ATC210518:Report of the Portfolio Committee on Small Business Development on Covid-19 Debt Relief Fund Beneficiaries virtual oversight, dated 12 May 2021

Small Business Development

Report of the Portfolio Committee on Small Business Development on Covid-19 Debt Relief Fund Beneficiaries virtual oversight, dated 12 May 2021


This report addresses the Portfolio Committeevirtual oversight conducted on Wednesday, 17 March 2021, toa sample of small enterprises benefited from the Department of Small Business Development (“the Department”) Covid-19 Debt Relief Fund. The fundis administered by the Small Enterprise Finance Agency (Sefa).The Portfolio Committee had selected and interacted with a total twelve (12) enterprises, which were randomly selected from 1 497 successful applicants out of 14 800 who had applied for fundingfromacross all nine provinces. These beneficiaries included the KPL Die Casting, Lapologa Bed and Breakfast, White Hills Trading, Waterfront Guesthouse, Rigana Manufacturing, Birdie Media, Libra Joiners & Interiors, Dirang Mmogo Business Enterprises, Cab for Ventures PTY LTD, VSM Construction, Mvesande Trading CC and Tattoo Republic.


The virtual oversight, though it was first of its first kind, was in accordance with the mandate of thePortfolio Committee as outlined in the Constitution of the Republic of South Africa, (“the Constitution”), which is to legislate, conduct oversight over the executive and facilitate public participation. It was also in line with its mandate as outlined in the Parliament’s mission and vision statements, the rules of Parliament and Constitutional requirements in an endeavour aimed at forging the realisation of a developmental state and ensure effective service delivery.


The objective of the virtual oversight was to furthermore implementthe Committee’s strategic objectives which are rooted on the strategic objective(s) and outcome(s) of the sixth Parliament. These(strategic objectives of the Committee) further recognises the Department and its agencies’priorities as captured in their respective five-year Strategic Plans and Annual Performance Plans (APP). As a result, this oversight was key to ascertaining the extent to which the Department’s endeavours to accomplish intents and purposes enclosed in Covid-19 Debt Relief Fund as provided by the declaration of the state of Disaster, aimed at giving financial relief to distressed SMMEs during the disruption caused by the Covid-19 pandemic, and provision of financial loans.


2.         BACKGROUND

According to Section 55 (2) of the Constitution of the Republic of South Africa, Parliament has the power to conduct oversight over all organs of state. Oversight is a function granted by the constitution to Parliament to monitor and oversee government actions. On conducting this virtual oversight, the Committee focused on, amongst others, implementation of laws and policies, application of budgets, and effective management of government departments. The vision of Parliament is to therefore ensure that departments and their entities are in fact responding to the needs of the people and that service delivery takes place, so that all citizens can live a better quality life. The Committee was fulfilling its constitutional mandate through engaging beneficiaries of the Debt Relief Fund which was designed to assist struggling SMMEs to cushion against the impact of the countrywide lockdown due to the COVID-19 pandemic. Therefore, the Committee conducted virtual oversight as a sign of the times propelled by the COVID-19 pandemic.


For many SMMEs, the lockdown due to COVID-19, meant that businesses would be left without an income, while other businesses would have cash flow challenges and would not be able to meet their contractual obligations. The lockdown did not bode well for government’s efforts to reduce poverty and unemployment in the country. The Department) intervened by introducing the Debt Relief Fund facility in 2020, when the COVID-19 pandemic restrictions were implemented. Provisions of the fund were, amongst others,financial support in assisting SMMEs from shutting down completely during the COVID-19 lockdown and support for SMMEs with working capital in ensuring that jobs are retained in the economy.


The Department mandated Sefato administer the Debt Relief Fund as a direct lending facility with an allocation of R513 million, to assist eligible SMMEs that have been affected by the outbreak of Covid-19. The Fund Facility attracted concessionary rates of prime less 5%, while others fixed rates of 5%. The Department, through Sefareceived ± 14 800 fully completed applications compared to 250 applications per annum via its Direct Lending facility. Subsequently, only 1 497 SMME applications were approved which constitutes ownership businesses, amongst others, as follows:

  • Youth owned is about 311 beneficiaries representing 20.8%;
  • Women owned is about 491 beneficiaries representing 32.8%; and
  • People with disabilities 4 beneficiaries representing 0.3%.

