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DSBD: Lindiwe Zulu: Address by Minister of Small Business Development, on the occasion of delivering budget vote speech,National Assembly, Cape Town (18/05/2017)

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DSBD: Lindiwe Zulu: Address by Minister of Small Business Development, on the occasion of delivering budget vote speech,National Assembly, Cape Town (18/05/2017)

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Small Business Development Minister Lindiwe Zulu

18th May 2017

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House Chairperson,
Ministers and Deputy Ministers present, Deputy Minister November,
Chairperson, Ms Ruth Bhengu, and Members of Portfolio Committee on Small Business Development,
Director General of the Department, Prof Edith Vries;

Board Chairpersons, Board Members and Chief Executive Officers of our entities

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  • The Small Enterprise Finance Agency (SEFA); and
  • The  Small Enterprise Development Agency (SEDA) Our Social Partners:
  • Organised  business  formations  representing  small  businesses, cooperatives and informal sector
  • Labour
  • Academia
  • Community members and
  • The Media

Small business owners and practitioners, Private sector representatives,
Our special guests; Compatriots

Introduction

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It is a mere three years ago that President Jacob Zuma announced the establishment of the Department of Small Business Development in May 2014. This announcement marked a turning point in the history of SMMEs and Cooperatives development in South Africa, demonstrating Government’s commitment to place SMMEs and Cooperatives at the centre of economic growth and job creation. This is in line with the aspirations of the National Development Plan (NDP) - which we ought to achieve in 2030 – a vision the ANC led government is still very much committed to.

Consistent with our mandate to create an enabling environment to establish new and to grow existing small businesses, our collective effort to unlock the potential of SMMEs, AND Cooperatives, remains firmly on track.

In this year of Oliver Reginald Tambo, a year of unity in action, all South Africans who regard themselves as patriots carry a responsibility to intensify efforts to create an economy that benefits all, and not to allow this goal to be an elusive mirage for the historically dispossessed.

House Chairperson, I’d like to quote Oliver Tambo’s views as expressed as far back as 1991 when he said:

“The objective of our struggle in South Africa, as set out in the Freedom Charter, encompasses economic emancipation. It is inconceivable for liberation to have meaning without a return of the wealth of the country to the people as a whole . . .

To allow the existing economic forces to retain their interests intact is to feed the roots of racial supremacy and exploitation, and does not represent even the shadow of liberation.“

Loyal to the pledge we made during the liberation struggle, we will never consider our mission accomplished and freedom attained until all our people have been emancipated from economic bondage, poverty, inequality, unemployment and despair.

Therefore, the right of the majority to economic inclusivity will never be betrayed, not by this ANC led government! Thus, our relentless pursuit of radical socio-economic transformation continues unapologetically and without question.

    State of the Nation Address by President Jacob Zuma, Parliament, Cape Town. 9 February 2017. Page 8

What we mean by radical socio-economic transformation was clearly articulated by HE President Jacob Zuma during his 2017 State of the Nation Address, and I quote.

“We mean fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor, the majority of whom are African and female, as defined by the governing party which makes policy for the democratic government.” 2 Close quote.

Thus, in pursuance of this goal, our mainstreaming of programmes ensures that 50% of our products support enterprises in township areas; 50% to women-owned enterprises; 30% to youth-owned enterprises and; 30% to enterprises operating in rural areas. In this financial year are planning greater emphasis for youth owned enterprises. During this address we will indicate to the House the extent to which we have remained true to this commitment.

The Journey Travelled Since May 2014

Since our inception in May 2014, we have been mobilizing society and raising awareness around entrepreneurship, the small business and cooperatives sector and the challenges that confront it and the opportunities available to them.

    State of the Nation Address by President Jacob Zuma, Parliament, Cape Town. 9 February 2017. Page 9

Because of our collective and concerted efforts, the majority of our citizens now appreciate the value and contribution of small businesses to our economy. They realise that supporting small businesses will defeat the scourges of poverty, unemployment and inequality.

The mind-set is changing! A changing mind-set is important, as for far too long South Africa has had a big business mind-set.

It is our considered view that in order to address what the World Bank has termed Africa’s “missing middle”, serious investment must be made towards bridging the gap between big and small companies; as small business and cooperatives are the lifeblood of economic growth and development.

