Hansard: NA: Mini-Plenary 4
House: National Assembly
Date of Meeting: 12 Jul 2024
Summary
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Minutes
UNREVISED HANSARD
MINI PLENARY - NATIONAL ASSEMBLY FRIDAY, 12 JULY 2024
VOTE NO 36 - SMALL BUSINESS DEVELOPMENT
PROCEEDINGS OF MINIPLENARY SESSION – COMMITTEE ROOM M46
Watch here: Mini-Plenary 4
Members of the mini-plenary session met at Committee Room M46 at 14:00.
The House Chairperson, Ms Z Majozi, took the Chair and requested members to observe a moment of silence for prayer or meditation.
APPROPRIATION BILL
Debate on Vote No 36: Small Business Development:
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chairperson, Deputy Minister Jane Sithole, members of the Portfolio Committee on Small Business Development and other members present here, the Acting Director-General and senior managers of our department, board members and officials from our portfolio, ladies and gentlemen, 30 years ago, having received a resounding support from the electorate, the ANC - a true champion of democracy - established a government of national unity, bringing together all parties to oversee the transitional period through our Constitution. Three decades later, the electorate takes us back to re-walk the journey as a country in a different context, where in it dictates that there should be an inclusive government as led by the ANC. Learning from history, hon members, let’s do more together.
It is by no mistake that we are tabling this Budget Vote in a month where we remember and honour Tata Nelson Mandela, our struggler icon and the father of our democracy. We have no choice but to invoke his spirit and wisdom to guide us successfully through this Seventh Administration.
As parties in the Government of National Unity, we have agreed that we need higher levels of economic growth and more especially growth that is more inclusive and job creating. One of the main reasons we remain in a low growth trap is because too many of our citizens are unable to participate in productive economic activities.
So, besides championing reforms to address energy supply constraints, logistics and crime - which is the focus of Operation Vulindlela - we must also focus our energies on reforms that unlock the potential of the small, medium and micro enterprises, SMMEs, and the co-operative sector. This must be our core priority as the Seventh Administration and one for which we bear responsibility as the Department of Small Business.
As a department we have just celebrated our 10th birthday and want to assure all members in society that even though we are young and still developing, we are up to the task before us. We have done enormous amount of consultation with SMME and co- operative stakeholders, starting with the road shows we undertook in all nine provinces when we joined the department in 2021. We have done this through a wide range of dialogues and other consultative processes that led to the development of the National Integrated Small Enterprise Development, NISED.
We also commend the work that was done in the Sixth Parliament through the portfolio committee that was led by the late hon Violet Siwela -may her beautiful soul rest in peace - and the Select Committee on Small Business Development let by former chair, Mr Rayi, in processing the National Small Enterprise Bill which amongst other things will enable the establishment of the one-stop-shop centre through incorporating the Small Enterprise Finance Agency, Sefa, and the Co-operative Banks Development Agency, CBDA, into the Small Enterprise Development Agency, Seda, while also establishing an Office of an Ombuds, which will also deal with unfair trade practices towards SMMEs and co-operatives.
We are starting this Seventh Administration with a very good sense of the needs and concerns of our SMMEs and co- operatives, having tried as much as possible within our fiscal envelope of R2,437 billion to ensure that this Budget Vote accords with these needs. President Ramaphosa reminds us that we do not have the luxury of time; we need to act with urgency and unity of purpose to eradicate the triple scourge of poverty, inequality and unemployment.
Everywhere we have been to, physically and digitally across all platforms, there are concerns about market access for small enterprises and co-operatives which forces us to do more to tackle market concentration and barriers to entry that exclude our SMMEs and co-operatives. We have five main areas that are targeting this. Firstly, we will support 200 SMMEs through our Small Business Exporter’s Development Programme to participate in 10 trade events in this financial year. We have since allocated a budget of R20 million to exploit opportunities that are presented by BRICS and the Africa Continental Free Trade Agreement amongst other partnerships that we have.
Secondly, we will enhance our Market Linkages Programme to ensure placement of SMME products in strategic warehouses of wholesalers and the shelves of retailers. Through our partnership with Proudly SA, and we are developing an e- commerce platform that is likely to go live in the second quarter of this year. The appeal to all of you, fellow members and South Africans, please make sure that you buy these products in all available platforms.
IsiXhosa:
Ningabahle xa ninokunxiba iiovaroli, iyunifom yomkhosi ...
English:
... and all the beautiful clothes that you wear, as long as they are produced by SMMEs.
Thirdly, we are working with the public sector in order to exploit opportunities which will be presented by the Public Procurement Bill, once signed into law, and we are working with corporates through Community of Practice to influence the Enterprise and Supplier Development, ESD, programmes and procurement of products from small enterprises and co- operatives.
We are actively building supplier capacity to meet and sustain the market requirements, and here we provide quality improvement, product testing and certification, as well as productivity improvement through Seda. Through the Small Enterprise Manufacturing Support Programme we have allocated an amount of R266,8 million which deepens the black industrialist programme and ensure more participation of small enterprise in the manufacturing sector.
Priority is also given to new growth drivers with low barriers to entry. In this financial year we will focus on the energy sector and the tech industry – while also implementing our
Cannabis Support Programme that will look both at the industrial hemp value chain as well as how to mainstream small indigenous cannabis growers for lucrative markets.
Access to finance remains one of the key constraints for small businesses and co-operatives, particularly, those owned by previously disadvantaged individuals and those in the start-up phase of the business lifecycle. To address this, we have developed an SMME and Co-operatives Funding Policy to expand access to finance and early-stage investment. We will be tabling this policy to Cabinet in this quarter.
The policy will be a gamechanger as it also proposes an establishment a fund of funds, which we are currently designing. The fund will derisk and leverage investment from the private sector and institutional investors for start-ups amongst other things. We will also prioritise developing a startup policy and legislation as required, and this will be done in collaboration with relevant departments.
We will also continue to build on the work we have already under taken in the previous administration to invest more in underserved SMMEs and co-operatives. In this regard, Sefa
disbursed R2 billion funding facilities against a target of R2,18 billion to 80 000 SMMEs and co- operatives, which led to
98 000 jobs facilitated in the economy. You are allowed to clap for that.
For this financial year, Sefa plans to disburse just under R2,16 billion and facilitate 130 000 jobs. The R2,16 billion disbursements comprise fiscal transfers and Sefa’s balance sheet funds. It is targeted that 40% of that will go to women- owned businesses, 30% to youth-owned businesses, R7 million to businesses owned by persons with disabilities whilst the rest goes across the board.
On township and rural economy, we plan to strengthen impact and accessibility to our Township and Rural Entrepreneurship Programme, TREP, which we have since reviewed offerings of. This year we have allocated R344 million to Sefa which will be administered accordingly. An amount of R255 million is allocated to our asset assist programme which is intended for business with less than R3 million annual turnover. We have allocated R45 million to general dealers as part of reclaiming the township and rural retail space. To ensure safe and decent space for SMMEs and co-operatives we will spend an amount of R153 million to build new structures.
To deal with fake products that are destroying our local economy while also exposing our people to harmful products this year, we have established Township Economy Task Force – which will also help unlock access to local markets. We are partnering with various stakeholders including Manufacturing, Engineering and Related Services Sector Education and Training Authority, merSETA, the Wholesale and Retail SETA, the National Skills Fund, and Unemployment Insurance Fund, UIF, among others to ensure that we provide quality and detailed support for township and rural enterprises.
Hon Chair ... can I take water? Thank you. You should have said cheers. Now I will turn to building a capable and responsive portfolio. If we think about an organisational maturity model, as a department we have developed from an establishment phase, which was between 2014 and 2019, and we just came out of a stabilisation phase which was between 2019 and 2024. Hon members will remember that we started as a chief directorate in the Department of Trade and Industry. Even if I say so myself, we have made good progress in strengthening our
internal controls and systems and improving the delivery of key performance outputs. We now receive clean audits and we have delivered on 80% of our performance targets. On our big target of supporting 40 000 competitive SMMEs and co- operatives across the portfolio, we have overachieved by supporting 50 000 competitive enterprises – 10 000 more. That deserves a clap. [Applause.]
We are now entering a phase of improvement and optimisation. We have the basics in place, and will now focus more on outcomes, impact, client interface, and integration and partnerships. We will also focus on value for money, directing our budget to where it has the most impact. This necessitates that we rapidly sophisticate our research, our knowledge systems, and our monitoring and evaluation.
Hon members, you will see that these are prioritised in our new organogram and related budget. Shifting to an optimised department during this Seventh Administration also means that we must make strategic use of digital platforms. These are things we will do in partnership with stakeholders in the entrepreneurship eco-system. This year we will also establish a portfolio war room to accelerate the execution of
priorities. There will be zero tolerance for underperformance and underspending, and we will be strengthening performance management and accountability. [Applause.]
