Date: 12 May 2021
The Committee met virtually on 5 May 2021 to receive the annual performance plans presentations from the Department of Small Business Development (DSBD), the Small Enterprise Development Agency (seda) and the Small Enterprise Finance Agency (sefa)
The Minister provided a political overview, highlighting the impact of the Covid-19 pandemic on the Department’s efforts to stimulate business activity and enhance job creation. The DSBD’s focus would be on supporting entrepreneurship in the townships and the rural areas, helping previously disadvantaged communities to escape from their previous barriers to enter the mainstream economy. The merger of the SEDA and SEFA would assist this process, and the DSBD was taking steps to ensure the transition was seamless.
SEDA advised the Committee that the Department would engage National Treasury to introduce regulations that set aside certain products to be sourced from small, medium and micro enterprises and cooperatives. The Committee also learnt from SEFA that medium term expenditure framework (MTEF) funding was used to finance some of its operational expenditures, and could also be used to lend to clients, although the remaining funding sources were ring-fenced and may not be used for its operational expenditure.
Members generally commended the progress and work being done by the two agencies, but were critical of issues such as the lack of support for small businesses seeking assistance, delays caused by unnecessary red tape, and the fact that little was known about their policies and services in the rural areas, where they were needed most.
See also: Department of Small Business Development Annual Performance Plan 2021/2022 (07 April 2021)
Date: 07 April 2021
Executive Authority Statement:
The 2021/22 Annual Performance Plan of the Department for Small Business Development was developed with the objectives of achieving the targets set-out in the National Development Plan, the Medium Term Strategic Framework, and the Economic Reconstruction and Recovery Plan of South Africa. The ability of the Department to advance the support to the SMME and cooperatives sector is directly liked to achievement of the APP targets.
Reports released by Statistics South Africa indicate that the SMME sector, including the informal business sectors, borne the largest brunt of the devastation visited upon business by the coronavirus (Covid-19) pandemic. Furthermore, the Covid-19 pandemic changed both the operating environment and business model, making the task of supporting SMMEs and cooperatives more urgent and complex, and thus requiring innovative approaches. Therefore, there will be a need for continuous evaluation for not only the attainment of the targets set in this APP, but the impact of its implementation and effecting the necessary reviews throughout the financial year.
In spite of the challenges posed by the Covid-19 pandemic, the 3rd and 4th quarter data of 2020 showed green shots of economic growth that were also enabled by the implementation of the government’s Economic Reconstruction and Recovery Plan (ERRP).
Thus, the 2021/22 APP is presented within a context of driving the implementation of the ERRP with a focused view on achieving inclusive growth. On 21 April 2020 when His Excellency, President Cyril Ramaphosa addressed the nation on further economic and social measures in response to the Covid-19 pandemic, the President committed us “not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality”, indicating that the economic strategy going forward is to restructure the economy and achieve inclusive growth. This requires that we build back better and with specific focus of making SMMEs and cooperatives not only the cornerstone of South Africa’s economic development but achieving sustainable and competitive development of SMMEs and cooperatives.
Specific to the mandate for the Department of Small Business Development, the ERRP directed us to promote localisation through industrialisation; support sustainability and competitiveness of SMMEs and cooperatives; to strengthen the informal sector; and to forge a compact for radical economic transformation that advances the economic position of women, youth and persons with disabilities; and make our townships, villages and rural areas vibrant centres of economic activity.
The ERRP has five objectives, which are linked to the country’s vision, set out in the National Development Plan (NDP Vision 2030):
• To create jobs, primarily through aggressive infrastructure investment and mass employment programmes;
• To reindustrialise our economy, focusing on growing small businesses;
• To accelerate economic reforms to unlock investment and growth;
• To fight crime and corruption; and
• To improve the capability of the State.
The Department has been allocated R4 billion over the medium term to township and rural enterprises, including blended finance initiatives. This funding will support the implementation of the Township and Rural Entrepreneurship Programme (TREP) that was developed and commenced implementation in 2020/21 with a view of supporting the growth and participation of predominantly township and rural enterprises in the mainstream of the economy. The TREP programmes are Autobody Repairers and Mechanics; Spaza Shops and General Dealer Support Scheme; Bakeries and Confectioneries; Clothing, Textile and Leather Scheme; and Butcheries Support Programme; and Manufacturing. If well supported, businesses in these sub-sectors have a potential to make townships and rural areas hubs of economic development.
In addition, the Department also opted for dedicated support geared towards growing the informal businesses that is premised on the formalisation of the sector and supporting their ability to access credit through commercial funding institutions including commercial banks. These informal business focused programmes are the Tshisanyama and Cooked Food Scheme; Personal Care Scheme; and Fruit and Vegetable Vendors Support.
Other initiatives that the Small Business Development Portfolio continues to implement towards the attainment of the goals of inclusive growth and the objectives of the Economic Reconstruction and Recovery Plan include:
- Supporting competitive SMMEs that contribute to inclusive economic growth and job creation: achieving this through schemes such as the Manufacturing Support Scheme; implementation of the SMMEs-focused Localisation Policy Framework including the Listing of product brands produced by SMMEs and Co-operatives with Wholesalers and Retailers; and creating markets for products of SMMEs and cooperatives;
- SheTradesZA programme, which is a platform that serves as a unique opportunity for women entrepreneurs in the SMME sector, enabling them to participate in the both local and global value chains and markets. The platform targets supporting womenowned businesses in the agro-processing, manufacturing, renewable energy, clothing and textile, cosmetics, creative industries, pharmaceuticals, retail and wholesale, exporters and importers, logistics and payment systems.
- The finalisation and implementation of the SMMEs and Co-operatives Funding Policy to improve access to finance and coordinate financial investment of both public and private sector.The Development Finance Institutions and the private sector continue to invest enormous financial resources to support the development of a vibrant and sustainable SMME. Despite these efforts, access to finance by SMMEs and cooperatives remains a major challenge and the impact of the efforts is not concomitant to the invest. The situation is worsened by the absence of the SMME Funding Policy.
The work set out in this APP also builds from the efforts of the 2020/21 financial year and the interventions that were necessitated by the outbreak of the Covid-19 global pandemic . Amid the pandemic, the Department and its agencies, had to realign and reconfigure existing budgets and programmes to respond to the situation that confront the country and our economy. As stated by the President in the 2021 SONA, “The year ahead must be a time for change, for progress and for rebirth. It must be a year in which we rise.” Successful implementation of this APP will also rely on a well-functioning and efficient Small Business Development Portfolio.
Hon. Khumbudzo Ntshavheni, MP
Minister for Small Business Development