Chairperson MaBoroto
Minister of Small Business Development. – Honourable Stella Ndabeni - Abrahams Ministers and Deputy Ministers
Chairperson and members of the portfolio committee Honourable Members
DG and officials from the Department
Board members and staff of SEDA and SEFA Distinguished guests
Entrepreneurs and small, medium and micro business owners Ladies and Gentlemen
Honourable Chairperson, allow me to dedicate my maiden budget vote debate to the mothers and grandmothers in the townships and rural areas who are supporting their families dependent on this sector. I am talking about those women who wake up every day to go to the markets, corners of the streets, taxi ranks, train stations, etc. to sell. These are the people who are the pre-occupation of our department.
Honourable members, this sector was hardest hit by Covid 19 and while trying to recover, the Russia – Ukraine conflict worsened the situation. Needless to say this contributed immensely to the high rates of unemployment, especially among black people, women and the youth.
Honourable Speaker Minister Stella Ndabeni – Abrahams has covered much in her input. I will focus on three critical areas of concern: red tape reduction, cooperative development, and designated groups.
In the South African context, with our unfortunate past, that was characterized by many laws of economic exclusion. Deliberate laws of successive racist and colonial government. I am referring to Land Acts of 1913 and 1936, The Group Areas Act, Group Areas Development Act, Bantu Education Act, Job Reservation Act, etc. All
these laws were meant to exclude the indigenous people from effective economic participation.
Our first democratic president, His Excellency President Mandela captured this situation aptly when addressing the National conference on Small Business when he observed:
“By stifling entrepreneurship amongst the majority, apartheid not only robbed many of their livelihoods, but it deprived the entire nation of critical job creators; it robbed itself of a pool of creativity and drive”. He continued to say, “ In order to develop the SMME sector in South Africa, we need to take into account inherited obstacles . These include: low levels of education and training; barriers to markets; inaccessible finance and lack of support institutions”.
Honourable members let me state this without fear of contradiction, unless and until we get it right with small business our efforts to grow the economy and create much needed employment opportunities, will come to zero. The fact that about 70 percent of SMMEs in South Africa only survive for 5-7 years means there is something we are not getting right as a country. The SMMEs and co-operatives suffer the same fate in our country. The reasons are many and varied, but red tape has been identified as one of the reasons. This refers to a series of actions or complicated tasks that are unnecessary that government requires SMMEs to do.
The President of the RSA, His excellency Mr Cyril Ramaphosa in the 2022 SONA he said,
“There are too many regulations in this country that are unduly complicated, costly, and difficult to comply with. This prevents companies from growing and creating jobs”.
He therefore appointed Mr Sipho Nkosi to head up a team in the presidency to cut red tape across government. That project is ongoing and starting to bear fruits.
This, in turn, will create jobs and stimulate economic growth. Honourable members the reason why SMMEs are recognized the world over as economic growth drivers is because the entrepreneurs at this level has a very high propensity to reinvest their profits. They do not horde their profits.
As the DSBD, during the 2023/24 Financial Year, we will:
- Having completed the Regulatory Impediments to SMMEs Study, which looked at the full universe of legislation and how it impacts on SMMEs, we will work with sector departments to see how various impediments can be addressed.
- Strengthen the co-ordination of SMME and co-operatives red-tape reduction work across government and will be working with the Presidency to build red- tape capacity in all provinces.
- Continue supporting municipalities with their red-tape work, working with COGTA and SALGA, and will assist 30 municipalities this year to develop Red- Tape Reduction Action Plans, building on the 20 supported this past year.
- The final area of our red-tape work is reviewing and amending the Businesses Act (No. 71) of 1991, as amended in 1993. We have completed the review process and will introduce the amendment Bill to Parliament by the end of the 2023/24 financial year through which the Businesses Act will be repealed and fit-for-purpose legislation enacted.
The National Small Enterprise Act, 1996 (No. 102 of 1996) as amended provides for the establishment of the Advisory Body. The Amendment Act, 2003 (No. 26 of 2003) repealed the provision for establishment of the National Small Business Council. According to the Act of 1996, the National Small Business Council was to be established as a juristic person with specific functions to:
a) Represent and promote the interests of small business, with emphasis on those entities contemplated in the National Small Business Support Strategy (NSBSS) and
b) Advise the national, provincial, and local spheres of government on social and economic policy that promotes the development of small business.
