouraged that the revised Broad-Based Black Economic Empowerment Codes of Good Practice present an added opportunity for small enterprises to access the supply chains of large organisations.
On transversal agreements, we have identified procurement opportunities for co-operatives and small enterprises and are currently negotiating transversal agreements with various departments to ensure access to these opportunities. The implementation of the 30% target for public procurement by SMMEs and co-operatives will ensure increased participation by emerging enterprises in the mainstream economy. The mainstream economy belongs to black people too. We have made significant progress in negotiating memoranda of understanding with the Department of Public Enterprises and the Department of Agriculture, Forestry and Fisheries. We believe these to be potentially game-changing transversal agreements. We continue to engage other government departments in this regard.
On the 30% public procurement set aside, as announced by the President during the 2015 state of the nation address, government will set aside 30% of appropriate categories of state procurement for purchasing from SMMEs and co-operatives. Hopefully, we will move from 30% to 100% one day. [Applause.] We wish to announce that we are working with National Treasury and have set a target date of September 2015 for the issuing of practice notes to implement the public procurement programme. These have sat in our drawers for too long. [Applause.]
On access to finance, the nonpayment of SMMEs and co-operatives creates a barrier to business growth and ultimately to the growth of the economy. Cabinet agrees with us that late and nonpayment of suppliers constitutes financial misconduct. I repeat: It constitutes financial misconduct. We welcome the creation of a special unit by the Minister in the Presidency responsible for Planning, Monitoring and Evaluation that will monitor the implementation of the 30-day payment of SMMEs and co-operatives, and we will work very closely with the Minister and his department.
Small businesses continue to face problems with accessing funding from the main commercial banks, based on our people not having adequate collateral and a lengthy track record of running formal businesses, but this is a chicken-and-egg story because without gaining access to capital, informal businesses will remain small and vulnerable, unable to develop the very track record and asset base the banks require. In order to ensure access to funding for small businesses and co-operatives, the Small Enterprise Finance Agency has migrated to the department. This will ensure a more integrated approach towards extending support to SMMEs and co-operatives. From its inception to date, Sefa has approved loans in excess of R2 billion to small enterprises.
Going forward, we will assess the impact of this expenditure with a view to increasing additional financial support but also watching out for value for money. The department is currently reviewing the guidelines for the Black Business Supplier Development Programme to ensure that it is aligned to our mandate. We will also develop a business rescue strategy aimed at supporting small businesses and co-operatives in financial distress, many of which are those that are in our communities. The youth, women and people with disabilities business support scheme has been conceptualised as a response to the specific challenges faced by enterprises owned by these targeted groups, especially at startup level. Women-owned enterprises and youth-owned enterprises have been allocated R30 million each in the current financial year. [Applause.] The funding instrument will assist enterprises to acquire critical assets and equipment required to grow and expand their business operations.
On township and rural economies, again, we have to address the imbalances of the past. We had nothing to do with the creation of the townships that we have today, but we have to then change and reverse what has been happening. Government is aware that small businesses and co-operatives find it difficult to flourish in underdeveloped areas such as townships and rural communities due to a lack of adequate investment in infrastructure and lack of appropriate policies to protect informal businesses. Statistics SA’s Survey of Employers and the Self-Employed, published on 14 August 2014, paints a disturbing picture. It points out that the informal sector accounts for between 5% and 6% of GDP and that it contributed 15,8% to total employment in 2014. Indeed, the informal sector has for a long time not enjoyed the full business support commensurate to its contribution to GDP and employment. Radical economic transformation requires that we integrate the informal sector into the mainstream economy without encumbering participants.
According to the survey, the informal sector provides jobs for one in every four employed persons in Limpopo and one in every five persons in Mpumalanga, the Eastern Cape and KwaZulu-Natal. Almost nine out of every 10 people running informal businesses are African. In light of the recent spate of violence against some local and foreign shop owners, it is worthwhile to note that these statistics reinforces the view that the battle is among traders of African origin and not incenting. The harsh reality is that 79% of informal traders do not have a bank account; 96,8% had loans from friends or family for their day-to-day operations, like my grandmother did. More than 95% have no credit facility, asset finance or mortgage loans for their businesses.
Government, and in particular local government, needs to ensure that they enforce bylaws without disenfranchising informal traders who have not had infrastructure support. We shall be working with metros, municipalities, the SA Local Government Association, Salga, and the National House of Traditional Leaders to review bylaws to be responsive to the local conditions in our townships and rural areas.
The department will expedite the implementation of the National Informal Business Upliftment Strategy, which seeks to create an enabling legal and regulatory environment, provide finance and nonfinancial support, promote intergovernmental relations to deliver to the sector, and encourage the role of private sector and support of informal trader organisations. In partnership with the Wholesale and Retail Sector Education and Training Authority, we shall upscale the Informal Traders Upliftment Project where currently we are piloting the support of 1 000 informal traders with skills and infrastructure nationally. The first training was conducted in Gamalakhe, Port Shepstone in April this year. An amount of R50 million has been allocated for the roll-out of the shared economic infrastructure facility and support for informal businesses generally.
My department remains seized with the task of working with local and foreign nationals who are operating in the informal sector to find lasting solutions to the violence that gripped parts of our country in the last few months. The task team that I established on 26 January 2015 has made significant progress in this regard. We welcome the formation of provincial task teams in Limpopo and KwaZulu-Natal and initiatives towards that end in the Free State. We urge the remaining provinces to follow suit. We now sit in the Interministerial Committee on Migration, and we are now able to locate our work within the mandate of the interministerial committee. The President has mandated us to speed up this process because South Africa cannot afford to find itself in the space in which it was a few weeks ago.
I have also taken note of the announcement by my colleague Minister Patel on the market inquiry into parts of the retail sector by the Competition Commission. I welcome the inquiry because this sector can be a critical catalyst for the development of small businesses but, in reality, the high levels of concentration of ownership and the growth in the major retail chains limit access for ordinary South Africans to trade and to enter the mainstream economic space. I would urge the Competition Commission to look at the lease arrangements in shopping malls that clearly favour big companies and retailing in townships and tend to exclude black South Africans from running and owning shops providing related services. [Applause.]
On enterprise development and youth development, in particular, our mass enterprise creation programme is aimed at creating enterprise opportunities for youth-owned SMMEs and co-operatives, committing government departments to earmark 30% of their procurement spend towards growing and expanding youth-owned enterprises in their acquisition of goods and services in fulfilling their operational mandate. The young people of today start operating in the business sector quite early compared to the older generation. The fact that many of them are out in the streets looking for something becomes our responsibility, and we have to make sure that we galvanise them so that their energy is channeled in the right direction.
In partnership with the Department of Energy, in rural Eastern Cape and KwaZulu-Natal, we are establishing co-operatives for young people who were trained in the installation, maintenance and repair of solar water geysers. These youth co-operatives are now ready to participate in the growth of the renewable energy and green economy sectors. We intend to gradually massify this programme across the country. Of course, we cannot do this in isolation. We have to make sure that we work with all the relevant departments to ensure that we maximise what government offers.
With regard to women development, as a department, we have placed the issue of women empowerment high on the agenda. The Bavumile skills development programme facilitates for women to access formal training to improve the quality of their products. Participants are supported to either formalise their businesses or to access markets by participating in the national pavilions or supplying local markets. Deputy Minister Thabethe will elaborate further in this regard.
With regard to people with disabilities, we indicated from the very beginning that we would focus on women, youth and people with disabilities. There were no dedicated programmes to support this important sector of our community. The department will develop incentives and programmes that are directed at this sector by working closely with relevant organisations. We are very conscious of the fact that people with disabilities always say, “Nothing for us without us.”
The department is determined to transform the franchising sector through various measures, and one of them is to develop more franchisors from township and rural communities. We have started a process of identifying and packaging successful and profitable businesses based in townships and rural areas. Microfranchising is still in its infancy stage in South Africa. The mainstream franchise market remains expensive and inaccessible to the majority of potential entrepreneurs, black people in particular.
As part of our efforts to inculcate a culture of entrepreneurship, we are establishing centres for entrepreneurship programmes within the technical and vocational education and training colleges working with the Department of Higher Education and Training. This programme seeks to increase the number of graduates who regard setting up their own businesses as a viable alternative to seeking employment. We have already launched some centres in Gauteng, the Western Cape and Mpumalanga. We are in the process of expanding the programme to other provinces.
Red tape reduction is our worst nightmare. Government also recognises the need to review the policy and regulatory environment that continues to hinder the development, growth and competitiveness of small businesses. All spheres of government should institutionalise the guidelines aimed at reducing red tape, including at local government level. To date, the Red Tape Reduction Guidelines workshops have been conducted for 102 municipalities across the country in partnership with the provincial Departments of Economic Development as well as district and local municipalities. It is envisaged that during the 2015-16 financial year, the department will continue with the roll-out to ensure inclusion of other municipalities.
Incubation has been identified by the department as key to the development of a vibrant and growing small enterprise sector. In this regard, we will pay particular attention to increasing Seda’s incubator footprint, directing specific interventions to the small and medium enterprise segments, identifying and working with large-scale projects and co-operatives, and prioritising growth sectors of the economy. Through our agency, Seda, we have made significant progress with regard to incubation support. The number of supported incubators continues to increase. It is also encouraging to note that the sectoral profile of Seda’s clients is in the priority sectors of service: the agriculture and manufacturing sectors. The percentage of clients in the upper end of the small enterprises sector - those employing between 21 and 200 people – has increased from 1,3% to approximately 2,4%.
In line with our differentiated programme offerings, we will be targeting, as part of our segmented support, high growth entities under the Gazelles programme. This programme was conceived by small business champion Dr Thami Mazwai, Dr David Phaho and our agency, Seda. Through this programme, 200 high-potential businesses will be selected annually. A structured, systematic blend of best practice support will be delivered to them. The best 40 of these 200 will be identified as the President’s Gazelles, being the most promising, high-potential entrepreneurs of the cohort – tomorrow’s industrialists. The roll-out of the programme started at the beginning of May, and the launch will be in June this year. [Applause.]
One of the important instruments that the department uses to advance the co-operatives development and support is the Co-operative Incentive Scheme, CIS. The CIS budget of R75 million will be used to provide financial support to sectors such as agriculture in the form of a grant to both startup and existing small-scale primary co-operatives. During the next few weeks, I will sign the Co-operatives Amendment Act to be released for public comment. I call upon those who are interested in co-operatives to watch out for it because public comment would be very important to us. On amending the National Small Business Act, during the last quarter of this year, we will embark on stakeholder consultations with regard to the National Small Business Act. The amendment process seeks to address gaps and any possible areas of ambiguity. More importantly, the Act needs to be aligned to the mandate of the new department.
In conclusion, my department, in partnership with provincial and local government structures, will convene a township and rural economy summit later this year. This will be geared towards the creation of a master plan or common framework for township and rural economic development. Last year, my department, in partnership with the Small Business Development Institute, launched a consultative process through the National SMME Policy Colloquium. The colloquium sought to consult SMME stakeholders on possible policy recommendations. I have taken note of the findings and will shortly make proposals on potential partnerships.
