ATC230524: Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour on Budget Vote 36, SP, 2022/2023 APP, (SEFA) & (SEDA) 23 May 2023

NCOP Trade & Industry, Economic Development, Small Business, Tourism, Employment & Labour

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour on Budget Vote 36, Strategic Plan, 2022/2023 Annual Performance Plan of the Department of Small Business Development, Small Enterprise Agency (SEFA) and Small Enterprise Development (SEDA) 23 May 2023

 

1. Introduction

 

Report of the Select Committee on Trade and Industry, Economic Development, Small Business Development, Tourism, Employment and Labour (Committee) on revised 2020-25 Strategic Plan and Annual Performance Plan 2020/25 of the Department of Small Business Development – Budget Vote No 36, Small Enterprise Finance Agency and Small Development Finance Agency.

 

The Committee having considered Budget Vote: 36 and Annual Performance Plan 2020/2025, budget and Annual Performance Plans of the Department of Small Business Development and its entities Small Enterprise Development Agency (Seda) and Small Enterprise Finance Agency (Sefa) for 2023-24 financial year, and reports on a committee meeting with the department on 02 May 2023 where the Department outlined the Budget and Spending Plans; reports as follow:

 

Both the global and domestic economies remain fragile as, large inflationary pressures, supply chain disruptions, and the Russia-Ukraine War have an effect to the global business environment. The South African economy remains trapped into low growth point, and economic activity in South Africa, is primarily centered in three provinces (Gauteng, Western Cape and Kwa-Zulu Natal).

 

Unemployment remains high, at around 32,7 percent and youth unemployment exceeds 50 percent.  Efforts to grow and expand SMMEs, are expected to play an essential role to contribute to a new growth trajectory advocated in the Economic Reconstruction and Recovery Plan (ERRP). A healthy small business sector is one of the prerequisite to have a growing economy with high employment opportunities. This would need better engagement by development partners to enhance the business environment for the benefit of SMMEs and Cooperatives.  The growth of the South African economy is largely depended on the growth and expansion of businesses, and the attraction of both domestic and foreign investment. Further, investment in skills remains pivotal to getting the economy moving, a point emphasised by the World Bank in various reports. The national electricity supply remains a crisis, and securing electricity supply remain a major risk to the economy, industries and commerce. Further, clean and safe drinking water, efficient freight transport for goods to reach global markets, also add to these challenges, as all these factors affect the functioning of the economy.

 

The SMMEs and Co-operatives are particularly hit hard by the power outages as many of them cannot afford alternative power sources. In response to the devastating impact of loadshedding, the Small Business Development Portfolio has worked on an energy relief package for SMMEs and Co-operatives to alleviate the devastating impact of loadshedding on small businesses and Co-operatives. Other upside economic risk factors include higher oil prices, higher wage demands and policy uncertainty due to global and domestic policy developments. Economic Policies remain under pressure as fiscal and monetary policies remain restrictive. The spending plans of the Department and its entities must be viewed against the context outline above.

 

The Committee noted the key priorities informing the 2023 Annual Performance Plan of the department which consists of five Game-Changers namely:

 

Game Charger 1: New Economy Start-up: The intervention is aimed at creating a more enabling support ecosystem for high tech and energy start-ups. The strategy is expected to create synergy among the different policy and strategy initiatives in the country as well as identify and address gaps in various polices further providing guidance in creating an enabling environment for the development of entrepreneurship and star-ups.

 

Game changer 2: Township and Rural Economic Development: The aim of this Burning Platform is to redirect Broad-based Black Economic Empowerment (B-BBEE) resources and Enterprise and Supplier Development (ESD) accelerator funding towards SMMEs located in South African townships and rural areas. The Department of Small Business Development intends to engage the private sector to raise awareness regarding the support of private sector towards the development and growth of township and rural enterprises.