We stand before you to table a budget that we feel will make a real impact on the lives of our people, even with the little sum that we have. In the 2024-25 financial year, the department is allocated a total of R2,437 billion. This budget is primarily directed towards transfers and subsidies, which account for 83,5% or R2,34 billion. Of this, 64% goes to Seda while 31% goes to Sefa. The department manages the remaining R478,1 million which accounts for 19,6% of the total budget.
I would like to thank former Minister, Dipuo Peters, Deputy Minister, Jane Sithole, who is our current DM, the portfolio committee members, the department as lead by the Acting Director-General, the entities lead by the board chairs and the CEOs and all the stakeholders that support the work we do. I therefore table to you Budget Vote 36 and call upon everyone to support the work of our portfolio by buying and procuring local products that are produced by the SMMEs and co- operatives. This work is not for yourselves. Kill that spirit, and when you rise, make sure that you lift others with you, as
Mme Charlotte Mannya Maxeke said. I thank you, House Chairperson.
Ms M C DIKGALE: Hon Chairperson, Hon House Chairperson, Ministers and Deputy Minister present here today, hon members of this august House, acting director-general, your team, Small Enterprise Finance Agency, Sefa, and Small Enterprise Development Agency, Seda, Board chairpersons, board members of co-operatives, COs, ladies and gentlemen, I greet you all in the name of our founding father, Rolihlahla Nelson Mandela, whom in six days from today we would be celebrating his 106 years birthday.
May his soul continue to rest in peace as the country emerges from the national general elections. His vision and legacy of a strong and united nation was relieved as voters turned out in numbers to once again remind us, as they did in 1994, that unity is sacrosanct, unity is power, and unity is strength.
House Chairperson, it is a great honour for me to stand here, today, in my capacity as a chairperson of Portfolio Committee on Small Business Development, to deliver my maiden Budget Vote statement. I am sincerely grateful for my nomination and
selection for this rather massive responsibility. I am pleased to accept the challenge and wish to thank all those who have made this possible. I shall indeed rise to the occasion.
The people of South Africa have spoken, Chairperson. For us, is to support them in any way they need us. We appreciate the voice that they have given us through their votes. We pledge to co-operate with those who support the government of national unity.
On that score, House Chairperson, I wish to congratulate His Excellency, President Cyril Ramaphosa, whose visionary leadership - yes, she said it - the ship in a stormy sea. Our founding father Nelson Mandela, once said, “It always seems impossible until it is done.” Congratulations to this Cabinet, to all Members of Parliament and representatives from national, provincial and local spheres of government, respectively.
Chairperson, I stand before you here today to declare that the ANC supports Budget Vote 36. The foundation of this department illustrates the ANC’s commitment to radical economic reform, job creation and poverty alleviation. We are of a firm view,
Chairperson, that adequate support for SMMEs and co-operatives from the government and established business will allow them to partake meaningful in the mainstream economy.
This budget, and plenty others before, aims to close the gap between the first and second economies by levelling the playing field. Hon members, this process of the Budget Vote debates provides an opportunity for Parliament to discuss and then formally adopt the budgets of government departments and entities that are funded through a parliamentary vote.
I am especially grateful that the debate allows us, as Members of Parliament, to haul the Ministers before this august House, to detail their spending priorities of their respective departments and link these to performance outcomes. In this way, they account to Parliament and the public on how public money is being used. This is a very important process in the calendar of Parliament, and it in fact underscores that we are a democracy.
House Chairperson, the National Development Plan, the long- term vision for the country, envisages that the country will create 11 000 000 jobs by 2030. The SMME and co-operative
sector is mandated to create 90% of new jobs. This means that the Portfolio Committee on Small Business Development, the department and its entities bear a critical responsibility of fostering a suitable climate for SMMEs and co-operatives to thrive.
However, without sufficient financial support, this responsibility is unlikely to be realised. I am stating this, Chairperson, because from 2019 to 2024, the average budget granted to this department has fluctuated around R2 billion. During the current fiscal year, it has actually decreased from R2,5 billion to R2,4 billion.
In employment discussions, it is often stated that small businesses make up half of the labor force and are crucial for this job creation. We are still faced with the tremendous task of ensuring that we move forward, bringing not only hope to our population, but also substantive positive changes in their lives. We are still dealing with the three challenges of poverty, high unemployment and inequality.
Unemployment in our country is structural, deep seated, systematic and persistent. That is why institutions like
Statistics SA continue to share unsettling statistics with us all. In its first quarter report for 2024, the working age population grew little while unemployment increased, bringing our national unemployment rate to 33%.
House Chairperson, the question that we should all be seized with is: Where would the jobs come from? The department put the portfolio committee into confidence with respect to the conundrum it is facing. The projected allocation of
R8,4 million was reduced by a staggering of R798 million, to R7,6 billion, over the medium term, leaving the department with only R2,4 billion during the 2024-25 financial year.
I respectively submit, House Chairperson, this is woefully inadequate if we are to diligently carry out the mandate entrusted to us by the NDP. Despite the challenges consistent with our purpose, to create an enabling environment for the establishment and growth of existing small businesses and co- operatives, our collective effort to unlock the potential of SMMEs and co=operative remains firmly on track. The committee will continue to monitor the department’s progress towards the implementation of the policy priorities.
House Chairperson and hon members, you may be aware that towards the end of the sixth Parliament, the committee successfully processed the National Small Enterprise Amendment Bill, which proposes several progressive interventions to establish the department and improve service delivery.
The new entity, Small Enterprise Development and Finance Agency, a merger of the Small Enterprise Development Agency, the Small Enterprise and Finance Agency and the Co-operative Bank Development Agency will be established to streamline the work of the three entities, to seamlessly provide both financial and nonfinancial services to South Africa’s SMMEs and co-operatives, all at one entry point. This will save many entrepreneurs’ time and resources, making the processes of obtaining support much simpler and faster.
The portfolio committee is looking forward to the establishment of Small Enterprise Ombuds Office, which will be a champion for hearing and resolving SMME and co-operative disputes while preserving SMME and co-operative rights. The office of the ombud addresses the lack of effective and inexpensive access to justice for small businesses.
This implies that SMMEs and co-operatives now have a cost- effective platform for resolving conflicts with large enterprises, government and other SMMEs in particular. The payment of suppliers on time has driven many small enterprises into oblivion.
We are optimistic that the event of the ombuds office will decisively put an end to this decades’ injustice. We look forward to the President signing this Bill into law, to allow the department to accelerate implementation efforts. In the midst of the previous government, President Ramaphosa declared that the department will begin the process of reviewing the Business Act of 1991.
The Business Act allows municipalities to provide trade licenses and permits to both formal and informal businesses that seek to operate within their geographic jurisdiction. During the Budget Vote briefing, the committee was pleased to learn that the department has already finalised the business licensing policy. This process will pleasingly culminate into Business Licensing Amendment Bill being referred to Parliament.
We are hopeful, Chairperson, that this development will help is the informal trading environment, which, in our view, is the most regulated and least protected. One of the major challenges ... [Interjections.] [Time expired.] I thank you. [Applause.]
Mr V ZUNGULA: Chairperson, can we just note that the ANC did not support this budget. Thank you.
The HOUSE CHAIRPERSON (Ms Z Majozi:): No! When she started, I heard in the middle that she did support the budget.
Mr H C C KRÜGER: House Chair, Small Business Development and Social Development lies in the very heart of South Africans economic progress. I want to acknowledge the entrepreneurial spirit that prosper in every corner of our nation, from bustling informal businesses in rural South Africa to the formal small business sector. They are the lifeblood in our communities, the engines of job creation and the drivers of innovation.
Statistics SA data shows, however, that 1 300 businesses shut their doors in 2023. There may be other underlying causes for
this regrettable trend, but the impact of COVID-19 and the load shedding on South African businesses cannot be undervalued. The ease of business has challenges. Access to finance remains a major obstacle with many entrepreneurs struggling to secure the capital needed to start or expand their ventures. The regulatory environment can be complex and burdensome for those lacking the resources to navigate through this mess. Big businesses often bully our small businesses, additional skills development and membership opportunists are limited, hindering the growth of our potential small businesses. Minister, the elephant in the House is red tape - bureaucratic red tape.
Afrikaans:
Die DA verkondig al vanaf 2014 dat rondslomp die nommer een vyand vir kleinsake is. Ons het met die regering gedebateer, opiniestukke in die media geskryf en selfs twee private wetsonwerpe aan die Parlement voorgelê. En onthou die departement het nog net een wetsontwerp voorgelê. So, die DA het al twee voorgelê, maar nog steeds dink die President dat die oplossing by die rondslompeenheid lê onder leiding van Mr Nkosi. Hierdie eendeid het nog nie ’n enkele knelpunt vir kleinsake opgelos nie.
