ATC241119: The Portfolio Committee on Small Business Development, Having Undertaken the Oversight Visit to the Northern Cape Province from 08 – 11 October 2024

Small Business Development

The Portfolio Committee on Small Business Development, Having Undertaken the Oversight Visit to the Northern Cape Province from 08 – 11 October 2024, Reports as Follows: -

 

1.         INTRODUCTION

The Portfolio Committee on Small Business Development (the Committee) visited the Northern Cape (the Province) from 08 – 11 October.  The aim of the four-day visit was to inspect the state of projects and individuals supported by the Department of Small Business Development (the Department) and agencies, namely, the Small Enterprise Finance Agency (Sefa) and Small Enterprise Development Agency (Seda), through various financial and non-financial programmes e.g. Informal and Micro Enterprise Development Programme (IMEDP), Seda Incubation Programme, Technology Transfer Programme, Wholesale and Direct lending programmes, Khula Credit Guarantee (KCG) scheme as well as Township and Rural Entrepreneurship Programme (TREP). These flagship programmes are multi-year endeavours that both the Department and agencies utilise to extend their support to small enterprises of all shapes and sizes. The Northern Cape was the only province that the Committee has not visited since its establishment in 2014.

 

Oversight is a legislated function of Parliament, through which Parliamentary Committees, evaluate the activities of the Departments against set targets and key performance indicators. The Committees of Parliament constitute an important element of the governance processes. Oversight visits are conducted to fulfil the Committee’s responsibilities that is to monitor the executive branch of government and promote public engagement as outlined in the Constitution of the Republic of South Africa (the Constitution). The goal of the oversight visits is to further assist Committees achieve their own strategic objectives, which are rooted in the strategic objective(s) and outcome(s) of the Sixth Parliament. Following this visit, the Committee aims to utilise the oversight report to determine the extent to which the Department and agency’s activities on the ground are aligned with their Strategic and Annual Performance Plans. The Committee will moreover take advantage of this oversight report to evaluate and make necessary inputs into the pending Strategic (2025 – 2030) and Annual Performance Plans of the Department and entities.

 

 

2.         BACKGROUND

The Committee has now visited all nine (9) provinces that constitute the Republic of South Africa.  The Northern Cape is the largest province in the country. However, it remains the province with the least proportion of the South African population with just about 1.2 million residents or two percent of the national population. The five district municipalities of Namakwa, Pixley ka Seme, ZF Mgcawu, Frances Baard and John Taolo Gaetsewe, further subdivided into 26 local municipalities, represent the modern-day Northern Cape province. The province is neighbouring the countries of Namibia and Botswana to the north, as well as the provinces of North West, Free State, Eastern Cape, and Western Cape. Northern Cape has a coastline in the west on the South Atlantic Ocean. The capital town is Kimberley and that is where the Committee kickstarted its oversight visit. Other significant towns and economic hubs include Upington, Springbok, Namaqualand, Kuruman, and De Aar.  Due to the vastness of the province, the Committee primarily inspected projects in Kimberley, Upington, Kathu, Kuruman and nearby areas.

 

The economy of Northern Cape is heavily reliant on mining and agriculture. The average contribution of the mining sector to the provincial Gross Domestic Product (GDP) is roughly over 25 percent. Nonetheless, the province has seen a steady decline in the mining output over the last ten years, with the sector’s share of the provincial GDP declining from 28 to 25 percent in 2023. A substantial portion of the province's GDP comes from agriculture which accounts for 8 percent, manufacturing with 3 percent and construction with 2 percent of the GDP. One of the two locations for the world's largest and most sophisticated radio telescope, the Square Kilometre Array (SKA Project) is the Northern Cape. The project is benefiting the province's tourist and hospitality sector, among many other things, since more and more interested parties and scientists visit the town of Carnarvon. Because of its semi-arid climate, the province has a potential to increase and diversify its economy by producing electrical power. Temperatures easily go beyond 40 degrees in summer.

 

The Committee began its four-day tour to a few selected enterprises that benefited from Sefa and Seda on 8 October 2024. Twenty-two (22) beneficiary projects and individuals – all in the Northern Cape province were carefully chosen for appraisal with the goal of determining their state of success or failure, whether operational or dormant, their business requirements, opportunities and challenges, effects on reducing poverty and job creation, their alignment to local integrated development plans and provincial growth development strategy. The visit produced mixed reactions and varying opinions from members of the Committee. Other initiatives were doing well, others needed additional support either from the Department and/or agencies, others were a complete failure while one could not be located. The following beneficiaries selected randomly were shortlisted for visitation by the Committee –

• Boitshepo Gaolehelwe, Intenet Café[1].
• Lemogang Setlhabi, Catering.
• Maggie Monabe, Catering.
• Mary Femmers, Catering.
• Kedisaletse Mmelesi, Beauty Saloon.
• Motshidisi Maroba, Fruit & Veg.
• Kimberly Diamond & Jewellery Incubation.
• Masego Nkolonyane, farming.
• Ingrid Moseki, Crop farming.
• Nicodemus Bok, Deco.
• Tlotlo Modise, Plumbing.
• Maria Kompe, Catering.
• Northern Cape Agriculture Incubator, Incubation.
• Letshotshwa (PTY) LTD.
• DCO HOLDINGS (PTY) LTD.
• Toufieka’s Projects
• Rasswater Community Craft Development.
• LAD Tuck Shop
• Lendies Cash Store
• Onathile Enterprise
• Masakhane Art Centre.
• Word of Mouth Life Coaching.
• Prudie M Enterprise.
• Sne and Busi Ceramics.
• Petra 23 Enterprise.
• Amor De Dios Creative Studio (10).
• JWC Fast Food.
• Thanodi Spares and Stationery (PTY) LTD.
• CH12MBO HOLDINGS (PTY) LTD.
• Fillies Enterprise and Services (PTY) LTD.
• Cwaro General Trading (PTY) LTD.
• Resemeletse Motlopi Coffee Project.
• Verquioline Holdings (PTY) LTD[2].
• Eric Melato[3].

 

3.         OBJECTIVES OF THE OVERSIGHT VISIT

The oversight function of parliament is an essential component of democracy. It is a method of holding the executive branch accountable for its activities and to ensure that policies are implemented in accordance with the laws and budget approved by parliament. The parliament's rigorous scrutiny of the executive branch is an indicator of exemplary governance. Accordingly, the purpose of the visit was to evaluate progress registered by the Department and entities on projects they supported in line with their strategic plans and annual performance plans, to test the legitimacy of the information provided by agencies through their quarterly and annual reports, to interact with internal and external stakeholders in order to inform the Department and agencies future strategic plans and annual performance plans, and lastly, to ensure intergovernmental checks and balances in an effort to streamlining the Departmental and entities systems and processes.

 

4.         COMPOSITION OF THE DELEGATION

The delegation included members of the Portfolio Committee on Small Business Development, Parliamentary Officials, Department of Small Business Development officials, Provincial Legislature, Department of Economic Development and Tourism, Districts and Local Municipalities Local Economic Development, and officials from the Small Enterprise Finance Agency and Small Enterprise Development Agency.

4.1       Members of the Portfolio Committee on Small Business Development
Ms MC Dikgale, MP                  (ANC) Leader of the delegation
Ms NK Bilankulu, MP                (ANC)
Ms L Sapo, MP                         (ANC)
Ms S Singh, MP                         (DA)
Ms B Mathulelwa, MP               (EFF)
Ms MC Mafagane, MP              (MK)
Ms D Ntshaba, MP                     (MK)
Mr Inkosi B Luthuli, MP              (IFP)
 Ms NL Webster, MP                  (BOSA)

           

4.2       Parliamentary Officials
Mr NK Kunene                          Committee Secretary
Mr S Gumede                          Committee Content Advisor
Mr M Dodo                               Committee Assistant

 

4.3       Department of Small Business Development Officials
 

Mr Lungisa Mzizana                              Parliamentary Liaison Officer (Office of the Minister)
Mr Mandla Sithole                                 Parliamentary Liaison Officer (Office of the Deputy Minister)
Mr Tinyiko Baloyi                                  Assistant Director: DSBD
Mr Vukile Nkabinde                               John Taolo Gaetsewe District Champion: DSBD
Mr Letlatse Lehane                               Head of Department: Khula Credit Guarantee (KCG)
Mr Tshekedi Rammutla                         Manager: Seda STP National
Mr Kagisho Manjinji                              Regional Manager: Sefa Northern Cape
Ms Kedisaletse Williams                       Provincial Manager: Seda Northern Cape
Ms Masego Job                                    Branch Manager: Seda Upington
Mr Ncedile Tola                                    Branch Manager: Seda Kuruman
Ms Mvuyo Madondo                              Information Officer: Seda
Mr Sinoxolo Zweni                                Regional Facilitator: Seda
Ms Bridgett Khoza                                Post-Investment Officer Collections: Sefa
Ms Charmaine Sali                                Regional Administrator: Sefa
Mr Ivan Juries                                      Senior Manager: LED & Tourism Dawid Kruiper Local Municipality
Mr David Davids                                   Member of Provincial Legislature: Chairperson of Provincial Portfolio Committee on Economic Development
Ms Florence Masilabele                        MMC of Planning, Development & LED: John Taolo Gaetsewe District Municipality
Ms Boitshoko Segoje                            Acting Director, Planning & Development: John Taolo Gaetsewe District Municipality
Ms Palesa Mocwane                             Assistant Director: DEDET
Ms Shereen Herholdt                            Project Administrator: DEDET

 

 

5.         PROGRAMME OVERVIEW

The Department aims to promote and develop entrepreneurship, SMMEs and Co-operatives through an integrated approach that guarantees an enabling legislative and policy climate for growth and sustainability of this important sector. The primary objective is to change the economy through sustainable and innovative SMMEs and co-operatives. To address the socio-economic outlook, the Department and its agencies, Sefa and Seda, have developed several programmes that seek to tackle lack of growth while increasing efforts to establish a favourable environment and provide support to SMMEs and cooperatives, and use internal support programmes.

 

For its Northern Cape visit, the Committee had grouped projects into product offerings by both the Department and entities. There were several projects inspected under the IMEDP, TREP, KCG, Seda Incubation Programme, Sefa Wholesale Lending Programme, and the CSP Programme. As discovered by the Committee, each programme has its own set of challenges. Whilst there is nothing untoward with the Department's approach of assisting small entrepreneurs in various ways, there is a real risk of creating a culture of dependence, especially if the objective is to create businesses that maintain and sustain themselves over time. It is thus important for the Department to integrate sustainability aspects into its programmes right from the beginning.