 

Game changer 3: Refuelled Incubator / Accelerator Programme: This programme will primarily extend the existing network of incubators for start-ups and accelerators for scale-ups in terms of the tiered small business support model. The Incubation and Digital Hub support programme is committed to building an ecosystem of enhanced sector-focused support service centres to produce high-performance entrepreneurs. The focus is to offer support through existing incubation centres and digital hubs towards growth by upscaling and exposing beneficiary businesses to refuelled support offerings that allow varied programs drawn from existing incubation support programmes, packaged together towards the attainment of their full potential through collaborations.

 

Game changer 4: A Recapitalised SMME Funding Package: Four interventions are proposed as part of this package: A Recapitalised Khula Credit Guarantee (KCG); a Micro Finance Intermediary Franchise Programme; a significantly up-scaled Direct Lending Programme; and Tailored Blended Finance. The DSBD to implement the SMMEs and Co-operatives Funding Policy to accelerate the achievement of the objectives of Game Changer 4. This Game Changer is going to be achieved by introducing targeted funding instruments linked to business development lifecycle including Micro Finance Intermediary Programme (MFIP).  The Department of Small Business Development will focus on implementing the recommendations of the World Bank diagnostic review pertaining to the Khula Credit Guarantee (KCG) to address identified shortcomings with a view to:

 

•   make the guarantee more responsive,
•  raise more capital,
•  remove access to finance barriers in the form of collateral requirements, and
•  make SMMEs lending more attractive by mitigating the credit risk through KCG.

 

Game Changer 5: Supplier Development Partnership Programme: The programme is aimed at leveraging the commitment of corporates and large firms to on-boarding and supporting new suppliers. The Department has set itself 25 targets for the 2023/24 financial year.  In the previous years, the Department’s performance on its set targets was as follows:

 

• 2018/19 – 62.1 per cent;
• 2019/20 – 67 per cent;
• 2020/21 – 86 per cent; and
• 2021/22 – 60 per cent.

 

Based on the past performance, the Department has set targets that it did not fully achieve. It was only during the Covid-19 hard lockdown that the Department managed to perform better on the targets that were set. The Department consistently meet its target of paying suppliers within 30-days, however, it seems reluctant to seriously engage national and provincial departments that consistently fail to pay SMMEs on time. The number of invoices older than 30 days and not paid by national and provincial departments at the end of March 2022 amounted to 67 862 with a Rand value of R 6.1 billion. This is nearly three times the R2.5 billion budget of the Department for the 2023/24 financial year. 

 

The Department has commenced with the process of reviewing Business Act (No.71) of 1991 and the National Small Enterprise Act, 1996 (Act No. 102 of 1996) as amended in 1993 and intends to introduce an amendment Bill to Parliament in the third quarter of 2023/24 financial year. The Businesses Act provides for the issuing of trade licenses and permits by Municipalities to both formal and informal businesses who want to operate in their geographic jurisdiction. The Businesses Act provides a very broad policy and legislative framework without sufficient guidelines or a framework to ensure policy coherence and similarity across all the Municipalities. This has also resulted in uneven implementation across the country, with effective implementation in highly resourced Municipalities and Metros, while poorest Municipalities have ineffective systems and procedures thus contributing to increased red tape. The Act was originally intended to regulate the licensing of certain categories of businesses, and the schedule of regulated sectors has not been updated since 1991, creating a vacuum and confusion as to which sectors are regulated or not. The Committee noted the merger challenges faced by the Department in establishing a one-stop shop agency for small businesses and Co-operatives. It was reported that Department will finalise the incorporation of Sefa and the Co-operative Banks Development Agency (CBDA) into Seda in 2023/24.

 

The Committee emphasised that in order to fully implement the NDP, ERRP, and the Re-Imagined Industrial Strategy, government would need to tackle regional finance gaps to support SMMEs and Cooperatives located in provinces and regions that are lagging behind in terms of economic development. The Department would need to leverage the current public funding and financing facilities to crowd-in private sector financing. Further, there is a need to increase support of High Growth-Tech companies. Partnership with private sector and industry players in science and technology remains a challenge. In addition, the Department should work in a strategic way to improve supplier development programmes that big corporates offer to SMMEs. Supplier development programmes should be much more than social responsibility programme. Must extend to the sustainability of SMMEs.