I can now boldly assert that we have successfully placing small businesses and cooperatives firmly on the national agenda so that we bridge this divide between too big and too small. As a result of our efforts we now have this high level of awareness within government that is encouraging. It is so fulfilling and exciting as more and more Ministers accept that small business development is a national priority and they unreservedly pledge the support of their departments. We have truly become advocates, defenders and supporters of the sector!!

Recent research confirms our view on this changing mind set. A study by the Global Entrepreneurship and Development Institute (GEDI), which we commissioned, has revealed that South Africa is making significant progress, ranked 2nd on the continent in terms of the quality of its small businesses and the development of an entrepreneurial ecosystem.

We are also cognizant of opposing views of the maturity of our small business ecosystem. For example, the Global Entrepreneurship Monitor, generally known as GEM, highlighted the low levels of entrepreneurial activity in our country. The focus globally is around sustainability of entrepreneurs rather than the number of start-ups introduced into the eco- system. We want to have the best of both worlds by deepening our efforts to get more people starting businesses, but we are also active in graduation and scaling-up programmes that are now producing quality small businesses.

We are working with thought leaders, academic and research institutions to enhance our understanding and the instruments to improve our entrepreneurial eco-system.

The National SMME Policy Colloquium has been an important forum where the Ministry interacts with broader private sector stakeholders as well as SMME practitioners since the advent of the Ministry in 2014. The colloquium, which is a partnership between the department and the Small Business Development Institute (SBDI), provides an important platform where key issues pertaining to matters confronting SMMEs and Cooperatives are discussed. One of the key recommendations that arose from the Colloquium was for the Department to consider introducing a National SMME Policy Master Plan linked to the National Development Plan. In this regard the department and the SBDI has established an interim Master Plan Task Team that presented this proposal to the last Colloquium which was held in October 2016, and the department is currently considering the report emanating out of that colloquium.

House Chairperson, the contribution of small, micro and medium enterprises (SMMEs) to the South African economy is far below its potential. According to the Quarterly Financial Statistics Report, the private sector earned a total of R2.3 trillion in turnover in the last quarter of 2016. Large businesses, dominant in the manufacturing and trade industries, contributed 60% to this total, followed by small and medium businesses at 40%. We need to do better and match the global average which show small businesses share higher levels of participation in various economies. This is possible if we heed the President’s directive to set aside at least 30% of government procurement budget of around R 600 billion towards SMMEs and Cooperatives.

It is significant to note that while large businesses remain dominant in the manufacturing and trade industries, their contribution to turnover was reduced from 63% to 60% and a slight growth by SMMEs from 37% to 40%.

The tax revenue collected from SMMEs also demonstrates that this sector is increasingly becoming a force to be reckoned with. The contribution by SMMEs continued to increase in terms of four tax categories, namely, Pay-As-You-Earn (PAYE), which increased from 57% to 59%, the contribution by SMMEs to the skills development levy increased from 51% to 54%. Corporate Income Tax (CIT) from 65% to 67% and Value Added Tax (VAT) from 57 to 58%.

The contribution of Small Businesses to the Unemployment Insurance Fund (UIF) also increased from 62% to 64%.

The contribution of SMMEs to the economy continued to increase despite the increasingly difficult economic conditions. Working together as the Small Business Development Portfolio comprising the Department, SEDA and SEFA including our social partners, we are determined to strengthen the small business sector to enable it to occupy its rightful place in the mainstream economy and to demonstrate that Small Business is the Big Business of the future and working together we can indeed achieve more.

Like any new organisation there are teething problems that are bound to be encountered, even organisational design experts will concur that three- years is a relatively short time in which to establish a new organisation, particularly an entire national government department that seeks to serve to such a significant sector of the economy. We will agree that the budget available is far below what is needed to deliver our mandate. Despite the above and regrettably we were unable to spend all the resources allocated for the 2016/17 financial year due to systemic reasons.

However, we have been able to set-up a sound administration in the Department, resulting in us achieving an unqualified audit outcome in the first year of operating as Budget Vote 31. And all indications are that the department will maintain an unqualified audit outcome in respect of the 2016/17 financial year. Both Seda and Sefa also maintained their record of clean unqualified audit outcomes.