5.1       Informal and Micro Enterprise Development Programme

The Informal and Micro Enterprise Development Programme (IMEDP) derives from the National Informal Upliftment Strategy which was piloted as the Informal Traders Upliftment Programme (ITUP). IMEDP is administered as 100 percent grant offered to informal and micro enterprises from a minimum grant amount of R500 up to a maximum amount of R20 000 worth of equipment and machinery. Based on budget considerations from year to year, the value of infrastructure provided must be averaged amongst all the qualifying applicants in any given financial year. This is communicated to the public as and when necessary.

 

The objective of the programme is to support informal and micro enterprises with equipment and machinery depending on the activities of the business (e.g., baking ovens, grass cutting machines, hair salon equipment, artisanal tools, generators/ inverters/solar systems, etc.) as a once off injection to eligible applicants. The IMEDP policy guideline states that the approved interventions will be monitored to assess how the programme is contributing to its stated development outcomes. But, as illustrated in this report, the Committee encountered almost the opposite in Northern Cape. The following individuals were selected for visitation by the Committee -

 

Table 1: IMEDP Beneficiaries

Name of Enterprise	Client	SBD Responsibility	Location
Internet Cafe	Boitshepo Gaolehelwe	DSBD IMEDP (MJ)	Delportshoop
Catering	Lemogang Setlhabi	DSBD IMEDP (MJ)	Delportshoop
Catering	Maggie Monabe	DSBD IMEDP (MJ)	Delportshoop
Catering	Mary Femmers	DSBD IMEDP (MJ)	Longlands
Fruit & Veg	Motshidisi Maroba	DSBD IMEDP (MJ)	Barkley West
Beauty Salon	Kedisaletse Mmelesi	DSBD IMEDP (MJ)	Barkley West
Farming	Masego Nkolonyane	DSBD IMEDP (MJ)	Kimberly
Crop Farming	Ingrid Moseki	DSBD IMEDP (MJ)	Kimberly
Deco	Nicodemus Bok	DSBD IMEDP (MJ)	Kimberly
Plumbing	Tlotlo Modise	DSBD IMEDP (MJ)	Kimberly
Catering	Maria Kompe	DSBD IMEDP (MJ)	Kimberly

Source: DSBD Database of IMEDP Beneficiaries

 

The crystallisation of key performance indicators has been a matter of great discontent for the Committee. Hence the focus of the visit was also to juxtapose key performance indicators with actual work or performance on the ground. The Committee is of the viewpoint that the Department and agencies give too much priority to numbers instead of assessing the impact of their support on recipients. In this oversight, the Committee identified several good interventions, nevertheless, they are unlikely to have a significant influence or yield the intended results on the ground. For example, there were numerous instances of beneficiaries who received training. But when they were probed further about how the training had helped them, whether through increased in sales performance, increased revenues, acquiring of new skills to turn around or expand the business, etc, it became clear that the goal of the interventions begin and end with training. There is no purpose of guiding recipients to self-sufficiency and self-sustainability.

 

5.2       Wholesale Lending Programme

In order to increase its ability to provide capital to small enterprises throughout South Africa, Sefa offers facilities (debt/equity) to intermediaries, joint ventures, partnerships (Specialized Funds), and other cooperatives through its wholesale lending loans of up to R150 million to intermediaries and R5 million from intermediaries to end users. In certain markets and/or sectors that are not served by Sefa's direct lending operations, small and medium-sized firms can obtain financing solutions from Retail Financial Intermediaries. The business loans are adaptable and designed to satisfy the RFI's funding requirements. The investment plan for the RFI may include a variety of equity instruments, including self-liquidating ones. For the first-time borrowers, the transactional limit will be based on need and will not exceed R100 million, or the counterparty limit set by Sefa. The Committee visited two RFIs and met with the loanees to assess their experience of working with the RFIs as opposed to working with Sefa directly, the rate of interest being charged, how they heard or learned about the intermediary, and the general conditions of the loan.

 

Table 2: Sefa Wholesale Lending Beneficiaries

Name of RFI	Name of Enterprise	Loan Amount	Location
Enable Capital	Cwaro General Trading (PTY) LTD	R81 120.00	655W Morgon Modupu Street, Maruping, Kuruman
	Letshotshwa (PTY) LTD	R189 750.00	21 Ashe Road, Klisserville, Kimberley
Peoples Fund	DCO Holdings	R10 976.00	25 Verberna Avenue, Square Hill Park Kimberly
	CH12MBO Holdings	R72 683.00	10886 Paddavreter Siyathemba, Kathu

Source: Sefa RFI List of Beneficiaries

 

Compared to MFIs and RFIs from other provinces, the two intermediaries with whom the Committee communicated with charges reasonably competitive rates ranging from 18 to 20 percent. The debtors also sounded pleased with the borrowing terms and the overall experience of working with the RFIs. Both RFIs and beneficiaries are honouring their loan repayments as they become due. From the Committee point of view, however, there is still a level of scepticism. The value proposition of the MFIs and RFIs, in the era of financial technology (FinTech), is failing to resonate with the Committee. During its North West visit, which focused on Wholesale Lending, the Committee made several observations and recommendations that Sefa is yet to execute. During this phase of the visit, several of the vulnerabilities and deficiencies might be noticed. The Committee’s view is that until those flaws are fully addressed this programme will remain in doubt.

 

5.3       Seda Incubation Programme

The Seda Incubation programme is a three-year programme designed to strengthen technology commercialisation and harness the entrepreneurship of the technology community in South Africa. Each of the Seda supported incubators has its own incubatee recruitment/selection process that is unique to their sector. Applicants must contact the relevant incubator for the recruitment criteria. Through incubation, entrepreneurs develop skills, knowledge and markets. These improvements are intended to lead to increased profitability and growth. Enterprises will be able to employ more people and enter new markets with cutting-edge products and services. During the oversight, the Committee visited and interacted with three incubators, namely, Northern Cape Agricultural Incubator, Kimberley International Diamond and Jewellery Academy and Sol Plaatjie - Centre for Entrepreneurship and Rapid Incubator all of whom are funded by Seda and other private sector organisations. Some of these incubators have been with Seda for more than five years.

Table 3: Seda Incubators and Beneficiaries

Project Name	Contact Person	Location
Northern Cape Agriculture Incubator	Adv. Itemogeng Steenkamp	Kimberley
Kimberley International Diamond and Jewellery Academy	Mr. Bonolo Moea	Kimberley
Sol Plaatjie - Centre for Entrepreneurship and Rapid Incubator	Mr. Anthony MacMinn	Upington
Beneficiaries
Mr Sho Mergeno		Kimberly
Toufieka’s Projects		29 Alwyn Street Keimoes 40km
LAD Tuck Shop		26 Arrie Steenkamp Steet, Upington
Lendies Cash Store		18 Shimane Street Paballelo
Onathile Enterprise		14 Seemue Street
Word of Mouth Life Coaching		185 Lovers Lane Street Paballelo
Prudie M Enterprise		Leubekkie Street, Progress, Upington
Petra 23 Enterprise		Silkcatskop Street Rosedale, Upington
JWC Fast Food		Rosedale Plakkers, Upington

Source: Seda Database

 

5.4       Township and Rural Entrepreneurship Programme

The Township and Rural Entrepreneurship Programme (TREP) is a dedicated programme to transform and integrate opportunities in townships and rural areas into productive business ventures. The focus is to create platforms that provide the business support infrastructure and regulatory environment that enables entrepreneurs to thrive. The programme targets beneficiaries from the enterprises which are owned by entrepreneurs based in the townships or rural areas. The goal of the initiative is to overcome the legacy of economic exclusion by creating a conducive environment for entrepreneurial activity and providing dedicated business support to enterprises in rural and township areas including access to funding. The Department encourages township or rural-based entrepreneurs to apply for support including funding through the common application template from the Small Enterprise Development Agency, the Small Enterprise Finance Agency, National Empowerment Fund and the National Youth Development Agency. The Committee visited and interacted with the only two beneficiaries of the programme during the last two financial years both domiciled in Kuruman.

 

Table 4: List of TREP Beneficiaries

Project Name	Funding Amount	Location
Thanodi Spares and Stationery (PTY) LTD	R264 044.61	Stop No 5 Beare Street, Savoy Building, Kuruman
Fillies Enterprise and Services (PTY) LTD	R347 000.00	540 Mocwagole Street Kuruman, Mothibistad

Source: Sefa Database

 

5.5       Khula Credit Guarantee Scheme

The scheme issues a range of credit guarantee products to lenders (commercial banks and other financial institutions) for SMME borrowers whose access to finance is impeded by the fact that they do not have collateral required by the lenders. SMMEs would normally require finance in order to establish, expand or purchase existing businesses. The three broad categories of indemnities available are individual, portfolio and institutional indemnities. The financial institutions assess the business plans and loan applications in terms of their lending criteria.

 

Sefa will set certain guidelines for the assessing and monitoring of the loan process on which the indemnity will be enforced. Once the application has been approved, the financial institution will approach Sefa for indemnity cover and a mentor may be appointed to help with the implementation of the business plan, setting up of operational systems and general business management. The financial institution manages the loan and collects payments for the duration of the loan. The full repayment of the loan remains the responsibility of the applicant. Banks are more likely to grant applicants more broad credit facilities on better conditions if their debtors are credit insured.

Table 5: KCG List of Beneficiaries

Project Name	Contact	Location
MS Du Plessis Familie Trust	Mrs. Catharine Lizelle Du Plessis	4A Kwikkie Street Upington
Bonte Trading BK	Mr. Elias Du Plessis	Upington
TK Auto Tryes and Spares (Pty) Ltd	Mr. Thabiso Kwadi	Erf No D320 Cardington Road, Magojaneng, Kuruman

Source: Sefa Database

 

The relationship between Sefa and commercial banks, through Khula Credit Guarantee (KCG), needs further strengthening. For a long time, the Committee has maintained that Sefa lacks sufficient financial reserves to support the millions of SMMEs and cooperative that require funding. The credit gap is just too huge. This programme positions Sefa well to derisk thousands of SMME, making them eligible for financing from commercial banks using instruments such as loan or credit guarantee agreements. Moreover, it helps them get closer to getting startup funding. The Committee held a briefing with KCG officials, and due to the confidential nature of the tripartite relationship between KCG, the funders and the beneficiaries, the Committee resolved to cancel the visits to the identified beneficiaries. The Committee is satisfied with the report it received with regards to the three projects that had initially been designated for inspection.