 

It was underscored that many SMMEs lack the financial, operational, and strategic structures that are common in larger businesses. Most are affected by the lack of liquidity and cash-flow management challenges. The resources should be effectively and efficiently allocated as the Impact results remain a challenge. 

 

2. Overview of the MTEF budget

  Table 1: Overall Budget of the Department for the 2022/23-2023/24

Programme	Budget Adjusted             Appropriation		Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2022/23	2023/24	2022/23-2023/24		2022/23-2023/24
Programme1:Administration	127,9	138,4	10,5	4,0	8,21%	3,15%
Programme 2:Sector and Market Development	120,7	163,8	43,1	35,4	35,71%	29,37%
Programme 3: Development Finance	1 317,1	1 349,6	32,5	-  30,5	2,47%	-2,32%
Programme 4: Enterprise Development	967,1	922,9	-  44,2	-  87,3	-4,57%	-9,03%
TOTAL	2 532,8	2 574,7	41,9	-  78,4	1,65%	-3,09%

Adapted from: National Treasury’s Estimates of National Expenditure (2023)

 

Programme 1: Administration, is allocated R138, 433 million to continue putting systems and capacity in place. Programme One (Administration) has an allocation of R443 million over the medium term broken down into four sub-programmes: Ministry has R89.7 million (20.2%), Departmental Management (ODG) has R116.3 million (26.2%), Corporate Services has R90 million (20.3%), and Financial Management R147.1 million (33.2%). To maintain a sound performance planning, reporting and monitoring system, the Department will continue to implement the Strategic Planning, Monitoring and Reporting Framework and Standard Operating Procedure (SOP). With regard to compensation of employees an average budget growth rate over MTEF is 12 percent due to an increase in the establishment from 211 posts to 357 posts following the approval of an organisational structure in September 2022. In terms of Goods and Services an average budget growth rate over MTEF is 13.9 percent largely to reprioritisations form transfer payments to Goods and services amounting to R186.5 million for IMED (R60m), SMME exposure (R87m), Cannabis (22m), Proudly SA R6.6m) and Ombudsman (R10.9), An average budget growth or reduction rate over MTEF on Capital Assets is 13.3 percent and transfers 2 percent.

 

Programme 2: Sector and Market Development. The purpose of the programme is to facilitate and increase access to markets for SMMEs through business information, product development support and value chain integration is allocated R163, 781 million, to drive our work around value chain localisation. An amount of R525.4 has been allocated over the medium-term with four subprogrammes: An allocation of R17.7 million (3.4%) is made to Sector and Market Development Management sub-programme; R75.1 million (14.3%) to Business Intelligence and Knowledge Management sub-programme, R24.4 million (4.1%) to Ease of Doing Business, and R406.9 million (77.8%) to Access to Market Support sub-programme.

 

Programme 3: Development Finance is allocated R1,3 billion; much of which gets transferred to the Small Enterprise Finance Agency (Sefa) for their various SMME and Co-operatives financial products. The Department in concluding the implementation of the Sixth Administration priorities, the revised MTSF targets were to ensure that at least 50 per cent of national and provincial DFI financing is dedicated to SMMEs and Co-operatives through the establishment of the SMMEs and Co-operatives Funding Policy by March 2021/22 financial year, 100 000 competitive small businesses and Co-operatives supported.by 2024 and 10 000 youth business start-ups supported per annum. Programme Three (Development Finance) has an allocation of R4.194 billion over the medium-term with four sub-programmes: To facilitate and increase access to markets for SMMEs through business information, product development support and value chain integration R7.3 million (0.2%) is allocated to Development Finance Management, R18.2 million (0.4%) is allocated to Model Funding Collaboration, R4.105 billion (97.9%) to Blended Finance Support, and R62.9 million (1.5%) to Business Viability.