Therefore, the Committee invited beneficiaries, from each province to share experiences on the impact of the COVID-19 lockdown including financial assistance offered by the fund in assisting businesses. Enterprises were randomly selected from the 1 497 list of beneficiaries provided by the Department spread from all nine provinces. Beneficiary list is however not exhaustive, but includes profiles in terms of race, gender and place to ensure various representation.



The aim of the virtual oversight was to evaluate the impact of the Covid-19 Debt Relief Fund financial assistance, to test the authenticity of the information provided by the Department and its agencies through its quarterly reports, to interact with entrepreneurs in order to identify gaps or weaknesses and areas that could be improved, ascertain the impact of assistance in curtailing job losses and/or to avoid shutdowns/closures, to determine the efficiency of the current systems in evaluating both the Department and its entities, to ensure intergovernmental checks and balances in an effort to simplifying the Departmental systems and processes and essentially to:-

3.1        evaluate the state of enterprises supported by the Department under the Covid-19 Debt Release Fund programme;

3.2        the extent of synchronisation with respect to service(s) and product(s) offering by the Department and its agencies;

3.3        assess the impact of financial and non-financial support given to enterprises by the Department and its agencies on triple challenges antagonising South Africa;

3.4        enhance cooperation and coordination between all spheres of government in developing small business sector and to;

3.5        enableassisted entrepreneurs to speak for themselves.



The delegation comprised of members of the Portfolio Committee on Small Business Development, Parliamentary Officials, and officials from the Department of Small Business Development and Small Enterprise Finance Agency.


4.1        Members of the Portfolio Committee on Small Business Development

Ms VS Siwela, MP                                 (ANC) Chairperson

            Mr F Jacobs, MP                                  (ANC)

            Mr H April, MP                          (ANC)

            Mr ET Myeni, MP                                   (ANC)

            Ms L Lubengo, MP                                (ANC)

            Mr J da Villiers, MP                               (DA)

            Mr HCC Kruger, MP                               (DA)

            Mr DF Mthenjane, MP                (EFF)*

            MsB Mathulelwa, MP                 (EFF)

            Inkosi B Luthuli, MP                               (IFP)

            Mr MGE Hendricks, MP             (Al Jama-Ah)


4.2        Parliamentary Officials

Mr NK Kunene                           Committee Secretary

            Mr S Gumede                                        Committee Content Advisor

            MrM Dodo                                            Committee Assistant

            Ms N Mbelekane                                   Committee Researcher

            Mr J Molafo                                          Media & Communication Officer


4.3        Department of Small Business Development Officials

Mr L Mkhumani                                      Acting Director-General

Ms Patricia Langa                                  Department of Small Business Development

Mr Didy Vollenhoven                             Department of Small Business Development

Mr Akhona Jonginamba                         Parliamentary Liaison Officer

Ms Landela Matoti                                 Parliamentary Liaison Officer

Mr M Mahosi                                         Chairperson (sefa board)

Mr M Matshamba                                  Chief Executive Officer (sefa)

Mr Don Mashele                                    Small Enterprise Finance Agency

Ms Dominique Vincent                           Small Enterprise Finance Agency

Ms Tumi Sefolo                                     Small Enterprise Finance Agency

Ms Danisile Shongwe                            Small Enterprise Finance Agency

Ms Likeleli Makaulile                              Small Enterprise Finance Agency



5.1        Presentation of KPL Die Casting

KPL Die Casting is a white female owned business established 23 years ago. The company is based in Eastern Cape. Before lockdown, the business was profitable with 80 employees. The first month of the lockdown was terrible and the company was unsure if it would last for the next three months. The Relief Fund was a great support. Most of the companies they service form part of the essential service sector. Without the Relief Fund they would not have survived. The company is involved in essential services, mainly street lighting, high pressure casting aluminium zinc industry and make all the housing and street lights. Recently it entered the auto-motor business and managed to secure a five-year contract, with a 15-year aftermarket contract with Volkswagen (VW). KPL posed a positive experience with Sefaas they have good line of communication. KPL Die Casting is grateful for what government has done. Their business is running smoothly.