Minister, daar lê werk voor om die Suid-Afrika kleinsake vriendelik te maak.
English:
Parliament needs to adopt a ruthless approach to eradicate red tape. Establishing a parliamentary ad hoc committee to fight red tape over the spectrum of government business is not negotiable. I will fight for the next five years for the establishment of such a committee. The department’s instability at the senior management service level characterised the effectiveness of service delivery and effective service delivery to small businesses.
Since 2014, the department has been unable to keep an accounting officer for more than 24 months. As a guardian of small business enterprise sector in the country, the department has a duty and obligation to ensure that all state organs comply with section 38(1)(f) of the Public Finance Management Act, paying invoices within 30 days is crucial for the survival of small businesses. The department needs to launch an educator to monitor all state entities and track invoices.
As we look at the future, the potential for small business development in South Africa is immense. The digital revolution opens up new opportunities for small businesses to reach customers and markets beyond their local communities. E- commerce platforms level the playing field, allowing small businesses to compete with more prominent players. The growth of the informal sector presents the opportunity to formalise and integrate these businesses into the mainstream economy, unlocking the full potential.
In conclusion, we need to foster a culture of entrepreneurship that celebrates risk-taking, innovation and diligence. We need to inspire the next generations of entrepreneurs, those who will create future jobs to drive our economic forward. We need to instil in them the belief that they have the power to make the difference, no matter how small their business may seem.
Developing small business is crucial for the economy and society. The department’s mandate is to lead and co-ordinate integrated approach to develop entrepreneurship, small business and co-operatives. They must also ensure that business friendly environment is created. However, with a shrinking budget of 4% and an increasing spending of 23% on
compensation one gets the feeling that this could be an uphill task. Thank you, Chair.
The HOUSE CHAIRPERSON (Ms Z MAJOZI): Thank you very much, hon member. We will now call upon the MK’s hon Magafane. And I should state that it is the hon Magafane’s maiden speech today, so please let us be kind.
Ms M C MAGAFANE: Greetings, hon members. Hon Chair, I am humbled and honoured as a servant of the people of South Africa through my party MK, under the leadership of President Jacob Zuma, to respond to this Budget Vote No 36 of the Department of Small Business as presented by the Minister of Small Business Development and her team. At the very outset, we reject the budget. At the very outset, it will be important to register the MK party concern that 30 years into our democratic dispensation, the economy of South Africa is still echoed and skewed in favour of neoliberal market policies, a policy direction brewed and located in ill-fated, ideological, unsound and previously failed notion of Government of National Unity, GNU, of 1994,
Ironically, the seventh administration finds itself at the
very intersection of yet another GNU, despite this ill-advised concept having unceremoniously collapsed two years into its initial experiment in 1996. It surely remains a puzzle to many of our ordinary masses why this failed GNU concept is now being revived after the previous failed attempt. The MK party rightfully enjoys and demand of all its members and public representative to foreground all its political programmes in the noble pursuit of reclaiming our birthrights as Africans and developmental agenda squarely rooted in the footsteps of pioneers, heroines and heroes of our struggle for the emancipation of African people from the yoke of colonial rule, such as Nomzamo Winifred Madikizela-Mandela, Oliver Reginald Tambo, Chris Hani, Walter Sisulu and Steve Biko, as well as many other unsung heroes and heroines of our struggle.
Most of these brave and gallant sons and daughters of the soil have lost their lives fighting for the recognition and restoration of the dignity of an African child - a mandate the MK party has reignited through its electoral people’s mandate in the recent national and provincial elections. In interrogating the proposed budget of the Department of Small Business and Development, the MK will lend its support or not to the stated development targets and the resource committed
thereof. I humbly urge this august House to depart from an understanding and appreciation of a complex, yet straightforward condition of an ordinary South African listening to or watching this debate. Are we talking to; are we talking with; or are we talking on behalf of the average women and men, young and old, people living with any form of disability or impairment or not. Outside of the fanciful language statistics, illustrations and graphs, can we honestly and truthfully say that this budget will make a difference to the very target population we claim to be working for?
Sepedi:
Ke re batho bageio ba kua Byldrift Ga-Seloane, ba kua Kwagga, ba kua Tsakane, ba kua Sebokeng, ba kua Merafong, ba KwaXimba kua KwaZulu-Natal, ba kua Rustenburg, ba hwetia diphetogo naa?
English:
Are our targets realistic? Are we not repeating the same unfulfilled promises we made the previous years. The government is failing small businesses - example is nonpayments of most of the small businesses leading to their liquidation and demise. With regard to Co-operative Development Support Programme issued early this year, closing
on 9 February 2024, prospective applications were given a mere two weeks to find all the necessary information and submit their application. It is certainly not reasonable to me to expect small businesses, especially from the segment of the population whom we are targeting, to have been in a position to successfully respond to this advert at such a short notice.
To add insult to injury, the requisite application forms were not immediately available on your department’s website, despite a very short response period. To some, this unfortunate incident can easily pass as a possible fiscal dump exercise rather than a genuine intervention, given the proximity of the call to financial year end. I am mentioning all this on behalf of our masses desperately needing support from your department. Surely, if you were serious about assisting vulnerable small businesses, you ought to be conscious of the circumstances and conditions and to enable them rather than create impossible barriers for excess.
With the former ruling party and current leader of the GNU having such a blemish record when it comes to corruption and public finance malfeasance, we hope this example was not a typical desperate ploy to enable their cronies with state
resources as the last kick of a dying horse before you were kicked out of power in the last elections. The MK party has observed that small and medium-sized enterprises, SMEs, owned by black people in general and designated groups of disadvantaged groups in particular, are marginalised and not enjoying optimal support in the mainstream ...
Mr G J SKOSANA: Order, Chair.
The HOUSE CHAIRPERSON (Ms Z Majozi): Could you please take your seat. There is a point of order. Yes, hon member.
Mr G J SKOSANA: Okay, thank you very much. I am rising on point of order on Rule 85. I know that it is her maiden speech, but the hon member on the podium is casting aspersions on the President of the Republic because she’s saying that he has a track record of corruption. In terms of Rule 85, she can only do that through a substantive motion. Thanks. [Interjections.]
The HOUSE CHAIRPERSON (Ms Z Majozi): Thank you very much, member. Hon Magafane, according to the Rules, we don’t cast aspersions unless we have a substantive motion that has
evidence that need to be produced. So, please, as you are still on the podium and it is your maiden speech, could you please withdraw that? [Interjections.] Hon members, please let’s allow the hon member to finish. The howling is too much, so we are in a very small room, and it becomes problematic, please.
Ms M C MAGAFANE: Thanks, House Chair. It is withdrawn. The MK party has observed that small, medium and micro enterprises SMMEs owned by black people in general and designated groups of disadvantaged groups in particular are marginalised and not enjoying optimal support in mainstream development, finance and banking sector. Hence the MK resolved on nationalising of the Reserve Bank and all major banks.
Minister, your government has dismally failed small business and black people in general over the years. The record of your failures is well documented and glaring, obviously for everyone to see. The MK party believes that a genuine development trajectory can only be born of a resolute and unshaken resolve to restore and reclaim our economy through a people-centred approach, through recognising and privileging localisation initiatives through rejecting neoliberal and
colonial legacy-based economics, not through this lip service Budget Vote. The MK party rejects this budget and will continue to raise the spear to fight for our masses to reclaim their economy, their dignity and their rightful place in the excellence of humanity. Thank you. [Applause.]
Ms B MATHULELWA: The EFF rejects the proposed budget of the Department of Small Business Development. This is one of those departments that should not exist. We had agreed in the Sixth Parliament that this department must be closed, and its functions being made a programme of the Department of Trade, Industry and Competition.
The role of small business in South Africa must be linked with the work of the Department of Trade, Industry and Competition. Together with the funding institutions such as the Industrial Development Corporation, IDC, and the industry policy.
Entities such as Small Enterprise Finance Agency, Sefa, and others that exist outside the industrial policy and other funding institutions such as IDC and the National Empowerment Fund, NEF, are simply wasting money that can be used by the desperate small business owners who exist without any form of support the by government. We are spending too much money on
officials and staff members doing work that officials at the DTIC can do.
House Chairperson, what is even more concerning is the fact that the annual performance plan that we are expected as Members of Parliament to pass the budget for is dependent on the National Small Enterprise Amendment Bill, which the President is refusing to sign. This is happening when the National Treasury continues to table the proposed budget ... [Interjections.] ... the department continues to fail to appoint permanent senior managers. It is always acting director-general, chief executive officers, or chief financial officers.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: On a point of
order. It is not correct and misleading for any hon member who took oath to come and lie and say the President has refused to sign. I think Members of Parliament must understand the work and the processes that are undertaken before the Bills are signed into law. I just wanted to raise that order that an hon member is not allowed to lie in front of South Africans. Thank you, Chair. [Interjections.]