 

Programme 4: Enterprise Development is allocated R922 929 000, much of which will be transferred to the Small Enterprise Development Agency (Seda) for their enterprise development and incubation support work. In the revised 2019-24 MTSF, one of the impacts is to reduce unemployment to between 20 per cent to 24 per cent, economic growth of between 2 per cent to 3 per cent and increase the level of investment to 23 per cent of GDP. One intervention to realise the impact is to create a conducive environment that enables national priority sectors to support industrialisation and localisation, leading to increased exports, employment and youth, women and PWDs-owned SMMEs and Co-operatives participation. Programme Four (Enterprise Development) has an allocation of R2.914 billion with three sub-programmes of the Programme: R7.2 million (0.3%) for Enterprise Development Management, R2.787 billion (95.7%) for Enterprise and Supplier Development, and R119.5 million (4.1%) for SMME Competitive.

TAL

3. Legislative and Policy Mandates

 

The following is the legislative and policy mandate that the DSBD is directly responsible for implementing, managing or overseeing:

 

• Business Act, 1991 (Act No. 71 of 1991). To repeal or amend certain laws regarding the licensing and carrying on of businesses, and shop hours; to make certain new provisions regarding such licensing and carrying on of businesses; and to provide for matters connected therewith.
• National Small Enterprise Act, 1996 (Act No. 102 of 1996), as amended. To develop, support and promote small enterprises to ensure their growth and sustainability. Seda provides non-financial business development and support services for small enterprises, in partnership with other role-players in the small business development environment
• Section 3 (d) of the Industrial Development Corporation Act, 1940 (Act No. 22 of 1940 (IDC Act). To provide access to finance to Survivalist, Micro, Small and Medium businesses throughout South Africa. Sefa supports the development of sustainable SMMEs through the                 provision of finance.

• Co-operative Development Act, 2005 (Act No. 14 of 2005) as amended. To provide for the formation and registration of Co-operatives; the establishment of a Co-operatives Advisory Board; the winding up of Co-operatives; the repeal of Act 91 of 1981; and matters connected therewith.
• Co-operatives Development Policy for South Africa (2004). To create an enabling environment for Co-operative enterprises which reduces the disparities between urban and rural businesses and is conducive to entrepreneurship. To promote the development of economically sustainable Co-operatives that will significantly contribute to the country’s economic growth. To increase the number and variety of economic enterprises operating in the formal economy. Further to increase the competitiveness of the Co-operative sector so that it is better able to take advantage of opportunities emerging in national, African and international markets. To encourage persons and groups who subscribe to the values of self-reliance and self-help, and who choose to work together in democratically controlled enterprises and to register Co-operatives in terms of this Act. To enable such Co-operative enterprises to register and acquire a legal status separate from their members. To promote greater participation by black persons, especially those in rural areas, women, and Persons with Disabilities (PWDs) and youth in the formation of and management of Co-operatives. To establish a legislative framework that will preserve the Co-operative as a distinct legal entity. To facilitate the provision of support programmes that target Co-operatives, specifically those that create employment or benefit disadvantaged groups.
• Co-operative Amendment Act, 2013 (Act No. 6 of 2013. To provide for the establishment, composition and functions of the Co-operatives Tribunal; to ensure compliance with the principles of intergovernmental relations; to provide for intergovernmental relations within the Co-operatives sector; and to provide for the substitution of the long title and the Preamble

 

4. Public Entities

 

4.1 Small Enterprise Development Agency (Seda)

 

The objectives of Seda is to provide non-financial business development and support services for small enterprises, in partnership with other role-players in the small business development environment. This Annual Performance Plan indicate that some SMME’s are still suffering from Covid -19 losses, floods and indeed loadshedding. It is within such challenges that the Board, towards the end of 2022 convened the board strategy review to reflect on the strategy implementation and the road that lay ahead in realising the outcomes set in the strategic plan.