 

5.6       Customised Sector Programme

The roles between the Department of Sports, Arts, and Culture (DSAC) and the Department may appear unclear in as far as this sector is concerned. The DSAC is currently in charge of the Creative Industry Masterplan, which was developed in large part thanks to the DSBD. The main areas of focus for the Creative Industry Masterplan are visual arts, crafts, design, audio-visual and interactive media, design and creative services, performance and celebration, including music, publishing and printed media. In August 2022, the Cabinet gave approval for its implementation. The Department is largely responsible for the commercialisation aspects of certain subsectors such as arts and crafts. In terms of the beneficiary list shared with the Committee in preparation for the oversight visit, the Committee could only identify four projects supported in Northern Cape during the past two financial years (2022/23 & 2023/24). These projects are outlined in table 6 below.

Table 6: List of CSP Beneficiaries

Project Name	Contact Person	Location
Masakhane Art Centre	Eunice Badanile	883 Rhune Pabalelo, Upington
Rasswater Community Craft Development	Nombulelo Masala	58 Knoffellan Raaswater Luisvadorp, Upington
Sne and Busi Ceramics	Shane Mayongo	1 Brand Street, Upington
Joy Box_By_NDS (Pty) Ltd	Lizelle Julie	President Steyn, Upington

Source: DSBD Database

 

In its amended 2020 – 2025 Strategic Plan, approved by Parliament in 2020, the Department made courageous statement in as far as this sector is concerned where it pledged to “increase contribution of the Creative Industries Sector to GDP” with a particular focus on increasing the value add, exports and contribution to employment. The development in the Northern Cape raises more questions than answers about this commitment. For example, the Committee is unable determine the advantage to the Department of establishing Memorandums of Understanding (MoU) with Provincial Investment and Promotion Agencies.  It is unclear what sort of services PIPAs provide that cannot be done in-house or through SEDFA. During the presentation of its annual report the Department informed the Committee that some CSP beneficiaries could not receive the targeted interventions as the Northern Cape Development Agency (NCEDA) was unable to assign a consultant to conduct the training due to compliance issues. In terms of this collaboration, NCEDA is expected to procure consultants to train the beneficiaries after receiving funding from the Department. The design of this partnership, and by extension, the DSBD programmes, is problematic because it is dependent on PIPA performance. If PIPAs fail to function, the Department's performance and budget suffer as well.

                                               

6.         DAY ONE – FRANCES BAARD DISTRICT MUNICIPALITY

The group converged at the Sefa/Seda provincial office in Kimberly for a short briefing, introductions, and to plan for the day’s activities. The first day of the Committee's schedule was set aside for visits to IMEDP beneficiaries in Delportshoop, Longlands, Barkley West and Kimberly all under Sol Plaatjie Local Municipality. The visit to Kimberley International Diamond and Jewellery Incubator was added to the programme, and one internet café visit was cancelled due to the beneficiary not being traceable or reachable.

6.1       Lemogang Setlhabi (Catering Business)

The first stop of the day was to Mr. Lemogang Setlhabi in Delportshoop. He is interested in starting a food and catering business. During his discussion with the Committee, he explained his background and what drove him to this type of business. He informed the Committee that part of his research included determining where he would conduct his business. His idea was to acquire a gazebo and had already picked the spot where he would install it to begin selling bunny chow (ikota), vetkoeks (magwinya) and other foodstuff that are in high demand. The success of a vetkoeks and kota business are highly dependent on its location. The business must be placed where a lot of new people are passing by. Mr. Setlhabi seems to have gotten this one right. He nevertheless struggled with the startup capital and ended up borrowing money from his uncle. He had barely even begun when he had to repay his uncle's R2000 loan.

 

When asked how he learned about and had applied for the assistance, he told the Committee that he overheard a friend say that the Department will be holding road shows in the area to inform the public about the assistance that the Department provides. Indeed, he attended the workshop and applied for R10 000 worth of equipment. His application contained a gazebo. However, when he arrived to collect the equipment, he discovered that the gazebo was not included. During his discussion with the Committee, it also became apparent that the Department had provided equipment without properly subjecting him to a needs assessment. There were lot of areas where the Committee felt that young and aspiring entrepreneurs like him should be subjected to an elementary business training before being qualified to receive assistance under the IMEDP programme. Due to several gaps that could have been averted had the needs assessment and analysis been completed, the equipment has lain unused and idle since it was received.

 

After inspecting the equipment, the Committee voiced concerns about the quantity and quality of the items compared to the cost. The recipient claims that he assumed the equipment was worth the sum of money he requested. Unfortunately, he did not receive a formal confirmation or delivery note specifying the quantity and the price of products when he picked up the equipment. Due to the absence of the officials from the Department with intimate knowledge of how the programme works, the Committee could only defer the matter for further investigation at a later stage. Seda officials present in the oversight pledged to continue working with Mr. Setlhabi to help him with various interventions, such as training, gap analysis, registrations, and applications for more help to launch his business. The Chairperson appreciated Mr Setlhabi for taking the time to interact with the committee.

 

6.2       Maggie Monabe (Catering Business)

Ms. Maggie Monabe runs a home-based catering service but also targets schools, pension pay-points and big local events. Following the introductory and welcome remarks, the Chairperson gave a detailed background behind the Committee’s visit to her homestead. She asked her to relax and just give the background information about the business, how she started, what brought her closer to this type of business, what exactly did she receive from the Department, the value of the equipment if she knew and areas where she needs additional assistance. Ms. Monabe welcomed the Committee and recounted that before the receipt of the equipment from the Department, she was struggling because she had an old equipment. Sometimes she was forced to hire.

 

She told the Committee that her love for catering started way back especially because of low startup costs compared to other businesses. With no brick-and-mortar, customer-facing space needed, starting a catering business from home can be more affordable – this is the view Ms. Monabe shared with the Committee. She is one of the beneficiaries of the Department’s IMEDP programme. She received one folding table, four plate gas stove, a 9kg gas bottle, three industrial ports and two stainless steel warmers. Her business has been doing reasonably well despite hiccups here and there. All the equipment is being used. She is able to earn income and grateful for that. Members of the Committee posed numerous questions, added input, made statements of appreciation and encouraged Ms Monabe to press ahead with her business venture.

 

When asked what other additional assistance she requires to ensure smooth running of her business, she highlighted challenges with transport, she often hires a vehicle to transport her equipment. There are various set of skills such as basic book keeping which her business requires from time to time that she does not have. But she is confident that given an opportunity she may be able to acquire those through training. As Seda was in the midst throughout the visit, the Committee directed that officials from the agency should do needs assessment and dispatch various interventions to assist Ms. Monabe take her business to another level.

6.3       Mary Femmers

Ms. Femmers is also a beneficiary of the IMEDP programme. Her business is operated from home in Longlands. She is therefore able to save on overhead costs. She received catering equipment to the value of R6000 which include a one pole tent, about 60 plastic chairs and three-legged pot.  She hires out the equipment including the tent to funerals and earn income. Currently, the local community rent expensive tents from a faraway. She saw a gap in the market which made her spring into action. The plan was for the local community to hire the tent cheaply and at market prices. To date, the tent has been hired on a number of occasions both within the community and to adjacent townships, and everything appears to be in order.

 

So far, Ms Fremmer is able to earn at least R1200 from renting out the tent. Her medium to long-term plan is to work with local funeral parlours. But due to her not having a reliable transport, she misses out on some of the opportunities. Committee members inspected the equipment but expressed similar sentiment like before that the value of the equipment seem way less than the amount mentioned by Ms Fremmers of R10 000. Once more, upon receipt of the goods, Ms Fremmer did sign any delivery note, she cannot remember signing any contract and she was not made aware of any additional assistance that may be available should she need more assistance. 

 

6.4       Motshidisi Maroba (Fruit & Vegetable)

Ms. Maroba is a street or informal trader operating her business near the taxi rank in Barkley West. She sells fruits and vegetables and many other daily essentials to the general public. She came across as a hardworking small entrepreneur who has been in the game long enough to know the ins and outs of the street trading. Ms. Maroba is operating legally and has a local municipality permit. Through the IMEDP programme she received the camp master shade tent. The tent gives her fruits and vegetables some nice solid shade both in sunny and rainy weather – keeping her fruits and vegetable fresh the whole day. As part of the package, she also received two rectangular folding tables which she uses to display her produce. The business is making the ends meet with a potential to grow even further provided she receives necessary support that will help her expand and diversify. There is a scope for her to supply cooked meal. The Committee was fairly impressed with a number of things e.g. her knowledge of the business, her demeanour and being people’s person, the area or positioning of her business and just general surroundings.

She has full comprehension of the informal trading business in general to a point that she sees her peers as partners instead of competitors, and she advocates for interventions like bulk-buying in order to lower buying costs. When asked how much money she makes per day, week and month, she estimated to be making roughly over R200 a day but during busy periods, that amount can double up to more than more than R500 a day. On average per month, she earns a gross income of between R5000 to R7000. Like a typical informal trader, Ms. Maroba’s challenges range from unavailability of funds to acquire large stock and negotiate favourable terms with the suppliers, lack of support from the government, lack of infrastructure particularly the ablution facilities, lack of management skills, and marketing skills, biggest challenge being that, even if there are training opportunities, informal traders often struggle to leave their businesses to attend those training. The Committee thanked her for her time and encouraged her to not stop knocking at Seda’s door should she need any form of assistance to propel her business forward.

 

6.5       Kedisaletse Mmelesi (Beauty Salon)

The Committee was impressed by Ms Mmelesi’s knowledge of the business and how over the years she has navigated and stayed the course in a business that is massively dominated by foreign nationals. Originally, her business was operated from home. But due to not having adequate space she resolved to look for a place with reasonable space for the comfort of her clients. The Committee visited her business premises in Barkley West to not only inspect the equipment she received through the IMEDP but to also discuss with her ways and means of growing her business. Through the IMEDP, Ms Mmelesi received massage bed, a mirror and other few items worth over R6000. She is one of the few IMEDP beneficiaries who informed the Committee that acquiring of the equipment is really helping and has brought much needed improvements in her business. She stressed upon the Committee that people visit salons not only for haircuts and manicures, but also to be pampered and relaxed. The salon may have all the best products and the most competent employees, but without a comfy salon bed, the customers may not feel completely revived.