Now that the National Integrated Small Enterprise Development Strategic Framework has been approved the Department is in the process of finalising the constitution to regulate the affairs of the Body and has consulted National Treasury regarding matters pertaining to the remuneration of the members of the Body, will proceed and follow a transparent process of appointing this Body as prescribed in the Act. We intend to advertise by the end of this month or early June and finalise the process within a period of two months.
The process of establishing the Ombuds Office which is aimed at ensuring that there is effective and affordable access to a justice mechanism for small enterprises as business-to-business disputes and late and non-payment are a significant reality in the lives of small enterprises across the world, with very real implications on their growth. The process was held in abeyance to enable the processes of the merger of Seda, sefa and CBDA to progress as it required an amendment to the same Bill that was being amended to establish the Ombuds Office.
Cooperative development is also crucial to our nation's growth. We must empower our communities and create opportunities for self-sufficiency through cooperatives. This will alleviate poverty and give our people a sense of pride and dignity.
The ANC-led government has prioritized cooperatives development, and the DSBD prioritizes amending legislation to cut compliance costs, integrating financial and non- financial support, allocating funding to cooperatives, developing a national co-op apex body, and ensuring better inter-governmental support.
We are busy reviewing our 2012 integrated co - operative development strategy for . Our research at this point reveals that:
Several challenges face cooperatives, including over-dependence on government support, a crisis of cooperative identity, and barriers to markets and financial services.
The government will also establish a single-digitized cooperative database and a Provincial Coordination Forum to ensure joint planning and integrated efforts across government.
The National Integrated Cooperative Strategy is being finalized to address challenges faced by cooperatives. The plan includes prioritizing five key areas, which are: amending legislation to reduce compliance costs, moving the Cooperatives Development Support Programme to Seda, allocating R73M for financial and non- financial support to 250 cooperatives, guiding the development of a national co-op apex body, and ensuring integrated inter-governmental support for cooperatives.
I appeal to all government departments and corporates to please pay suppliers timeously. Liquidity risks are high and SMMEs do not have the savings to ride through the current times of rising costs and reduced market demand.
I am happy to see the DSBD leading by example here, having in the last quarter paid 100% of valid creditors within 30 days. We challenge all departments to present their record on creditor payment.
The DSBD developed the Gender, Youth and Disability (GEYODI) Strategy to mainstream women and youth participation in the economy. One of the objectives of this strategy is” to provide entry points for increased inclusion of women, youth and persons with disabilities into all SMME development and financing initiatives to benefit equitably from these initiatives.
We are rolling out the Youth Challenge Fund (YCF) whose purpose is to stimulate innovation amongst youth owned businesses. The primary objective is to provide the necessary financial support through the Small Enterprise Finance Agency 50/50 % Blended Finance and non-financial through Seda’s Business Development Support service. (BDS)support to youth start-ups to promote innovation and enable them to acquire digital capability for competitiveness.
Chairperson, today after this session we are going to Spinach King, which is a business that is owned by Mr Lufefe Nomjana who is a young person funded through our TREP fund.
The Minister has already alluded to the skills development programs for unemployed graduates.
We are deliberate in ensuring that SMMEs with disabilities benefit from various packages we have. We are partnering with municipalities and Chambers for Persons with Disabilities to reach entrepreneurs with disabilities. Through the Informal and Micro Enterprise Development Program, we are giving up to R15 000 per business to buy tools of trade.
Further than that, the DSBD, through sefa, is administering the Amavulandlela Funding Facility whose aim is to support enterprises owned by Persons with Disabilities.
Chairperson, tomorrow the 17th May we will be launching a laundry, Sparkle Always down the road from here. The business is funded through the Amavulindlela Fund. Asimanga siyaqhuba!
Furthermore, Department, through the Small Enterprise Development Agency (Seda) is administering the SheTradesZA Hub whose aim is to assist South African women entrepreneurs to increase their competitiveness and connect to regional, and global market.
We are leaving no one behind!
Honourable Speaker, we are thankful for the guidance and direction provided by Parliament and the Portfolio Committee, as well as the NCOP, in helping us to focus on reducing red tape and supporting cooperatives. Despite opposition criticism, the 6th Administration has successfully met its targets in supporting SMMEs and cooperatives.
THANK YOU, KEALEBOGA,BAIE DANKIE
