8. Report of the Portfolio Committee on Small Business Development on Budget Vote 31 of the Department of Small Business Development for Financial Year 2019/20, Dated 10 July 2019 1. INTRODUCTION The Portfolio Committee on Small Business Development (“the Portfolio Committee”) having considered Annual Performance Plans and Budget allocations of the Department of Small Business Development (“the Department”), alternatively, (“DSBD”) and its entities, Small Enterprise Finance Agency (“sefa”) and Small Enterprise Development Agency (“Seda”), reports as follows: - 1.1 Background At the beginning of each year following the State of the Nation Address (SONA) by the President, the Minister of Finance tables before Parliament a detailed plan of the State's Budget: how much money will be or ought to be spent, on what, in that financial year. Thereafter, various government Departments present their budget votes before Parliament stipulating how they intend reconciling their resources with service delivery imperatives as outlined by the President of the Republic of South Africa in the State of the Nation Address. One of the main statutory functions of Parliament in that regard is to discuss, pass and oversee the State's Budget. On that score, the Department of Small 1
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pmg.org.za · Web viewSupplier Development and Market Access Support 13,079 13,686 14,486 41,251 Total 127,628 135,080 142,269 404,977 Source: DSBD Annual Performance Plan 2019/20
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8. Report of the Portfolio Committee on Small Business Development on Budget Vote 31 of the Department of Small Business Development for Financial Year 2019/20, Dated 10 July 2019
1. INTRODUCTION
The Portfolio Committee on Small Business Development (“the Portfolio Committee”)
having considered Annual Performance Plans and Budget allocations of the Department of
Small Business Development (“the Department”), alternatively, (“DSBD”) and its entities,
Small Enterprise Finance Agency (“sefa”) and Small Enterprise Development Agency
(“Seda”), reports as follows: -
1.1 Background
At the beginning of each year following the State of the Nation Address (SONA) by the
President, the Minister of Finance tables before Parliament a detailed plan of the State's
Budget: how much money will be or ought to be spent, on what, in that financial year.
Thereafter, various government Departments present their budget votes before Parliament
stipulating how they intend reconciling their resources with service delivery imperatives as
outlined by the President of the Republic of South Africa in the State of the Nation Address.
One of the main statutory functions of Parliament in that regard is to discuss, pass and
oversee the State's Budget. On that score, the Department of Small Business Development
Budget (Vote No. 31) was thus referred to the Portfolio Committee for consideration and
reporting.
Budget vote debates provides an opportunity for Parliament to discuss, and then formally
adopt, the budgets of government departments and entities that are funded through a
parliamentary vote. Budget votes are the formal negotiation between a committee and a
department about the desired outcomes that might be expected from the policy priorities and
resource allocations indicated in the budget under consideration. Each department and entity
is required to table its strategic and annual performance plans and budget in the National
Assembly.The debate therefore allows for Parliament, and the public, to be updated about
what departments are doing, how they are performing and exactly how public money is being
used in a forum larger than a Committee meeting.
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It is important for the strategic plans to be tabled within the stipulated period because the
plans provide information for the budget appraisal process of the relevant Portfolio
Committee. Strategic Plans identify strategically important outcome orientated goals and
objectives against which public institutions medium-term results can be measured and
evaluated by Parliament. Annual performance plans identify the performance indicators and
targets that the institution endeavours to accomplish in the upcoming budget year. It
furthermore shows funded service-delivery targets or projections. The annual budget sets out
what funds an institution is allocated to deliver services and most importantly, indicates the
resource envelope for the year ahead, and sets indicative future budgets over the Medium
Term Expenditure Framework (MTEF). The budget covers the current financial year and the
following two years.
1.2 Purpose of the Budget Vote
The Constitution of South Africa (Act No. 108 of 1996) recognises that the legislative
authority has an important role to play in overseeing both the financial and non-financial
performance of government departments and public entities. Section 27 of the Public Finance
Management Act (No. 1 of 1999) makes provision for Ministers to table the annual budget
for a particular financial year in the National Assembly before the start of that financial year.
Whereas section 10(1)(c) of the Money Bills Amendment Procedures and Related Matters
Act (No. 9 of 2009) makes provision for Ministers to table Strategic Plans and Annual
Performance Plans for their respective Departments, public entities or institutions, which
must be referred to the relevant Portfolio Committees for consideration and adoption.