5.2        Lapologa Bed and Breakfast

Lapologa is a black woman ownedfour star graded bread and breakfast business. It issituated in Limpopo with three branches in Polokwane, Tzaneen and Phalaborwa. It indicated that before lockdown, the business was doing very well and the disruption was brought by imposing of lockdown to an extent that it was uncertain if they would be able to keep workers employed. With assistance received from Covid-19 Relief Fund, retrenchment of employees was circumvented and also assisted in opening a Polokwane self-catering branch.


5.3        White Hills Trading

White Hills Trading, is a black woman owned business in hospitality sector from Mpumalanga, White River. The company has a total employment of ten (10) employees. Scope of the business in baking, catering and events management. Prior to the lockdown, the business was operating from home and was on the verge of moving to a bigger place. Lockdown disrupted signing of lease agreement as the business had to refund clients that had made bookings for catering and events. However, with funding assistance from Cocid-19 Relief Fund, lease property agreement was finalised, renovations of a leased property were done and concluded, salaries for ten employees were paid and, with easing of lock down regulations, the business is gradually picking up especially on bakingalthough it still remained difficult to recover fully due levels alert the country is in.


5.4        Waterfront Guesthouse

Waterfront Guesthouse is a white woman owned business, started 14 years ago and situated in the Northern Cape Province at a prime spot in Upington with a 500m stretch of river view. Due to it being on a riverbank and a prime spot, the property is expensive to maintain and it now deals with various liabilities on monthly basis. The lockdown period disrupted plans which had already been started to expand guestrooms,starting hosting conferences, weddings and other community functions, however, all plans had to be abandoned. With assistance received, and slowly opening of the economy, temporary workers were employed to complement the five permanently employed and plans for expansion were reactivated.


5.5        Rigana Manufacturing

Rigana Manufacturing is a black female owned business with head offices in Durban, KwaZulu Natal, and a branch in Johannesburg. The business was established in 1982. Its scope of work started focusing on supplying quality products to the Petro-Chemical Industry. However, the business has expanded to caters for a wider range of industries including aviation, transportation, construction, retail forecourts, mining and marine. Prior to lockdown things looked good. They set strong targets for the year. In March to April 2020, at the beginning of lockdown, things took a turn for the worst, business survived with employment of business coach who had to implement new strategies with also an assistance from Relief Fund. By the end of the 2020/21 financial year in February 2021, the business exceeded its profit target by 45%, managed to keep all staff; and everyone was paid throughout the lockdown.


5.6        Birdie Media

Birdie Media is a South African based company that specializes in campaign marketing, events, media buying and corporate branding, based in Nelspruit, Mpumalanga Province and owned by black male and employ seven employees. Lockdown impacted negatively in this business to an extent of laying off all employees and office closure. The owner then converted one of his house-rooms into an office. The Relief Fund assisted in ensuring that the business survives by servicing overheads, and currently, with easing of lockdown regulations, the business is slowly gaining momentum.


5.7        Libra Joiners & Interiors CC

Libra Joiners and Interiors CCis a shop fitting company owned by a Coloured male and have over twenty years of experience in the retail, commercial and hospitality industry. Libra provides services such as, turnkey solutions, workshop drawings, sample boards for client approval as well as, project management, and with employment of 108 employees. It is based in the Western Cape, Lansdowne in Cape Town. The business appreciated the receipt of the Relief Fund. As the scope of the includes amongst others, is in the building industry, specifically in the retail sector,it was hardly hit by lockdown. When the lockdown started the business had suppliers, staff and contractors to pay. The Relief Fund helped the businesses resolve cash flow issues.


The operations resumed in July 2020 as restriction levels were lifted. The financial constraints on the business had been tough. Fortunately, due to smart saving and spending they did not have to retrench any employees. During the lockdown they were still put under pressure by contractors to ensure that projects were completed on time. The company appreciates the assistance Sefa had granted them. Libra Joiners and Interiors propose that government look into considering abolishing the loan repayments from Relief Fund beneficiaries. They trust that moving forward with all our prayers, they will not have to endure a hard lockdown in the future.