Next year, we will have a global entrepreneurship summit. I am pleased to announce that our ongoing entrepreneurial revolution has been given renewed impetus by the announcement that the City of Johannesburg will host the 2017 Global Entrepreneurship Congress, GEC. This will be the first GEC to be held on the African continent. [Applause.]
Chairperson, in conclusion, I would like to thank my family who are in Parliament and the gallery today for the first time. I would like to thank them for the support they have given me in order for me to serve the people of South Africa. Thank you. [Applause.]
The HOUSE CHAIRPERSON (Ms M G Boroto): Thank you, hon Minister. Our dignified guests in the gallery and members of the public, we appreciate your presence here, and we welcome you. However, we have Rules in this Parliament that are aimed at upholding the decorum of the House. Those Rules bar you from participating in any way in the proceedings of the House. That includes clapping of hands, using of cameras and so on. Please bear with me. I am sorry to break the news to you but resume your observer status. Thank you.
Ms N R BHENGU
The HOUSE CHAIRPERSON (Ms M G Boroto)
Ms N R BHENGU: Hon Chairperson, hon members, and fellow South Africans, I dedicate my speech to Mme Ruth Mompati, a gallant ANC fighter.
The ANC supports Budget Vote 31: Small Business Development, the first budget of the Department of Small Business Development. The establishment of this department demonstrates a commitment by the ANC to radical economic transformation, job creation and poverty reduction. Adequate support to SMMEs by government and established businesses will enable SMMEs and co-operatives to effectively participate in the mainstream economy.
South Africa has a mixed economy, driven by active participation by the state, the private sector and co-operatives. Co-operatives are organised people with organised material and financial resources, collectively used against the exploitative monopoly capital in order to advance the wellbeing of the people. Co-operatives mobilise communities to participate in the economy and are therefore an important pillar of the economy that deserves to be treated as such. In South Africa, co-operatives formed by black people are currently perceived as Cinderella businesses that deserve breadcrumbs, a mentality that needs to change for South Africa to radically transform the economy.
The department has allocated 2% for co-operatives development in the 2015-16 financial year. This demonstrates a lack of understanding of the role of co-operatives in realising a mixed economy and building a developmental state. It is like sending soldiers to war without ammunition. Therefore, in future, Treasury should reassess the budget allocated to the Department of Small Business Development.
Incane kakhulu imali enikezwe lo Mnyango wokuthuthukiswa kosomabhizinisi abancane namabhizinisi asebenza ngokubambisana, akukho lapho ingasibeka khona. Siyakhala sithi sinikezwe imvuthu yesinkwa kodwa imisebenzi eyizi-800 000 ngonyaka ibhekwe kosomabhizinisi abancane nakumabhizinisi asebenza ngokubambisana. (Translation of isiZulu paragraph follows.)
[The budget allocated to this Department of Small Business Development is too little; it cannot take us anywhere. We are not happy, and we feel that we were given bread crumbs whereas about 800 000 jobs per year are expected from the Department of Small Business Development.]
The slow pace iof establishing the Co-Operatives Banks Development Agency, the co-operatives academy and a co-operative bank is retarding the process of developing sustainable co-operatives. We therefore urge the Minister of Small Business Development, Treasury and the Minister of Higher Education and Training to move with speed to establish these entities which are central to the development of co-operatives.
The National Development Plan sets targets for job creation at 11 million more jobs by 2030 with 9,9 million jobs expected from small businesses and co-operatives. The resolution of the 53rd ANC Congress on developing SMMEs and co-operatives through public sector procurement and infrastructure spending is a firm commitment by the ANC government in opening a sustainable market for SMMEs and co-operatives to transform the economy radically.
His Excellency President Jacob Zuma in his state of the nation address on 12 February 2015 announced that 30% of goods and services will be procured from SMMEs and co-operatives, another firm commitment by the ANC government on radical economic transformation, job creation and poverty reduction. [Applause.] Our ability to align the process of developing SMMEs and co-operatives to service delivery and skills training would enable us to achieve maximum benefits through well-co-ordinated limited resources.
Targeting poor people who depend on government social grants and free basic services would reduce a culture of entitlement and dependency of poor families on social grants and free services. An integrated planning and implementation approach by different departments and spheres of government would reduce duplication and yield maximum results. Let South Africa use the experience gained by hosting the 2010 FIFA Soccer World Cup. The Department of Small Business Development needs to speed up the process of signing transversal agreements with the private sector, other departments and spheres of government so that the development of SMMEs and co-operatives could be done in a co-ordinated manner.
Hon Chairperson, clause three of the Freedom Charter says, “The wealth of the country shall be shared amongst the people”. It further says that “all other industry and trade shall be controlled to assist the wellbeing of the people”. The portfolio committee is engaging the retail sector and government departments on policy implementation of 30% procurement from SMMEs and co-operatives. The portfolio committee resolved to establish a task team to further research the size and the behaviour of the retail sector to determine the 30% share of the market and changes that need to be made for SMMEs and co-operatives to take advantage of this policy and participate in the mainstream economy.
The ANC believes that the franchise sector in South Africa is a law unto itself and therefore needs to be transformed to address monopoly capital practices entrenched in the retail sector.
Asidlali siyaqhuba, uzophela umkhuba wokunikeza umndeni owodwa izitolo ezingaphezulu kwekhulu kube kunabantu abayizigidi eziyi-17 abondliwe wuhulumeni ngemali yezibonelelo. (Translation of isiZulu paragraph follows.)
[We are not playing; we are taking South Africa forward. The tendency of allocating more than 100 shops to one family, whereas there are 17 million people who are supported by government through social grants, will come to an end.]
The department is at a transitional stage from being a programme of the Department of Trade and Industry to becoming a standalone department that focuses on developing SMMEs and co-operatives. The budget allocated to the department would be used mainly to establish the department, design programmes and support services that are relevant to the mandate of the department, and employ personnel with relevant skills whilst at the same time continuing to provide services inherited from the Department of Trade and Industry. The budget will also be used to assess financial and nonfinancial services regarding their relevance to the mandate of the department including their structural design so as to lay a firm foundation for providing adequate support to SMMEs and co-operatives. The ANC believes that proper planning and building a firm foundation and capacity would yield better results.
Asifuni ukushesha senze izinto esingenalo iqiniso lokuthi zizokhiqiza imiphumela esiyifunayo. [We don’t want to rush into doing things that we are not sure will yield the desired outcome.]
Hon Chairperson, transition is a very difficult exercise characterised by resistance and adaptation. The department is experiencing such challenges and is managing them with the assistance of the portfolio committee. I thank members of the portfolio committee from all political parties for their commitment beyond the call of duty in shaping the thinking and the direction of the department. I also thank the Minister and the Deputy Minister for regularly attending portfolio committee meetings, as well as for listening to issues raised and committing the department to work on improving them.
We assessed the budget of the department on its relevance to service delivery priorities. We looked at how the budget responds to the felt needs of SMMEs and co-operatives, which include access to finance and markets, adequate support for women businesses, adequate infrastructure, reduction of red tape, incentives and skills development. The committee also assessed the alignment of strategic plans of agencies to the strategic plan and the mandate of the Department of Small Business Development. The Small Enterprise Finance Agency and the SA Women Entrepreneurs’ Network, Sawen, had not aligned their strategic plans to the strategic plan of the department. The committee guided them and gave them time to meet with the department to align their strategic plans and allocate budget to priority areas. There is now a better understanding on alignment and co-ordination of efforts and resources between the department and agencies designed to support SMMEs and co-operatives.
The portfolio committee believes that all support services designed for SMMEs and co-operatives should fall under the Department of Small Business Development. We also believe that Seda and Sefa should merge to reduce red tape and provide complementary services under one agency and one roof. In engaging with Statistics SA, street vendors, spaza shops, tuck shops owners and small businesses at a survivalist level, we realised that our financial support systems do not relate to the felt needs of our target group. The portfolio committee believes that the use of intermediaries by Sefa to provide financial loans to small businesses at interest rates on loans of 42% to 110% is a rip-off to small businesses and something that we need to review. [Applause.]
The ANC believes that channelling loans to small businesses and co-operatives at the survivalist level through stokvels would make loans easily accessible and, at the same time, develop stokvels into credit unions, community banks and co-operative banks – a process that would result in community-owned financial services. [Applause.] It may have been dark yesterday; the future is certainly very bright. I thank you.
Mr R W T CHANCE
Ms N R BHENGU
Mr R W T CHANCE: Chairperson, Minister, Deputy Minister, hon members and visitors in the gallery, good evening. Last year, I spoke of the fairytale formation of the Department of Small Business Development and likened the hon Zulu to Cinderella. If she took the DA’s advice, Minister Zulu could rid herself of the ugly stepsisters, Davies and Patel, and become the first business-friendly Minister in the Cabinet. A year later, the department is yet to be weaned from the suffocating grip of the DTI and the Department of Economic Development.
At two recent portfolio committee meetings, Minister Zulu expressed her frustration at having inherited a department not towing the line. I admire her frank assessment of the challenges she faces. From her speech, you would think that she has been listening to my advice, but the reality is somewhat different. The Minister, it turns out, is the Sleeping Beauty.
After being pricked by Cosatu’s poisonous needle for daring to suggest labour reform could lead to job creation, her communist Cabinet colleagues have lulled her into a deep sleep from which she is struggling to wake up. Meanwhile, a forest of regulations, red tape and job destroying legislation is choking the Zuma kingdom, blocking it from the outside world and obscuring the economic devastation it is wreaking. For Minister Zulu to be asleep on the job is a grave disappointment.
The NDP, supposedly government policy, calls for 11 million new jobs by 2030, with 90% coming from small business. If the ANC took the NDP seriously, it would put the Department of Small Business Development at the centre of its economic policy. However, a senior official from Seda, which consumes 80% of the department’s budget, recently told our committee that the first 10 years of its existence had been “indefensible”. Its incubation programme expects to create only 5 000 jobs over the next three years. Why is that? It is because the DTI, where it was housed, was and still is culturally inimicable to small business.
Meanwhile, Sefa which the department inherited from Minister Patel, spends R1,60 for every R1,00 it generates in revenue. At this rate, the department will fail dismally to make an impact and will be seen to be costly and irrelevant.
I have long said Minister Zulu could adopt a narrow view of her mandate or an expansive one and champion the root and branch reforms our economy so desperately needs. On its own, her department can have little impact because it does not control the levers of the economy. She relies on so-called transversal agreements to influence other departments, but after a year in office, we are yet to see a single transversal agreement.
If only Minister Zulu could show the same spirited belligerence towards the enemies of economic growth as she shows towards her political opponents in this House, we would be a lot better off. [Applause.] Wake up, Minister. Wake up.
The HOUSE CHAIRPERSON (Ms M G Boroto): Hon member, will you please address the Chair? [Interjections.]
Mr R W T CHANCE: Meanwhile, our energetic and likeable portfolio committee chair, the hon Bhengu, and her ANC colleagues dream of a socialist utopia overflowing with co-operatives. This conveniently ignores the fact that 90% of the co-operatives set up with grant funding from the DTI have failed. For South Africa to become the engine, and not the laggard in sub-Saharan entrepreneurship and small business development, we must get our priorities right. We must balance identifying and supporting high-growth businesses which can create large numbers of jobs with support for five million informal micro businesses. The Endeavour jobs calculator estimates 49 000 small businesses growing at an annual rate of 20% can create 11 million jobs by 2030. By contrast, we would need 8,2 million small and micro enterprises to create the same number of jobs.