The HOUSE CHAIRPERSON (Ms Z Majozi): Thank you, hon Minister, but that is not the point of order. The member from the EFF can continue. She was referencing that the President is refusing, but it is not a point of order, hon Minister.
Ms B MATHULELWA: Thank you, Chair, for protecting me from the lies that were made by the Minister. This is happening when the National Treasury continues to table the proposed budget with cuts. The department continues to fail to appoint permanent senior managers. Minister ...
IsiXhosa:
... nantsi into ofanele ukuba ujonga kuyo.
English:
It is always acting director-general, chief executive officers, or acting chief financial officers. The only permanent person is the Minister, and her team. When we go to public hearings all over the country, small businesses and co- operatives complained that there was no support from the department. SMMEs complained that the department is supporting initiatives by big businesses such as Shoprite and Pick n Pay, who are driving them out of the business of the townships. The
requirements to participate in many of these schemes by big companies are designed in such a way that exclude most of the people in the townships. The people came with proof to the public hearings to show that the department is colluding with big businesses to shut them down.
IsiXhosa:
Nantso ke Mphathiswa. Amashishini asakhasayo atsala nzima ezilokishini nasemaphandleni ngakumbi kuMasipala iZululand, uLundi, AbaQulusi apho oosomashishini abasakhasayo kufuneka baveze ikhadi lobulungu lombutho i-IFP ukuze bafumane inkxaso. Onke amashishishini asakhasayo ngamandla koomasipala basemakhaya eMpuma Koloni, KwaZulu -Natal, eMntla Ntshona naseVhembe eLimpopo abazange baxhamle kuhlahlo-lwabiwo mali lweSefa neSeda kude kube namhlanje.
English:
To cut the budget, you are permanently putting small businesses in a mostly disadvantaged situation.
House Chairperson, the people who are suffering the most from lack of support in the SMME sector are women. Most of the people in this sector are women, and many of them are
breadwinners. Women do not receive any support. The only thing that they are exposed to daily is the harassment by the police in the streets of Johannesburg, Cape Town, Durban, and Tshwane because they do not have permits, instead of helping them to get permits, they take their goods and go and share at the police station. When this happens, there is a family that is going to bed hungry. Many people in the SMME sector are there because of unemployment, but they end up suffering more. As the EFF, we are not going to support the proposed budget, and we will continue to call for the proper industrial policy that is linked with the SMMEs, so that we can create jobs, support women in the SMME space, and grow the economy. Chairperson ...
IsiXhosa:
... ndithe ke mandiphathe olu siba ukuze uMphathiswa alunike uMnu Cyril Ramaphoza ukuze atyikitye lo Mthetho uYilwayo kuba sele upasile. Ingxaki iphi ke ngoku? Ingaba siza kubanjwa yindoda enye ngomtyikityo nje wayo? Ndicela kuwe Sihlalo ukuba ndiludlulisele kuMphathiswa. [Uwele-wele.]
English:
Thank you very much. Note that we reject the Budget with its cuts. [Applause.]
Mr S S ZONDO: Hon Minister, I think it’s an insult to South Africans to reject the Budget for Small Business because you can’t say you are fighting for people and when it is time to pass budgets that talks to their needs, and you come here ... [Interjections.] ...
The HOUSE CHAIRPERSON (Ms Z Majozi): Yes, hon member.
Ms B MATHULELWA: On a point of order. As much as ...
IsiXhosa:
... sikwingxoxo-mpikiswano makungathethwa izinto ezingeyiyo inyani. Makungathiwa sichasa uhlahlo lwabiwo-mali. Sichasa ukuncitshiswa kwalo. Enkosi Sihlalo.
The HOUSE CHAIRPERSON (Ms Z Majozi): Hon member, that’s not a point of order. Please continue.
Mr S S ZONDO: Hon Chair, this is proof that some of us came here just to grandstand and not to represent the people that have voted for us to this Parliament. [Applause.] We have come here to combine our manifestos as mandated by the people to say that all the parties must go to Parliament and work
together to produce policies and budgets that will uplift the lives of the people. So, we have come here to ensure that the budget of the departments must be able to accommodate different manifestos, and make sure that they produce the approach that is appropriate to uplift the lives of our people.
As a country, we need to recognise the indispensable role that the small business sector plays in contributing to our nation’s gross domestic product, GDP. It is imperative that our government harnesses the full potential of this sector to benefit all as has been demonstrated in the growth trajectories of other developing countries.
Our goal is to achieve economic freedom for all who live in South Africa. As we usher in the new governmental dispensation in accordance with the will of the South African people, we therefore need to continue to impress upon our leaders to prioritise the advancement of this sector to achieve this collective goal.
The small business sector services some of the most vulnerable members of our society and it is our government’s
responsibility to ensure that favourable conditions for small, micro and medium enterprises and entrepreneurs to thrive.
Despite notable reductions in load shedding in recent months, it is important to remember that the effects of it linger and disproportionally and it impacts on the small business sector resulting in a further hike in the rate of unemployment. It is for these reasons, House Chair, that the IFP urges the government to diligently implement the Energy Action Plan considering the plight of vulnerable small businesses, including those in townships and rural areas.
The budget allocation for the Department of Small Business Development should reflect and align with these objectives. It is time to propel South Africa past economic barriers towards true economic freedom and not just wax lyrical. With these concerns in mind, the IFP accepts the budget and wants to urge the Minister to make sure that this budget go straight to the people who needs it, not just to pass a budget will not help people that we are representing at the end of the day.
In our manifesto going to the election, it was on the top to make sure that local economy is developed. We made sure that
we are taking away people who are taking our economy, made sure that we own our economy, and made sure that our small business also contributes in terms of eradicating unemployment rate in South Africa. We want to eradicate poverty and make sure that the environment is conducive for our small business to thrive. So, it is upon you, Minister and the department to make sure that people find joy in this government. Thank you very much. [Applause.] [Interjections.]
Mr N S MATIASE: Stand there. Why are you leaving? You can leave.
The HOUSE CHAIRPERSON (Ms Z Majozi): Hon member, no, you cannot do that. You raised a point of order while he was speaking, I was about to recognize you, unfortunately, he had finished his speech. So, you cannot say, no, leave. You cannot do that. Let us preserve respect for all of us because you would want another person to do the same to you and respect you in a manner that you would want them to respect you. So, please let us preserve that. It is a plea, hon member. Thank you.
Ms L M NGOBENI: Acting Chairperson, hon members, fellow South Africans, good day. We stand at a critical juncture in our nation’s history. The budget for small business development is not a mere line item. It is a vital resource for millions of South Africans who are working tirelessly to achieve a better life for themselves, their families and their communities.
Yet, the current allocation does not address the fundamental challenges of our local entrepreneurs. We, as the Action SA demand more.
With a profound sense of urgency and responsibility, we launched the #Spaza4Locals campaign in April this year. This campaign was not just a strategy. It has a potential to be a powerful tool for the revitalisation of our townships and rural areas. To be clear, the name “spaza” does not refer to corner shops only, the word captures the spirit of innovation, resilience and imagination of our people who started these businesses during the dark days of apartheid. It is designed to put South Africans first. Take back the township economy, empower local entrepreneurs, create jobs and foster sustainable economic growth.
It is high time that we deal with the proliferation of illegal foreign nationals dominating the spaza economy throughout our country. We must strive to emancipate ourselves from the idea that putting ourselves first implies hatred for others because nothing could be further from the truth. However, it will only succeed if we make bold decisions that prioritises South Africans in everything we do.
It is a reality that local entrepreneurs face insurmountable obstacles, limited access to finance in adequate infrastructure and institutional support. The #Spaza4Locals campaign is a response to these challenges. To that end, we propose three things: that this department rename the Township and Revitalisation Policy Framework, otherwise known as “TRAP”, which sounds like you are trying to trap someone. And instead, use simple, accessible language, like “spaza support framework”. The people all over South Africa must know that these opportunities exist to provide low interest loans and grants to locally owned and operated spaza shops.
Secondly, we must dedicate ourselves to establishing spaza trade zones in our townships and rural areas. These zones must
have essential infrastructure, including secure trading spaces, storage facilities and reliable utilities.
Thirdly, we call for the drafting of the reserve sectors bill, which will prioritise South Africans in specific sectors of our economy, particularly small and informal businesses. We must use legislative instruments to ensure that South Africans have the first priority to benefit from the economic activities in their communities.