House Chairperson, I am pleased to inform the House that the department’s vacancy rate is below 10%.

The target for women in senior management positions (50%) as well as the target for people with disability (2%) have been exceeded with 3.5% and 0.5% respectively.

Despite these limitations we are proud of the services we have delivered and its impact on the sector, noting that of service delivery response has been informed by the views and proposals of the small business and cooperatives sector.

House Chairperson, I’d like to integrate our response to the key challenges faced by SMMEs with reporting on our achievements over the past year as well as our 2017/18 priorities.

Policy, Legislation and Regulations

Firstly, policies, legislation and regulations are the core levers in the control of government through which to create an enabling environment for small businesses to grow and thrive in our economy.

In our last Budget Speech, we urged National Treasury to fast-track the implementation of the 30% set asides policy and programme for small businesses and cooperatives. We are encouraged with the progress made towards achieving the implementation of the 30% set aside announced by the President in 2015 and further reiterated in his 2017 State of the Nation Address.

National Treasury has gazetted the revised Preferential Procurement Regulations in January 2017, which encourages Government and its entities to procure at least 30% of goods and services from SMMEs and Cooperatives.

It is important to note that National Treasury is working on the Procurement Bill, which will streamline government’s procurement processes and provide for the full implementation of the 30% procurement from SMMEs and Cooperatives.

I am pleased to report that the 30% targeted procurement from SMMEs has been exceeded by provinces such as Gauteng, Kwa Zulu Natal and North West as well as some national government departments such as Public Works, Tourism and my own department. The department of small business development recorded 60% procurement from SMMEs and Cooperatives.

House Chairperson a monitoring and evaluation framework with an implementation plan for the monitoring of the 30 percent procurement directive has been developed in collaboration with the National Treasury to ensure effective monitoring.

This intervention is timeous in the light of the recent and unfortunate downgrades. Our hypothesis is that the downgrades will negatively impact small businesses and our cooperatives and their ability to absorb or recover from the potential shocks is limited. Hence, we have commissioned research and we will conduct stakeholder consultations in order to craft an appropriate response to the potential impact of the downgrade in this sector.

We are proud to report that the preliminary stakeholder consultations on the review of the National Small Business Act, No. 102 of 1996, as amended in 2004, have been completed.

The objective of the review is to introduce standard definitions, greater policy and programme harmonisation as well as improved monitoring of the impact of government and private sector investment in small business and cooperatives development. We expect the Bill to be introduced in the legislative process in the first quarter of 2018.

House Chairperson, if there is a point of consensus between policy makers and the small business sector; it is the need to ease the burden of compliance. Our efforts to reduce the burden of regulatory and compliance by small businesses, is gaining momentum. Since 2014, we have rolled-out the guidelines on red tape reduction to about 165 municipalities. Building on these guidelines at least two provinces (Kwa Zulu Natal and the Western Cape) have adopted these guidelines into a provincial response.

The red tape reduction programme has been enhanced to cover further analysis and research areas to minimize challenges faced by small businesses. Our plans for the future include assessments of regulatory protocols within various provinces and the introduction of ICT as one of the instruments of creating efficiencies.

We would like to acknowledge the insight and constructive proposals that we consistently receive from organized business.. We are confident that through collaborative efforts we will progressively gravitate towards a simplified business environment.

House Chairperson, we are embarking on an evidence-based review of the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises. As we are all aware the current strategy has been around for over 15 years. The evaluation will be finalised by December 2017. The research will inform the design of the strategy, which is relevant and responsive to the economic and social needs with the expectation of achieving social and economic transformation.

We are also embarking on a process to review the cooperatives strategy. Our goal is to promote the growth and development of cooperatives on a sustainable basis and drastically reduce their mortality rate.

Access to Finance:

Secondly, access to finance has consistently been raised as a challenge by Informal businesses, start-ups, existing SMMEs and cooperatives. In response to the felt needs there are a range of instruments, grants and loans available in the Small Business Development Portfolio.

The department has, through the Black Business Support Development Programme (BBSDP) supported 611 small businesses and has disbursed grants to the value of R268 million during the 2016/17 financial year.