To find the right balance, we should prioritise five things. Firstly, South Africa is full of inventors and innovators. I recently met Coenie van Blerk, an engineer from Bedfordview with a patented device for generating electricity using turbines inserted into water pipes running under our streets. Not only could this alleviate our electricity shortage, but it could also generate up to 30 000 jobs, becoming one of the high-growth companies or gazelles I referred to – and I am glad to see the Minister referred to – earlier but only if the invention is commercialised and penetrates international markets. The department should be finding ways of making this easier and cheaper. Chairperson, the Minister should wake up. [Laughter.]
Secondly, supporting our township and rural economies is a priority for South Africa. A total of 70% of South Africans live here, but due to apartheid’s spatial engineering, their contribution to GDP is negligible. The Minister is well aware of my campaign to get Sefa to account for the appalling state of the Gauteng Township Industrial Parks, but so far we have seen preciously little action. The DA would set up opportunity centres in all townships and rural areas, one-stop shops for business licensing, financial and nonfinancial support and training.
Thirdly, we need a different approach to financing small businesses. Government must withdraw from direct lending and establish a national venture capital fund, managed by private sector professionals but with ministerial oversight. As the chairperson said, the Minister should merge Sefa and Seda and restructure the new entity along the lines of the British Business Bank. This should include a start-up loan facility with incentives for angel investors and mentors who are vital for nurturing entrepreneurial ventures.
Fourthly, we must ramp up efforts to instil an entrepreneurial mindset in our youth. Our total entrepreneurial activity rate must rise from its derisory 6% to closer to 15 to 20%. To help achieve this, the Minister must put her weight behind the Human Resource Development Council’s report on entrepreneurship in schools.
Finally, the Minister can have an immediate impact if she persuades the Presidency to invoke the Temporary Removal of Restrictions on Economic Activities Amendment Act, Act 72 of 1987. This Act gives the President sweeping powers to chop down the forest of regulations, red tape and market unfriendly legislation the Zuma kingdom refuses to recognise, which is throttling business and job creation.
The Department of Small Business Development was formed to much fanfare in small business circles a year ago. To date, its impact has been virtually invisible. Minister Zulu – hon Chairperson – wake up and take charge of your department. Thank you. [Applause.]
Vho T E MULAUDZI
Mr R W T CHANCE
Vho T E MULAUDZI: Muhulisei Mulangadzulo na muhulisei Vho Minisiṱa na Muthusa Minisiṱa, vhahulisei vhoṱhe na vhathu ngeo hayani, ri ri ndi madekwana. Tsha u thoma riṋe vha EFF, a ri khou tikedza Mugaganyagwama hoyu nga zwi tevhelaho: Ri khou vhona uri hoyu Mugaganyagwama wo itiwa u tshi khou iteliwa muhasho, zwine zwa sia u tshi khou ḽa tshelede ine i nga ya kha vhoramabindu vhaṱuku, ya vha gudisa uri vha kone u wana vhutshilo ha khwine.
Ri khou zwi pfesesa nga maanḓa uri kha u vuliwa ha Phalamennde kha lushaka nga Muphuresidennde, vho amba nga 30% uri i ḓo vha kha vhoramabindu vhaṱuku, fhedzi heyi 30% ri tou zwi ḓivha zwavhuḓi uri i khou itelwa vhathu vha dzithandela vhane vha tikedza ḽihoroḽivhusi, vhane vha dzula vha tshi khou lwela zwone hezwi zwithu.
Zwino tshiṅwe tshine ra khou dovha ra amba tshone ndi tsha uri Muhasho wa Mbambadzo na Nḓowetshumo u vha u tshi khou amba nga u bveledziswa ha nḓowetshumo na u aluwa ha ikonomi, fhedzi ndi nga mini ho dovha ha itiwa muhasho muṅwe muswa, lune zwithu zwo vha zwi tshi nga vha zwi tshi khou itiwa nga mihasho heyo miṅwe? Ho bala mini uri heyo mihasho i ite zwine zwa khou ambiwa zwino? (Translation of Tshivenḓa paragraphs follows.)
[Mr T E MULAUDZI: Hon Speaker, hon Minister and deputy Minister, all hon members and people at home, good evening. Let me begin by saying that the EFF does not support this budget because of the following. We feel that this budget is meant for the department, which misuses funds that are suppose to be used for training small businesses so that they can elevate their lives.
We fully understand the fact that in his state of the nation address, the President spoke about allocating 30% to the small businesses. However, we all know that this 30% is going to tenders that belong to those who support the ruling party, who are always fighting to get them.
Another issue that we are raising is that the Department of Trade and Industry talks about industrial development and economy growth, but why was another department established when everything could be done by those departments? What is so difficult for those departments to implement what we are talking about now?]
To begin with, as long as small businesses are treated with the same administrative legislation as the big white monopoly capital, they will cease to exist. One would think government funding for small businesses would be customised to meet the needs of small businesses in South Africa, but emerging entrepreneurs are still expected to put up collateral when they seek funding assistance. Where must they get this collateral, hon Minister? To solve the problem of stumbling blocks for small businesses to access funding, what is required of them must be practical.
Ri a zwi ḓivha zwavhuḓi uri vhathu vha tshi ṱoḓa masheleni a tshomedza kha mabindu avho vha vhudziwa zwithu zwa dziodithi na dziakhaunthenthe na zwoṱhe, zwine a zwi konadzei kha vhathu vhane vha khou thoma mabindu. Kha ri ṱoḓe zwithu zwine zwa konadzea kha vhoramabindu vhaṱuku. Mimoḽo ine ya khou fhaṱiwa kha dziḓorobo dza mahayani i songo vha i tshi khou itiwa ... (Translation of Tshivenḓa paragraph follows.)
[We know very well that when people seek funding assistance for their businesses, they are told about the auditing status and the accountants, which they don’t have, and it is impossible for the new entrepreneurs to afford these services. Let us focus on things that are attainable for small businesses. Those shopping malls that are being built in rural areas shouldn’t be ...]
... for the sake of suffocating the small businesses.
Heyo mimoḽo kha i vhe ine ya thusa vhoramabindu vhaṱuku. I songo ya dziḓoroboni dza mahayani ya swika ya vhulaya mabindu maṱuku. I tea uri i vha thuse uri vha khwinifhadze vhutshilo havho. Zwino nga zwezwo ri khou ri ri pfa zwi si zwavhuḓi musi ri tshi isa mimoḽo, vhoramabindu vhaṱuku vha vha vha khou tambula. (Translation of Tshivenḓa paragraph follows.)
[Those malls must assist the small businesses. They should not come to rural areas and townships to put small shops and convenient stores out of business. They must assist them to elevate their lives. We do feel that it is unfair to have malls in rural areas and townships because they tend to suffocate small businesses.]
How can we expect those small businesses to compete when means of production have been monopolised and are controlled by a few, and small businesses have to buy their stock at inflated prices? Even if ...
... vha bvisa dzithandela, havho vhoramabindu vhaṱuku vha tea u ya vha renga kha vhoramabindu vhahulwane nga mitengo ya nṱha, zwa sala zwi tshi khou sumbedza uri a vha wani nzwalelo. Ndi heneyo mihasho ine ya lenga u badela vhoramabindu vhaṱuku.
Zwino kha ri ḓe na nḓila ine ra ri tshifhinga tsha u badela tsha fhira hu dzhiwe vhukando. Riṋe ri vhona u nga ri zwa ita nga heyo ṋdila zwi ḓo fhedza vhoramabindu vha tshi khou shuma zwavhuḓi. (Translation of Tshivenḓa paragraphs follows.)
[... you stop tender processes, small businesses still need to buy their stock from big businesses at higher prices and may end up not making any profit. It is those departments that delay payments for small businesses.
Let us come up with a system where if payments are delayed, there should be some sort of penalties. We think if this system can be adopted, small businesses will do well.]
How can you even promise to increase participation of small businesses in the mainstream economy controlled by a few, that you, as government, do not have access to either?
Zwiṅwe zwe ra amba zwone ri kha dzikomiti ndi zwauri, heḽi dzina ḽa u pfi – small business development ḽi khou siedza. Kha ḽi ambe ḽi khou ṱanganyisa na –co-operatives. Zwino ṅwaha woṱhe wo fhela, vha khou balelwa u dzhenisa – co-operatives. Riṋe vha EFF ri khou ri hoyu Mugaganyagwama a ri khou ima nawo. Ndaa! (Translation of Tshivenḓa paragraph follows.)
[Some of the issues which we have raised in the committees were that the name “Small Business Development” is incomplete. It should include “Co-operatives”. Since last year, they have been struggling to include “co-operatives”. As the EFF, we reject this budget. I thank you.]
Ms S J NKOMO
Vho T E MULAUDZI
Ms S J NKOMO: Hon Chairperson ...
Ṋamusi dzi khou vhuya ngoho. Ndo pfa Vho Mulaudzi vha tshi khou amba nga iṅwe ṋdila. [Today, it is really tough. I heard Mr Mulaudzi speaking in another tone.]
Small business development in South Africa accounts for approximately 40% of our total GDP and nearly 60% of all employment, yet it still faces a myriad of challenges, most of which could and must be overcome through great government support for the sector, particularly support centred around the creation of new entrepreneurs and greater ease of entrance to the market.
The IFP is aware that this is quite a critical matter that needs to be taken up by the department, and we are grateful that we have noted some of those issues, although the implementation is the main issue we need to look at. This is vital if the department is to meet its vision of a radically transformed economy through effective development and increased participation of SMMEs and co-operatives in the mainstream economy. When one addresses the matter of co-operatives, one thinks of areas that were started by His Excellency the president of the IFP many years back when he addressed issues of co-operatives to improve self-help and self-reliance.
Of concern is that early-stage development of entrepreneurial activity rates in our country is presently only half of what it is in other developing countries. Some key proposals to support small business development are to simplify the regulatory environment to implement commitments to 30-day payment to small suppliers. I am grateful that the Minister addressed this matter, and she actually ensured that she spoke of – I think it is – the Presidency where there will be a task team that will be looking at this matter. This matter has been ongoing for ages where there haven’t been payments. We hope that through the implementation of that task team, something will definitely happen. People will be paid because most small businesses are actually brought to their knees due to the lack of payment after 30 days or, actually, in the long run.
Making government procurement opportunities more accessible to small business is another area that is quite important as well as streamlining tender processes. I think with tender processes, as a country, we have had quite a lot of discussions on this matter, and we would like to see tenders being given to our people in such a way that everybody gets to benefit because they deserve to benefit, not because they are so-and-so’s relative.
The issue of improving transparency and getting rid of corruption is a matter that needs to be taken care of. We need to ensure that issues that have been brought up by corruption watchdogs are addressed because we seem to be overtaking most countries in issues of corruption.
Simplifying the regulatory environment, as has been stated by some of my colleagues, and providing access to debt and equity finance are important. Again, one has to acknowledge what His Excellency Prince Mangosuthu Buthelezi did when he set up banks like Ithala Bank many years back. Those who have their history correct know about it, and those who would like to ask questions, please raise your hand and ask about it; I will respond.