Money must circulate among us and for us to deal with capital flight. This is not about exclusion, it is about empowerment. This was the promise of the new South Africa. When a flurry of black entrepreneurs and industrialists would burst onto the scenes of economic activity was expected, - real ones, not those who profit from government tenders without adding real value, - the “tenderepreneurs.”
On the other hand, it is worth noting that we are pleased that the department’s plans include an effort to cut red tape and make it easier for entrepreneurs to enter the scene. This is indeed a step in the right direction, and we commend the department for that.
Hon members, the time for rhetoric is over, it is time for action. We must recommit ourselves to restoring the dignity of our people. Chairperson, the Action SA not in good conscience can support this budget without the stated emphasis on putting South Africans first. Thank you.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: House
Chair, I see that the clock reads five minutes, I hope I have ten minutes.
The HOUSE CHAIRPERSON (Ms Z Majozi): You are allocated five minutes.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you.
Do I have ten minutes?
The HOUSE CHAIRPERSON (Ms Z Majozi): No, it’s actually five minutes you are allocated, not ten.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you,
House Chair. It is also my maiden speech, I thought I will get grace from you. It is a great honour ... [Interjections.] ...
The HOUSE CHAIRPERSON (Ms Z Majozi): Hon Deputy Minister, excuse me, it’s five minutes. I have just enquired with the table. But let us not take this opportunity to discuss whether it is five or ten minutes. All Deputy Ministers were also given five minutes at the previous mini-plenary sessions.
However, I wanted the hon members to recognise that this is your maiden speech, but it is not written here that it is your maiden speech. So that is not my fault. Thank you very much.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Hon Chair,
the document that I have received says it is ten minutes.
The HOUSE CHAIRPERSON (Ms Z Majozi): Ok, you can continue for now. We are still consulting of what is actually happening because there is two times that are written here. So, while we consult, you can continue with your speech.
Mr N S MATIASE: House Chair! I rise on a point of order. The rules of Parliament are clear on the allocation of time per party. And it must be made forthrightly on the onset, how much time is allocated to the member on the podium? You can’t make a determination about that halfway towards the end of her
speech. Can you please make an indication before she starts speaking?
The HOUSE CHAIRPERSON (Ms Z Majozi): No, hon member, I will not accept that, because on my form the member is right. It says ten minutes at the bottom, but it says five minutes here. So, we must give the correct time, that is a matter for the administration. It is not a matter for this House. She raised it as a Deputy Minister because she knows that she has been allocated ten minutes. It is an administrative matter, and we will deal with it from our side. There is no need to deal with this issue and I will not open it for discussion until we consult and come back with the correct time. Thank you. Please continue, Deputy Minister.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: ... Hon
Chairperson of the sitting, chairperson of the Portfolio Committee on Small Business Development, Ms Masefako Clarah Dikgale, members of the portfolio committee, Minister of Small Business Development Mme Stella Ndabeni-Abrahams, hon members, Ministers and Deputy Ministers present, members of the Portfolio Committee on Small Business Development, ladies and gentlemen, it is also a great honour and privilege for me to
be delivering my maiden speech in this day and month, which is the Mandela Month.
The first democratic President, His Excellency President Nelson Mandela captured our mission correctly when addressing the National Conference on Small Business when he said, and I quote:
In order to develop the SMME sector in South Africa, we need to consider inherited obstacles, particularly barriers to markets, lack of access to business finance and supportive institutions.
The seventh administration is bestowed with the agency to deliver services to all South Africans. In the context of the National Government Unity, GNU, we are all expected to work together for the betterment of the lives of our citizens.
South Africa is still faced with many challenges, including poverty and inequality and high levels of unemployment, especially amongst the young people of this county. The call to speed up the service delivery across all sectors of the economy, society and a concerted effort to advance redress of the imbalances of all forms is a clarion call of the entire
leadership of the seventh administration to leave no one behind as we provide services to our people.
Hon Chairperson, I will build on the platform that the Minister has established and talk specifically about the issues of red tape, co-operative developments in formal traders and micro enterprise support, as well as support for women, youth and persons with disabilities. On the matter of ease of doing business, we know that the red tape that frustrates SMMEs is found in the local sphere of government.
During the 2023/24 financial year, the department assisted 55 municipalities with red tape awareness training against an annual target of 30 municipalities. For the 2024/25 financial year, the department aims to conduct awareness training in 30 local municipalities. We must tackle the issue of red tape head-on, so that no one is left behind. Indeed, it is frustrating for small businesses to go through such, and that end up sometimes killing their businesses.
Last year, the department concluded the regulatory impediments implementation report which sets out the activities and timelines to address regulatory constraints across various
spheres of government. The department is now engaging with the championing departments to address these pieces of legislation to see how reforms can be activated.
The department will enhance its monitoring role. During the 2024/25 financial year, we will focus on developing sector indicators for red tape reduction and ease of doing business. This will be monitored through the intergovernmental relations and interprovincial ease of doing business forums.
Hon Chair, the department will also this year move to establish the office of the small business ombuds. This will be enabled through the National Small Enterprise Amendment Bill, which is currently with the President for ascent. This will begin to address the issue of non-payment and late payments of MEs by government and the private sector, which causes tens of thousands of small businesses to shut shop each year. The department will also this year finalise the Business Licensing Amendment Bill, which will streamline business licensing procedures and costs.
Hon Chairperson, allow me to speak on the subject of co- operative development. This is an area that we are improving,
as evidenced by the Small Business Amendment Act, where we will bring in the Bank Development Agency as part of the single entity that we are creating as a department. This year, we will target 250 co-operatives, of which 40 will be financially supported and 210 non-financially supported. The budget allocation for 2024/25 is R62 million.
We need to provide more emphasis on sustainability of market access support to co-operatives and ensuring that co- operatives receive an integrated package of financial and non- financial support.
In respect for the informal economy and micro-enterprises that are that are a buffer for impoverished and employed communities ... [Interjections.] ...
The HOUSE CHAIRPERSON (Ms Z Majozi): Deputy Minister, please excuse me. I just wanted to come back to the question of your allocated time. It is indeed an oversight that was made in the office. You were given ten minutes instead of five. The reply has just arrived, and I have been informed that you have been allocated ten minutes. So, with your remaining five seconds,
we will add five more minutes so that you can finish, and I do not have to interrupt you any further. Thank you.
The DEPUTY MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you,
House Chair. In respect of the informal economy and micro enterprise that are a buffer to the impoverished and unemployment in communities, we have adopted a holistic approach by providing support to the small businessmen and women. We do this by supporting the informal micro enterprises including cutting the red tape, providing infrastructure within which informal enterprise can operate, allowing traders to do business in the central business district, CBD, and at busy public transport hubs where there is much foot traffic.
They also need micro finance, such as that provided through Small Enterprise Finance Agency, SEFA,’s wholesale lending to micro finance intermediaries. The formal business support is provided through various instruments that include spaza shops’ support, which was extended to 1 525 spaza shops to the value of R14,5 million in grant facilities, as well as the informal Micro Enterprises Development Programme, which is a 100% grant offered to informal and micro enterprise from the minimum grant amount of R500 up to the maximum of R15,000.
During the 2023/24, we allocated R20 million for the Informal Micro Enterprises Development Programme and we are able to support 2 045 informal businesses. Based on the success of the programme, we have increased the allocation and for 2024/25 have provided a budget of R37,3 million.
Allow me to mention our interventions for young people, women and people with disabilities. Promoting youth entrepreneurship remains a priority for our country. We have seen that the Youth Challenge Fund has gone through its teething problems but is now ready for scaling up. For this reason, during 2023/24, we have allocated R67,9 million which was dispersed by SEFA to youth owned businesses via the Youth Challenge Fund against an allocation of R79 million.
The Portfolio Committee on Small Business Development provided financial and or nine financial supports to 18 843 start-up youth b businesses during the period under review against the revised 12029/24 Medium Term Strategic Framework of 10 000 start-ups, youth businesses supported per annum.
The broader target for 2024/25 SEFA disbursement is RR649 million t to youth owned businesses. Our efforts to build
youth entrepreneurs must be integrated into the design of the fund of funds that the Minister spoke about so that youth start-ups and early-stage innovators get the support they require. We. We must lift people out of poverty. We must set this country on a growth trajectory so that we create a conducive environment for SMMEs to thrive.
Through SEFA, R811 million was disbursed to 78 194 enterprises owned by women and R26,8 million to SMMEs owned by persons with disabilities. Despite budget cuts to the department, these SEFA disbursements are expected to increase to R866 million to women-owned businesses and R64 million to disability-owned businesses. This is encouraging, but as with youth, we need to shape the entire ecosystem so that businesses owned by women and people with disabilities are not left out. The people of our country have made it clear that they want us to work together, and we all have a duty to ensure that we leave no one behind. Thank you. [Applause.]