 

During this reflection the organisation took stock of the gains made in the achievement of the MTEF targets and ERRP goals which are aligned to the Minister’s contract. The organisation noted that it’s on course to achieve targets set to increase the number of competitive small businesses based in township and rural areas. The goal of increasing incubation centres and digital hubs to 100 by 2024 has already been achieved, the new focus will be on improving governance, independent sustainability and returns on investments in these incubators. It was reported that Seda analysed previous year’s performance, current performance trends, enablers that are required for the organisation to excel including the challenges that are needed to overcome the last year of the 6th administration. Among key considerations was the game changers that were proposed by the Minister of Small Business Development which are geared to improve the livelihood of small businesses in South Africa.

 

The game changers prioritised support offered to township and rural based SMMEs and Cooperatives, refuelling incubators and accelerators, amplifying supplier development encouraging and supporting youth entrepreneurship and addressing responding with agility on the issues of financial and non-financial support. The organisation developed its own game changers which are aligned to those developed during the portfolio strategy session. These includes market access and supplier development partnership, entrepreneurship mobilisation, township and rural economic development, pre-investment and post-investment business development support programme, district ecosystem facilitation, refuelled incubator/accelerator, SMMEs participation in catalytic projects programme and smart systems and technology programme. In pursuing these adequate human and financial resources are required.

 

 

Table 2: shows Small Enterprise Development Agency budget allocation per programme

The table shows an increase of 0.64 per cent which is far below the inflation rate and this required the review of the planned target and to reduce some. Seda is unable to expand and meet the SMME’s demand due to the financial resource limitations.

 

4.2 Small Enterprise Finance Agency (Sefa)

 

Small Enterprise Finance Agency’s (Sefa’s) 2023 Corporate Annual Performance Plan (APP), which was tabled in Parliament on 14 April 2023 outlined that Sefa provides financial products and services to qualifying small medium and micro-enterprises (SMMEs) and cooperatives, as defined in the National Small Business Act No. of 1996 and amended in 2004, through a hybrid of wholesale and direct lending channels. It was reported that Sefa continued to pursue its primary objective of contributing towards job creation and economic growth by providing financial and non-financial support to small, medium, and micro enterprises (SMMEs) and co-operatives, even though faced with challenging global and domestic environment. The entity’s advanced that its integrated approach and programme of action aligns with the National Integrated Small Enterprise Development (NISED) Masterplan, which outlines the outcomes and outputs needed to accelerate small enterprise development and growth. By partnering with business, labour, and civil society, the NISED Masterplan presents a coordination tool and repository of action steps to be taken by numerous actors within government and society to drive SMME growth and performance.

 

Sefa's business and funding activities are aligned with the key activities of a development finance institution (DFI), which include playing a catalytic role to attract other industry players, funding gaps in the market, supporting government policies in multiple industries, and providing risk funding that combines both grants/subsidies and loans. To give effect to its role as DFI, the entity aims to address market failure in the provision of finance to SMMEs and co-operatives; support and fund sustainable businesses; and prioritise funding to qualifying business ventures within the services, manufacturing, primary agriculture, construction, mining services and processing, and green industries sectors.

 

Some of their key initiatives for the upcoming year include recapitalising Khula Credit Guarantee as a funding mechanism for previously disadvantaged entrepreneurs, developing a network of microfinance intermediaries, strengthening the focus of the Direct Lending Programme, providing pre-investment and post-investment support, enhancing the blended finance approach, and engaging major corporates through a public-private partnership platform. In addition, work to stabilise and strengthen the Sefa property portfolio will continue. Sefa is committed to achieving its desired impact of sustainable small, medium, micro, and co-operative enterprises, increased job creation and economic participation, ownership, and access to resources and opportunities, prioritising women, youth, and persons with disability (PWDs). The entity believes that by implementing the strategies outlined in the spending plans will be able to make a meaningful impact in the SMME and co-operative sectors and contribute to the overall economic growth of the country

 

The Annual Performance Plans identify the performance indicators and targets that the institution will seek to achieve in the upcoming budget year. Some Sefa’s key indicators and annual targets for the 2023/24, include broadening access to finance firstly through direct and wholesale lending credit guarantee scheme, micro finance scheme, products and services, as indicated in the following tables.

