Seda 2014/2015 Performance Report Briefing to the Portfolio Committee on Small Business Development 15 October 2015 Mr Lusapho Njenge, Seda CEO (Acting) 1

2014/2015 Auditor-General Opinion Seda’s Delivery Network as at end March 2015 Seda Staff Complement as at 31 March 2015 Performance Highlights Performance Information by Strategic Objectives Strategic Indicator Trends Statement of Financial Performance Year to date Financial Performance (April to August 2015) Seda and Stp Actual Funding and ENE Allocation Focus Areas for 2015/2016 Presentation Outline 2

Unqualified Audit Opinion on Annual Financial Statements sustained for seven consecutive years. No material findings on the Annual Performance Report concerning the usefulness and reliability. No non-compliance to applicable laws and regulations. No matters to report under Corporate Governance. No findings pertaining to procurement/Supply Chain Management. Reduction in number of internal control deficiencies in ICT. Financial health of Seda was evaluated and found to be exceptionally healthy. 2014/2015 Auditor-General Opinion 3

Seda Delivery Network at 31 March 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

Number of Staff Members Contract Staff Number of Vacancies Total Posts Vacancy Rate as a % of Total Posts National Office ,86% Provincial Network ,86% Total ,49% Seda Staff Complement at 31 March

Service delivery achievements (target in brackets): 99% (93%) client satisfaction levels with quality of Seda services. 63% (52%) of assisted clients indicated an increase in turnover. 43% (33%) of assisted clients indicated an increase in number of people employed. Payments over R400 million have been facilitated by the SMME Payment Assistance Hotline since inception. Performance Highlights 6

Service delivery achievements (target in brackets): 3,016 (1,710) clients supported by the Seda Technology Programme (Stp). 1,963 (1,650) direct jobs created by Stp. 173(127) small businesses supported through conformity assessments and product testing. 71,02% of total funds received utilised in the Seda delivery network. R 6,8 million leveraged and utilised from delivery partners during the financial year, with additional in-kind contributions. Performance Highlights 7

Performance Information by Strategic Objectives 8 Strategic Objective 1: Enhance the competitiveness and capabilities of small enterprises through co- ordinated services, programmes and products. OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Client satisfaction ensured % of surveyed clients satisfied with quality of Seda services 93%99%High performance is attributed to the efforts and quality of business development service providers and to the improved project management None Client business performance improved % of surveyed SMME clients whose turnover has increased 52%63%Increased market access enabled the clients to increase their turnover None % of surveyed SMME clients whose number of employees has increased 33% 43%Agriculture and service industry contributed to employment creation by SMMEs None

Performance Information by Strategic Objectives 9 Strategic Objective 2: Ensure equitable access to business support services OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Client reach improved Number of clients working with 12,00010,697Underperformance due to capacity constraints during the course of the year and accreditation of Business Advisors on appropriate diagnostic tools. Recruitment and accreditatio n to be prioritised during the first quarter of 2015/16. Rural enterprise developme nt enhanced Number of supported secondary cooperatives 2735Continued support of secondary cooperatives from previous year in line with Seda’s delivery model. None Cost sharing with delivery partners maintained Value of service delivery costs covered by delivery partners R 10 milR6,8 milPartners that have contributed towards Seda’s delivery costs in the past had to reduce or contributions as a result of financial constraints. Continue to work with existing partners and source new partners.

Performance Information by Strategic Objectives 10 Strategic Objective 2: Ensure equitable access to business support services OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Cost sharing with delivery partners maintained Number of partnerships operational 6849Financial constraints experienced by potential partners have had an adverse impact on entering into partnerships. A number of partnerships initiated during the year could not be finalised. Partnerships for the next financial year will focus on enterprise and supplier development, to leverage from the BBBEE codes.

Performance Information by Strategic Objectives 11 Strategic Objective 3: Strengthen the organisation to deliver on its mission OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Cost efficiency improved % of direct service delivery costs versus total delivery costs 71%71.02%Minor deviationNone, in line with Seda’s principle to utilise more funds on direct service delivery. % of deviations of actual expenditure from approved budget 5%7.31%Under expenditure on personnel costs due to moratorium placed on filling of vacancies due to the re- alignment project. Re- alignment vacancies were filled in 4th quarter of the financial year.