Mr W M THRING: Hon House Chairperson, the ACDP is cognisant of the fact that in any thriving and developing economy it is small businesses that create jobs and provide the most opportunities for poor people to earn a living. As President
Ramaphosa said, a vibrant community of small businesses is a valuable asset to any society and the conditions under which such companies operate need to be altered to encourage them in this.
The ACDP notes that the department received approximately R2,4 billion, representing a reduction in the budget of approximately R92 million. In our view, the reduction in spending capacity will have a snowball effect slowing down expenditure on vital financial support to small, medium and micro enterprises, SMMEs, and co-operatives.
It bears mentioning that the National Development Plan envisaged the creation of approximately 11 million additional jobs between 2010 and 2030, identifying that small and expanding firms should be able to create 90% or some
9,9 million of those jobs.
Putting the COVID-19 period aside where some 2 million to
3 million jobs were lost and load shedding which has kept our economy on perpetual pause, this department still need to fill
90 vacancies or 28% of the 322 planned staff complement. With six years to go to create 11 million jobs with the economy
underperforming, unemployment and poverty increasing the department must admit failure in achieving the targets of SMME growth.
The ACDP expresses concern on the inverse proportional relationship between performance outcomes and expenditure. This indicates inefficiencies in expenditure which invariably means the delivery of services to SMMEs are negatively affected. Clearly, to then improve on its spending efficiency this department must ensure that budget expenditure is aligned with performance against planned targets.
Hon House Chairperson, the reduced budget, perpetual red tape, the postponements in the finalisation of the measures of the entities that should be providing support for SMMEs, is disconcerting. It was hoped that the establishment of the new One-Stop shop with the merger of the Small Enterprise Finance Agency, Sefa, the Small Enterprise Development Agency, Seda, and the Co-operative Banks Development Agency, CBDA. will go a long way in making a dent in narrowing the credit gap and improving access to finance for SMMEs.
It is the view of the ACDP that in order to save the taxpayers’ money this department would be better placed under the Department of Trade, Industry and Competition where one could then leverage on the economies of scale, improve inefficiencies and reduce complexity. [Time expired.] I thank you.
Ms N L WEBSTER: House Chair, hon Minister, hon Members of Parliament and South Africans who are watching, today, we consider the Department of Small Business Development’s budget, plans and priorities for the medium-term. This department is one of the youngest having been established only
10 years ago with a mandate to place SMMEs at the centre of economic growth and job creation. On paper it makes a lot of sense considering that as the previous hon member has said, the National Development Plan, NDP, states that 90% of all new jobs created by 2030 would be by SMMEs. It’s an ambitious goal, however it is almost impossible to measure. No available statistics can reliably account for which new jobs are created and where they come from. What we can measure though is that new jobs are few and far between with 11 million willing citizens in South Africa unable to find a job. South Africa boast one of the highest unemployment rates in the world.
Through effectively set up SMMEs to create 90% of new jobs would require us to be able to better rates the performance of this department and measure the performance of this department. It all looks good on paper in glossy annual performance plan, APPs, but I do have to say that on interrogation of the department’s plans and programmes it appears to be a lot of fluffiness. The young people would say vibes.
We need to be able to better and effectively define how much funding is needed in order to create a set amount of jobs in a said period by SMMEs. We need to be able to define how we measure the quality and longevity of SMMEs, of co-operatives and of the jobs that are created. Once we can answer these questions and other questions, Minister, we can then justify requesting more funding the Treasury to turn this into a super Ministry that creates jobs rapidly.
Finally, the department’s township and rural entrepreneurship programme is key to expanding the economy so that we can create more jobs. But we have to be more ambitious about the township economy than spazas. As Bosa we have maintained that we need to broaden our imagination on the types of new SMMEs
that are created and grown particularly in townships and rural areas. An amount of R5 billion to this allocation to this programme must ensure it contributes to township and rural businesses properly being industrialised and commercialised, but it does need more funds. Minister, R5 billion over the medium-term is just not enough, and that we agree on. The unemployment crisis in this country is a ticking timebomb and small businesses can be the solution if afford it the weight it deserves in appropriation and accountability. I thank you. [Applause.]
Mr V ZUNGULA: House Chairperson and Minister, the structure of the economy has not changed since 1994. The economy is still in the hands of few companies and few families, and it is only SMMEs that can change this unfortunate reality. However, SMMEs can change this reality if there is a government spending that is above 50% on SMMEs. Any government contract or tender must show priority on SMME spending. It can’t be that the NDP says by 2030, 90% of the jobs would be coming from SMMEs yet SMMEs are only allocated less than 20% of the government spending.
If the government is serious about achieving the NDP goals it must be backed up by a legislation that is intentional about SMME spending.
Minister, SMMEs don’t want you to only come here wearing SMME- produced brand only in these debates, but they want systematic solutions to their problems which include their invoices being paid on time, government departments being compelled to buy from SMMEs and most importantly access to markets.
Minister, the citizens that are trading in the informal sector are trading for survival. The government is lacking care by failing to protect such vulnerable people. Go to any township, village or small town, all economic activities are either in the hands of big companies or foreigners who are dominating all economic activities in that space, yet we have the highest level of unemployment in our country.
isiXhosa:
Akekho umntu oza kusuka eAsia aze kusithengisela iigusha eMzantsi Afrika.
English:
Protect South Africans who are trading in that business sector because they are trading for their next meal. It is unfortunate that now the foreigners that are operating in the spaza sector do not want South Africans to trade there. They
even go to an extent of killing South Africans who want to open spaza shops. In Ratanda, Heidelberg, we have lost so many South Africans from that crime. We plead with you, Minister, work with the law enforcement agencies to deal with those crimes including the crimes of extorsion that are continuing to kill small businesses.
In your last budget debate you spoke about business inspectors that will investigate all businesses operating in the small business sector and ensure that they comply with the laws of our country.
IsiXhosa:
Baphi abo bahloli, Mphathiswa?
English:
Lastly, we want a South Africa whereby all the spazas, hardware stores, cellphone shops and most importantly all businesses in the sector are proudly owned by South Africans. South Africans in general, and black South Africans in particular, must dominate all economic activities. [Time expired.] [Applause.]
Ms S SINGH: Hon House Chairperson, at our meeting this past Wednesday, when the department’s APP was presented, there was general consensus regarding the impediments to small business development in South Africa. It was stated, according to the National Development Plan, in 2011, 90% of new jobs will be created by small and medium-sized enterprises by 2030. This equates to 9,9 million jobs. The pertinent question is, therefore, are we on track to achieve this, and if not, what are we as the Seventh Parliament going to do to turn this around?
The facts paint a grim picture. Over 9 500 businesses were liquidated from 2019 to 2023, and this does not take into account businesses that closed down without being formally liquidated. According to Statistics SA, over 1 300 businesses shut their door in 2023 alone. Between 70 to 80% of small businesses fail in the first five years. It is therefore no coincidence that we have an unacceptably high unemployment rate of 32,9%, which rises to 42,4% when one includes discouraged job seekers.
Clearly existing legislation, policies and programmes have not been successful. This is the business bloodbath leading up to
our term and the need for change has come, and this change has to be brought about by us in the Seventh Parliament.
Small businesses are the backbone of our economy, driving innovation, creating jobs and fostering economic growth. Creating and enabling environment for small business to thrive and unlock their full potential must be driven by this department. Business in general and small business in particular cannot function viably without stable electricity and water supply, proper roads, utilities, infrastructure and the like. The administrative burden or red tape and certain labour regimes also cut across other departments.
I trust that our Minister and our Deputy Minister will take up the case and pursue favourable policy and legislative changes at the executive level.
And now for the job at hand for this committee. We need to acknowledge and understand the fundamental challenges faced by small business and then produce the necessary legislative, policy and regulatory framework to create an enabling environment. Decisions taken must be backed by evidence and we
must leverage on models that have successfully worked in other parts of the world.
Increasingly, entrepreneurs in South Africa are reluctant to start new businesses, limiting the creation of desperately needed jobs in our country. According to the latest World Competitiveness Yearbook, South Africa is ranked 60 out of 67 countries in 2024, in terms of the regulatory burden of starting a business. We have to strengthen South Africa’s startup ecosystem, making it easier to start a business and help foster entrepreneurship and business growth.
Navigating complex regulatory requirements can be time consuming and costly. Simplifying regulatory processes, providing clear guidelines and establishing one-stop shops for business registration and compliance will ease this burden. It is imperative that we advocate for and implement policy reforms that ease the regulatory burden on small businesses.