During the same period, the Cooperative Incentive Scheme (CIS) supported 237 cooperatives and disbursed grants to the value of R64.85 million. In total, R333 million was spent towards supporting cooperatives and small businesses.

In the current financial year the department is targeting 641 beneficiaries to the value R256 million for BBSDP and for CIS has targeted 302 beneficiaries whose projects are valued at R78 million.

In this financial year we will review the Cooperatives Incentive Scheme and BBSDP. The objective of the review process is to enhance the programme’s effectiveness to ensure sustainable and growing cooperatives in the economy. These instruments are part of our strategy to design relevant policy instruments in response to the need to bring about radical economic transformation in the development of cooperatives and enterprises.

Our entity, sefa, continues to contribute to the stimulation of the economy through the financing of small enterprises. Since its establishment in 2012, it has financed over 237 000 businesses and facilitated the creation and maintenance of about 262 000 sustainable jobs.

During the 2016/17 financial year alone, sefa disbursed just over R1 billion to SMMEs and Cooperatives, which benefited approximately 44 000 enterprises. We are confident that if we proceed along the same path, we will make a meaningful contribution towards achieving the target of 90% of the 11 million jobs as per the National Development Plan.

Since 2014, sefa has disbursed funds to over 50 thousand (50 583) Youth owned enterprises to the value of R955 million of which R222.4 million was disbursed in the past financial year alone.

Honourable House Chairperson, I am pleased to say that women entrepreneurship remains a major strategic focus for the country. The

House will be pleased to hear that sefa has disbursed over R400 million to Women-owned enterprises in the past year.

We are aware of the challenges that confront entrepreneurs with disabilities. In response to this challenge and through sefa, we launched a R30 million Amavulindlela Fund dedicated to entrepreneurs with disabilities. Through this fund, we seek to empower existing and aspiring business owners with disability to access funding and business opportunities to enable them to participate actively in the mainstream economy. To date, a total of R9.3 million has been approved.

I am certain the President of the South African Informal Traders Alliance (SAITA) Ms. Rosheda Muller and Ms Rose Nkosi (Chairperson of South Africa Spaza Shops Association SASTA will both be pleased to learn that sefa has allocated R25 million for Micro Loans targeting informal businesses.

One of the major challenges faced by small businesses is late payment of their bills. This is one of the main challenges consistently raised by organised business. And, as government departments are the main defaulters, government has through the PFMA compelled all spheres of government and its entities to pay service providers within 30 days of receiving valid invoices. We have introduced a Hotline operated by Seda and monitored by the department of Planning Monitoring and Evaluation. This service has been highly successful in resolving the late payment of SMMEs.

Since its inception in 2009, invoices to the value of R523m were resolved. Between 01 April 2016 and 13 February 2017, 1199 calls reported to the Hotline and 1112 were resolved leaving only 87 still pending.

Non-Financial Support

House Chairperson, we see support for informal businesses as one of our priority areas. Through the Informal and Micro Enterprise Development Programme (IMEDP), 7519 informal businesses were supported with training in 2016/17. This is an impressive progression from the pilot of just over 1000 informal enterprises supported during the 2015/16 financial year.

We are determined to upscale informal business infrastructure through the Shared Economic Infrastructure Facility (SEIF) programme, which is geared towards providing appropriate infrastructure for small enterprises in rural and township areas, Mqanduli (Ingquza Hill); Mnambithi Municipality, Tshakuma Fruit and Vegetable Market amongst others.

We continue to do everything in our collective power to ensure that cooperatives grow and thrive. During the last financial year, 342 cooperatives in all provinces were trained in cooperative governance and management, bookkeeping and quality management systems, and product improvement.

Last year, we made an undertaking to establish the Cooperatives Development Agency (CDA), which would provide financial and non- financial support services to cooperative enterprises in the whole economy. We were unable achieve this goal due to budgetary constraints.

The process of establishing the agency will be accelerated as soon as the Cooperatives Development Amendment Act (2014) is proclaimed.

In the previous financial year, Seda, through its branch network, managed to support 12 215 aspiring and existing entrepreneurs. Through specialist programmes, Seda has supported 167 clients through the supplier development programme, 353 clients through trade facilitation, 41 clients on systems implementation, 256 clients on mentorship and coaching and a further 893 clients on training on local and international standards.