5.8        Dirang Mmogo Business Enterprises

Dirang Mmogo Business Enterprise (DMBE) is a black female owned business based in Klerksdorp in the North West Province. DMBE is an environmental company, which provides a wide range of environmental services, including landscaping and maintenance, instant lawn, grass cutting, clean-up campaigns and compost production. The company delivers and installs lawn in Gauteng and the Northwest Province with a total employment of 49 permanent employees’ prior lockdown and a very good sales turnover. The impact of lockdown led into finding the business having no invoices going out, and that led into no income and retrenchment of 39 employees and be left with only ten(10). With the Debt Relief Fund, the business was able to cover most of its expenses and appreciate assistance received from sefa and the Relief Fund. They have started making repayments towards the Relief Fund loan but their financial position has not improved. They request that SEFA consider presenting different repayment strategies to beneficiaries.


5.9        VSM Construction

VSM Construction is a black young male owned business specialising in construction services such as building, renovating and manufacturing of steel gates, based in Gauteng Province. With Relief Fund assistance, VSM Construction managed to pay staff salaries and buy more office equipment. However,it experienced challenges in dealing with logistics as they have to outsource trucks to supply and deliver building materials and political intervention of politicians in getting work. He lastly indicated that the business has not yet fully developed, however it does have potential clients and appreciated financial assistancereceived from sefa and the Department.


5.10      Mvesande Trading CC

Mvesande Trading CC is a dream company owned by young black individual whose ambition is to make a difference in the previously disadvantage community especially in the Eastern Cape which has been classified as the poorest province in the country. It is registered as a Close Corporation and is 100% black owned by a young people and is a BEE Compliance Company. The company is based at Port St Johns in the OR Tambo District in the Eastern Cape. The company was established in the 2009 after identifying a gap in the market were there was no business that would offer people with consultant at the rural town and surrounding.


In 2014, the Close Corporation bought an existing telecommunication business at the value of R75000.00 from a local businesswoman thus results in expanding services to telecommunications. It was the only business that would offer such services with industry copy machine and 4 X Computer’s as one of their assets. The monthly turnover was between R25 000.00 to R30 000.00 until a new competitor emerge with the perfect premises that is access to everyone as there are based near taxi rank at the ground floor.


The company applied for the COVID-19 Relief Funding, it submitted all the necessary documentation to Sefa. The loan facility was subsequently approved but that it can only be granted funding for three months. It agreed and signed all the necessary agreement that was issued to it. It was later informed that there was an outstanding debt which needed to be clarified or discussed with the property owner. The ownersentered into an arrangement with the Landlord and submitted the documentation to Sefa on 3 August 2020. Nevertheless, upon making a follow up regarding the payment, the owners were informed that Sefa management hadmade a decision that all approvals and disbursements must be cut-off as of the end of July 2020. Therefore, by the time the final submission was made by Mvesande Trading CC in August 2020, a decision had already been made during July 2020 to stop approvals as Covid-19 Relief funds were running low.


The current situation is that the business has four personnel, being two close corporation’s Directors and two employees. It has contractual agreements with 10 Contractors from theWorking for Water EPWP programme as Administrators. The close corporation has a lease agreement for the office rental at the amount of R2420.00 per month and is renting industry copy machine from Nashua South Coast (“NSC”) of which NSC has refused to service in the past four (4) months due to outstanding rental debt.  The business is currently not operational, costs are piling up and close corporation employees have had to be released.


5.11      Tattoo Republic

Tattoo Republic is a white female owned business which is a tattoo parlour situated in Bloemfontein, Free State Province. The business had six employees at the time of lockdown. The lockdown hit them really hard. They were only permitted to open during lockdown level three. During their four months of lockdown they did not earn any income. Covid-19 Relief Fund assisted the business as it managed to pay employees’ a basic salary and overheads of the business. The road to recovery has been difficult for Tattoo Republic but they are grateful for the help from government. To abide by the strict Covid-19 regulations set for the tattoo and beauty industry they had to set up a completely new tattoo parlour. The business now works strictly on an appointment basis. They are only able to accommodate a certain number of people per day. They had to retrench some of their employees. Without the Relief Fund the business would not have survived past the lockdown.


