Date: 17 November 2021

In this virtual meeting, held on 17 November 2021) the Small Business Development Committee received briefings on the 2020/21 annual reports of the Department of Small Business Development, the Small Enterprise Development Agency (SEDA), and the Small Enterprise Finance Agency (SEFA).

The Department reported that it had received an unqualified audit with findings and had achieved 19 (86%) of its 22 annual performance targets, an improvement over the 67% achieved in 2019/20. The targets not met had been in the Integrated Co-operatives Development programme and the Enterprise Development and Entrepreneurship programme. It had spent R2.249 billion of its R2.278 billion budget, for underspending of R28.6 million (1.3%). However, cuts to the employee compensation budget remained a problem, with key positions left vacant.

SEDA reported that its performance in 2020/21 had been poor, with 12 (52%) of 23 annual performance targets achieved. It had supported a total of 52 139 businesses, creating 2 292 jobs. Of its R990 million budget, it had spent R773 million (78%). SEDA acknowledged that it had not adapted quickly enough to the COVID-19 pandemic, and it had also been affected by a cyberattack in April. SEDA’s unqualified audit with findings, a regression from previous years, was primarily a result of the cyberattack. However, SEDA had now successfully implemented a hybrid model in response to the pandemic, and its performance had already improved in the first two quarters of 2021/22.

SEFA reported that it had received a clean audit but had only achieved 5 (29.4%) of its 17 annual targets. One reason for its underperformance was the COVID-19 pandemic, which had to led to sluggish demand conditions and had compelled SEFA to suspend its organisational loan programme temporarily, so that it could focus on the debt relief programme and the restructuring of its funded clients. However, SEFA delegates emphasised that its funding approvals and disbursals had been very high in the year under review. It had approved funding worth R1.9 billion and had disbursed R1.6 billion, facilitating 99 112 jobs. The quality of its loan book continued to present a credit default risk.

Members asked the Department about a range of issues, including its expenditure on fumigation and the visibility of the Department’s programmes in the provinces. Audit performance was also a central concern – Members asked about the Co-operative Incentive Scheme and the Black Business Supplier Development Programme, both of which had been flagged by the Auditor-General, and asked how the Department responded when its agencies received audit findings. In respect of SEDA and SEFA, Members’ primary concerns related to the agencies’ accessibility and reach, and particularly their onerous application requirements and processes.

Overall, Members expressed satisfaction with the performance of the Department and SEDA, but many expressed concern about SEFA. Two Members suggested that the Committee should undertake much more intensive oversight to ensure that SEFA was correctly recording its disbursals.

Note: The full meeting summary can be accessed on the PMG website, here