The budget is a political and financial instrument that the government uses to ensure that its
policy programmes are operationalised through the allocation of financial resources to the
different spheres of government, specifically to programmes and projects. It reflects an
outcomes centred public spending approach. It is further described as a tool that the
government uses to evaluate the financing of its key policy objectives. It also used to evaluate
whether the macro-economic perspectives of the Budget and the respective Budget Votes
meet the requirements of government policies and give substance to the government’s five-
year plan. Therefore, the purpose of Vote 31 for the Department is to promote the
development of survivalist, small, micro, medium and co-operative enterprises that contribute
to inclusive growth and job creation.
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1.3 Objectives of the Report
The objectives of the report are as follows: -
1.3.1 To describe and analyse the budget of the Department of Small Business
Development and its entity Seda, vote 31, over the 2019/20 financial year;
1.3.2 To consider, soon to be phased out due to the recent reconfiguration of state
departments, vote 25 as sefa, is still an agency of the Economic Development
Department (EDD) through Industrial Development Corporation (IDC);
1.3.3 To report on the deliberations and consideration, which are essentially the unpacking
and examining of the Department annual performance plan and its associated budget
vote in relation to the strategic plan;
1.3.4 To make recommendations concerning the endorsement, adjustment or rejection of
budget vote 31 and any other recommendations regarding the implementation of the
Department strategic plan;
1.3.5 To record general and specific observations and make appropriate recommendations.
1.4 The Portfolio Committee Process
The Portfolio Committees have met with departments and their entities to pore over their
strategic and annual performance plans, budgets and performance targets in preparation for
reports to be considered by the House. In compliance with the referral by the National
Assembly, the Portfolio Committee on Small Business Development held its briefing on July
03, 2019 with the Department of Small Business Development, Small Enterprise
Development Agency and Small Enterprise Finance Agency to consider their annual
performance plans and the Department budget vote. The above exercise explains the
significance of the budget and strategic plan process in the calendar of Parliament and the
requirement for departments to table these on time to ensure that Parliament is provided with
information required for its oversight work.
The APPs are forward looking plans, however, their consideration do consider the past
performance of the Department and its entities. Honourable Minister Khumbudzo
Ntshavheni, Honourable Deputy Minister Rosemary Capa, led the DSBD delegation while
the Accounting Authorities and Chief Executive Officers from the agencies led their
respective delegations. The APPs and budget was deliberated against the Department and
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entities strategic plans, soon to be reviewed, and government priorities as captured in the
National Development Plan (NDP), Medium Term Strategic Framework (MTSF) of 2014 -
2019, New Growth Path (NGP) as well as February and July 2019 State of the Nation
Address (SONA).
2. OVERVIEW OF THE DEPARTMENT OF SMALL BUSINESS
DEVELOPMENT
2.1 Aim and Purpose of the Department
To support the radical transformation of the economy through the promotion and
development of sustainable and competitive entrepreneurs, small businesses and co-
operatives, that contribute to job creation and economic growth.
2.2 The mandate of the Department
The mandate of the Department is “to lead and coordinate an integrated approach to the
promotion and development of entrepreneurship, small businesses and co-operatives, and
ensure an enabling legislative and policy environment to support their growth and
sustainability”.
2.3 Legislative and Policy Mandates
The directive of the Department is primarily premised on diverse sections of legislations and
policies such as the Constitution (1996), Public Finance Management Act (1999), Public
Service Act (2007); White Paper on National Strategy for the Development and Promotion of
Small Business (1995), Small Business Development Act (1980), National Small Enterprise
Act (1996), as amended in 2003 and 2004, Companies Act (2008), Close Corporation Act
Co-operatives Development 9,038 9,672 10,268 28,978Co-operatives Programme Design and Support 105,511 111,722 117,515 334,748Supplier Development and Market Access Support 13,079 13,686 14,486 41,251Total 127,628 135,080 142,269 404,977
Source: DSBD Annual Performance Plan 2019/20
5.4 Programme 4: Enterprise Development and Entrepreneurship
Programme 4 has been allocated R7.2 billion over the MTEF with a sizeable portion of this
amount going to Seda. The spending focus for the Enterprise Development and
Entrepreneurship Programme over the medium term will be on the four (4) subprogrammes
constituting the Programme, namely, Enterprises and Supplier Development Programme,
SMME Programme Design and Support, SMME Competitiveness and Entrepreneurship. For
the current financial year 2018/19 the Programme has been allocated R2.6 billion which as
indicated consist of Seda allocation of R868 million and sefa provision of R1 billion.