 

Ms Mmelesi was quizzed by the Committee on a number of business-related issues such as her monthly turnover, competition, if she needed any further assistance to grow her business. She was thankful to the Department for the equipment. It is early days she said, she had only received hers a month or two back and she was not therefore in a position to indicate if it has helped her improve her turnover. However, she makes roughly over R6000 per month. Her other concern was the area or location of her business which seemed to be a distant away from where the crowd is. As a result, she relies on referrals, word for mouth and social media to advertise her business. Overall, the Committee was happy with Ms Mmelesi presentation and pressed upon her to keep making contact with Seda for any assistance that may help improve her business.

 

6.6       Kimberley Diamond and Jewellery Incubator

The initial programme of the Committee did not include a visit to Kimberley Diamond and Jewellery Incubator (KDJI).  Nevertheless, the Committee felt that Northern Cape and Kimberley in particular has been at the forefront of mining activity, it should at least visit one mining related project. There is for example a project that was launched five years ago in Kimberley where mine owners granted more than 800 unlicensed or informal small-scale miners the right to legally mine around 1 500 acres of diamond-rich waste fields. The aim of this noble government-backed scheme was to curb illegal mining and black-market trade in diamonds and serve as a blueprint for future attempts elsewhere, not only in the diamond sector, but potentially also manganese, gold and chrome. Regrettably, the project was immediately plagued by violence and collapsed. In the four areas visited by the Committee in Kimberley, Upington, Khathu and Kuruman, there is no small-scale mining project supported either by the Department, Sefa or Seda.

 

The KDJI incubator was founded by the Northern Cape Provincial Government and the Small Enterprise Development Agency on 16 April 2015. The KDJI is in the heart of Kimberley. It was established as the sole incubator within the precious stone and minerals beneficiation as well as jewellery manufacturing sector. It is one of 115 Seda supported incubators. The incubator offers knowledge sharing, communal infrastructure and technological assistance to jewellers, diamond cutters and polishers who are unemployed, facing difficulties, or are unemployed within a single supportive environment. The purpose of KDJI’s establishment is to develop diamond cutters, polishers and jewellery manufacturers into better business people through appropriate business development interventions. These interventions are focused on addressing the high failure rate of existing small entrepreneurs in the mineral beneficiation and jewellery manufacturing sectors due to a lack of entrepreneurial skills. KDJI works with viable small, medium and micro enterprises in the mineral beneficiation and jewellery manufacturing sectors.

During its visit to the incubator the Committee was welcomed by the Chief Executive Officer Mr. Bonolo Moea. He briefed the Committee that Seda has funded the incubator since 2015 to the tune of R20 million. During the past financial year, the incubator received R1.3 million while during the current financial year it receives R1.4 million. He took the Committee through a tour of the multi-million rand facility and responded to several clarity-seeking questions from members of the Committee. He informed the Committee that since its formation, KDJI has grown to become the only incubator with capacity to provide knowledge exchange, shared infrastructure and technology support to entrepreneurs in the precious minerals and jewellery manufacturing sector.

 

The KDJI has assisted over 70 small business enterprise in the diamond and jewellery industry since 2015. The incubator has assisted and opened doors for some of the small-scale diamond polishers to exhibit their products domestically and overseas. Seda has been funding it since 2015. To strengthen the capacity of the incubators to deliver, Seda is now nominating its officials to serve on the Boards of the incubators. Overall, the Committee was happy with the experience and the support Seda has provided up to so far. But made it clear that there should be an exit plan in the horizon. The Committee reminded Seda that in terms of its guidelines, incubators are meant to be supported for a period not exceeding 36 months. The Committee thanked Mr. Moea for making time at such short notice and wished the incubator well.

 

6.7       Masego Nkolonyane (Cattle Farming)

Ms Masego Nkolonyane is an aspiring cattle farmer with interest in cattle breeding. She owns two-hectare farm 12 kilometres away from Kimberley CBD. She applied for a stock fence to protect her property and for controlled grazing, a big Jojo tank (5 000 litres) and a wheelbarrow. Fencing on farms is erected for a number of reasons, including separating the properties of different owners, keeping livestock within certain areas or out of other areas, and for security. It is particularly important for a start-up venture due to lack of insurance in case of theft, to keep the livestock safe and secure, dividing pastures and offering security. When the IMEDP prospect came across, she saw an opportunity and lodged her application.

 

Regrettably, upon receipt of the goods, she received four rolls of chicken wire fence, a 260-litre Eco tank, and a wheelbarrow. Some of the items had just been delivered to her a few days before the Committee's visit by a courier company. She expressed her displeasure at the entire process, including an application she submitted to Seda for Technology Transfer Assistance (TTA) that has been pending for almost a year. The Committee was also not satisfied with how her application for IMEDP had been handled including the TTA application. Once again Seda officials were called upon to follow up on both cases to ascertain what had happened, to urgently develop a plan of action and report back to the Committee and Ms. Nkolonyane. On Monday 11 November 2024, the Portfolio Committee made a courtesy call to her to ascertain if anything was being done or not to assist her. She confirmed that on the TTA application, Seda had called her the week before to finalise her application.

 

6.7       Ingrid Moseki (Poultry Production)

Ms Moseki is a young aspiring woman entrepreneur with lot of potential. She has interest in the poultry farming business. She is in the process of starting a backyard or small-scale chicken farming venture. Impressively, she uses her resources to get some of the basics done. Ms Moseki fully understands that starting a chicken farm is a difficult endeavour that requires extensive planning, discipline, and devotion. But it is also a profitable and gratifying business. Her theoretical knowledge of running a chicken farm business was very remarkable including her ability to keep records. She told the Committee that as a small-scale farmer, her initial plan is to start servicing the local community and slowly expand to mining areas. When asked what exactly did she receive from the Department, the value of the equipment or if at any point she was informed how much she actually qualified for, she told the Committee that she only received the chicken mesh wire and the razor fence. Ms Moseki has never done any training on poultry production.

 

She was not aware as to the value of both items and was also unaware how much initially was approved as there was no paperwork given to her. She was also not made aware that the maximum amount she qualifies for was R15 000 even when it was clear that she needed more than that. The Committee asked Ms Moseki if she had applied at Seda for assistance with overall business planning process including funding, training, branding and any non-financial products offered by Seda, she said no. She had only applied to the Provincial Department of Agriculture before coming across the IMDEP programme. Ms Moseki now sources 500 chicks weekly from a trusted supplier. She employs only a few red heating bulbs that offers additional warmth as needed with an overhead panel heater. From the Committee point of view, it was clear that without adequate infrastructure and enough space, the project will most likely suffer in the long run. She informed the Committee of a two-hectare family plot in Roodepan where she plans to launch her full-scale poultry project. When the Committee arrived at her premises it was late at night. She had waited half a day and the Chairperson, on behalf of the Committee, thanked her for that. Seda was directed to walk this journey with her as it was clear that she has passion and knowledge of the business. She just needed support and sector specific training on poultry production and management.

 

Following a thorough examination of the IMEDP projects and beneficiaries, the Committee concluded that, despite their noble aims, but the training and other support interventions are lacking in many respects and are not streamlined. They are also not intended to guide or assist beneficiaries throughout the entire value chain process. The distribution of utensils, catering supplies, machinery, and other items without first determining the beneficiaries’ needs was another example of the mismatch in offering help or support that was not necessarily needed by the clients or beneficiaries. Consequently, the needs of the beneficiaries and the intervention provided were sometimes at odds. The Committee also took note of the fact that almost all projects under IMEDP lacked surveillance and constant monitoring. At some point, informal traders aspire to evolve into a more formalised business. The programme drafters and officials should always keep this in mind.

 

7.         DAY TWO – FRANCES BAARD DISTRICT MUNICIPALITY

Day two of the visit was assigned for finalisation of the previous day’s Committee programme that ended late at night and to interact with Sefa Wholesale lending beneficiaries, Tender Capital Cape (Pty) Ltd and Peoples Fund (Pty) Ltd as well as their beneficiaries still in Sol Plaatjie LM.

 

7.1       Visit to Northern Cape Agriculture Incubator

The Committee’s first visit of the day was to Northern Cape Agriculture Incubator (NCAI) in Minerva Gardens, Kimberley. The company was founded in 2018 but actively began operating in 2022. It is corporatised as a Non-Profit Company (NPC) in terms of the Companies Act. The NCAI is a beneficiary of the Seda incubation programme and has in its Board a Seda official looking after the interest of the government. It is one of the only 3 fully operational Seda supported incubators in the Northern Cape Province. The incubator’s head office is in Kimberley with satellite campuses in De Aar and Kathu. It is so far the only Seda supported agriculture incubator in SA offering support services in both crop and animal production. Seda funded the establishment to the tune of R5 million for capital expenditure (CAPEX) and co-funded by the founders to the tune of R2.3 million to establish demonstration centres in order to generate additional income. There are other partners like Eskom Foundation that made monetary contribution to the tune of R2.7 million to help the incubator lower the cost of infrastructure.

 

The Northern Cape Agriculture Incubator follows a trial and tested incubation model where a period of three to six months is utilised as a pre-incubation period (pre-selection, assessment and selection), 24 months dedicated to full training, technology assessment and transfer, development and mentoring, implementation, commercialisation stage, market partnerships and six months preparation to graduation stage. The incubator capacity is 15 but currently has 40 students due to high demand of the programme. According to the leadership of the incubator, there is a growing concern that Seda funding has dwindled over the years. For instance, the funding amount has gone down from R1.9 in 2023 to R1.4 million during the current financial year. The Committee was taken through a tour of the facility. The facility is quite expansive with a well equipped with state-of-the-art broilers, hatchery, layer house, feeders and watering systems and egg handling equipment etc. Plans are afoot to construct an advanced abattoir in the farm that meets all the market demands including such as South African Bureau of Standards (SABS), Hazard Analysis and Critical Control Points (HACCP), International Standards Organisation (ISO) and Organic content certification. The abattoir will be used as a shared facility and accessed by incubatees at a nominal fee.