The skills gap is also an issue that should be addressed. Also, of critical importance is the issue of small business development in our rural communities and access to land for small, medium and macro enterprises as well as co-operatives. Again, on the issue of co-operatives, His Excellency also started the matter of co-operatives well before 1975. Again, for those who would like to know, they may ask questions. [Interjections.]
In the agricultural sector, this has great potential from the empowerment and employment perspective and also as a key driver in the economic sector. Our rural communities ...
The HOUSE CHAIRPERSON (Ms M G Boroto): Hon member! Hon member, please check the screen on your left.
Ms S J NKOMO: The screen on my left?
The HOUSE CHAIRPERSON (Ms M G Boroto): Yes.
Ms S J NKOMO: Are you referring to the seconds?
The HOUSE CHAIRPERSON (Ms M G Boroto): Yes. Thank you very much.
Ms S J NKOMO: In conclusion ...
The HOUSE CHAIRPERSON (Ms M G Boroto): They are done.
Ms S J NKOMO: ... this department must get to work on getting things right in South Africa. The IFP will definitely support this budget, and we have a history of having done quite a lot of things on entrepreneurial issues. I thank you. [Applause.]
Mr S C MNCWABE
Ms S J NKOMO
Mr S C MNCWABE: Hon Chairperson, hon members of the House, Ministers, Deputy Ministers present, the leadership of different business organisations, the chief executive of the Small Business Development Institute Mr Qubeka, ladies and gentlemen, as the NFP, we are aware that the decision to establish this department was aimed at advancing the development of SMMEs and co-operatives for job creation, as well as the reduction of poverty and inequality with a particular focus on youth, women and people with disabilities.
As the NFP, we commend this decision. We are convinced that a radically transformed economy can only be realised through effective participation of SMMEs and co-operatives in the mainstream economy. Therefore, it is essential that this department must have a well-planned strategy for developing and co-ordinating both financial and nonfinancial support services designed for the development of SMMEs and co-operatives. The enterprise development and entrepreneurship programme as well as the co-operatives support and development programmes are, in our view, the core programmes of this department. We welcome the budget allocated for each programme. However, we wish to emphasise that these two programmes must be prioritised by the department because this will be the only way to create jobs and reduce poverty.
As the NFP, we do not believe that the high number of our citizens receiving social grants indicates success and prosperity on the side of the government. In our view, we should not be building a welfare state but a developmental state with a viable economy. Therefore, to achieve this goal, we need to reduce this high number of social grant recipients in the long term by ensuring this department achieves its goals, its targeted outcomes, its vision and its mission. We believe that by doing so, we will be able to reduce this high number of people in the social grant register and start making them self-reliant.
The NFP is also concerned about the low visibility of Small Enterprise Development Agency offices. These offices are not found in townships and rural areas where a large portion of our people resides. You see, nowadays in townships and rural areas, malls are being constructed, for example Mega City in Umlazi, Durban. We believe that Seda offices should be placed in these malls where people will be able to access them for whatever kind of assistance they might need.
We also want to caution the department against spending more money on those development agencies that, in turn, hire expensive consultants to help our people. We do not want this budget to go to and enrich the already rich consultants. We want the budget to go directly to small businesses and co-operatives. The Bavumile skills enhancement programme, which aims to enhance women’s skills to produce quality and commercially viable products for major local and international markets, is fully supported by the NFP. We further urge the department to fully implement the Black Business Supplier Development programme, which is intended to benefit 110 000 youth enterprises.
Finally, please do not misunderstand me on this – ningangizwa kabi [I am not taking advantage.]. The NFP would like propose and we would like to urge you, Minister, that, at some stage you, together with the department, should consider lobbying this House or introducing to this House a proposal for legislation that small businesses like spaza shops and tuck shops, hair salons and street-hawking businesses be reserved for South Africans only. This is happening in Ghana; it is known as the Ghana Investment Act. So, if Ghana can do it, why can’t we do it? The NFP fully supports this budget. Thank you. [Applause.]
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT
Mr S C MNCWABE
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Igama lamakhosikazi malibongwe! [Praise the name of women!]
HON MEMBERS: Malibongwe! [Let it be praised!]
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chairperson, Minister Zulu, who is quite awake all the time – 24 hours a day or 24/7 - Ministers and Deputy Ministers present, Chairperson of the Portfolio Committee on Small Business Development Ms Ruth Bhengu, members of the portfolio committee, members of the National Assembly, acting director-general Lindokuhle Mkhumane as well as MECs and heads of departments, the head of my office Adv Lenzie, leadership of Sawen represented by chief executive officer Ruth Masokoane, president of Sawen Ms Nana Ditodi, leaders of organised business and labour, two students Tshwane University of Technology present Beatrice and Zizipho, distinguished guests, ladies and gentlemen, I would like to extend a special welcome to my Techno Girls from Arthur Blaxall School in KwaZulu-Natal.
I am extremely proud of my young girls because Arthur Blaxall is a special needs school – a school for the blind, partially sighted and learners with multiple impairments from Pietermaritzburg in KwaZulu-Natal. Minister, they are here because they are an amazing group of young girls. Through our Techno Girl programme, they presented a revolutionary coffee-machine idea that uses hand-print memory technology to provide the user with custom-made coffee all the time. The coffee machine caters for blind people because it has Braille codes. I must mention that they are now working with Seda to develop the prototype, and soon it will be on the market. [Applause.] They truly are guests today but entrepreneurs tomorrow.
Thanks go to hon Bekwa for attending this function. Minister Zulu, this happens through your department with you being wide awake, not fast asleep. So, I’m not sure what those who are saying you are fast asleep actually mean because then we wouldn’t have these learners here today. I am sure the Minister of Science and Technology is happy that our learners are inventing at this early age. [Applause.]
Chairperson, allow me to take this opportunity to pass my word of condolence to our stalwart Isithwalandwe Mme Ruth and also dedicate this speech to her. We enjoy the freedom today because of her sweat. She was in the trenches with the Minister. Of course, this is a cadre and not just a person that you can think is sleeping. She is not sleeping on the job, but she is already on top of the job. Minister, just drive; we will be able to assist you. Siyaqhuba, siyakulandela, sizosebenza kunye nawe. [We are moving forward, we are right behind you, and we will work with you.]
May I also take acknowledge the opportunity to congratulate ...
... uKumkani wamaXhosa, ... [ ... the King of amaXhosa ...]
King Zwelonke Sigcawu and other leaders who are here today.
Sithi: Ah! Zwelonke! Ngokubekwa kwesi sihlalo sibalulekileyo. [We say, “Ah! Zwelonke!” in response to your accession to this important seat.]
It is with confidence that I reassure South Africans that we are committed to our vision to radically transform the economy of South Africa through effective development and increased participation of SMMEs and co-operatives in the mainstream economy. We submit a plan that clearly demonstrates how we are creating an environment conducive to the development and growth of small businesses and co-operatives through the provision of enhanced financial and nonfinancial support.
We are equally excited about the 30% that is set aside, as announced by the President during the state of the nation address. Hon Mulaudzi, the 30% is for all South Africans, but I think I can ask you - in terms of those whom you think the ruling party will give the 30% to - about your leader who benefited from the tenders he received in Limpopo province. So, you must also criticise your own leader and not only the 30% from President Zuma’s government. [Applause.]
Whilst Minister Zulu also touched on this point, it is an even bigger matter of interest to women who are hopeful that they will get a fair share of the 30%. We will be ensuring that, as we negotiate and sign transversal agreements as the Minister alluded to, this goes to women, youth-owned enterprises as well as people with disabilities. It is only when these targeted groups begin to benefit from our products and services that we will truly realise the goal of radical economic transformation.
Support for women in this country continues to be fragmented. We know that we do not have a single door of entry to women support programmes. As part of the ongoing realignment, we are to radically transform Sawen to be a meaningful and powerful vehicle to advance the agenda of women-owned SMMEs and co-operatives for purposes of achieving radical economic transformation in order to address poverty, unemployment and inequality. We know that in South Africa, our Gini coefficient is not closing, but the gap is widening. That is why we believe that with this intervention we will be able to support women entrepreneurs.
As government, we should honour commitments made at Beijing in earnest by increasing support to women-owned SMMEs and co-operatives. The Sawen continues to support women through various programmes and initiatives. I am glad that the Sawen board members – as I indicated in a portfolio committee meeting, they are not paid board fees but do this work because they want to see the women of the country empowered, and they risk their businesses by coming to assist us. Thank you, Sawen. I hope you will be able to do this work, and the portfolio committee acknowledges your leadership in this.
We need to support this because the majority of the South African population is women, yet participation in the economy is poor, and that leads to all the other issues we are faced with as a result. We believe that it is time we reposition Sawen as a public entity in line with schedule two or three of the Public Finance Management Act.
The Technology for Women in Business, TWIB, programme continues to unearth amazing talent by especially young women in business.
Minister, our 2014 Technology for Women in Business award winner is Ms Khaya Cokoto from the Eastern Cape. She invented a new mobile advertising platform, UmoyAir. This advertising platform will offer free 1-minute-and-17-second calls from any cellphone to subscribers who willingly listen to a 10-second advertisement before the call. Oh, my gosh! [Applause.]
How can you then say the Minister is fast asleep, if you can unearth this talent under her leadership? Minister, just carry on. We will support your initiatives and make sure that you can support co-operatives and as you said ... [Applause.] ... I am not sure which planet the other members are from.
Right here in the Western Cape, the DA-controlled province, leadership closes offices for small businesses. It is unfair for hon Chance to come here and criticise the ANC leadership by saying we are not serious about providing assistance. [Interjections.] Under your DA leadership, you closed Real Enterprise Development Initiative, RED door, offices that were assisting the poor and the poorest of the poor to run businesses, but you claim that you are representing those people. The ANC-led government reopened those offices under the Small Enterprise Development Agency. That is a fact; you can’t change that even if you don’t like it. You can’t change that, but then the commitment is there. The Minister is also driving that process now to make sure that we can open up all other offices and continue with this. [Interjections.]
You will never succeed in intimidating me. Try it. I have been here for 21 years; you have added your voice only this year. [Applause.] [Laughter.] You will achieve nothing. I will continue and finish my speech not intimidated by people who live on another planet because I believe that the South African government is well. The ANC is leading with good results.
We have supported creative industries, enterprises and organisations actively to access the Export Marketing and Investment Assistance, Emia, schemes. We have managed to take a lot of these ... Listen! We supported 10 publishers at the South African Book Fair and 10 publishers at the Frankfurt Book Fair. Frankfurt, you know, is in Germany, not here in the Western Cape. [Interjections.] We also supported seven publishers at the London Book Fair. I’m sure you know London very well. It is not here around Khayelitsha, but you go abroad. We also support craft and design and supported 38 crafters at trade fairs in Atlanta showrooms.
You can look at me: I look proudly South African, and I am glad that this is African Month. [Applause.] This is the work of co-operatives and Sawen members - some of them are sitting in the gallery - who make these garments. You see, I’m proudly South African, and I am beautiful. Minister, go ahead. If women can produce such beautiful garments, we do not have to buy them from elsewhere. They are made in South Africa. So, drive on, Minister.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please conclude, hon Deputy Minister.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: I will, Chair.