Over the same period, a total of 115 primary cooperatives were established and 45 secondary marketing cooperatives were also established. 1 747 emerging enterprises were supported through the Basic Entrepreneurial Skills Development (BESD) programme, which is a collaboration between Seda, GIZ and the National Skills Fund.

Seda entered into 76 partnerships during the year in areas such as co- location, access to markets, supplier development, access to finance and other much needed services by small enterprises and Cooperatives.

Through the Seda Technology programme (STP), 2 582 new jobs were created to date by its network of 57 supported incubators.

The enterprises within Seda-supported incubators enjoyed growth in revenue and have generated a collective turnover of approximately R825 million. To highlight one specific market access success from an incubator, Timbali Technology Incubators, located in Mpumalanga Province incubates entrepreneurs in the agricultural sector.

Timbali’s incubated enterprises and cooperatives used to sell 100% of their produce to the wholesale market due to difficulties in entering the retail market.

Today, these famers are supplying 56% of their produce to the retail market and deliver predictable high quality products to retailers. I must indicate that Woolworths is one of their customers. These are ordinary people who were unskilled but had the necessary entrepreneurial spirit.

Another entrepreneurial success story to share is from a newly established renewable energy incubator, the South African Renewable Energy Business Incubator (SAREBI). iSolar manufactures solar water heating systems for the low-pressure roll-out facility by the Department of Energy (DOE). iSolar has been a client of SAREBI since 2013 and took up residence at SAREBI in April 2015. They are graduating in the coming months and have already secured the rental of a 3 000 m2 facility in Atlantis where they will be continuing trade. In the last financial year alone, their revenue has grown exponentially and are now employing over 35 full-time staff members.

Overall, 47% of all enterprises supported by Seda through its various non- financial support interventions are women-owned. In addition, 43% of enterprises supported for technology transfer are also women-owned. We believe that with some concerted effort Seda will reach the Portfolio target of 50% of all investments favouring women-owned enterprises.

Access to Markets:

Thirdly, SMMEs and Cooperatives have pointed out to us that their growth and sustainability is hampered by lack of access to markets. As such much of the interventions by Seda are to make enterprises investment- ready and incubators serve as a platform for making them expansion ready. I’d like to share a few of our endeavours in respect of creating access to markets.

The first is access to the public procurement opportunities, which I referred to earlier in discussing the revised PPPFA regulations. These regulations increased possibilities for the sector to benefit from the R 600 billion budget.

In February this year we launched PEEK an e-commerce platform for small businesses in the crafts sector. PEEK, with its technology, links these entrepreneurs into the ever-expanding national and international networks of market opportunities, putting them on a growth and profitability path. It highlights the very best of what South Africa offers in the crafts sector.

Our National Gazelles Programme, which we launched in 2015, has taken small business development to a higher trajectory. As this is a three-year pilot, we annually evaluate its effectiveness to identify gaps and strengthen the programme. Three weeks ago, we had a workshop to evaluate the programme and I am excited to inform you that  many successes are emerging. The entire cohort of 40 Gazelles has during the first year demonstrated an increase in turnover and job creation.

One of the Gazelles, Gribow, a 100% woman-owned entity has had access to Global markets. They secured a contract from a Dubai based

Company, Aggreko, on a Project was for the construction of a Specialized Substation at Dema Power Station in Harare, Zimbabwe.

According to Gribow, and I quote, “Our association with the Gazelles and the fact that this was a Government backed initiative, led to the Aggreko Team awarding us the Contract in Zimbabwe based on the fact that the Government had backed us as one of the Top 40 Small Business in the country.”

Their sterling performance in the Zimbabwe contract led to Gribow being appointed to join a project aimed at constructing a gas plant in Benin.

The 4th Industrial Revolution, characterized by digitisation and automation, is gaining momentum. It will fundamentally change the way is which we live, work, transact and trade. It thus stands to reason that the small business and cooperatives sector must future-proof their core business offerings and business models, in order to be part of a digitised world and economy, failing which they will fall behind and remain trapped in a survivalist mode. We will support the building of the right digital capabilities into companies and sectors so that they remain relevant in the new environment and resultant markets. This not only ensures their survival in the digitization megatrend as companies need to be clear about their digital strategy to ensure it sharpens their competitiveness.