 

Table 3: Broadening Access to Finance for the 2023/24 financial year

Output Indicators	Amount
Value of approvals and Disbursements
Approvals to SMMEs and cooperatives (R’000)	R2 339 752
Disbursements to SMMEs and Cooperatives (R’000)	R2 346 589
No. of jobs and SMMEs
Number of SMMEs and co-operatives financed	93 671
Number of jobs facilitated and sustained	120 022
Disbursements to designated groups
Black-owned enterprises (R’000)	R1 642 613
Women-owned enterprises (R’000)	R938 636
Youth-owned enterprises (R’000)	R703 977
Enterprises owned by entrepreneurs with disabilities (R’000)	R164 261
Township-based enterprises (R’000)	R586 647
Enterprises located in rural towns and villages (R’000)	R938 636

Source: Sefa (2023)

 

For the Credit Guarantee Scheme Sefa plans to achieve the following;

 

Table 2: Credit Guarantee scheme targets for the 2023/24 financial year

Output Indicators	Amount
Value of approvals and Disbursements
Approvals to SMMEs and cooperatives (R’000)	R275 000
Disbursements to SMMEs and Cooperatives (R’000)	R376 750
Number of jobs and SMMEs
Number of SMMEs and co-operatives financed	686
Number of jobs facilitated and sustained	8 744
Disbursements to designated groups
Black-owned enterprises (R’000)	R263 725
Women-owned enterprises (R’000)	R150 700
Youth-owned enterprises (R’000)	R113 025
Enterprises owned by entrepreneurs with disabilities (R’000)	R26 373
Township-based enterprises (R’000)	R94 188
Enterprises located in rural towns and villages (R’000)	R150 700

Source: Sefa (2023)

 

5.   Engagement from Committee and Department

 

• The Department indicated that it is aware of the capacity constraints in Local Economic Development (LED) Units in local municipalities. Over the medium term in collaboration with municipalities including SALGA, the Department of Cooperative and Traditional Affairs and National School of Government (NSG) will formulate a strategy and action plan to tackle capacity requirements in relation to LED Units.
• With regard to the perception of merger delays between Sefa, Seda and Co-operative Banks Development Agency (CBDA) due to internal conflicts, the Department indicated that, a joint business operation forum has been established which consist of technical committees led by the Director-General inclusive of the Chief Executive Officers. There are work streams that are driving the work towards merger. The Department indicated that there is a need for the promulgation of new legislation that will create this new agency. Currently, the Department is in the process for review the legislation to accelerate the process, and the business case has been approved.
• The Committee indicated that after September 2023, Parliament will not be in a position to process the new bills.
• The Department reported that the new comprehensive small business strategy will tackle issues that affect SMMEs across the industries in the economy.