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SMALL ENTERPRISE DEVELOPMENT AGENCY
6. MANDATE
Small Enterprise Development Agency (Seda) is an entity of the Department of Small
Business Development whose mandate include, inter alia, developing, nurturing, supporting
and promoting small business ventures throughout the country, whilst ensuring their growth
and sustainability in a harmonised fashion with various stakeholders. The Minister of Small
Business Development is the executive authority of the agency and as such exercise oversight
role over the agency as prescribed by the Public Finance Management Act. Seda was
conceptualised in 2004, through amendment of the National Small Enterprise Act,
amendment Act 29 of 2004, which essentially made provision for the incorporation of the
Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre and any
other designated institutions into a single Small Enterprise Development Agency under the
Department of Trade and Industry (the dti). It is a schedule 3A national public entity in terms
of the Public Finance Management Act (PFMA), Act 1 of 1999, as amended, and
incorporated as a company in terms of the Companies Act, 2008.
6.1 Seda Vision
To be the centre of excellence for small enterprise development in South Africa.
6.2 Mission
To promote entrepreneurship and develop small enterprises by providing customised non-
financial business support services that results in business growth and sustainability, in
collaboration with other role players, including global partners who make international best
practices available to local entrepreneurs.
6.3 Values
Nature;
Innovation;
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Customer- centric;
Responsible conduct.
6.4 Goal
Ensure that the small enterprise sector grows and increases its contribution to sustainable and
equitable social and economic development, employment and wealth creation.
7. SEDA PROGRAMME SUMMARY
7.1 Administration
The purpose of administration programme is to provide strategic leadership and support to
core delivery to ensure successful implementation of the organisations strategy. This includes
monitoring organisations performance, strategic alignment with the shareholder’s
expectations and capacitating the organisation to achieve its set objectives. This programme
is intended to support the achievement of all the perspectives of the balanced scorecard i.e.
organisational capacity, internal processes, finance and customer and stakeholder
perspectives.
By improving strategic alignment, stakeholder engagement, organisational performance
increasing funding improving cost efficiencies including improving customer and stakeholder
satisfaction the organisation seek to ensure that all non-core divisions are able to support,
improve and optimise their functions to contribute effectively in the organisation
performance. An estimated R177 million has been budgeted for this programme, while this is
expected to increase steadily over the MTEF period to R198 million.
7.1 Enterprise Development
The purpose of the programme is to support small businesses and co-operatives by providing
them with needs based and growth oriented non-financial business development support, to
ensure that their businesses are sustainable and contribute to the countries developmental
goals of decreasing unemployment and increasing economic contribution to GDP. This
programme is intended to support the achievement of the organisational capacity perspective
of the balanced scorecard. By improving service access the organisation seek to ensure that
supported enterprises and cooperatives are provided with business related information,
advice, consultancy, training, coaching, mentoring and business development intervention to
improve their business performance.
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These services aimed at providing solutions related to various business functions from
production to human resources, finance, marketing, quality improvement and export
development. Rural and township enterprises including cooperatives are prioritised by
ensuring that must of the support offered is directed towards them. For the current financial
year, the programme is allocated R534 million.
7.2 Seda Technology Programme
To provide technology and innovation oriented interventions, including quality and product
improvement support to small enterprises and cooperatives. To enable incubated clients to
improve their survival rate beyond first challenging two years of business start-up by
providing support to improve their product offering and other business development support.
Moreover, the programme is intended to support the achievement of the organisational
capacity perspective of the balanced scorecard. By improving service access the organisation
seek to ensure that supported enterprises and clients are provided with incubation support,
technological equipment and innovation support to improve their capacity and productivity.
Another focus of the programme is to ensure that incubated clients are given tools to be self-
sustainable post incubation period and are able to contribute meaningfully to the economy.
The Quality and Standards interventions ensure that the products and services of the
supported enterprises complies with the statutory and regulatory requirements and create
market access. For the current financial the programme is budgeted R225 million.