 

Following Adv Steenkamp presentation members of the Committee were invited to pose questions. Members were appreciative of the incubators recorded progress and how Seda assistance got the ball rolling. There was a request for the incubator to share its annual financial statements for the members to follow how Seda has been supporting the incubator over the years. There were also questions and statements around how the incubator was planning to sustain itself considering that Seda funding has a limited cycle of three years, how does the incubator attract youth to the farming sector, the incubators interest in doing seed production as part of its other core business, what was the incubators view or position on the sunrise sector like cannabis and others.

Adv Steenkamp responded that it is indeed difficult to attract the youth to the farming sector more so without adequate support from government. He agreed that the industry is more appealing to senior individuals and those looking to retire. Fortunately, NCAI incubator has youthful population, lot of young women and people leaving with disabilities. On the question of expanding to international markets, he concurred that export market is quite lucrative. But that it requires a sophisticated skill set often found in big farms or corporations. NCAI thus advocates for the exhaustion of domestic opportunities and that is the focus of the incubator. He lamented the invisible role of the private sector which is extremely important in terms of providing market access for incubatees but also to open opportunities for employment.

 

He informed the Committee that incubatees are being exposed to various farming subsectors, such as lucerne production, to broaden their breadth and viewpoint. As part of the incubator deliverable, NCAI is in the process of building a pipeline of bankable projects for submission to Land Bank and SEDFA. On the cannabis he stated that an application for a license has already been submitted. Once the license is obtained NCAI will most definitely involve SEDFA because the approval will come with lot of downstream and upstream opportunities for the incubatees. After extensive deliberations and touring of the facility, the Committee thanked Mr and Mrs Steenkamp for taking time out of their busy schedule to engage it, and in doing so, gave the Committee a valuable insight into how the Seda incubation programme works.

 

7.2       Tender Capital Cape: Cwaro General Trading (Pty) Ltd and Letshotshwa (Pty) Ltd

Tender Capital Cape (Pty) Ltd is a Tshwane based company founded in December 2017. The company is a beneficiary of the Wholesale Lending programme and one of Sefa’s Retail Financial Intermediary partners with a R 30 000 000 facility approved. The business facility with Sefa has a term of 72 months for on-lending. Tender Capital is a 60 percent woman and black-owned funding enterprise. The funding partner provides mainly Purchase Order (PO) funding to SMMEs mostly in the public sector but private sector from time to time. The Committee had an interactive session with the business Chief Executive Ms Athena Mpitsang who briefed it regarding the business itself, how it started, terms and conditions of the facility with Sefa and the profile of its clientele which includes Letshotshwa (Pty) Ltd and Cwaro General Trading (Pty) Ltd. It was a very helpful question and answer session with many insightful perspectives regarding the programme. 

Procurement financing is one of the primary areas of interest for the Committee. Procurement finance is a comprehensive finance solution designed to help entrepreneurs carry out and service their orders, notably those of the supply and delivery kind. This is meant to alleviate SMMEs and cooperatives of the capital-intensive nature of purchase order contracts, which require SMMEs and cooperatives to have a significant amount of cash to service the contracts' requirements. This solution may differ from one SMME to another, depending on the SMME and project feasibility. Most Request for Quotation (RFQ) requires 24-to-48-hour delivery. MFIs and RFIs have a quick turnaround time in processing applications. This puts them in a good position to play in that space.  The Committee was happy with Tender Capital presentation. The only area that may need clarification is that of its CEO, who also serves as a director of Letshotshwa (Pty) Ltd.

 

Letshotshwa (Pty) Ltd is based in Galeshewe, Kimberley. The Committee visited the premises of the founder and owner of the business Ms. Bontle Mocwane who briefed the Committee and gave a thorough background regarding her area of interest. She told the Committee that her reason for choosing Tender Capital Cape is because since from 2021, Tender Capital Cape has responded to Letshotshwa financial needs very professionally. Initially, she landed at Sefa, but Sefa took too long to process her application. While application for funding with Tender Capital Cape was fairly quick and the business was offered a competitive rate of between 18 to 20 percent - a good rate by market standards. Letshotshwa specialises in supplying and delivering medical equipment and accessories, such as surgical gloves, chest drainage removals, and gauze mainly for the Northern Cape Department of Health. She also has an interest in student accommodation.

 

Cwaro General Trading (Pty) Ltd is based in Batlharos, Mothibistad, Northern Cape. It is a youth women owned business that was founded in 2017. The company handles the general supply and delivery of awarded request for quotations, including the supply and delivery of brown bread to the Department of Correctional Services and school uniforms on behalf of Sishen Iron Ore Company's (SIOC), a community development trust based in Northern Cape and Limpopo. Cwaro General Trading has on a few occasions received funding from Tender Capital Cape at favourable interest rate not exceeding 20 percent per annum. The director and owner of the company Ms. Primrose Radebe had an engagement with the Committee on the last day of the Committee visit in Ga-Segonyana local municipality.

7.3       Peoples Fund:  Chi2mbo Holdings (Pty) Ltd and DCO Holdings (Pty) Ltd

The Peoples Fund (TPF) is a purchase order crowdfunding platform for businesses seeking funds to fulfil government and corporate contracts. The Peoples Fund raises cash in an innovative way. The company provides a platform that allows individuals to invest in the success of these great entrepreneurs while simultaneously making it easier for them to acquire capital. For example, users would donate varying amounts from R100 to fund a purchase order. The entrepreneur would then split a portion of the project's revenues with the investor and the rest of the crowd. The Peoples Fund is also one of Sefa’s funding partners. Sefa approved a business loan facility of R 30 000 000 in March 2021 with a term of sixty months. The facility was approved for the funding of SMMEs and cooperatives through purchase order funding. TPF is an 80 percent black owned company and has a considerable shareholding by women and youth with a level 2 BEE status. The Peoples Fund provides purchase order funding to SMMEs with the majority being in the public sector.

 

One of the TPF client is Chi2mbo Holdings (Pty) Ltd. It is a black-owned company based in Siyathemba, Northern Cape. It was founded in 2018. Chi2mbo Holdings is involved in the general supply and delivery space and was funded to fulfil a purchase order from Anglo American, Sishen mine. Another TPF client is DCO Holdings (Pty) Ltd, a private company established in 2021. It is domiciled in Squarehill Park in Kimberly and specialises in the supply and delivery of goods/services. The client has in past been funded for the fulfilment of a request for quotation in the public sector. The orders funded were mainly from the Department of Justice and Constitutional Development and South African National Defence Force (SANDF).

 

The Committee is not entirely happy with how the wholesale lending programme is structured. It is viewed as outsourcing especially since their value add cannot be determined. It also appears that the majority of Sefa funding is channelled through MFIs and RFIs then direct lending. During the consideration of the Sefa annual report, it was reported that more than R760 million was distributed to less than six MFIs and RFIs via wholesale lending. The Committee is of the opinion that for complex sectors like agriculture, energy and infrastructure etc, where experts in the field are needed to evaluate applications, SEDFA should explore partnerships with relevant Development Finance Institutions like Land Bank and Industrial Development Corporation to assist with evaluation of applications relevant for that specific sector as an alternative to using intermediaries.

7.4       Maria Kompe

Due to schedule constraints the day before, the Committee was unable to pay Mme Maria Kompe a courtesy visit. Mme Kompe is an experienced and passionate caterer. She owns and runs the business. She applied for assistance under the IMEDP programme for a two-plate gas stove with a cylinder, deep freezer, six industrial pots, two rectangular folding tables, four food warmers and microwave. However, she only received four food warmers, two industrial pots and one microwave. She did not receive all the other items she had applied for. Mme Kompe ardently welcomed members of the Committee into her home. She informed members of the Committee that her business thrives primarily on weekends. Her business provides a wide range of catering services mainly to funerals, weddings and functions or parties. When asked how the equipment assists her and the business, she stated that the business was quiet. She did however indicate that the delivery of inadequate equipment also affected her. Some of the accessories were not in use.

 

Her story was almost identical to prior interactions in which adequate due diligence was not carried out. As a senior citizen who most likely would not benefit from training intervention, it was difficult to determine which approach would be most suitable to her if the Department or Seda were to embark on a turnaround strategy to inject life into her business. Members of the Committee inquired, for example, if there were any grandchildren involved or assisting with the business and her response was no. She explained to the committee that she only works with her neighbour on weekends. Seda was asked to inquire about the status of the equipment that had not been delivered. The committee thanked her for her time and wished her the best.

 

7.5       Tlotlo Modise

The last visit in Kimberly was to Mr. Tlotlo Modise. Mr Modise is a plumber by profession and a fulltime employee. Due to his job commitments, the Committee was unable to meet with him the day before. To meet with the Committee, he had to take time off from work. According to his estimates, his equipment is worth more than R7000, including a chainsaw and a generator. He uses the equipment primarily on weekends when he is not working. He normally uses the chainsaw to cut and trim trees, cut firewood, and clean up storm damage, and charges a fee for his services. While the generator is mostly used for energy generation and lighting during load shedding. When the Committee visited his property, the generator was not operational due to a technical issue.

Like other IMEDP beneficiaries, members of the Committee asked him a variety of questions, including how he learned about the programme, how he applied, what his experience was, if there was any documentation or delivery note signed upon receipt of the goods, and whether he understood how much money he qualified for. Members were also keen to understand the choice of equipment when he is actually a plumber. His responses were consistent with those of the others. The majority of them had no idea about the programme or how much money they were eligible for. They were not made to sign any documentation upon the receipt of goods, and the majority of them claimed to have been contacted by Seda few days before the Portfolio Committee visit. Regarding equipment selection, he noted that some of the equipment he had applied for had not been delivered. Once again, the Committee expressed gratitude to Mr. Tlotlo for making time in his busy schedule to meet with them.

 

8.         DAY THREE – ZF MGCAWU DISTRICT MUNICIPALITY

The third day of the visit was dedicated to projects in Upington and surrounding areas with a specific focus on Seda incubation programme, Sefa KCG programme and the Department’s Customised Sector Programme. However, on Sefa KCG programme, the Committee agreed that owing to the confidential nature of the tripartite transactions involving the commercial bank, the debtor and KCG, it might not be advisable to continue engaging with KCG beneficiaries. The focus therefore became the Sol Plaatjie Centre for Entrepreneurship and Rapid Incubator, its beneficiaries and the CSP beneficiaries.