Performance Information by Strategic Objectives 12 Strategic Objective 3: Strengthen the organisation to deliver on its mission OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Organisatio nal staffing improved Vacancy rate14%15.49%Higher than targeted percentage due to re-alignment project the organization embarked on. Vacancy rate should reduce to acceptable levels by end of the first quarter. Seda image improved Annual Stakeholder Forum (ASF held) End Septemb er 2014 None Number of updates on the SMME sector produced. 21Financial constraints limited the number of studies Seda could participate in during the year. Seda will look at partnering with other institutions.

Performance Information by Strategic Objectives (Stp) 13 Strategic Objective 1: Enhance the competitiveness and capabilities of small enterprises through co- ordinated services, programmes and products. OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Incubation support enhanced Number of incubators supported 48 None Client satisfaction ensured % of clients satisfied with the quality of Seda services 70%76%Implementation of measures to deal with areas of dissatisfaction identified during the previous None Client business performance improved Number of jobs created 1,6501,963 Manufacturing Construction and Agriculture sector, business cycle contributed to high performance overall None

Performance Information by Strategic Objectives (Stp) 14 Strategic Objective 1: Enhance the competitiveness and capabilities of small enterprises through co- ordinated services, programmes and products. OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Client business performance improved Number of clients supported 1,7103,016Increase in number of incubators and intake of new clients at established incubators contributed to the over performance. None Technology transfer programme implemented Number of clients assisted 6342 Insufficient funds available to assist qualifying clients. Mobilise for more resources to be availed to Seda’s high impact programmes Conformity assessment and product testing programme implemented Number of clients supported The number of requests declined in the third quart due to the short trading period. A number of audits have been initiated in the fourth quarter. Most audits are scheduled for the fourth quarter. Finalisation of audits in progress during the first quarter of 2015/16/

Performance Information by Strategic Objectives (Stp) 15 Strategic Objective 1: Enhance the competitiveness and capabilities of small enterprises through co- ordinated services, programmes and products. OutcomePerformance Measure or Indicator Annual Target Annual Achievement Reasons for varianceMeasures taken to rectify Training on national and international standards conducted Number of clients trained Increased demand from Seda Branches None. In line with Seda’s strategy of also servicing the upper end of the SMME sector. Systems implementat ion support provided Number of clients supported 3244Increase in the number of applications from established clients and incubates. None. In line with Seda’s strategy of also servicing the upper end of the SMME sector.

Strategic Indicator Trends 16

Strategic Indicator Trends 17

Statement of Financial Performance 18 Revenue2014/2015 (R mil)2013/2014 (R mil) Parliamentary Grant  Seda  Seda Technology Programme (STP) 624, , , , , ,215 External earnings71,83651,779 Interest received16,33712,354 Gain on sale of assets0,529- TOTAL REVENUE713,352641,112 TOTAL EXPENSES  Administrative and other Costs  Personnel Costs  Programme and Project Costs 645, , , , , , , ,456 SURPLUS / (DEFICIT) FOR THE YEAR 68,10919,810

Year to date Financial Performance (April to August 2015) 19 RevenueBudget (Rmil) Actual (Rmil) Difference Grant Allocations318,50 - External earnings45,3623,9721,39 Interest received4,174,91(0,7) TOTAL REVENUE368,03347,3820,66 (5.61%) EXPENSES300,51260,3740,14 (13.36%) Note 2 Note: 1.The total revenue budget for the year is R693,09 million and total projected expenditure for the year is R692,58 million. 2.Under expenditure is due to annual salary increase from 1 April 2015 not effected yet. Assets of 2015/16 not acquired yet. Timing difference from commitments of programme and project related costs and actual payments.

Seda and Stp Actual Funding and ENE Allocation (R mil) 20

Focus Areas for 2015/ To focus on outcomes (job creation, increase in turnover and sustainability), the following are key focus areas/themes for the 2015/16 financial year: Review of programmes in line with DSBD mandate and government priority areas. Roll out of Small Business incubation. Focused attention on cooperative support, including collectively owned large scale projects. Implementation of the Gazelles programme to identify and profile high performing entrepreneurs. Facilitation of timeous payment of SMMEs. Public/Private Partnerships. Directing specific interventions at medium sized enterprises and cooperatives (i.e. employing between 21 and 200), such as access to markets, mentorship 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.