Through these efforts, we believe that we will transform this economy radically and, working together, we will create the much-needed jobs and gradually defeat the triple challenge. I thank the Minister, the Ministry staff, the director-general, my office, my daughter in the gallery, of course, and the many other children that are here including my Techno girls. I’m saying ...
Mhlonitshwa, qhuba! Awulalanga ukhona uyasebenza. Kudala uyihamba lendlela. ... [Hon Minister, continue! You are not slacking but delivering. You’ve been doing this for a very long time ...]
You don’t sleep; you are a cadre, and they don’t know that. Thank you very much. [Applause.]
Ms D CARTER
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT
Ms D CARTER: Hon Chairperson, I actually think that I should just rewrite my speech as I stand here.
Firstly, hon Deputy Minister, I want to say to you that Cope t-shirts are also all proudly South African. Maybe everyone should follow suit and help us get rid of all the cheap imports from China. [Interjections.] This department has the largest responsibility in government to transform the economy. Unfortunately, it is running on the spot and doing minimally where we need optimal engagement. South Africa needs to invest heavily in training and developing, especially artisans.
Cope therefore urges government to think of artisanal mining, artisanal manufacturing, artisanal agriculture, artisanal technology solution services, engineering and mechanical services, artisanal financial services and even artisanal fisheries. We could continue in this vein, but the key word is artisanal.
The need to establish artisanal firms in our country and to train artisans superbly in the diverse range of economic activities is imperative. We need to see the development of persons, co-operatives or companies, so a high quality or distinctive product or service becoming available in our country.
The African Growth Opportunities Act, AGOA, provides a 10-year opportunity for favourable trade with the USA. The AGOA’s aim is to reduce poverty and improve food security in Southern Africa. This is an opportunity for artisanal agriculture to come into its own providing fruit, vegetables, and meat of distinct quality to meet export as well as local demand. This demand will grow substantially.
Just, please, for the sake of the members on the right, I am not criticising the department here but giving ideas on how we can move forward. So, it will be nice if we all listen. In our country, we also have exceptional opportunities for artisanal mining operations. These will allow for the exploitation of marginal or small deposits. This is where government can step in to facilitate access to capital, facilitate the creation of the required labour pool, and facilitate access to markets. It can support artisanal miners with legal, environmental and administrative services. That will put a stop to, for example, the illegal mining.
The department has policies but lacks the knowledge that exists elsewhere. Policy must marry with knowledge for policy to succeed. Knowledge is the better half of policy. According to Alberto M Criscuolo, government must help artisan participants to find their way through dispersed information, understand little-known or little-understood ideas, access resources, capacities and skills so that policy can translate into an outcome through that knowledge, foster partnerships with a diverse range of stakeholders to build a community of shared values and standards, and carry out the individual activities more effectively through learning from their peers.
To get there, the department will have to use a three-pronged approach to foster small business development. Firstly, it should organise them into artisanal associations so that they influence policy decisions affecting their activities and can pool resources to widen market opportunities and improve competitiveness. Secondly, the department should buffer them from legal requirements and provide them with administrative accounting, payroll, tax and financial services so that they can comply with all formal regulations without frustration. Thirdly, it should introduce a formal system of industrial relations for artisanal sectors so that they too can forge links with labour unions and respect labour standards whilst achieving high levels of competitiveness.
The third obstacle to the economically efficient establishment of small firms is the excessive cost of electricity. Unfortunately, I am out of time, so I do not have time to include what I wanted to from my own speech. I thank you.
Mr N L S KWANKWA
Ms D CARTER
Mr N L S KWANKWA: House Chair, hon Ministers and hon members, the UDM supports Budget Vote 31: Small Business Development.
Kaloku sifuna ukuba uPhuhliso lwamaShishini asaKhulayo luqhubeke. [Indeed, we want the development of small businesses to continue.]
Small businesses are the engine that drives the economic growth which, in turn, leads to job creation. Official estimates put the number of people who are employed by the SMME sector at approximately 60%. In addition, the SMMEs also serve as the building blocks for our large corporations. We therefore welcome government’s renewed focus on small business development. However, several challenges remain.
Uye ufumanise kuqala ukuba iiSefa, Small Enterprise Finance Agency ezi zibekelwe ukuphuhlisa abantu abakwazi ukuba baziphumeze iinjongo zabo, ngamanye amaxesha, abazibekele ngokwabo, Mphathiswa. (Translation of isiXhosa paragraph follows.)
[You sometimes find that regional offices of Sefa, which are there to help people develop their businesses, are unable to meet the objectives that they have set for themselves, Minister.]
I think it was 2013-14 where they set themselves a target of achieving 30% of their disbursement to the youth, and only 15% of that was achieved.
Ukanti ayondawo yokuqala. [But not only that.]
The other issue related to that is an issue relating to the absence of enough branches in our black areas.
Ngoko ke abakwazi ukuzifumana iinkonzo. [Madiba, uyamosha.] Kodwa ke umcimbi ... [Therefore, they cannot access services. [Madiba, you are disturbing me.] But ...]
... the issue of the intermediaries that charge exorbitant interest rates creates a problem because when these small business owners start their business, the core structure has increased already. Now, when they come to government to tender for business, what then happens? They are told that they are not efficient, that their quotes are high. The tender goes to those with lower quotes ...
... babe bona bebethwe zii ... [... whilst they have been hit hard by ...]
... intermediaries that delay the process of disbursements because of the conditions attached firstly but, at the same time, also the exorbitant fees that they charge. In addition, much more should be done to increase the support and the access for businesses of people with disabilities and co-operatives as well.
We therefore hope that the support offered to co-operatives by developing programmes will be a major focus over the next few years. Hon Minister, I saw that you recently visited my friend’s business, Silulo Ulutho Technologies in Khayelitsha. As a person who was part of that business when it still had just about five branches, I can assure you that Silulo achieved much of its success by, amongst other things, having a symbiotic relationship with big business and government.
The private sector has an important role to play in the development of SMMEs and in helping to inculcate a culture of entrepreneurship in South Africa. We welcome the decision to procure 30% of goods and services from small business.
Ingxaki ethanda ukwenzeka yinto yokuba ukuba azihlawulwa kwangethuba, ayinakusebenza. [The problem is that, if small businesses are not paid in time, this cannot work.]
The other issue is that if Treasury can pay suppliers within 10 days – I think it was 10 days, hon Tobias – why can’t other departments do it?
Yintoni le ibangela ukuba abanye bakwazi ukuyenza amanye amasebe angakwaziyo ukuyenza. Ndifuna ukuphinda ndithi phambi kokuba ndihlale phantsi, bendisanda kuva kutsha nje ukuba ... [Why is it that some departments can do it and others cannot? I want to repeat, before I take my seat, that I recently heard of ...]
... the attempts to move informal traders from Adderley Street.
Yingxaki ke le yaseMzantsi Afrika yokufumanisa ukuba abathengisi basezitalatweni abancedisa ekukhuleni koqoqosho kufuneka basuswe kwiindawo esicinga ukuba zindawo zezicwinana, baye kubekwa kwiindawo ezisitheleyo. (Translation of isiXhosa paragraph follows.)
[The fact that, in South Africa, informal traders who contribute to economic growth have to be removed from areas deemed for the elite and placed in a corner somewhere is a problem.]
However, when we talk, we want to be fancy and sophisticated and go and lecture them about the importance of choosing the correct site for business.
Sibasusile kwiindawo esiza kukwazi ukuthenga naxa siphuma apha. [We have removed them from convenient areas where we could buy from them even as we leave here.]
It happens all the time. Over and above that, when they are moved, they are abused by the law enforcement agencies.
Xa besuswa abaphathwa ngendlela elungileyo, ingathi ngabantu abophula umthetho ngokuthengisa izinto bezama ukuphila. Ndiyabulela. [When they are removed, it is not done in the right manner; they are treated as if they are people who, by trying to eke out a living, have broken the law. I thank you.]
Mr T R J E RAMOKHOASE
Mr N L S KWANKWA
Mr T R J E RAMOKHOASE: Hon Chairperson, hon Ministers and Deputy Ministers, hon chairperson of the portfolio committee, hon members of the House, ladies and gentlemen, distinguished guests, the ANC unconditionally supports the Budget Vote.
An HON MEMBER: Thanks for clearing that up!
Mr T R J E RAMOKHOASE: Yes, “small business is big business”, so said the President of the Republic of South Africa, Jacob Zuma, during the state of the nation address. Indeed, small business is big business. It is only the ANC and President Zuma’s kingdom that have laid the foundation ...
An HON MEMBER: His kingdom? He’s a king now? [Laughter.]
Mr T R J E RAMOKHOASE: ... yes, as you call it, that created the environment in which you think you can do things better than what we are doing, today. Indeed, South Africa is a better place than ever before. [Interjections.]
The Constitution of the Republic of South Africa, as adopted in 1996, enjoys the respect of the overwhelming majority of the population. It is seen as the canvas upon which South Africa’s freedom of spirit can find expression. Some, within the ranks of those who were privileged under apartheid, may harbour ill feelings towards the process of change and always demonstrate racist attitudes and hopeless arrogance.
We continue to see pockets of ethnic chauvinism and regionalism that manifest itself in a new form under new conditions. The ANC will never allow these tendencies under the democratic order to happen – never!
One great economist, Rosa Luxemburg, when describing the evils of capitalism, explained there is nothing worse than not being exploited enough. This statement refers to some people who come from serious exploitations today and still believe that it was not enough, that they still need more. As I look to this side, I see some of them saying that this is not enough.
Re phete, hapehape! [Give us more, again and again!]
They ask that. Watch, my brothers. That is the DA; they will do it. [Interjections.]
In meeting social needs through microsocial tasks, the following has to be achieved: continuous service improvement to people trough enhanced public infrastructure, efficient systems, and the requisite personnel. This will need a co-ordinated approach between the Departments of Higher Education and Training and Small Business and Development to urgently set up a co-operative academy of business, to begin to provide training to improve business skills — a challenge to the majority of the country’s small business entrepreneurs.
In line with the ANC’s 53rd national conference held in Mangaung, the following was stated as a conference resolution:
We must continue to encourage the creation of new businesses, co-operatives and the expansion of small businesses by reducing the cost of compliance with government regulations, make it easier for companies to ‘do business’ with the government, making sure that the government pays its invoices on time, and strengthening the role of our development finance institutions.
The chair has said it: We move or propose that the co-operative bank must actually be established urgently so that the issues of co-operatives would receive the attention that they need. [Interjections.]
An HON MEMBER: So you failed on every one!
Mr T R J E RAMOKHOASE: Outcome 4 focuses on the creation of decent employment through inclusive economic growth. This is in line with the NDP’s long-term Vision 2030 to accelerate the gross domestic product growth ...
An HON MEMBER: You don’t believe in the NDP!
Mr T R J E RAMOKHOASE: ... so that unemployment and inequality can be reduced and a more inclusive society created.
In the same vein, the development of SMMEs and co-operatives will be a critical instrument to achieve decent employment through inclusive economic growth. The democratic ANC government passed the Intergovernmental Relations Framework Act, Act 13 of 2005 to allow different spheres of government to work together so that service delivery is accelerated and efficient enough to address the problem of red tape where service providers had to wait to be paid for the services that they had delivered.