6.         Deliberations

Members of the Portfolio Committee were generally receptive to the presentations and applauded entrepreneurs for being resilient and in ensuring that businesses are kept afloat during the lockdown period on different alert level posed by the Covid-19 pandemic. The Committee further commended both the Department and Sefa for ensuring that Covid-19 Relief Fund is implemented swiftly and deserving enterprises were able to sail through the disruption posed by the pandemic. The beneficiaries expressed gratitude not only to Sefa and the Department but also to the Portfolio Committee for having been given an opportunity to participate in these important discussions. As a result of the financial assistance some businesses had flourished during Covid-19 lockdown while others were still in the process of recovery. However, most businesses indicated that the recovery process was sluggish and implored the Portfolio Committee to consider asking the Department and Sefa to defer payments and/or renegotiate payment terms. Business owners furthermore asked that lines of communication between them and Sefa should be enhanced so that Sefa, at all times, is kept abreast of all the recovery processes taking place in each enterprise.


7.         Observations

After deliberations, the Committee made the following observations -:

7.1        The virtual oversight was the first of its kind since the Portfolio Committee was constituted. There was therefore an element of uncertainty. This method was adopted as a trial due to the State of Disaster the country is in due to lockdown regulation. However, it turned to be effective as the Committee managed to interact with 11 out of 12 entrepreneurs that were invited from the nine provinces to receive an overview of the implementation of Covid-19 Relief Fund. Therefore, the Committee should conduct more of such oversights whilst the country is still under lockdown regulations;

7.2        The Committee noted the work of the Department and Sefa in the implementation of Covid-19 Debt Relief Fund and swift response in facilitating applications, approvals and ultimately the funding.A total of 35 865 applications were received with 14 451, which is 40% of completed applications versus 21 414 (60%) of incomplete applications and were referred to Seda for assistance. Of the 14 451 (10.4%) completed applications, 1 497,representing 4.2% were approved and funded with a total disbursementof R316million, representing 62% from an allocated budget of R513million;

7.3        Beneficiaries that the Committee interacted with were randomly selected from a list supplied by the Department based on various criteria, people with disabilities were particularly difficult to find, hence only one beneficiary was found, he was not available during the meeting date;

7.4        Beneficiaries were happy, except for Mvesande Trading CC, with financial package received from Sefa through Covid-19 Debt Relief Fund. Most were not aware that it was effectively the Department of Small Business Development intervention.The advised for the Department on the means of communication, which is mostly online, would create challenges concerning the amount of documentation that should be loaded in the system;

7.5        Participants noted conditions attached to the loans. All beneficiaries indicated their willingness to adhere and abide by the conditions of repayments. However,they pleaded with the Department to be flexible and tolerant due to various alert levels of lockdown during the festive periodthat effectively led into a slow pick up of business activity. Thus, the common theme from many participants was for the Department and Sefa to consider myriad of interventions i.e. payment holidays of between three to six months, conversion of a loan portion into a full-fledged grant, rate of interest and renegotiation of repayment agreements;

7.6        In the case of Mvesande Trading CC, records from the Department indicates that an enterprise was financially assisted when in fact it was not. Representative from the close corporation indicated that the funding that had been approved was not actually paid into the banking facility of the close corporation,this creates an impression of discrepancy that needs to be investigated in the reporting system.

8.         Recommendations

The Committee recommended that the Minister of Small Business Development attend to the following-:

8.1        Out of the total number of SMMEs assisted in the stated period, more enterprises are still in need of assistance based on the total number of applications versus the total number of applicants that were successfully approved and funded. Therefore, both the Department and agencies should enhance theirmarketing and visibility strategies to ensure that they are easily accessible.

8.2.       The number of enterprises in the rural areas and those owned by people leaving with disabilities remain a major concern. The Department is encouraged to enhance its outreach strategies.

8.3        The Department together with agencies must ensure that communication strategies are improved especially during post investment period largely to ensure that investment made yield positive outcomes and minimise non-repayment of loans.

8.4        The matter pertaining Mvesande Trading CC ought to be investigated by the Department and Sefa. Once all facts are ascertained, the Department must brief the Committee, including remedial measures to assist the close corporation, andfurthermore improve reporting systems to ensure authenticity of the information.


Report to be considered.


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