 

8.1       Visit to Sol Plaatjie University Centre for Entrepreneurship and Rapid Incubator

The primary focus of the Sol Plaatje University (SPU) Centre for Entrepreneurship & Rapid Incubator (CfERI) in Upington is the entrepreneurial development of young people and students in the ZF Mgcawu District Municipality and beyond. The incubator is targeting start-ups and new SMMEs operated by entrepreneurs of all ages. The Department of Small Business Development through Seda was the driving force behind the formation of the incubator. In 2016, DSBD and the Vaal University of Technology (VUT) signed a Memorandum of Agreement (MoA), which led to the introduction of the CfERI in 2017. According to the MoA, DSBD would supply funds for SMME development and core operations, while VUT would serve as a governance and support entity. However, on 1 June 2021, the CfERI moved to Sol Plaatje University (SPU).

The centre’s primary goals are youth development, employment generation, and SMME development. Furthermore, black, rural, disabled, and women development are currently the main priority. Although incubator’s services are extended to the entire ZF Mgcawu district municipality, the incubator is being piloted mainly within the Dawid Kruiper local municipality. The development of SMMEs, the formation of start-ups, the creation of jobs, the stimulation of economic activity, the raising of awareness of entrepreneurship as a career, and the training of aspiring entrepreneurs are among the incubators' main goals.

 

The Committee visited the incubator premises in Toekoms street, industrial area, Upington to interact with the leadership and incubatees where it was warmly received by Mr. Anthony Mac Minn. The Committee learnt quiet a few things with regards to the incubator such as that the programme duration is 36 months. Its main objective is to create start-up enterprises and develop them into sustainable job-creating SMME’s, through a process of training, business support, during the initial 18-month period, and including coaching and mentoring during the latter half. The incubator was conceptualised sometime back as joint project between the Department and Vaal University of Technology before being transferred to Sol Plaatjie University.

 

8.1.1     Beneficiaries of the Incubator

The incubator has mentored and produced a number of entrepreneurs through various interventions such as capacity building, training and skills transfer to mention the few. During this leg of the visit the Committee had prepared and targeted a list of beneficiaries it wanted to engage. For instance, it visited Toufieka’s Projects in Keimoes, Lad Tuckshop in Upington, Lendies Cash Store in Paballelo and various other projects that benefited from the incubation programme. Most of those visited on site were doing fairly good. The Committee’s probing questions were mainly directed at establishing the link between training and turnover. This is arguable one of the greatest areas of concern for the Committee that the training interventions are not linked to impacts. Many beneficiaries for example who run the spaza and tuck shops were still in no position to compete with foreign owned spaza shops. After training, their businesses still showed no sign of improvements be it the shop design and layout, improved sales performance or revenues. At the incubator site, there were few incubatees that had been invited to mingle with the Committee. There were five incubatees, and none of them are currently running fully operational enterprises.

8.2       Visit to CSP Beneficiaries

The CSP programme is one of the oldest programmes of the Department that was inherited from then Department of Trade and Industry. It has produced may success stories and brands such as Maxhosa. However, its performance in recent years has faded. The Committee had identified four projects for visitation, namely, Masakhane Arts Centre, Rasswater Community Craft Development, Sne and Busi Ceramics and Joy Box By NDS (Pty) Ltd. All four projects were visited and assessed to gauge their performance in relation to investment. The Committee visit produced mixed results where other projects e.g. Rasswater Community Craft Development were doing well despite limitations in terms of the location, space and trading area. The project is co-owned by Ms Nombulelo Masala and her husband. She was very thankful to the Department for all the support she has received over the years. But the Committee noted that her business lacks long-term view. There is no plan for sustainability should the Department discontinue its support. The Department has provided support to Ms Masala for a good couple of years. The Committee reasoned that the Department and Seda should begin to develop an exit strategy for her business.

 

The Masakhane Arts Centre was particularly concerning for the Committee because it is recorded on paper as having received support from the Department – through Northern Cape Development Agency. Yet it did not. The Committee visited the premises of Mme Eunice Badanile and found no activity. Even the essence of her business could not be determined by the Committee. On the contrary, it was quite impressed with the products of Sne and Busi Ceramics. The owner of the business Mr Shane Mayongo took the Committee through the business, what they do, role of provincial Department of Economic Development and Small Business Development, exhibitions that they have attended through the support of government. Mr Mayongo was encouraged to also touch base with Seda should he need non-financial support. The last Committee visit in Upington was to Ms Lizelle Julie of Joy Box By NDS (Pty) Ltd. Unlike others, Ms Julie has only received training assistance from Seda. She uses hand knitted wool to create beautiful baby clothes.

 

Generally, the Committee is not happy with the performance of this programme including the role of the Department. It recently considered the annual report of the Department and noted inconsistencies in terms of what is being reported in the annual report, and what it found on the ground where it became clear that the programme was not doing well. Only four projects have been supported over a period of two previous financial years. Part of the Committee oversight visit included inspections to clients whom on paper are recorded as CSP beneficiaries. Yet due to challenges at NCEDA some of those interventions were not extended to the indicated beneficiaries. This information was not reported nor disclosed in the annual report.

 

9.         DAY FOUR – JOHN TAOLO GAETSENE DISTRICT MUNICIPALITY

The final day of the visit was designated for visits to the two TREP beneficiaries in Ga-Segonyana and Gamagara local municipalities under John Taolo Gaetsene district municipality. The group converged at the local municipality council chamber where all the other beneficiaries, save TREP beneficiaries, had been invited to come join and interact with the Committee. Those invited include two complainants that had written to the Committee, one expressing misgiving at how Sefa shortchanged him leading to the repossession of property and blacklisting of his name and company, as well as the other one (an alleged whistleblower) complaining about what he perceived to be corruption by Seda’s secondment of its officials to serve on the Boards of the incubators.

 

9.1       Group Session – Ga-Segonyana Local Municipality Council Chamber

The last day was short considering that members of the Committee had to drive back to Kimberley to catch a Johannesburg bound flight. All recipients gathered at Ga-Segonyana LM for briefings.

 

9.1.1     A Matter Between Mr. Wapad and Sefa

First to brief the Committee was Mr Wapad, the owner and director of Verquioline Holdings (Pty) Ltd T/A DIY Depot Kuruman. Verquioline Holdings was funded by Sefa in February 2020 and immediately thereafter faced a Covid-19 situation. The amount applied for was R5 million. However, Sefa approved R3.8 million.  The funding requirement was that the company should have appropriate business premises. They hired someone to start constructing a building which was finished somewhere in October 2020. The schedule to start with the operations was set at 1 November 2020, later deferred to 28 November 2020, there was still no payment from Sefa. The first tranche of the R3.3 million payment was only done on 17 December 2020. By then, the business was already operational in a sense that there were people employed. The company had to then work backwards. The timing of the payment was problematic in many respects because, besides the covid situation, many retail stores had already closed for December holidays.

In January 2021, when the business was reopened for the new year, it was still unstable because Sefa had not paid all the money as approved. Numerous requests were made to Sefa for more vehicles e.g. light truck and forklift. In essence, the request was for Sefa to at least release the R500 000 balance which would have made huge at the difference. By then, it was clear that the business might not survive. In the midst of the covid-19 pandemic, the Department of Small Business Development introduced and implemented the Business Viability Programme to assist small enterprises experiencing business distress. Verquioline Holdings applied for financial assistance and presented a good turnaround plan. Regrettably, that application was not successful because the business was not trading nor making money. Yet, according to Mr Wapad, thousands and thousands of their businesses were closing down. Mr Wapad felt that Sefa officials that worked on Verquioline Holdings account, were not truthful, did not care, they had zero empathy towards the plight of his business. Numerous letters were written to all the Departments, including the Minister of Small Business Development, to Parliament and provincial legislature without success. There were R2 million worth of assets in the building that were all repossessed and sold for R68 000. Mr Wapad is eager to reopen talks with Sefa aimed at resuscitating the project.

 

9.1.2     Eric Melato

Also, the Committee invited Mr. Eric Melato who had written to the Committee to complain about allegations of misconduct by Seda officials and the provincial Department of Economic Development and Tourism (DEDaT). Mr. Eric Melato’s issue can be classified into two broad categories, the first complaint raises few issues of corporate misgovernance involving Seda and incubators, in particular, the secondment of Seda officials to serve on the Boards of the incubators funded by Seda e.g.  Northern Cape Agriculture Incubator and Kimberley Diamond and Jewellery Incubator. The Committee had to admit that it was not aware of this practice. In fact, Seda had never in the past briefed the Committee with respect to such a decision. Mr. Melato was therefore reporting this matter as a whistleblower and called for the Committee to institute an investigation. He had first written to the Minister of Small Business Development for the investigation to be instituted. But seemingly his complaint fell on deaf ears. When he interacted with the Committee on Friday 11 October 2024, his communique to the office of the Minister dated 3 September 2024, addressed to Ms. P Ramutla and Ms. V Dayile, had not been responded to. It is unclear whether the Department has always been aware of the Seda decision to second its staff to the incubators.

The second category of Mr Eric Melato grievance related to the allegations of fraud and corruption against the provincial entity of the Department of Economic Development and Tourism, Northern Cape Solar Business Incubator (NOCSOBI). The Northern Cape Solar Business Incubator is an entity of the Northern Cape’s Department of Economic Development and Tourism in partnership with its entity, the Northern Cape SMME Trust. His presentation and subsequent trail of emails submitted to Parliament indicates that before writing to the Committee, he had first written emails to Mr. U Ngomane of the Northern Cape’s Department of Economic Development and Tourism which were all but ignored. He had written to the provincial department to seek clarity on the roof top solar programme, a joint initiative between NOCSOBI and DEDaT.  He had identified few issues of irregularity that he needed clarity on such as the establishment of NOCSOBI as a Non Profit Company and subsequent appointment by DEDaT as an implementing agent of the solar roof top programme, alleged conflict of interest involving senior officials of the Department, deliberate negligence of a vision and mission statement of the Department.