Developing countries, including South Africa must leapfrog to minimise the divide. After all this revolution comes with opportunities just as it comes with challenges. It is a golden opportunity for our youth who, in any case, are already in this intellectual space.

It is for this reason that digitalization is a key focus for Seda, especially their incubators. Seda cannot talk of enterprise development and not prepare their clients for the future. Focus trends include digital innovation and product development, digital supply chain and operating systems, digital marketing, sales and service. Our incubators must also play a role in levelling the playing field.

Hence we were very excited by the launch of the French-SA Tech lab in February, the second of two on the continent. It is an incubator where entrepreneurs can design and test their innovative IT solutions to resolve real world problems and create answers to new opportunities. The Department of Science and Technology is supporting the development of these innovative solutions and products and seda is supporting the entrepreneurs in the translation thereof into a business enterprise.

Other initiatives which we will vigorously pursue in the current financial year, is an implementation for the Transversal Agreement with the Department of Telecommunications and Postal Services and their SMME ICT strategy and the Seda ICT incubator.

We are excited about the PUBLIC-PRIVATE PARTNERSHIPS we have concluded to advance market access. We have signed partnership agreements with private sector organisations such as Pick n Pay, Anglo Platinum, SABMiller now AB-In Bev, Sumitomo Rubber South Africa (Dunlop), Nestle SA amongst others.

The Women-in-Maize programme is proceeding apace. The partnership between the department, South African Breweries-Miller (SAB-Miller) and the Agriculture Research Council (ARC) is focused on implementing the

Women-in-Maize programme. Since its execution, the partnership has seen 32 Cooperatives linked to SAB Women-In-Maize supplier development programme under CROP 16 and 17.

The programme will empower 5 000 women-owned farming Cooperatives and SMMEs over the next five years and will increase the inclusion of black women-owned Cooperatives in SAB’s supply chain; develop skills of women farmers; improve food security; and stimulate local economies by increasing procurement from local suppliers.

A similar effort must be made with executing transversal agreements with other departments. Talking more broadly, coordination between all spheres of government has to be a priority. I have not gone to a single community without contacting and working with the Provincial MEC and appropriate MMCs. I have already met with the MECs for Economic Development in Gauteng, Free State, North West and Mpumalanga. I will in the next few weeks meet with the remaining MECs to better coordinate our efforts to build our small business sector.

In any case, there is R15 billion in small business support in various pockets of Government which will be coordinated to ensure a greater return on investment. We have been talking to Treasury in this regard. This coordination will be far more effective in our small business development strategies than the current silo approach in which we duplicate support, and thus waste valuable resources. Seda and Sefa will be part of this coordination. We will come back to this House in the next Budget Vote to give a detailed account of the impact of these agreements.

International Relations

In 2016/17, we introduced an International Relations function. We have been overwhelmed by the enormous opportunities it offers for the sector and the department in terms of creating an optimized the ecosystem to accelerate the growth and ensure the sustainability of small business and cooperatives.

In March this year, we hosted, with our various partners, the first Global Entrepreneurship Congress (GEC) on the Continent. It was a resounding success. One of the legacy projects emanating from this Congress was the establishment of the Global Entrepreneurship Network Africa (GEN Africa) which I will lead with my counterparts on the continent. We will host GEC Africa in 2018 as an inaugural entrepreneurship forum for and by African countries.

There are strong synergies between GEN Africa, the outcomes of World Economic Forum on Africa and the African Union’s Agenda 2063 in terms of the promotion of entrepreneurship in order to enhance Intra Africa Trade amongst small businesses in Africa. We are committed to taking leadership in opening this opportunity.

We have concluded a multi-year grant to the value of 52 million Euros form the European Commission, to support employment creation through small business. This programme will start operating in October 2017.

I want to appreciate the Her Excellency, Ambassador Thygesen and her team at the Danish Embassy in Pretoria for the recent Study Tour to Denmark they arranged for our team. Denmark ranks 4th in the world in terms of the ease of doing business and No.1 on the Transparency

International ranking hence, offering us for us much to learn from. The team was exposed to the entire Danish ecosystem built over many years to support their SMEs, comprising 98% of businesses in the country. An invigorated and energised team returned on Saturday past and we look forward to seeing the translation of the lessons learnt into our “youthful” ecosystem.