This is affecting up-and-coming SMMEs and co-operatives to the extent that some have to close shop and business due to nonpayment or late payment by state departments. This matter needs urgent attention, and the President has said it as well.
Coupled with the above, the development and enforcement of bylaws by local government regarding small business licences, hygienic health hazard issues, provision of business sites and services where needed as a development strategy to formalise the nonformal traders, which we refer to as survivalists, are urgently needed to accommodate small businesses for government support, such as incentives skills.
Hon Minister, I think we have mentioned that we also support the issue of looking at the regulations and legislation. If an amendment is to be made, so be it. We want to see the survivalists also having a space in the economy of the country.
I want to say that the hon Chance wants to portray himself as a person who can deliver better services to our people today, but he had failed to do that many years ago. Now that the environment is conducive, he feels strongly that he can do things better for black people who he had suppressed for so many years. We are not going to allow you that space. You are going to be part of our processes. [Interjections.]
Let me deal with local economic development ... [Interjections.]
Mr I M OLLIS: Excuse me! Chairperson, on a point of order: Is it parliamentary for the hon member at the podium to basically say that the hon Chance has suppressed black people? What evidence have you got? [Interjections.] You are insulting an hon member, and I would respectfully request that he withdraws that comment. It has no basis in fact.
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon Ramokhoase, please withdraw that comment.
Mr T R J E RAMOKHOASE: I withdraw, Chair!
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Do not refer to an hon member; rather refer to a political party if you want to criticise but not to an hon member.
Mr T R J E RAMOKHOASE: Thank you, Chair. I refer to the party that has ... [Laughter.] [Interjections.] ... suppressed the people for so many years ... [Interjections.] ... and today the same party feels that it can do better because the ANC has created ... [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Please, conclude. Conclude!
An HON MEMBER: You need a new day job!
Mr T J R E RAMOKHOASE: Let me deal with local economic development and local government issues because this is a space created to specifically deal with local government issues. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Conclude.
Mr T J R E RAMOKHOASE: In conclusion, this notion is supported by the great economist Friedrich List, nicknamed the father of the infant industry argument. He said the following: Only large and populous states in the moderate climate zones were capable of developments. Those who stayed in hot zones ought to specialise in the provision of foodstuffs and agricultural raw materials. Therefore, competition at home and protection against overwhelming competition abroad have worked wonders. [Interjections.]
The ANC supports the budget. [Applause.]
Rev K R J MESHOE
Mr T R J E RAMOKHOASE
Rev K R J MESHOE: Chairperson, almost all countries with growing economies have small, medium and micro enterprises as an important source of employment and economic growth. South Africa is unfortunately lagging behind on this front.
To correct this, the Department of Small Business Development was established and mandated to promote and develop SMMEs and co-operatives that would participate effectively in the mainstream economy and make them the cornerstone of the South African economy. This is in line with the National Development Plan that states that 90% of jobs in our country will be created through small businesses and co-operatives by 2030.
In Asia, for example, SMMEs reportedly make up 95% of all corporations and employ up to 80% of the labour force which contributes almost 60% to their gross domestic product. On the other hand, our country, which is lagging behind with SMMEs, is creating employment opportunities at about 50%.
Experts have identified government policies, lack of financial support and inadequate education and training as the three most important factors constraining entrepreneurship in South Africa. They recommend that legislation and streamlining administrative processes that impact on entrepreneurial activity should be simplified and all inhibitive red tape be drastically reduced.
On average, it takes between 19 to 22 days to register and run a business in South Africa, while in Brics countries, and developing countries like Mauritius, it takes only six days to start and run a business.
The ACDP believes that a culture of entrepreneurship has to be inculcated in our children from an early age. We agree with those who are calling for the introduction of entrepreneurship education from basic school level right up to tertiary education because there is a direct link between education and entrepreneurial activity.
We must cultivate an entrepreneurial mindset in our young people so that when they finish high school, they will consider starting their own businesses rather than just looking for a job. The South African job market is saturated with unemployable youth because of their inadequate education and training and lack of entrepreneurial skills.
According to the Kasipreneurs 2015 series, about 60% of South Africa’s unemployment comes from townships and informal settlements, and only 25% of money generated in the townships is spent there. We should find ways of increasing the percentage of money spent in the townships, particularly on infrastructure, so that there can be more development and upgrading of townships and informal settlements.
During the committee’s oversight visit to different provinces, we were exposed to challenges facing township entrepreneurs. These challenges include a lack of access to finances, lack of access to markets, and what they call “unfair competition”, as they are competing against well-funded and well-organised foreign entrepreneurs. This, they lament, denies them opportunities to develop and grow their small businesses.
Allegations that their competitors, who just arrived on the scene, are subsidised heavily must be thoroughly investigated. The ACDP appeals to the hon Minister to look at the possibility of subsidising and giving support services to survivalist enterprises, such as street vendors, spaza shops, tuck shops and other township entrepreneurs who are struggling to keep their heads above water.
The ACDP will support this Budget Vote to help transform townships into self-sufficient and vibrant economies that would participate effectively in the mainstream economy. I thank you. [Applause.]
Ms N T NOVEMBER
Rev K R J MESHOE
Ms N T NOVEMBER: !Gai Tses [Good day], Chairperson, Ministers, Deputy Ministers, members, officials, and guests in the gallery, the ANC supports this Budget Vote.
Sifuna lo mntwana angafi ezalwa. Siyaqhuba thina. [We don’t want this child to die at birth. We are working.]
Die debat gaan oor klein besighede en ko-operatiewe ontwikkeling, en my taak is spesifiek om oor die Suid-Afrikaanse Vroue-entrepreneursnetwerk, SAVEN, te debatteer.
Die vroue in Suid-Afrika het ’n baie lang pad geloop om by hierdie punt te kom. Daar was geen kommunikasie, geen ondersteuning en geen respek vir vroue tot daar ’n straaltjie lig was en toe ’n lig begin brand het na die ANC-beheerde regering aan bewind gekom het nie. [Tussenwerpsels.] Daarom is ek baie trots om ’n ANC-lid te wees. [Applous.] (Translation of Afrikaans paragraphs follows.)
[The debate is about small businesses and co-operative development, and it is my duty to debate specifically on the SA Women Entrepreneurs’ Network, Sawen.
The women in South Africa have come a very long way to reach this stage. There had been no communication, no support and no respect for women until a dim beam of light and thereafter a bright light started to burn when the ANC government came into power. [Interjections.] That is why I am very proud to be an ANC member. [Applause.]]
The department has a gender unit responsible for the development of women business through networking and exhibitions. These are aimed at building the capacity of women-owned businesses, as well as facilitating access to markets. The gender unit is aligned to Sawen, a nongovernmental organisation that supports women-owned businesses and co-operatives and provides nonfinancial services. Financial services to women-owned businesses are provided by the Isivande Women’s Fund.
We commend the ANC-led government for identifying the need for paying special attention to the development of women in business. Women constitute 52% of the South African population. The 2008 National Income Dynamics Study, which looked at both income poverty and multidimensional poverty, found that there is a large gender poverty gap in terms of income. Women tend to be up to 38% poorer than men. At the household level, there is an even larger poverty gap. Households headed by women are from 38% to more than 100% poorer than households headed by men.
Many women from poor households start their own survivalist income-generating projects. Some resort to sex work to earn an income, and many survive on government social grants. Young girls from poor families depend on dignity packs provided by government.
This situation points to a need for a distinct and effective response in developing women-owned businesses and helping them to learn from one another. The ANC-led government is therefore correct in establishing a stand-alone Department of Small Business Development and mandating it to prioritise the development of SMMEs and co—operatives owned by women.
The Portfolio Committee on Small Business Development assessed the strategic plans of Sawen and Isivande to determine the relevance of support services provided to women and how those services relate to the mandate of the department and, in particular, the gender unit in the department. The Sawen is allocated approximately R16 million, and the Isivande Women’s Fund is allocated approximately R8,8 million for the 2015-16 financial year.
Incinci ke kakhulu loo mali koomama. Siyakhala madoda. [The money is too little for women. We are indeed complaining.]
This budget is too small to address the needs of women and to make a meaningful contribution to poverty reduction and job creation.
We commend efforts by the Department of Trade and Industry to develop women-owned SMMEs and co-operatives. Today, we have women-owned companies participating in the building of trains and houses and the manufacturing and installation of solar heater geysers. We have women in mining and in exporting and shipping businesses. The ANC believes that both Sawen and Isivande need to focus more on developing women at grassroots level where there is more poverty.
Siyikomiti ke salikhenketha eli loMzantsi kuba sifuna ukuzanelisa ukuze sithethe esikwaziyo, singqine esikubonileyo. [Kwaqhwatywa.] Ukuba ithuba belindivumela ngendinibalisela ngendawo ekuthiwa yi-Self Help Association of Paraplegics apho kusebenza khona abantu abakhubazekileyo. No hunger no more apho kusebenza khona oomama. (Translation of isiXhosa paragraph follows.)
[As the committee, we travelled across the country because we wanted to satisfy ourselves so that we can talk about what we have experienced and testify on what we have seen. [Applause.] If I had enough time, I would give you a narration about a place called Self Help Association of Paraplegics where disabled people work. There should be no more hunger when women are working.]
Street vendors and spaza shop businesses in townships, informal settlements and rural areas are struggling. They are experiencing competition that had not been there in the past. Therefore, our support services need to address that reality. Stokvels in our country operate on the consumer side, yet they have enormous savings power because they are organised groups of people built on trust and mutual interests.
We need to build on this solid foundation to facilitate the establishment of consumer co-operatives and community banks to make our financial resources rotate in our communities. We need to assist our people with adequate infrastructure and financial support. The ANC, at its 53rd congress held in Mangaung, resolved to develop SMMEs and co-operatives through public procurement and infrastructure spending.
In conclusion, we need to sharpen the skills of women through training. Gai Ai-os. [Thank you very much.] [Applause.]
Mr L R MBINDA
Ms N T NOVEMBER
Mr L R MBINDA: Chair, hon members and hon Minister, Ma-Afrika ngokubanzi, [Africans at large ...] the struggles of small business development centre on access to finance, access to markets and access to expertise.
The PAC is of the view that the current paradigm within which we are trying to support small businesses is that of apartheid. As such, we operate from within a paradigm which says that small businesses should remain survival businesses, that we are not planning to make small businesses big business.
We see that government-owned wholesale funding is impeded by the use of traditional banks. These banks have criteria that small African businesses in particular find impossible to meet. Furthermore, these banking facilities have interest rates that are impossibly high. This certainly guarantees that small businesses will not survive if they borrow money.
These facilities are supposed to support the development of the small businesses, yet they are burying small businesses under super-high interest rates. Moreover, these financial branches are not accessible to small businesses. They are located far from the businesses and are only found in big metropolises. They should be accessible and not only to the elitists.
Although there are numerous grants that are made available to small businesses, they are highly inaccessible. There is no information flow to these same businesses about the grants. The PAC therefore calls for all grant forms to be made available in all languages so that our people do not have to complete the forms in foreign languages.
The markets for small businesses, particularly in manufacturing and agricultural businesses, have not been made available to them. These businesses have difficulty in finding wholesalers to put their products onto the mass markets that could make them grow. The market is further strangled by big kings who are sticking to their apartheid supply-chain partners. Even access to property for places to trade has been made very expensive, with business rental being too high for small business owners. This results in small businesses being stifled out of the market.