 

9.1.3     Resemeletsi Motlopi (Coffee Project)

Ms. Victoria Rino is the owner of Resemeletsi Motlopi Coffee Project. She applied for TREP funding. The application was approved. She was renting a space at OP Village Mall and as part of the due diligence, Sefa officials came through to inspect the premises. When they got there, they discovered that she was also selling fish, russian and chips. That incident did not go down well with Sefa officials who thought the application was specifically for a coffee shop. She told the Committee that despite her explanation that she had only started the business and needed to cover the overhead costs of a startup, Sefa officials were unimpressed with the sale of another foodstuff. She explained that since she was renting, she had no other source of income and had to sell other items in order make adequate revenue to cater for all the business expenses. The same officials later came back with a gentleman from Standard Bank whom she was told was going to fund the business. unfortunately, that was the last time she heard from Sefa.

 

She was grateful to Seda for helping her with the coffee initiative. She is making coffee from the roots. The agency assisted in having it tested and approved by the South African Bureau of Standards (SABS). Seda also assisted her in attending pitching competitions, which brought her from Upington to Johannesburg where she won a prize of R15 000. She used the prize money to purchase the laptop. She also received R50 000 from Seda through the Technology Transfer Assistance (TTA) programme. She is having a very good business relationship with Seda and Business Advisors. From the provincial government, Department of Economic Development to be specific, Ms Rino was awarded a grant of R100 000 to buy equipment. But only R60 000 of the R100 000 was paid which was used for fencing. The Department withheld R40 000 without providing much explanation, and to date, she is struggling to get that money. For that reason, her farm is half fenced. She still needs additional assistance to drill the borehole and do electricity installation (to put up a new transformers).

 

9.1.4     Responses from Seda and Sefa

In response, specifically to Ms Victoria Rino, Ms. Wiliams tried to clarify the matter of Business Advisors that they are not necessarily fired. It could be that, like any organisation, they find better opportunities elsewhere. On the issue of the R100 000 grant from the Department of Economic Development, which was not paid in full, she left it to the Department officials who were present in the hearing to respond to. But she promised to still engage with Ms. Rino to ensure that she continues to get the assistance from Seda. In response to Mr Eric Melato allegations, she clarified that they were unfounded. An institutional decision based on the legal opinion had been taken for Seda officials to serve on the Boards of the incubators to look after the interest of government. She stressed that as Seda officials, “there was no stipend or allowances due or payable to them for serving on the Boards of incubators”. The Committee accepted the clarification but felt strongly that the matter still needed to be discussed further when the Committee considers its report.

 

With respect to matters raised by Mr Melato involving the provincial Department of Economic Development, he was advised to write to the Head of Department, Head of Ministry (email addresses were provided to him), and carbon copy the Personal Assistants. His complaints would certainly be responded to. Also, Mr Davids, Member of the Provincial Legislature and Chairperson of Provincial Portfolio Committee on Economic Development undertook to follow up on both matters involving Ms Rino and Mr Melato. Sefa moved to clarify the matter of Verquioline Holdings (Pty) Ltd, what happened, and why the project received no further financial support from Sefa. As this matter has already been referred to the Committee for its consideration, members were advised to just listen to Mr Wapad and allow the matter to be ventilated further in Parliament.

9.4       Fillies Enterprise and Services (Pty) Ltd

Fillies Enterprise and Services (Pty) Ltd is a black and youth owned business. The business is based in Kathu, Gamara local Municipality. It specialises in custom manufactured steel designs, steel roofed-assembly areas for schools, steel carports, fencing, gates, signage frames and installations, design gate and all work that has to do with steel. Fillies Enterprise and Services provides steel designs and offer erection services for any conventional steel and building structures. Their services include but not limited to: steel assembly roof for schools, building Structural Steelwork, site and workshop welding services, custom designed staircases, maintenance walkways, signage Frames and Installations and vehicle steel (Bakkie Rails).

 

Fillies Enterprise and Services is a beneficiary of the Township and Rural Entrepreneurship Programme. The programme supports informal, micro and small enterprises and cooperatives in the rural and township economies. It is a DSBD programme but managed by Sefa. TREP provides blended finance and business development support to various sectors with a view of promoting their participation in the mainstream economy. Fillies Enterprise and Services received a funding amount of R347 000 to acquire a punching machine. Of that amount, loan amount equates R247 000 while the grant amount is R100 000 split into a rebate of R11 750 in the machine, R35 260 for working capital, R50 000 for input material and R2990 for initiation fees. Sefa is happy with the conduct of the account. Through this visit, the Committee had an interaction with the owners of the business who enthusiastically briefed the members, their vision and plans moving forward.

 

The business operates in the premises that are managed by North West Development Corporation, an entity of the North West province. Adjacent to the building where Fillies operate, is a local municipality owned building that is not utilised. The Committee sought clarity from the MMC Ms. Florence Masilabele why the building was not utilised for the purpose of developing of small entrepreneurs seeing that they are struggling with affordable business premises. She informed the Committee that since the building belongs to the local municipality of Ga-Segonyana, she will need to investigate, follow proper channels and come provide feedback to the Committee. Access to affordable business premises is one of key area of interest for the Committee. Overall, the Committee was happy with Mr. Fillies business particularly his knowledge of the industry. The Committee wished him well and undertook to follow up on the issue of the property.

9.5       Thanodi Spares and Stationery (Pty) Ltd

Thanodi Spares and Stationery (Pty) Ltd is in the retail sector. It is a 100 percent female-owned business based Kuruman. The business currently has four employees and anticipates adding one new employee. The business supplies stakeholders like schools and mines with stationery. They also run an internet café at a small scale. The business is also supplying New Wrench Ville Primary School with groceries (a memorandum of understanding between the two parties has been provided). In April 2020, Sefa approved an R 92 400 SMME Relief Finance Term loan to pay for working capital during the covid lockdown period. This SMME Relief Finance was fully settled. 

 

On 16 June 2021, the client approached Sefa for additional funding. TREP Term loan was approved for R25 000 and a grant facility of R25 000 to assist in expanding the business by providing embroidery of clothing labels and logos on clothes and items. The Facility was approved for a period of 36 months. The funds were disbursed on the 22 September 2021. The facility was fully settled in February 2024. On 16 August 2023, Thanodi Spares and Stationery approached Sefa as a returning client to purchase stock for the store as the business was receiving orders from Assmang Manganese Mine to supply and deliver stationery to Assmang and Black Rock Mine Operations as and when needed for the period of 3 years starting 01 February 2023 until 31 January 2026. A loan of R 189 044 and a grant of R 75 000 were approved. The facility was disbursed on the 31 October and 11 November 2023.  The facility is up to date with monthly instalments paid on time.

 

The Committee visited her premises just to understand how the business was doing, if she was happy with the loan terms and conditions, profitability and sustainability of the business considering that, even though she is a good payor, but she keeps going back to Sefa for more funding. She briefed the Committee how she started, her struggle to recover from the aftermath of the Covid-19 pandemic, challenges with non-payment from her clients in particular schools and some mining companies. For instance, she told the Committee that she was sitting with a debtor’s book of R700 000 and orders of roughly over R610 000. She was therefore unable to fulfil those orders due to cash constraints. Her major challenge lies in handling the accounts receivable of her company. She often refrains from applying too much pressure on her clients to fulfil their payment obligations because she fears it might lead to them leaving for good.

Members probed if orders are done, is there no condition that they should pay deposit, to which she responded with affirmative no. The business also faces the challenge of location. She is struggling to get a convenient store where there is sufficient pedestrian traffic that ideally would augment her business cash sales. Currently, the store is not visible because of where it is located to an extent that she is considering relocating back home and scale up on online sales. The Committee asked Sefa if there were any interventions in that regard that could be considered in order to rescue the business. The provincial manager reasoned that the business maybe requiring a financial mentor to assist with cashflow management and debtors’ management. Subsequent measures, such as a revolving facility, might then be implemented. He echoed that the money was there, the problem was probably the cashflow management, which was perhaps made worse by the fact that she was unable to do hard collections on her clients for fear of reprisals.

 

The Committee left it to Sefa to propose and implement various remedial measures to ensure the sustainability of the business. Also, the MMC present in the hearing undertook to follow up with Ga-Segonyane local municipality in terms of identifying suitable trading spot, speak to the District Manager – Department of Education on outstanding payments and escalate the matter to the district local economic development. The Committee thanked Ms. Peggy for taking her time to engage it and wished her well.

 

10.       COMMITTEE OBSERVATIONS

Following the Northern Cape oversight visit to initiatives supported by the Department, Sefa and Seda, the Portfolio Committee has made the following observations for consideration by the Department: -

 

10.1      The Northern Cape was the last of nine provinces not visited by the Committee since its inception. For years, the Committee has been concerned about the province's share of financial and non-financial support from the Department and entities. The Committee's reservations regarding the lack of adequate support for small enterprises in the Northern Cape were validated by the number of small initiatives funded there. Sefa reported in its last annual report that Northern Cape received only R23 million. The Committee calls for a paradigm change in the way resources are spread evenly among the provinces.

10.2      The Committee notes the partnership between the Department and Northern Cape Development Agency. It is still unclear though what sort of services PIPAs provide that cannot be done in-house or through SEDFA. As part of this collaboration, PIPAs procure consultants to train the beneficiaries after receiving funding from the Department. In other words, PIPAs operate more like post-boxes.

10.3      It was reported during the tabling of the annual report that some of the DSBD targets were not met e.g. transfer to the North West Development Corporation (NWDC) was not done owing to non-compliance issues. While the Free State Development Corporation (FDC) contributed R350 000 to the underspending due to compliance issues with South African Revenue Services. One beneficiary visited by the Committee in Northern Cape had not             received assistance because of internal issues at NCEDA.

10.4      On the Informal Micro Enterprises Development Programme the Committee noted the contents of the annual report that the “Department achieved significant results when measured against the number of targeted informal and micro enterprises located in townships and rural communities. The Department indicated that 2 045 informal business were supported through IMEDP, far surpassing the target of 1333”. But the Committee was             not entirely pleased with what it discovered on the ground based on the sample of few projects inspected there. For example, there were numerous instances where beneficiaries received training. But when probed further regarding how the training had benefited them, be it increase in sales or revenues, skills to turnaround or grow the business and so forth, it became apparent that the objective of the interventions start and end with training.

10.5      The Committee noted that some training and support interventions are not meant to guide or handhold the beneficiaries throughout the entire value chain process. Of course, there were interesting anecdotes and lessons learned. As a result, the Committee bases some of its recommendations on these best practices for amplification.