We must aim to broaden the collective bargaining system to enhance the representation of bargaining parties and exempt SMEs from the administrative extension of bargaining council agreements. These agreements frequently overlooked the
financial viability of smaller entities. Exempting SMEs from these obligations will make it cheaper and easier for them to hire people, while allowing for company level flexibility.
Effective mechanisms to improve access to funding, access to markets and access to critical market information and resources must be prioritised. The significant gap in business and technical skills among small business owners and their employees must be addressed by investing in vocational training, business development services and mentorship programs.
Research and development initiatives must be supported to foster innovation and competitiveness amongst SMM. Providing incentives for technology adoption, offering training on digital tools and supporting tech-based incubators and accelerators are essential steps forward.
The DA believes in building a capable state and that the state’s role is to create an enabling and inclusive environment where every individual, regardless of their background, can start a business with ease, enabling them to access economic prosperity. South Africa needs to become a
country of entrepreneurs, not simply employees. It is incumbent on the Seventh Parliament to be an engine for small business generation. I thank you.
Isindebele:
Num G J SKOSANA: Sihlalo ohloniphekileko, mhlonitjhwa Ngqongqotjhe neSekela Ngqongqotjhe, malunga ahloniphekileko, sizwe sekhethu, lotjhani.
English:
Small businesses employ a large percentage of people in South Africa. They are formal employment rate is still lower than that of the
Development, OECD, nations, which is between 60 and 70%. Small businesses generated R2,3 trillion, or 22% of the
R10,5 trillion total formal business turnover. According to Statistics SA 2023 breakdown of turnover by business size. Large businesses made up the largest share of the total turnover. Accounting for just over two thirds, which is 68% of it, while medium-sized businesses contributed the least, which is 10%. This demonstrates unequivocally that small businesses are crucial to the economy and will propel growth in South Africa. While we are grateful for the 1,7% increase in funding
from the previous administration, we still have room for lobbying and vigorous discussion as the current amount will not be sufficient for the programmes of the department, which include the co-operative development support programme, the business viability program, the Township and Rural Entrepreneurship Programme, TREP, and the Small Enterprise Manufacturing Support Programme, SEMSP.
The department’s overall budget is R7,6 billion which will grow from 2,5 billion in 2023-24 to R2,7 billion in 2026-27 at an average annual rate of 1,7%. Over the Medium-Term Expenditure Framework, MTEF, period, transfers to organisations that assist the Small, Medium and Micro Enterprises, SMMEs, are expected to make up 80,4% or
R6,1 billion of the department’s budget and R4,1 billion of this amount will go to the Small Enterprise Development Agency, SEDA, and the remaining portion will go to the to the Small Enterprise Finance Agency, SEFA. As the ANC, we believe that this will guarantee an increase in the revenue base of the Small and Medium Enterprise, SME, sector, and consequently, a rise in the number of jobs created locally.
The department and its entities need to provide the necessary
support for small businesses to access both domestic and international markets.
IsiNdebele:
Malunga ahloniphekileko [Hon members] ...
English:
... the National Small Business Amendment Act of 2004 allowed for the establishment of the Small Enterprise Development Agency, SEDA, in 2004, implementing the government small business strategy, creating a uniform national delivering network for the growth of small business and integrating government funded small business support agencies throughout the government, are among the agency’s mandate. The department’s medium-term goals will center on giving SMMEs co- operatives, township and rural enterprises, startups and more access to financial and nonfinancial support, introducing them to international markets, renovating or constructing approved business infrastructure for them and assisting informal businesses through the program for the development of informal and micro enterprises.
IsiNdebele:
Sizwe sekhethu ...
English:
... another reason that makes us to support the budget is the fact that the enterprise development, innovation and entrepreneurship programme has allocated R38,4 million to the craft customised sector programme, to support a targeted 3000 crafters in both financial and nonfinancial support in the upcoming period. I thought we would clap hands, hon members. [Applause.] The product markets programme is allocated
R198 million over the MTEF period in the integrated co- operatives and Micro Enterprise Development Programme, MEDP, to give working capital business infrastructure, business development services and information access to informal and micro enterprises in a targeted 21 product markets. of this sum, an estimated R101 million is set aside for these businesses to purchase an equipment they require.
IsiNdebele:
Sihlalo ohloniphekileko [Hon Chairperson] ...
English:
... the department and government are determined to address the exorbitant interest that dishonest micro lenders charge on SEFA funding, to guarantee that SMMEs have far less of an administrative burden and can concentrate more on the growth of their businesses. Red Tapes needs to be reduced. There is a need to improve operations of the department, to increase awareness on Micro Finance Institutions, MFIs, and Request for Information, RFIs, to ensure that they are following the government’s mandate of making finance available to all small enterprises and ensure equitable spread. The organisation will keep fostering business viability, competitiveness and localisation over the medium term, with an emphasis on the growth of informal. Township and Rural enterprises, through the upkeep of incubators in these areas. Additional resources for this project will come from a range of government and nongovernment sources. The agency intends to carry out a co- operative development support programme.
IsiNdebele:
Malunga ahloniphekileko [Hon members] ...
English:
... we are also happy that training for business development support will be provided to a targeted 12,500 spaza shops and general dealers, most of whom are in rural areas, through these partnerships. The initiatives’ expenditures are covered by the agency’s National Skills Fund, NSF, allotment. The National Development Plan has made projections that by the year 2030 there will be an estimated additional 2 million jobs that can be created by the informal sector in South Africa, which will greatly assist in achieving long standing goals of the NDP, which are to reduce poverty, unemployment and inequality. It then becomes of utmost importance for the government to ensure that there is provision for small businesses both in financial and nonfinancial support.
IsiNdebele:
Malunga ahloniphekileko [Hon members] ...
English:
... we appreciate all political parties that have supported this budget, and we also note those who say they are not supporting, hon Mafagane, yes, you are raising very important matters, but it’s going to be important for you to attend committee meetings so that you can get a greater understanding
and appreciations of what the department has achieved and also the challenges that the department is faced with.
Ms M C MAGAFANE: On a point of order.
The ACTING CHAIRPERSON (Mr W M Douglas): Hon member, please take a seat. Thank you. For a point of order, please proceed.
Ms M C MAFAGANE: We had one committee meeting, and I was present. Thank you, hon member.
The ACTING CHAIRPERSON (Mr W M Douglas): It’s not a point of order. Could you please ... [Interjections.]
Ms M C MAFAGANE: Can you please withdraw. He must withdraw that I didn’t attend.
Mr G J SKOSANA: Okay. No, we appreciate that you attended. However, you are speaking like a person who did not attend the meeting. You are speaking like a community member who is attending an Integrated Development Plan, IDP, imbizo, in the community where the mayor is addressing, then is raising issues.
Ms B MATHULELWA: On a point of order, Chair.
The ACTING CHAIRPERSON (Mr W M Douglas): Go on with the point of order.
Ms B MATHULELWA: Thank you, Chair. We want this House to note that we were in the meeting with the same member. All ANC members were not there in such an extent that the meeting was postponed to the next day. So, we must not mislead the nation about the attendance, while you must fix your issues. Thank you.
The ACTING CHAIRPERSON (Mr W M Douglas): Okay, before the speaker gets up, could I just ask all members of this committee and of this House to please honour the rules of the House. A point of order must be according to the rules of the House. None of those two statements or comments or whatever those words, is not a point of order. Could this be noted by everybody? Thank you. We will start sanctioning people for not doing what the rules say. Thank you, Mr speaker, continue, but please, Mr speaker, also, will you also make sure that you stick to the rules of the House and not personalise attacks at the hon members?
Mr G J SKOSANA: Thank you very much, Chair. What is important, hon members, as the hon members of this House who have taken an oath, we’ve got the responsibility, all of us, across all political parties, to play an oversight role to the executive and hold the executive accountable. We can’t do so through grandstanding, we must do so through attending committee meetings, getting reports, raising questions and give advice. So, we can’t do that through grandstanding. Hon Mathulelwa from the EFF, I’m very disappointed that she’s saying that the government must do away with this Department of Small Business Development, maybe hon Mathulelwa does not know why the department was created. This department is only 10 years old. It was created because previously issues of small business were not getting attention from the then Department of Economic Development.
Ms B MATHULELWA: Order, Chair. Order, Chair.
The ACTING HOUSE CHAIRPERSON (Mr W M Douglas): Hon speaker, please sit down. Can I please make sure that this is a point of order as per the rules. Thank you. On which rule are you rising a point of order?
Ms B MATHULELWA: On Rule 85. Chair, I’m rising on Rule 85.
IsiXhosa:
... uyamazi uMthetho wama-85 (Rule 85) ukuba uthini? Ndifuna ukulungisa apha, siye sanentlanganiso sachitha ixesha lethu ngoLwesibini. Amalungu eANC ebefakiwe hayi la afike ngoLwesithathu kuba la athetha apha ngamatsha. Asifuni bantu abaza bezokuqhayisa apha ...
