Statement by the Department of Small Business development on presentation of its Annual Report to the Portfolio Committee
The Department of Small Business Development appeared before the Portfolio Committee on Small Business Development this morning to present its Annual Report for the 2015/16 financial year.
The Annual Report highlights a number of achievements. Over the reporting period, the Minister led the charge of engaging small businesses, cooperatives, sector organizations and experts to share her vision and to understand their expectations, needs and experiences. At the same time the department firmly established itself as a champion and voice for small business in the public sector. The department remains encouraged by the goodwill and multiple best practices throughout the country.
In its first year as an independent department operating under its own budget, Budget Vote 31 on Small Business Development, the department focused on leading the coordination of an integrated approach to the promotion and development of small businesses and co-operatives.
The department received an unqualified audit opinion in its first year. On the employment equity front, the department achieved a 50.1% women representation at sms level. This is above the 45% government target.
The department continues to lead by example by complying with the 30-day payment policy. The department achieved a 100% payment to all eligible creditors within 30 days.
Support to enterprises
The department linked many cooperatives to critical market value-chains, mostly in the agricultural sector. 227 cooperatives benefitted from skills development through partnerships. In addition, 247 primary co-operatives were funded to the tune of R74.9 million through the Cooperatives Incentive Scheme (CIS).
The department funded 678 enterprises with a total amount of R224.8 million through the Black Business Support Development Programme (BBSDP).
NIBUS
The department continued to implement the National Informal Business Upliftment Strategy (NIBUS) as part of addressing the development void in terms of support to informal businesses, the economic activity of the millions of black people in particular, who have historically been excluded from the mainstream economy. The strategy specifically targets entrepreneurs in the informal economy and seeks to advance government’s priorities of speeding up growth and transforming the economy to create decent work and sustainable livelihoods through inclusive growth.
As part of empowering informal businesses to take their rightful places in the mainstream economy, the department rolled out the Informal Traders Upliftment Programme (ITUP) through which 1037 informal businesses were trained in various areas of business management.
Support for entrepreneurship
The department continued with its programmes to support for entrepreneurship. In partnerships with Technical Vocational Education and Training (TVET) Colleges, the department launched five Centres of Entrepreneurships. The centres were launched in KZN (Durban University of Technology); Limpopo (Vhembe TVET); Northern Cape (Vaal University of Technology, Upington); North West (Rustenburg Orbit College); Eastern Cape (Ikhala TVET). The purpose of the Centres for Entrepreneurship is to provide generic enterprise development services and incubation to Orbit TVET College graduate students and members of the surrounding communities. The centres will contribute towards the promotion of entrepreneurship and to assist college graduates who cannot be absorbed by the labour market in starting their own businesses.
As part of bringing services closer to communities and its constituencies, the department established 29 co-location points across the country. These serve as integrated complimentary services offered by Seda, Sefa, provincial partners, SARS, etc to increase business support services in townships and rural areas.
National Gazelles
In September 2015 the department launched the National Gazelles Programme. This is an integrated business growth acceleration programme that seeks to provide dedicated high-level support services to 40 high-potential SMMEs. These 40 Gazelles who were selected, out of a pool of 206 qualifying applicants, will benefit from access to funding, equipment grants, specialist mentorship and business networking.
The overall aim of the programme is to ensure that SME owners have access to all the right support they need.
Finfund
The department launched FinFind, a web-based solution aimed at improving access to finance for small business owners, in October 2015. Finfind is South Africa’s one-stop solution for access to finance for SMMEs. Finfind assists SMMEs to become finance ready by providing expert advice and linking business owners with accountants and business advisors as well as providing them with the easy-to-use tools to help with their financial recordkeeping. Finance ready businesses will be linked with matching lenders in the Finfind lender database.
By end of September, 45 685 individuals had visited the Finfind platform, with 29 582 total users spending an average of 6 minutes accessing information about finance and financial products from various financial institutions. A request to roll out Finfind in eight provinces was approved so that the tool could be popularised to the small business sector across the country.
Areas that require improvement
The department concedes that it has not achieved all its performance targets. During the period under review, the department conducted a review of the programmes transferred from the Department of Trade and Industry, to examine the relevance of these programmes to the Small Business Development mandate and their impact on the constituencies we serve. The Review further enabled the department to craft a vision, strategy and service delivery model that would position it to deliver on its mandate.
Thus during the last quarter we commenced a multi-year transition process to a new service delivery model and this transition impacted on our performance. In the context of the current budgetary constraints, the department has not been provided with the resources to support a fresh and comprehensive approach to promote small business development as a catalyst to economic growth and job creation.
The department acknowledges challenges relating to the vacancy rate, which stood at around 23% in September 2015. However, the department managed to reduce the vacancy rate to 16.3% by the end of the financial year. It must be noted that the department’s view has always been that it would not be prudent to fill all the positions before the program review had run its course as the new strategy and approach to small business development would determine the resources needed to deliver the mandate.
The department has strengthened its performance management system as well accountability and consequence management. The department is confident that it will be more effective and efficient in delivering its mandate in subsequent years. In this regard, the department developed and adopted the necessary policies and systems in 2015/16.
Conclusion
Government’s Nine-Point Plan seeks to ignite growth and create jobs. We are a lead department for the priority intervention which seeks to unlock the potential of SMMEs, cooperatives, township and rural enterprises. In order to unlock the potential of SMMEs and Co-operatives, we are focusing on five critical areas that will drive the development and sustainability of the small business sector, namely, creating an enabling and simplified the policy and regulatory environment, optimize public sector procurement opportunities for SMMEs and cooperatives, building market access into private sector value chains, improving access to finance and support to township and rural economies.
The National Development Plan seeks to encourage all South Africans to become active citizens. It is expected that by 2030, 90% of the 11 million jobs will be created through small to medium enterprises. We also want to see small businesses and cooperatives contributing 60-80% of the Gross Domestic Product. However, we cannot do this alone. We need partnerships with all critical stakeholders to help us achieve our targets.
Enquiries:
Cornelius Monama
Spokesperson: Ministry/Department of Small Business Development
Tel: 060 960 3158
E-mail: Twitter: @cmonama
E-mail: @dsbdsa