The 2017/18 Budget

The process of building a fully independent department continues rapidly. Despite all the challenges of setting-up a new home with limited resources, the department was invigorated by an unqualified audit opinion from the Office of the Auditor General for the 2015/16 financial year. The department continues to build on this baseline to ensure an effectively governed environment.

On financial allocations:

  • Transfers  and  Subsidies  take  up  84.8%  or  R1.24  billion  of  the allocated R1.46 billion.
  • Seda is allocated 51.9% or R743.1 million,
  • whilst  the  remaining  33.2%  or  R484.6  million  is  administered through the following four grants:
  • Black    Business   Supplier     Development     Programme (BBSDP) is allocated R256.8 million;
  • Cooperatives Incentive Scheme (CIS) is allocated R78.7 million;
  • Enterprise Incubation Programme is allocated R49.7 million, and
  • The National Informal Business Upliftment Scheme (NIBUS) is allocated R99.4 million for the current financial year (2017/18).
  • Compensation of employees is allocated 9,5% or R139 million
  • Goods and Services are allocated 5.5% or R80.1 million
  • Whilst Capital Assets are allocated 0.2% or R2.6 million.
  • Sefa’s total budget for the current financial year is R223.8 million.

We have been in existence for three years and with the benefit of hindsight organised ourselves to function as a portfolio. The aim of our portfolio is to lead an integrated approach in the development of SMMEs and Cooperatives. We are being pragmatic about it and providing coordination, direction and leadership on policy, planning and mobilizing resources and strengthening accountability, partnerships and communication with sector stakeholders for the development of SMMEs and Cooperatives across the three spheres of government. This is a major step-change for the Portfolio.

Conclusion

House Chairperson, the 2019 aspirations that we set ourselves to realize, is to

  • ensure growth in the contribution of SMME to GDP from 42%  to 45%,
  • increase the number of SMME and start-ups from 2,15 to 2,56 million
  • increase the total number of jobs created by SMMEs from 7,33 million to 9,09 million

We remain confident that these aspirations we set in 2015 emanating from the Nine-Point Plan are still attainable.

The performance of small businesses and the Portfolio in delivering these aspirations demonstrates that we are on course to achieve the key indicators of radical economic transformation and the National Development Plan: Vision 2030.

Acknowledgements

Chairperson, I would like to express my appreciation for the support I have received from my family, colleagues, the people of South Africa, and the team in the Small Business Development Portfolio.

To my family, thank you for your unconditional love and support. You remain my pillar of strength.

I would like to acknowledge my Cabinet colleagues for their continued support, advice and leadership.

I want to appreciate the former Deputy Minister, Ms. Elizabeth Thabethe who unselfishly shared her depth of experience in the sector and worked with me to establish the Small Business Development Department since its establishment until March 2017. Thank you Deputy Minister.

Deputy Minister, Nomathemba November, thank you for your support. You may be new to the department, but you remain a veteran when it comes to issues of small business and Cooperatives.

Members of the provincial Executive Councils (MECs) responsible for economic development, I wish to say: Thank you for your contribution and for giving concrete expression to the notion of cooperative governance.

Chairperson of the Portfolio Committee on Small Business Development, Cde Ruth Bhengu and Committee Members, thank you for your guidance and support. Your dedication and passion for delivering the small business development mandate to our people has been an unwavering beacon that beckons us to honour our reason for existence.

I must express my sincere appreciation to the Director-General, Prof Edith Vries and the entire department; and the CEOs and teams in our entities seda and sefa, for your dedication and commitment to delivering our mandate. You are a small team carrying ever-increasing load and I appreciate your hard work and the incremental improvements in the maturing portfolio service delivery model.

To the entrepreneurs, owners of and operators, practitioners and experts in the small business and cooperatives sector, thank you for your dedication to the small business development agenda which you drive, with or independent of our support. Your support, advice and patience with us is appreciated.

Chairperson,  I  herewith  present  Budget  Vote  31  on  Small  Business Development for 2016/17

Together we move South Africa forward through small business and cooperatives development.

I thank you.

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