English:
... while they are failing to attend committee meetings. So, Chairperson, please protect us from the lies of the speaker. Thank you.
The ACTING HOUSE CHAIRPERSON (Mr W M Douglas): Comrades, before the speaker continues, can I ask – I won’ say comrades, I will say all the hon Members of Parliament. Could you behave like hon Members of Parliament and obey? No, it’s not a debate when you raise a point of order. A point of order has specific rules that you follow, and you must do it according to those rules. So, can I ask that everybody, please, not to interrupt all the time? We have a constitutional mandate to fulfill, to allow each speaker to continue and finish their debate. Can we
let them finish the debate. A point of order must be raised on a specific matter that is in the rule book. So, continue, please. You have 59 seconds left. Thank you, Mr speaker.
IsiNdebele:
Num G J SKOSANA: Ngiyathokoza, Sihlalo [Thank you, Chairperson].
English:
I’m sure our people at home are very disappointed, especially the poorest of the poor, because small businesses, in the main, are servicing the working class and the poor, and I thought that the EFF is representing that constituenc, but they are saying we must do away with the department that assists the poorest of the poor, dealing with small businesses. They are saying that we must do away with that department. So, I’m very much disappointed, I’ve never expected that, especially from the Economic Freedom Fighters. We acknowledge, I think, a very important points that are raised by the hon Zungula. Well, for you, I know you are a small party, you can’t be able to attend all the committees. However, we then appreciate that you are coming here to debate and raise these issues, but we have raised very critical
matters which we think the department must take them into consideration. Chairperson, as the ANC we support Budget Vote 36.
IsiNdebele:
Ngiyathokoza. [Ihlombe.]
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Acting House
Chair, indeed, hon Skosana, I don’t know what you expected because others would really want to wish the department to be closed. It tells of the store of Venda Building Society, VBS, and many other institutions that had to suffer in the hands of those that call themselves honourable. Hon members, the performance of the department is in the public and our reports are publicly available for members to read, and I will invite the secretary to provide those. As the department we continue to provide quarterly reports in Parliament, and as indicated in the final quarter of the previous final year ... [Interjections.]
IsiZulu:
Nk D NTSHABA: Sihlalo, nginephuzu lokukhalima okuphambukayo: Ngiyabonga, Ngqongqoshe wami, ngenhlonipho, ugogo kuncane nje
afuna ukubuza, ukuthi lento enikhuluma ngayo nikhuluma ngentuthuko yosomabhizinisi abancane, nisazoqala yini ngoba phela anikwazi? Nisazokufunda yini ngoba angikaze ngikubone?
English:
The ACTING HOUSE CHAIRPERSON (Mr W M Douglas): Hon Minister, please continue. Okay, just hold on. Hon member, could you please hold your comments for afterwards? Thank you. Please, continue.
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you so much.
As I indicated earlier that the department has achieved 80% of the target set. Now, there’s everything wrong with someone’s mentality, who believes that 80% of set targets that are achieved that is dismal failure. We need a new dictionary for some wording. The real performance that can be measured, and we invite members to take a journey with us to oversight this work, and, indeed, Mama ...
IsiZulu:
... asiqali namhlanje ukuzokwenza izethembiso ...
English:
... as you are aware that we’ve been doing this work in the past nine years as we are turning 10 now. We will continue improving where there are weaknesses. However, of course, I wouldn’t blame those that don’t want to see anything ...
IsiZulu:
... ngoba lisho neBhayibheli, “Inkosi ilusizo kulabo abangaboni benamehlo.”
English:
We agree, hon members, that our fiscal envelope is not sufficient, but we are moving beyond mourning but forming strategic partnerships with other departments and the private sector to attract more funds through collaboration. In the last financial year, we had a strategic relationship with the European Union, and we accounted to South Africans. We created many jobs, and we had many departmental programmes that were supported.
Also, hon members, we are having a strategic relationship as I indicated with Unemployment Insurance Fund, UIF, which seeks to put more than R2 billion into the work of small, medium and micro enterprises, SMMEs. That is government, whether we like
it or not. I mention this, hon members, for us to appreciate that there’s work being done to attract more funds.
IsiZulu:
Asinokwazi ukuhlala senza izililo zikaJeremiya. Okwethu ...
English:
... is to acknowledge that there’s a crisis and therefore if there’s the crisis, it means somebody must provide a solution, just like we have provided a solution as government of national unity, GNU ...
IsiZulu:
... ephefumulisa abantu ngenxeba.
English:
We agree, hon members, that it is high time that we have set aside segments for SMMEs within our economy and the business licensing policy with the National Business Licensing Bill will bring this into realisation. The more we participate we will understand the legislations and the process within government works in, in case we have already forgotten, because we crossed the floor.
Hon members, the old record is scratchy now. This department is here to stay. Small business development will not again be a tired of any department, hon Mathulelwa. It is illogical to believe that taking our department back to Department of Trade, Industry and Competition would empower SMMEs. Right above us, there’s the number of SMMEs who have benefited from the mere R2 billion that we have. It is a shame to say ...
IsiZulu:
... abenzanga lutho uHulumeni kanye nabo
English:
I would like to invite all the service providers or the clients of Small Enterprise Finance Agency, Sefa, that have been funded from Arion Power up there, the energy generating
... they must see all of you, please stand up. [Applause.]
IsiZulu:
Ngoba abanye bacabanga ukuthi sixoxa izinganekwane. Asixoxi izinganekwane, singuHulumeni, asifisi ukuba. [Ihlombe.]
English:
There’s Mr ... [Inaudible.] ... up there from here in Cape Town, who’s doing well, please buy shoes from him. Hon Zungula, it is important to procure from locally produced products, especially by SMMEs, it starts with buying. When you procure, then there’s an invoice. You can’t have an invoice that must be paid in 30 days without you procuring a service. However, I don’t expect everyone to pay, because for some hon members, they’re here to politic about the challenges that are faced by our SMMEs. Shame to you, fresh from an electoral mandate that puts their hopes in all of you, and others come and grandstand rejecting the budget, but they say that they are representing the public and the SMMEs. Which ones, if you don’t want them to get any support?
By the way, we are aware that these are self-serving individuals because they will continue to get their salary and packs in Parliament, but they expect the SMMEs out there not to benefit from government. We are never going to allow that to happen in our country ... [Applause.] ... Shame unto you.
Just like our struggle icon Mama Winnie Madikizela-Mandela of the ANC said:
One of the greatest things I fear is letting down my people. I wouldn’t live with that type of conscience, of having let down my people after they’ve been brutalised for so long.
And I add, especially by people who have experience oppression and now want to come and act holier than thou. We have walked that path. We see right through you and therefore we will do the best to serve our people. Hence, we remain the ... [Interjections.]
Ms B MATHULELWA: I’m rising on a point of order, the Minister
... [Interjections.] ... Rule 85. Hon Acting House Chair, I’m rising on Rule 85.
The ACTING HOUSE CHAIRPERSON (Mr W M Douglas): Please, make a point of order. What is the point of order?
Ms B MATHULELWA: Thank you, Acting House Chair. Can you please protect me from these who are howling in this House? My point is, the Minister must not come here and grandstand on Mama Winnie Madikizela-Mandela. Acting House Chairperson, the Minister is saying that they are taking inspirations from her, but they did a GNU of apartheid under her name. They cannot
come here and celebrate Mama Winnie Mandela. Not now, not anymore. Thank you. [Applause.]
The MINISTER OF SMALL BUSINESS DEVELOPMENT: Thank you, Acting
House Chairperson. The problem of stillborn is that they would want to rewrite history. Winnie Madikizela-Mandela of the ANC continues to live within us. Therefore, this is why we are here to do the work that we do. Shame on you, that you betray her to an extent of making sure that power goes to other people because you are so self-centred wanting power, whilst you’re destroying our institutions. We are not going to watch it happen.
We will put to jail everything that is corrupt in this country. We will continue to serve our people, creating jobs for this country in your own ... [Inaudible.] ... whilst you come here and reject the Bill. We reject everything antiprogress, the ANC government. Thank you very much, and we love you all. Thank you, Acting House Chairperson. [Applause.]
The ACTING HOUSE CHAIRPERSON (Mr W M Douglas): Thank you very much. Your time has expired. Hon members, that brings us to the conclusion of this day. That concludes the debate and the
business of this miniplenary session. Could I ask everybody to please respect the House and the Rules of the House. This is still Parliament. Could we respect this. That concludes the debate and the business of this miniplenary session. The miniplenary will now arise. Thank you.
Debate concluded.
The mini-plenary session rose at 15:51.
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