DEPARTMENT OF SMALL BUSINESS DEVELOPMENT PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC AND BUSINESS DEVELOPMENT 1

OUTLINE DSBD mandate DSBD Programmes Financial Support Services » Sefa Non-Financial Support Services » Seda 2

The department will lead an integrated approach to the promotion and development of small businesses and cooperatives through a focus on the economic and legislative drivers that stimulate entrepreneurship to contribute to radical economic transformation. (that will lead to increased employment, poverty reduction and reduced inequality) Mandate

Programme 2: Cooperatives Development Primary cooperatives support – Value chain linkages, incubation and Business Development Services Support Secondary Cooperatives Support Implementation of the National SMME and Co-operatives Development Framework (dti, EDD, Agencies and Provincial EDD) 4

Programme 3: Enterprise Development and Entrepreneurship Entrepreneurship – Centres for Entrepreneurship – National Enterprise Development Fund – Micro-franchising Informal Business and Chamber Support Public Procurement (30% implementation, M & E) Co-location and capacity building Women-owned, People with disabilities owned and Youth- owned enterprises support Red tape reduction programme Implementation of Craft customised sector plan 5

Nine-point plan role DSBD is leading programme number seven under the nine-point plan that was announced by The President during the SONA in February The programme is Unlocking the potential of SMMEs, Cooperatives, Township and Rural Enterprises. Key actions undertaken under this programme are – Public Sector Procurement – Building Access to private sector value chain – Access to finance – Support to township and rural enterprises – Policy and regulatory environment 6

Financial Support Instruments Black Business Supplier Development Program (BBSDP) – Youth BBSDP – Women Business Development Scheme Cooperative Incentive Program (CIS) Share Economic Infrastructure Facility (SEIF) Informal and Micro Enterprise Development Program (IMEDP) Emerging Enterprise Development Program (EEDP) 7

DEPARTMENT OF SMALL BUSINESS DEVELOPMENT sefa 8

Financial Instruments Direct Lending – Bridging Loan – Term Loan – Asset-based Finance – Revolving Credit Wholesale Lending – Business Loans – Funds/Joint Ventures – Credit Indemnity Scheme – Land Reform Empowerment Facility (LREF) 9

Funding Model 10

Underpinning Principles 11 1.Market Failure: sefa’s activities are geared towards correcting market failure & crowding-in the private sector. 2.Catalytic or unlocking latent potential: sefa strives to be a leading catalyst for the development of sustainable micro, small, and medium sized businesses through the provision of finance; 3.Transformative: the strategy will also be one of the transformation tools that seeks to redress the SMME funding gaps for R to R5 million; 4.Partnership: Cooperation, Coordination and Collaboration: sefa forms strategic partnerships and consolidates existing ones; 5.Focus on SMMEs: sefa will ensure that SMMEs across the spectrum have access to finance, particularly to SMMEs that require smaller and administratively costly loans.

Developmental Focus Areas 12 Increased funding access and awareness to people living with disabilities an outreach and partnership programme with organisations representing people living with disabilities is being implemented to develop and source viable business proposals To improve lending to co-operative enterprise the following financing programme is under implementation and is premised on a value-chain approach and focuses on: Agriculture Development of low-cost franchising concepts such as brick-making co-ops, community bakeries, etc. Bulk buying programmes Member funds mobilisation Building and strengthen of secondary to negotiate off-agreements Business support to co-operative enterprises Focus on priority sectors (ICT, Mining, Manufacturing, Agriculture and Tourism) – approvals represent 35% of the total annual target.

What is different about sefa 13 High appetite for risk in exchange for high developmental impact Provision of capital and/or interest moratorium up to 12 months Financing SMMEs including start-up businesses Addressing the financing gap for loans below R500k Provision of pre and post loan business support Provision of funding to entrepreneurs with adverse credit records Lending not solely based on security backing Specific focus on Youth-owned businesses

Decentralised access 14

Disbursements per province 15

Challenges faced by sefa 16 High-level of impairments – balancing developmental and high risks associated with micro/small enterprises Repayments of public contract-based finance; cessions from public entities Low levels of funding to enterprises owned by people with disabilities Full optimisation of the Khula Credit Guarantee Scheme sefa property portfolio (rental arrears) sefa recapitalisation for growth Internal capacity development Client experience Red – tape

DEPARTMENT OF SMALL BUSINESS DEVELOPMENT SEDA 17

Programmes offered by Seda 18 The Gazelles Enterprise Accelerator Programme Basic Entrepreneurial Skills Development (BESD) Access to Markets: i.e. Procurement Portal, Export Promotion and Development Mentorship and coaching Supplier Development Cooperatives support One- Municipality One Product (OMOP) Training on national and international standards Quality Training and Audit Manufacturing Support Programme Information Programme (Cobweb, Data Monitor & BER economic research platform) SMME Payment Hotline on behalf of the DSBD Promotion of Entrepreneurship: Entrepreneurship in Schools Incentive scheme Awareness creation (e.g. EMIA, SASS, BBSDP & CIS)

19

Developmental Focus Areas To focus on outcomes (job creation, increase in turnover and sustainability), the following are key focus areas/themes for the 2015/16 financial year: Roll out of Small Business incubation Focused attention on collectively owned large scale projects. Facilitation of timeous payment of SMMEs. Public/Private Partnerships. Directing specific interventions at medium sized enterprises (i.e.employing between 21 and 200), such as access to markets, metorship and coaching, supplier development, technology transfer. Repositioning of support functions from a reactive role to a proactive, strategic support role, especially in areas such as ICT, advocacy and lobbying, and human capital. 20

Seda Target Market 21

Seda Delivery Network 22 ProvinceSeda Branches Seda Satellite Offices Seda Supported Incubators Co- location Points Mobile Units Info Kiosks EC FS GT KZN LP MPU NC NW WC TOTAL

Definitions of Service Network 23 Branches serves as Seda’s key delivery points for the: Delivery of Seda products and services. Implementation of programmes and projects. Identification of opportunities and business linkages for small enterprises. Accommodation of public and private sector partners in small enterprises development and support. Development, support and monitoring of Satellite Offices. The Branch network consist of Large-, Medium- and Small branches. Branch size are classified according to number of BA’s whilst the number of support staff remains the same. Satellite Branch: Satellite Branches are strategically located and serves as an extension of an existing branch, hosting a minimal staff compliment of 1 to 2 BA’s or Information Officer and a receptionist.

Definitions of Service Network 24 Mobile Units (Offices) Seda Branded/co Branded Mobile Offices that are deployed to further extends Seda’s reach especially to more remote locations and are operated by BA’s from selected branches. Co – locations: Seda promotes integrated service delivery for small business development by providing office space for key strategic partners in the Seda network to deliver their own services to small enterprises. Seda may co-locate BA’s and IO’s at the offices of a strategic partner such as an LED Office. There may or may not be cost sharing i.e. free office space, use of equipment, furniture, etc. depending on the partner agreement.

Definitions of Service Network 25 Information Kiosks A self-service, electronic information unit, which displays via touch screen preloaded business information for entrepreneurs and interested members of the public that can be downloaded to CD, DVD and USB flash drive. Provides entrepreneurs with access to a wide range of relevant business resources, including SMME information websites, publications and sector- specific research reports, Seda information brochures and templates i.e. business plans and marketing and budget plans, etc. Information Kiosks are paced at secure locations hosted by Seda’s partners, such Absa Small Business Advisory Centres, Local Libraries, Municipal Offices, and Local Economic Development (LED) offices in all nine provinces.

26 THANK YOU