10.6      The distribution of utensils, catering supplies, machinery, and other items without first determining the beneficiaries’ needs was another example of the mismatch in offering help or support that was not necessarily needed by the clients. Consequently, the beneficiaries’ needs and the intervention were often misaligned.

10.7      On average all the recipients the Committee spoke to receive no more than R10 000 worth of equipment, yet the maximum grant amount is R15 000. The Committee did not come across any situation where this thresh-hold was exceeded, even though there was a clear indication that the beneficiary needs additional support. While some recipients reportedly signed contracts with the Department, none of those we interviewed were able to provide those contracts.  Some beneficiaries vaguely remembered signing certain documents.

10.8      Some beneficiaries were presented with supplies that they had not requested. Ms Nkolonyane, Mr Modise and others were recipients of such benefits. While plenty others received inadequate equipment. Since it appears that the equipment delivery was done by an external source, it is the Department's duty to check with IMEDP recipients to confirm if they received the right items. If wrong items were supplied, the Department must create a corrective strategy to guarantee that the right supplies are given to the recipients.

10.9      All the recipients did not sign the delivery notes upon receipt of equipment which ordinarily consist of the details of the seller, number of goods delivered by whom and when, shipping or invoice addresses, the amount per each item etc. The way in which the products are provided to the recipients necessitates additional inquiry, such as who procures the goods, at what cost to both the beneficiary and the department, warranties, and the lack of purchase invoices and delivery slips or receipts.

10.10    The Committee is noting various measures by the Department and agencies, in particular Seda, to augment and sharpen the corporate governance of the incubators by seconding its staff to serve on the Boards of the incubators. But the Committee feels strongly that such decisions ought to have been communicated timeously because at face value, it creates an impression of a conflict of interest. Such governance issues are at the heart of the Portfolio Committee responsibility of holding the executive accountable.

10.11    Similarly, it further notes Sefa’s practice where directors of the MFIs and/or RFIs are allowed to serve as directors of the businesses they fund like in the case of Tender Capital Cape (Pty) Ltd and Letshotshwa (Pty) Ltd. Once more, in the corporate governance ecosystem and to the Committee’s point of view, this practice constitutes a direct conflict of interest and hinders the ability of the Committee to fully exercise its oversight function over the Department, entities as well as their programmes. The Committee expressed concerns about Sefa providing loans to MFIs/RFIs just for purchase orders. The Committee feels Sefa's oversight of MFIs and RFIs is inadequate and the wholesale programme should be revamped in line with the recommendations of the North West oversight report.

10.12    In contrast to the Nort West province MFIs/RFIs, there is a marked improvement in the Northern Cape particularly around the rate of interest charged by the intermediaries and the general rapport between the lenders and the borrowers. However, there is still a serious doubt as to the efficacy and value proposition of the MFIs and RFIs, especially in the era of FinTech. The Committee is not finding resonance with Sefa's wholesale lending initiative. The Committee observation is that the use of intermediaries is no different to outsourcing of functions more especially if their value add cannot be ascertained.

10.13    Similar to other provinces, members of the Committee observed that most beneficiaries were called few days before the Committee visit. This means that the Department, Sefa and Seda still do not make efforts to know the exact location of the projects they support. Of course, some of the projects like IMEDP were funded directly by the Department but the Committee is on record that Seda should be utilised as an extension of the          Department especially in far-flung areas. Most of the projects visited by the Committee have never been visited before. Some were to be looked for or searched with   SEDFA officials and that points to the glaring absence of post-project support and monitoring.

10.14    The Committee acknowledges Mr. Wapad’s complaint regarding Sefa that was referred to the Committee on 28 August 2024 by the Speaker of Parliament, Hon Thoko Didiza. In 2022, the former Speaker of Parliament, Hon Nosiviwe Mapisa-Nqakula, was also made aware of this issue. She subsequently referred the matter to the Minister of Small Business Development. Upon following up with the office of the Minister, the Committee was informed that the Minister’s office does not have any records regarding the former Speaker's referral nor Mr. Wapad’s complaint. On the last day of the Committee's visit, Mr. Wapad was invited to provide a brief update to the Committee about the developments since 2020. He was assured that his matter would still be addressed in Parliament.

10.15    Mr. Melato's persuasiveness as a model of an active citizenry was lauded by the Committee. His efforts to expose corruption and poor governance were valued and supported. The Committee noted all of his concerns, but in particular, Seda's and the Department of Small Business Development's unwillingness to reply to his repeated emails asking for clarification regarding the appointment of Seda officials to the incubator boards.       On the rooftop solar project, the Committee promised to follow up with the MEC and HOD.

11.       COMMITTEE RECOMMENDATIONS

Based on the summary of key findings and observations, the Committee makes the following recommendations: -

 

11.1      The MoUs between the Provincial Investment Promotion Agencies and the Department should be reconsidered. Based on the Northern Cape experience the Committee concluded that they add no value. Seda’s national footprints is far much wider than PIPAs which are mostly located in the provincial headquarters. Unless there are strong grounds to maintain this partnership, all activities or interventions earmarked for delivery through PIPAs should be transferred to SEDFA on or before 31 March 2025.

11.2      The relationship between Sefa and ABSA, through Khula Credit Guarantee (KCG), needs further cementing. With over 90 percent of startups failing in a few years after their launch, de-risking is something that can help lower this percentage. The Committee supports this programme and wish to see other banks actively participating in the programme and many SMMEs and co-operatives roped in.

11.3      The Department and entities should galvanise SMMEs and cooperatives in the provinces like Free State, North West and Northern Cape. Financial support directed to these provinces is alarmingly small compared to other regions. The agencies must conduct needs assessment to better understand the obstacles that hinder SMMEs and co-operatives in those areas from actively seeking financial or non-financial assistance from the Department and agencies. The Committee will monitor the Department and SEDFA quarterly reports to track progress regarding the quantum of resources going into these provinces.

11.4      The SEDFA wholesale lending programme requires overhaul and remodelling. Subsequent to the oversight visit in the North West province, the Committee had resolved and recommended that the Sefa Board should institute an independent investigation to ascertain if the programme was being carried out within the confines of the law, policies, rules and guidelines that administrates it. To date, none of those recommendations are being implemented. The Committee Secretariat is herewith directed to set aside space and time in the Committee’s agenda to invite SEDFA to present its findings pertaining the wholesale lending programme before the end of the current financial year.

11.5      Furthermore, the Committee had directed that the Board should consider amendments to the policy guidelines to include condition for a dual licensing of the MFIs and RFIs by National Credit Regulator and Financial Sector Conduct Authority (FSCA) as authorised Financial Services Provider (FSP). The NCR licensing process has weaknesses in that it concentrates on the entity or company as a juristic person, whereas the FSCA includes both      the firm and the individual behind the company. The majority of NCR-licensed businesses are led by directors who do not meet the 'fit and proper' criteria. Licensing is an important component of the regulatory framework and plays an important role in the monitoring value chain. Sefa should brief the Committee on the steps it has taken to execute this resolution.

11.6      Sefa should investigate and brief the Committee on its upcoming quarterly report on 27 November 2024 if the practice by Tender Capital Cape (Pty) Ltd of nominating its staff to serve on the entities funded by intermediaries is in line with the guidelines and policies that regulate relationship between Sefa and MFIs/RFIs. The Committee believes this is a flawed business practice that should be reviewed and discontinued immediately.

11.7      Following its visit to the three incubators in the province, the Committee is yet to establish if the rate of return is commensurate with the investment. In all three incubators, the Committee left without being shown a success story or a product of an incubator. The Committee is calling for the revamp of the programme mainly the financial support to the incubators for a prolonged period and enhanced performance monitoring.

11.8      In addition, unless a compelling case is made and a legal opinion that recommended the             secondment of Seda officials to the Boards of incubators is proffered to the Committee, the Committee is not able to support that decision. The Committee holds the view that one of the foremost reasons for governance failure is a lack of proper oversight and accountability mechanisms. Seda must strengthen its capacity to oversee incubators instead of relying on poorly structured, ambiguous and noncompliant approaches. The Committee Secretariat is once again directed to find a suitable date in the calendar of the Committee to invite SEDFA to brief it on the rationale behind this decision.

11.9      Many beneficiaries praised the IMEDP programme. The Department should choose between supporting thousands of entrepreneurs with minimal impact or focusing on a select few that can be monitored over time as they grow. Informal traders require training too, but without stipends, the Department may struggle to provide effective interventions to informal traders. For sole traders like Kedisaletse Mmelesi, Motshidisi Maroba and others, the loss of a day's earnings has a significant opportunity cost. Hence programmes like IMEDP should be designed with that fact in mind.

11.10    The Department must gain a comprehensive understanding of all the projects it supports             and identify gaps that require supplementary intervention, such as additional funding, non-financial support, business infrastructure, technical assistance, skill development and training. In addition, and where feasible, the Department must strengthen its relationship with provincial, district and local governments by signing transversal agreements to scale        up delivery of assistance to SMMEs and cooperatives.

11.11    On a matter between Mr Wapad, Verquioline Holdings (Pty) Ltd and Sefa, the Committee             will proceed from the premise that the Executive Authority (Responsible Minister) is the             governing body in charge of the effective and efficient implementation of the defined service delivery requirements as well as shareholder oversight. Mr Wapad's situation or            subject matter have substantial financial, policy and legal implications that must be weighed and considered carefully by the Board of Directors and the Executive Authority as the owner and shareholder of the entity in question. The Board is exclusively responsible and fully accountable for the performance of Sefa. Accordingly, the Committee cannot usurp the powers of the executive authority and completely disregards the separation of powers doctrine. It is legally bound to allow internal process to run its course. Hence it is calling on the Department to probe the dispute between Sefa and Verquioline Holdings (Pty) Ltd, including investigating allegations that assets worth R2 million were auctioned for R68 000, the findings of which must be reported back to the Committee before 25 November 2024. Meanwhile, the Committee will present a progress report to the Speaker of Parliament, Hon Thoko Didiza, while awaiting the final report from the Department.

11.12    The Department is also directed to respond in writing to Mr Eric Melato to clarify his concern about the secondment of Seda officials to incubator Boards by 30 November 2024. The Department's response must also be shared with the Committee.

 

Unless otherwise indicated, responses to the above recommendations should be submitted to the National Assembly by no later than three months after the adoption of this report by the National Assembly.

 

Report to be considered.