Even though many vouchers are given to businesses for training, the relevance of this training is questionable. The training that is provided to small businesses is more for corporate clients, rather than entrepreneurs. The spirit in which training is provided promotes the acquisition of a certificate rather than the acquisition of new ways of conducting business. The PAC feels that the whole regime of the Skills Development Act has not been pushed enough from an entrepreneurial perspective.
The new department has not yet asserted itself well. It still operates as if it is a component of the Department of Trade and Industry. It continues in the manner of serving big business needs, rather than looking after small businesses. If it wants to succeed, it will have to cut a lot of the bureaucratic issues that were created for corporations. Thank you.
Mr H C C KRUGER
Mr L R MBINDA
Mr H C C KRUGER: Chairperson, exactly one year ago, Minister Lindiwe Zulu took the reins of the newly created Small Business Development Ministry. Mandated to support and promote small businesses as the primary vehicles for job creation, her department began its journey.
Sadly, one year later, we have nothing to show for it, besides a talk shop here and there.
Agb Voorsitter, die feit dat ’n tamatie ’n vrug is, is kennis. Om nie ’n tamatie in ’n vrugteslaai te gebruik nie, is wysheid. Dat rompslomp, oftewel “red tape”, ’n groot struikelblok vir kleinsake-ontwikkeling is, is algemene kennis. Om daarvan ontslae te raak, wens ek die agb Minister hope wysheid toe. (Translation of Afrikaans paragraph follows.)
[Hon Chairperson, knowing that tomatoes are fruit is knowledge. Not using it in a fruit salad is wisdom. The fact that red tape poses a major problem for the development of small businesses is general knowledge. I wish hon Minister loads of wisdom in getting rid of the problem.]
The formula is simple: Small businesses create jobs. However, in South Africa, most new small businesses fail to grow. At 72% — as was stated by Minister Davies – we have one of the highest failure rates in the world.
Whenever I have been out talking to business, they all say the same thing: The biggest hindrance to the success of small businesses is red tape and regulation. Red tape is a hidden tax that kills jobs and suffocates business. During this critical time when businesses are looking for ways to grow whilst keeping costs down, we must cut businesses loose from unnecessary red tape so they can do what they do best: create jobs, invest, innovate and grow. Our economy depends on it, and every unemployed South African depends on it.
The Economic Freedom of the World 2014 Annual Report gives South Africa a shamefully low 4-out-of-10 red tape rating. In the recently released World Bank Doing Business report 2015, South Africa ranked 64th out of 189 countries with regard to the ease of starting a business. This is down from 56th the previous year.
The drop in the ranking for ease of starting a business highlights the challenges around red tape that business owners need to overcome when starting a business. On average, it takes 19 days to register a new business in South Africa, which is roughly a week longer than it takes in other countries.
Small businesses are facing tough times. Regulatory burden is increasing, particularly the observance of labour laws. Eighty-one per cent of Commission for Conciliation, Mediation and Arbitration, CCMA, cases involve small businesses. A typical firm is taken to the CCMA twice a year to resolve a dispute, meaning that 10 business days are wasted.
Under all economic circumstances, regulatory efficiency and clarity are crucial objectives for the credibility of government’s role in the marketplace. However, in today’s economy, it is absolutely essential to design a regulatory structure that protects the wellbeing of our citizens, without imposing unnecessary costs on business and society as a whole.
In 2007, the government launched a programme of action that included the implementation of a pilot regulatory impact assessment, RIA, system. The decision to introduce a RIA system was based on recommendations from a report entitled “Counting the cost of red tape in South Africa”, commissioned by the Presidency back in 2004.
Amongst other things, the study revealed the following:
compliance cost business 6,5% of GDP, which amounted to R79 billion; 30% of respondents believed that the complexity of the compliance process was the most important constraint to growth facing their business; and one out of five of the respondents said they would avoid regulatory compliance by reducing the levels of employment in their business.
Despite sporadic efforts and guidelines for the implementation of a RIA issued by the Presidency, no significant impact on the reduction of red tape has materialised. Government must implement a red tape reduction plan that commits to improve service delivery and accountability. Businesses must know exactly how long they must wait for permits, licences and other requirements dreamed up by bureaucrats, and this must be made available and accessible on government department websites.
Government must keep track of just how much red tape it is cutting and how much progress it is making in improving service delivery and lessening the burden for small business.
Due to the 11-year delay in implementing the RIA in its entirety, I will this year introduce a Private Member’s Bill before this House to make regulatory impact assessments required by law.
Red tape is the silent killer of jobs, and the DA will not allow this to continue any longer. I thank you. [Applause.]
Nkul X MABASA
Mr H C C KRUGER
Nkul X MABASA: Mutshamaxitulu Tatana Mdakane, Holobye Manana Zulu, Xandla xa Holobye Manana Thabethe, mutshamaxitulu wa komiti Manana Bhengu, Mukhomeri wa Mufambisi Tatana Nkumane na vayeni va hina, ndza mi xeweta. Miako i masungulo eka nhluvukiso na nsirhelelo wa bindzu rin’wana na rin’wana lerintshwa. (Translation of Xitsonga paragraph follows.)
[Mr X MABASA: Chairperson Mr Mdakane, Minister Ms Zulu, Deputy Minister Ms Thabethe, committee chairperson Ms Bhengu, deputy chairperson Mr Nkumane and our guests, I salute you. Infrastructure is the basis in the development and security of any new business.]
When the Sanlams of this world and the Koöperatiewe Wijnbouwers Verenigings van Zuid-Afrika, KWVs, of this world were built through co-operatives, there was nothing wrong because it was to benefit a few whites at the expense of many blacks. [Applause.] Ms Nkomo of the IFP, Mr Mncwabe of the NFP, Mr Kwankwa from the UDM and Rev Meshoe from the ACDP, your comments become constructive because you are saying that you support the budget and add those comments. However, I do not know what the other parties that do not support the budget want. In case some of them might have forgotten, some anecdotes go as follows. A book written by Roskam, Apartheid and Discrimination, states the following: Sometimes we may think Dr Verwoerd was the architect of all these evils. He was not. He merely perfected what the predecessors of apartheid started.
I contend that we are the finest race in the world, and that the more of the world we inhabit the better it is for the human race.
Evans said the races are so different in capacity, character and culture that identical treatment is impossible. As if that wasn’t enough, Smuts followed:
There are certain things about which all South Africans are agreed, all parties and all sections, except those who are quite mad. The first is that it is a fixed policy to maintain white supremacy in South Africa.
But just to go for two more, the Tomlinson Report said that the presence of Africans will only be tolerated because of the needs of the whites for their labour; otherwise, all Africans should be in those homelands where they had been put on rocks, where they had been put on nonarable land. [Interjections.]
Here we go to small business. Yes, the United Party said discrimination or differentiation in itself is not necessarily an evil. The all-important question is the basis on which it is done and the motive behind it.
These are the people who know what seeds they had planted in South Africa. Therefore, as the ANC, we now have a job of repairing and working on all that they had planted. [Applause.]
Even big businesses rely on infrastructure provided by government. That is how big businesses have grown – through the highways, the rail, electricity and bridges. Electricity went over the mountains and over the huts and houses of black people to farmer Swanepoel after having crossed many villages. [Interjections.] It is only because of the ANC that electricity went to rural areas. It is only because of the ANC that piped water started going to rural areas too. [Applause.] It is only because of the ANC that the blackjacks - the police then were serving the National Party - stopped knocking on every door saying, “Gqoka, vuka sihambe”. [Wake up and get dressed; let us go.] The ANC has come with that solution. It is only the ANC that has said even small businesses will be allowed to trade in towns. [Applause.] It is only the ANC that said it was wrong that Indian people were not allowed to trade in the Free State. It is the ANC that said Indian people and black people can trade everywhere. [Interjections.]
Mabindzu ya swiphaza a ma fanelanga ku tshama ma ri matsongo vutomi bya wona hinkwabyo. Ma fanele ku kula. Maphorisa va fanele va ta na makungu yo sirhelela mabindzu ya swiphaza leswaku lavo yiva va nga koti ku yiva mpahla ya vanhu lava xaviselaka eka mabindzu ya swiphaza.
Masipala u fanele ku pfuneta hi ku basisa hi mikarhi hinkwayo. Mbhasiso wu fanele wu va kona. Ndzawulo ya swa Rihanyu a yi tshineli yi tirhisana na vamabindzu ya swiphaza. A yi tshineli yi tirhisana na vamanana lava xavisaka maapula na swifaki leswaku rihanyu ra Afrika-Dzonga xikan’we na mabindzu ya vona swikula. (Translation of Xitsonga paragraphs follows.)
[Spaza shop businesses should not remain small ones for the rest of their existence. They have to develop. The police have to come up with strategies to protect these businesses to ensure that thieves are unable to steal goods from the traders. The municipality should assist with cleaning at all times. Cleanliness should prevail. The Department of Health should avail itself and work hand in glove with spaza businesses. It should avail itself and work with women who are trading with apples and mealie crops so that South Africa and their businesses can develop.]
The challenge is to collaborate with street vendors, to plan with street vendors, and get buy-in from them so that the plan that is implemented receives mutual support. As we all say, nothing about us without us. Government needs to plan with street vendors and not plan for them.
In many parts of the world, the economy is shouldered by small businesses and co-operatives. In Kenya, families that keep dairy cattle make a living out of it. A family that keeps about 10 heads of cattle is as good as rich. These families milk the cattle and deliver the milk to a central dairy depot. One big truck goes around the village collecting milk to deliver it to the central dairy place where it is tested for freshness and to ensure it is bacteria free. In that way, the whole village produces milk. The milk that is produced is turned into full cream milk, cheese, and yoghurt, both low fat and fat free. In that process, you see a value chain right from the rearing and milking of the cattle to the sending off of the product to the dairy, as well as the production of cheese and yoghurt.
Let me speak about the Preferential Procurement Policy Framework Act. This Act is disempowering to black-owned small business in particular in that it imposes the burden of the price element over other key elements of the Preferential Procurement Policy Framework Act such as ownership and technical competence. In places, traditionally white-owned businesses are thus able to cut out and out compete smaller businesses because of their production of critical mass and a much bigger balance sheet through the 90/10 or through the 80/20 requirement on price which makes lowest price a determining factor. In essence, the Preferential Procurement Policy Framework Act does not provide any preferential treatment to start-ups or black SMMEs and co-operatives; thus, it fails to give them a competitive edge.
Eskom ... [Interjections.]
HON MEMBERS: Yes, yes!
Mr X MABASA: Yes, I am taking your tone. This Eskom is the Eskom that never ever looked after rural places. It used to skip many areas to go and supply Koekemoer with electricity. [Interjections.] Today’s Eskom is struggling a little bit because it is looking after many South Africans ... The ANC supports the Budget Vote. [Time expired.] [Applause.]
The MINISTER OF SMALL BUSINESS DEVELOPMENT
Mr X MABASA
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I’m sure everybody who can see me right now here in this hall and at home is aware of the fact that I’m very wide awake. [Interjections.] I’ve been awake from the day that I was appointed; I will be awake until I’m comfortable with the mandate that was given to me, my department, and everybody else to improve the lives of ordinary South Africans through small and medium enterprises and co-operatives.