• The Committee acknowledged the work of the Department to realise the objective set out in the NDP, however it emphasised that more work still needs to be done. Further, the Department was urged to enhance its monitoring capacity and capability to track spending against the set strategic policy priorities.
• The Committee appreciated the significant role played by the Department relating to the Cannabis industry. It was urged that the Department must protect and promote local businesses to benefit from the Cannabis industry, in particular local businesses in Lusikisiki area. In the main the Cannabis industry should support growth of regional economies, and improve growth of local businesses and improve rural incomes.
• On the issue of Cannabis industry, Seda responded that they work close with the Eastern Cape Provincial government, and form part of the meetings that takes place with industry players, and critical stakeholders.
• The Department has set aside funding to support rural economies. As part of the broader SMMEs and Cooperatives support programme, Seda has created in incubators in Amathole, OR Tambo and Buffalo City to support local economic development. Traditional leaders have been drafted in to support the programme.
• Regarding international market access in Limpopo province, the Department indicated that it has supported some of the SMMEs originating from Tzaneen, Vhembe, and Sekhukhune and from the Polokwane community. Further, in relation to international market, Seda has visited SMMEs to check the quality of products produced to ensure that they meet the international standards required before they exposed them to international trade. Seda has established more than 40 incubators over the past three to four years with limited funding. Out of the 12 incubators some are linked with the mining in Mpumalanga Province, Agriculture in the Northern Cape and Cannabis in the Eastern Cape.
• The Department indicated that the report will be submitted to the Select Committee on the number of SMMEs and Co-operatives supported by them on quarterly and annual bases.
• With regard to the loss experienced by Small Enterprise Finance Agency in the past financial year, the challenges faced by Sefa was the expectation to fund those business that are very risky, that cannot be supported by the banks. The inherent nature of DFIs is to close the gap because banks are very strict in terms of financing SMMEs. It is important to assess the approach based on the performance of the business. The Department has reported that it has raised the concern with National Treasury at some stage that expectations with regard to entities supporting businesses in rural areas and in townships must not be too exclusive to what the banks are doing.
• The measurements in terms of the performance of the entity is very important, in the past few years before Covid-19 pandemic started, the Department has not invested in new businesses and most of the funds have been allocated to supporting existing businesses. The Department spent R300 million on Covid -19 response, R200 million on riots and over R50 million on floods relief. The Department reported that it is trying its best to save existing jobs.  
• The Department indicated that new funding had to be invested in startup businesses, especially those businesses that will be creating new jobs in future.
• The losses at Sefa are informed by the instruction from the Department, to request Sefa to implement a payment holiday and this had an effect in the balance sheet of Sefa. Some of those investments resulted in Sefa not being able to recover money from the SMMEs.
• The Committee noted that the department has requested Sefa to implement a business turnaround intervention where they can assist with business viability. This instrument aim to assist existing businesses that are suffering losses; those businesses that are not expected to pay immediately and where they need to operate for a particular period to recover and start making money, before they start paying back the money owed.
• With regard to the spending in support of Cooperatives entities, the National Youth Development Agency and the Department of Agriculture made addition contributions with the latter investing R100000, and the Department of Small Business Development contributing R330 000 derived from the Cooperatives Incentives Scheme. The Department in collaboration with Seda will embark on a post investment programme to support Spaza shops.
• The Department confirmed that all businesses that were visited during the oversight for floods disaster have been paid in full. Currently, the Department indicated that it would need extra funding to other projects that might come up, unless the National Treasury could provide additional funding.

 

6. Recommendations

 

The global and domestic economies are fragile, and the South African economy is trapped in a low growth point. Compounded with Covid-19 pandemic it impacted on small enterprises, and it appears that the targets set in the National Development Plan (NDP) in relating SMMEs will not be realised, unless government in partnership with the private sector set bold measures designed to improve the support of SMMEs.

 

1. By the end of the 2023 financial year, the Minister working through the Department, should finalise the review and legislation development of the National Small Enterprise Act (1996), the National Small Business Amendment Act (2004) and the Business Act (1991), and submit such envisaged Acts (Bills) to Parliament for consideration.
2. Over the 2023 medium term, the Minister should establish capacity and capability within the Department to support and promote initiatives to Ease of Doing Business across the country. Further, it should formulate an action plan in collaboration with other spheres of government’s agencies responsible for supporting SMMEs and Cooperative to accelerate nation-wide Ease of Doing Business Initiative.
3. Growth and support of SMMEs and Cooperatives remains high on the government policy agenda. Further, closing the financing gap experienced by SMMEs and Cooperatives, particular in provinces and regions that are lagging behind in terms of economic development, should be prioritised. The Committee reiterate that the Minister should continue to engage the Minister of Finance to consider allocating additional resources over the 2023 medium term to the Department to scale-up funding and financing to bolster growth and expansion of SMMEs and Cooperatives across the country, and closing the rural and urban financing gap.

 

 

Report to be considered