Department of Small Business Development Presentation to the Portfolio Committee 20 August

Content Purpose List of Acts, rationale and salient elements of each Act Supporting structures for SMMEs & cooperatives especially SANACO & NAFCOC including challenges and proposed solutions 2

Purpose To apprise the Portfolio Committee on existing Acts of Parliament governing the work of the Department of Small Business Development (DSBD), As well as previous and current Acts together with any recently promulgated amendments 3

List of Acts Primary legislation – Small business Development Act (Act 112 of 1981) – National Small Business Act 1996, amended 2004 – Companies Act, 2008 – Cooperatives Act, 2013 – Industrial Development Corporation Act 1940 – Financial Advisory and Intermediary Services Act (37 of 2002) Supplementary legislation & other policy measures – BBBEE Act – National Empowerment Act, – Preferential Procurement Policy Framework Act – Youth strategy – Women Development empowerment strategy – Coops strategy – Innovation and technology Strategy 4

Small Business Development Act The National Small Business Act of 1996 was promulgated based on the repealed Small Business Act of The National Small Business Act of 1996 provided for the establishment of the National Small Business Council and the Ntsika Enterprise Promotion Agency; and to provide guidelines for organs of state in order to promote small business in the Republic; and to provide for other related matters 5

National Small Business Act To provide for the establishment of the National Small Business Advisory Council (NSBAC) and the Small Enterprise Development Agency(SEDA); and to provide for guidelines to be followed by organs of State to promote small enterprise in South Africa; and for matters incidental thereto. ( Principal Act of 1996 and amendment of 2003) By its nature the Act is enabling as opposed to enforcement. ( a possible avenue for amendments ) Another salient feature of this Act is that it provided a definition of small business. 6

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National Small Business Act The National Small Business Advisory Council (NSBAC) is appointed by the Minister in terms of the provisions of the National Small Business Act, 1996 (Act No.102 of 1996) as amended in 2003 (Act No. 26 of 2003). The core business of the NSBAC is to represent and promote the interests of small business in South Africa. The functions of the NSBAC are to monitor, advise and advocate on matters concerning small business. 10

COMPANIES ACT To provide a new legislative framework for the incorporation, registration and management of companies; to establish a Companies and Intellectual Property Commission (CIPC) and Companies Tribunal; The current legislation does away with the close corporation registration system and treats all businesses as companies. 11

INDUSTRIAL DEVELOPMENT CORPORATION ACT To constitute a corporation, to promote the establishment of new industries and industrial undertakings and the development of existing industries and industrial undertakings, and to provide for other incidental matters. Has allowed for the establishment of SEFA to advance the objectives of SMMEs and Coops 12

Cooperatives Act 13 To provide for coops principles and compliance with coops principles, including application and registration in line with ILO definition The Cooperatives Amendment Act, No 6, 2013 calls for the establishment of a single National Apex Cooperative. The National Apex Body is the national structure of cooperatives whose main purpose, amongst other things, is to lobby government and private sector making policy recommendations that may improve and grow cooperatives in the economy. The National Apex Body represents the interest of the whole cooperative movement at both the national and international level. The National Apex Body can be formed by the minimum of three operational tertiary cooperative that operates at national level and a minimum of five operational multi-sectoral cooperatives that operates at the provincial or district or local level. The national apex structure like cooperatives as a whole is an independent structure from government and cannot be control by government

Intermediaries Act Financial Advisory and Intermediary Services Act (37 of 2002)-FAIS The Act is aimed at regulating the financial services providers in tandem with the National Credit Act The Act seeks to deal amongst other matters with restless and unsecured lending This Act is aimed at regulating the conduct of Financial Services Provider (FSP), and provides for guidance to consumers in their daily dealings with the considered product provider. The Act also provides for remedies such as Ombud and hello Peter The Development Finance Institutions (DFIs) are also financial services provides in terms FAIS including their intermediaries 14

Apex Fund The South African Micro-Finance Apex Fund (samaf) was a wholesale funding institution formally established in April Samaf was tasked to facilitate the provision of affordable access to finance by micro small and survivalist business for the purpose of growing their own income and asset base. The primary purpose of samaf was to reduce poverty and unemployment and also to extend financial services to reach deeper and broader into the rural and peri-urban areas. 15

Apex Fund (cont.) The delivery of financial services to micro and survivalist businesses was through financial intermediaries i.e Marang Financial Services, Women Development Bank, village banks and a number of Micro Finance Institutions (MFIs) One of the mandates of Samaf was to build capacity amongst its clients but also train intermediaries. Intermediaries were considered as partners for the success of the Samaf model as they were close to communities where micro and survivalist businesses were located. 16

Small Enterprise Finance Agency The Small Enterprise Finance Agency (Sefa) provides financial support using both Wholesale and direct lending as channels Sefa therefore also utilises financial intermediation through amongst others the commercial banks Sefa unitlisation of intermediaries such the MFIs started during the time of the then Khula before the merger 17

Supporting structures SANACO NAFCOC FABCOS AHI BBC 18

SANACO 19 SANACO (South African National APEX Co-operative) was formed as a result of a conference hosted by dti focussing on co-operatives in SANACO is a tertiary co-operative representing the interests of primary and secondary co-operative members. SANACO is registered as a tertiary co-operative in terms of the Cooperatives Act SANACO provides advocacy services to its members and assist co-operatives with capacity building. Currently there are 26 tertiary co-operatives existing including SANACO. Co-operatives Act of 2005 enables tertiary co-operatives to have the word apex as part of their name. SANACO has provincial representation in at least 5 of the 9 provinces. SANACO is a member of the International Co-operative Alliance (ICA) and represent co-operatives at international forums such as ICA Africa and BRICS Co- operatives.

SANACO (cont.) 20 SANACO aspires to become the fourth tier of the cooperative movement, namely, a national apex body in terms of the 2013 Cooperatives Act. SANACO provides advocacy services to its members and assist co- operatives with capacity building. SIU through the President Proclamation is given powers to investigate COGTA whose alleged to have misused funds of the Department extended to SANACO to execute. The funding of SANACO has been suspended by the department pending the outcome of the investigation.

NAFCOC The department has working relations with Nafcoc, as business chambers are seen as vital for lobbying on behalf of their members, capacity building and networking. Various partnerships have been established with Nafcoc in the past with the aim of supporting its members who happened to be SMMEs. One recent project was a request to Seda to provide business skills to Nafcoc members. Out of this programe Seda trained about 1283 Nafcoc and Fabcos members The programme also has a capacity building for Nafcoc and Fabcos leadership Given its leadership challenges, Nafcoc has two factions. We have elected to work with both these factions for the sake of providing support to their members who are SMMEs. There is also a pending MOU with the current Nafcoc which was negotiated and drafted with the dti 21

FABCOS There has been a good working relationship with Fabcos. In the same breath Fabcos members were trained through the Seda programme mentioned 22

BBC In the past various business units within the dti have worked with the Black Business Council (BBC) on a range of projects such as black industrialists (driven by the BEE Unit of the dti) and Growth Spark (Accelerator programme) for high-impact businesses (a project now run by the Department of Small Business Development). The objective of the growth spark programme is to accelerate initially 250 small and medium businesses to become high impact businesses with employment potential and high turnover 23

AHI There are no working relations with the AHI, but the organisation has recently approached the new DSBD for a working relationship to support SMMEs with business development support services. Discussions are on-going to assess what type of relationship would be established. A chamber support programme is being developed to support in the main the local and affiliate chambers, but also to deal with pertinent issues challenging the chamber movement. 24

THANK YOU 25