The good thing is that I was built by an organisation that is very receptive to constructive criticism. We have in the committee indicated at all times, even to the opposition, that we have an ear to listen to them. We believe South Africa belongs to all and that when people are being constructive in assisting us to create a better South Africa, we will always listen, and I am one of those always willing to listen. [Applause.]
We work with a very open mind; it is for this reason that we have patiently sat in all committee meetings because we know how committed members of that committee are to assist us, as a department, to be better able to deliver to our people.
I would also like to respond to a very important area, that of informal traders. Members of the portfolio committee but also members of organisations of informal traders have had serious discussions with us in this regard. We want to say that we will expedite the implementation of the National Informal Business Upliftment Strategy because we believe that working together with local government and provincial structures is the only way that we can deal with this, considering the fact that informal traders need infrastructure, infrastructure that also has to be provided for by local government structures.
We’ve also listened to the portfolio committee with regard to the development of co-operatives. We hear you, chairperson of the portfolio committee, and we believe that through co-operatives we can reduce the number of people who depend on social grants.
I don’t think that any South African who is capable of providing for his or her family would like to remain ...
... bekhongozela kuhulumeni ngaso sonke isikhathi. [... dependent on government all the time.]
I think it is also an insult to the people of South Africa, particularly those that were never brought into the mainstream economy, to think that all they want is to wait for government grants. As a matter of fact, I know that I was brought up by a grandmother who did everything in her power to make sure that I went to school, to make sure that ...
Nksz M S KHAWULA: Ngiyabonga Sihlalo, bakithi ngicela ukuzibuzela kancane kuNgqongqoshe ukuthi: Uthini ngalezi zinxanxathela zezitolo ezigcwele emalokishini abantu abamnyama eseziwise bhu phansi izitodlwana zabantu ezincane ezingaxhaswa, ezingenzelwa lutho? Uthini ngalaba bantu abadayisa emadolobheni abaxoshwa nsuku zonke? Ngizwa iphutha manje uma nithi nina nilwela abantu abamnyama. Ngiyabonga. [Ubuwelewele.]
USIHLALO WESIKHASHANA (Mnu M R Mdakane): Mhlonishwa, bekuyoba ngcono ukube nawe ububambe iqhaza la kule nkulumo mpikiswano. Bengicabanga mhlawumbe wena uletha iphuzu lokucaciseleka. Uma uNgqongqoshe esesonga inkulumo mpikiswano ayifuneki imibuzo. Useyavala ... (Translation of isiZulu paragraphs follows.)
[Ms M S KHAWULA: Chairperson, if I may ask the Minister: What do you say about these malls that are all over black townships? They have taken over from small tuck shops that are not sponsored. What about the vendors in towns who are chased away daily? I now hear misinformation when you say you are fighting for the black people. Thank you. [Interjections.]
The TEMPORARY CHAIRPERSON (Mr M R Mdakane): Hon member, it would have been better if you were also part of this debate. I thought you were rising on a point of clarity. Questions are not allowed when the Minister is concluding the debate. She is closing ...]
... because I have allowed you enough time to pose questions, hon Khawula.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Chairperson, I would like to state that entrepreneurship has become a buzz word today in South Africa. There are people who now believe and see the possibility that they do not have to go and look for a job because the government decided to create a Ministry that can, at least, be their voice and create an environment conducive to that.
Ngifuna ukusho ukuthi lo mbuzo nje oqeda ukubuzwa manje, ngike ngawuphendula enkulumweni, futhi nginesiqiniseko ukuthi ilungu elihloniphekileyo lingayithatha leyo nkulumo, liyibheke ngoba ngikhulumile ngayo le nto akhulume ngayo. (Translation of IsiZulu paragraph follows.)
[I would like to state that, in my speech, I have already answered this question, and I am sure that the hon member can take that speech and look at it because I did mention it.]
We have in our midst Kgosi Bakgatla Ba Kgafela Nyalala Pilane and his adviser, Mr Andrew Pheto. We want to thank them for the good work they are doing in Moruleng. We have visited the area, and we hope that many of our people, especially our chiefs, will look at that model and begin to see what can happen in their areas. [Applause.]
We also would like to thank Roseline Nkosi, president of the SA Spaza and Tuck Shop Association, who is here today and who helped us a lot when we were dealing with the situation in Soweto.
Last but not least, in thanking my staff, I must tell you they are slave drivers. They drive me all the time to work more than I’m supposed to work. I wish to thank them for all the support they have given me. Also, I would like to thank the former acting director-general Pumla Ncapayi who assisted in setting up this department. We can say to all South Africans listening at home that we are here for them. We will give it our best shot, as we promised, to fulfil the mandate given to us by the ANC. I thank you, Chair. [Applause.]
The Committee rose at 19:33.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
National Assembly and National Council of Provinces
The Speaker and the Chairperson
1. Bills passed by Houses – to be submitted to President for assent
- Bill passed by National Council of Provinces on 20 May 2015:
- Auditing Profession Amendment Bill [B 15B – 2014] (National Assembly – sec 75).
1. Introduction of Bills
- The Minister of Social Development
- Children’s Amendment Bill [B 13 – 2015] (National Assembly – proposed sec 75) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 38703 of 17 April 2015.]
- Children’s Second Amendment Bill [B 14 – 2015] (National Assembly – proposed sec 76) [Explanatory summary of Bill and prior notice of its introduction published in Government Gazette No 38704 of 17 April 2015.]
Introduction and referral to the Portfolio Committee on Social Development of the National Assembly, as well as referral to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160.
In terms of Joint Rule 154 written views on the classification of the Bills may be submitted to the JTM. The Bills may only be classified after the expiry of at least three parliamentary working days since introduction.
- Report of the Portfolio Committee on Basic Education on the Official Handover of the Valhalla Primary School in Metro North Education District, Western Cape, dated 19 May 2015.
The Portfolio Committee on Basic Education, having participated in the official handover of the Valhalla Primary School in Metro North District, Western Cape on the 27th March 2015, reports as follows:
- A delegation of the Portfolio Committee on Basic Education undertook a visit to participate in the official handover of the Valhalla Primary School in the Metro North District, Western Cape on Friday, 27 March 2015.
1.2 The delegation comprised the following members of the Portfolio Committee on Basic Education: Hon N Gina MP (ANC) (Chairperson), Hon H S Boshoff MP (DA) and Hon D Van Der Wald MP (DA).
1.3 The delegation from the Ministry of Basic Education included Mr D Ngobeni: Head of Special Projects and other officials from communications and Physical Planning Unit.
1.4 Members of staff who formed part of the delegation included Mr M Kekana (Researcher), and Ms S Ntabeni (Committee Assistant).
The Accelerated Schools Infrastructure Initiative (ASIDI) is a national programme that aims to eradicate and replace inappropriate school infrastructure in the country, such as mud school buildings and other unsafe structures. ASIDI also aims to ensure that all schools have access to basic services such as water, sanitation and electricity. The Schools Infrastructure Backlog Grant (SIBG) introduced in the 2011/12 financial year, funds the ASIDI programme. ASIDI is a massive R8.2-billion public-private partnership programme and one of the Government's Strategic Infrastructure Projects (SIPs) as part of the broader Presidential Infrastructure Coordinating Commission (PICC). ASIDI aims to replace some 510 schools in the country built from inappropriate materials.
3. Briefing Session with the Ministry of Basic Education – Mr D Ngobeni
The Ministry of Basic Education (DBE) welcomed and appreciated the participation of the Portfolio Committee on the official handover of the Valhalla Primary School. The delegation received a brief background on the school to be handed over. The handover of Valhalla Primary School in Cape Town, Western Cape as the Accelerated Schools Infrastructure Development Initiative (ASIDI) marks its 99th school handover.
The school was built at a cost of R34 million, is capable of accommodating 1036 learners and is a state of the art school boasting 28 classrooms, a library and science laboratory. All classrooms, the administration block, kitchen, and multi-purpose hall were fully equipped with the necessary furniture, appliances and apparatus. The library, on inspection, was stocked with some books.
4. Official Handover of the Valhalla Primary School – Hon A Motshekga, Minister of Basic Education
The delegation held a briefing session with all stakeholders which included amongst others, District Officials, local Government Leaders, the Principal, the School Governing Body, Unions and other stakeholders on Government’s initiative on the school to be handed over. The delegation was taken on a site-visit and walk-about of the school before the official handover ceremony. During the handover ceremony, Hon A Motshekga, Minister of Basic Education gave the keynote address, urging members of the community, teachers and learners to take ownership of the school and look after its facilities and resources. This was followed by the official unveiling of the plaque which concluded proceedings.
- SUBMISSION OF A LEGISLATIVE PROPOSAL: MEMORANDUM IN TERMS OF RULE 238 OF THE RULES OF THE NATIONAL ASSEMBLY BY THE PORTFOLIO COMMITTEE ON HOME AFFAIRS, DATED 19 MAY 2015
The Portfolio Committee on Home Affairs is hereby requesting the permission of the House in terms of Rule 230(1) for the introduction of the following legislation in the House, namely the Refugees Amendment Bill, 2015:
- Purpose of the Bill
The purpose of the bill is to amend the Refugees Act, 1998 (Act No. 130 of 1998) so as to confer a discretion upon the Refugee Appeals Authority to allow the public and the media access to its proceedings in appropriate cases.
(b) Background and Objects of Bill
1. On 27 September 2013, the Constitutional Court, in the Mail and Guardian Media Limited and Others v MJ Chipu and others CCT 136/12  matter (“the Chipu case”), declared section 21(5) of the Refugees Act, 1998, inconsistent with section 16(1)(a) and (b) of the Constitution to the extent that it precludes members of the public or the media from attending proceedings of the Refugee Appeal Board in all cases and fails to confer a discretion upon the Refugee Appeal Board to allow the public and media access to its proceedings in an appropriate case. The declaration of invalidity was suspended for a period of two years from the date of the order to enable Parliament to correct the constitutional defect in section 21(5) of the Refugees Act, 1998. Pending the correction of the defect, or the expiry of the two-year period, whichever occurs first, the Constitutional Court provided a temporary reading-in order into section 21(5) of the Refugees Act, 1998, conferring a discretion on the Refugee Appeal Board, on application and on conditions it deems fit, to allow any person to attend or report on its hearings. The two-year period ends on 26 September 2015.
2. The Bill will address the Constitutional Court judgment in the Chipu case by amending section 21(5) of the Refugee Act, 1998, so as to confer a discretion on the Refugee Appeals Authority (the name of the Refugee Appeal Board after the Refugee Amendment Act, 2008 (Act No. 33 of 2008)), on application and on conditions it deems fit, to allow any person, including the media, to attend or report on its hearings. The Bill will further provide that this discretion conferred on the Refugee 1951
3. Appeals Authority must be exercised with due regard to relevant factors, such as whether the asylum seeker consents to such third party’s attendance or access; or whether it is in the public interest to allow such attendance or reporting after taking into account all relevant factors.
4. The Bill will also deal with necessary consequential amendments and transitional arrangement in order to effectively amend section 21(5) as set out above.
(c) Financial Implications for the state
The proposed legislation will not lead to any expenditure for the state.
Report to be considered.
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