1. Department: Small Business Development 2016/17 Appropriation Appropriations Committee 13 May 2016

2. Outline 2  Legislative and other mandates  Mandate  Key programmes  Strategies: Effective procurement within the government for supporting small businesses  Key partnerships for effective support of small businesses

3. Legislative and other mandates 1. Constitutional Mandate: Section 22: Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law. 2. Policy mandates: The National Development Plan – Vision 2030 developed on the basis that South Africa needs an economy that is more inclusive, more dynamic and in which the fruits of growth are shared more equitably The DSBD plays a major and direct role in implementing Chapters 3 and 6 of the NDP that deal with the economy and employment and rural inclusive growth, respectively. The NDP builds on the government’s New Growth Path that aims to create 5 million jobs by 2020 and bring about a new more inclusive, labour-intensive and efficient economy. The department is tasked to contribute to two outcomes of the MTSF, namely, Outcome 4: Decent employment through inclusive growth, and Outcome 7: Rural development. 3

4. 2015 | 4 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. DSBD Mandate Growth-focussed Support -Established SMMEs with scope to grow -Greater employment multiplier -Greater ROI and sustainability for financing activities -Feeder initiative for opportunities such as the candidates for the Black Industrialists through the National Gazelles programme Poverty Eradication -Focus on micro and informal enterprises -Priority is sustainable livelihoods for the poorest in society (incl rural areas and priority groups – women, youth, people with disabilities) -Focuses resources on the areas of greatest need and community economic development While the breadth of the mandate means that DSBD does not have the luxury of focussing purely one or the other, a balance must be found that ultimately prioritises the highest impact opportunities.

5. Organisational Readiness 5 The DSBD was established in May and proclaimed on 7 July 2014; The Broadening Participation Division of the dti was transferred to the DSBD, which contained some of the functions for Small Business and Cooperatives enterprise development on 1 of September 2014 together with financial and human resources; In 2014/15, the department operated as part of the dti Budget Vote 36 until the end of that financial year; In 2015/16: –The Budget Vote 31 on Small Business Development became effective, but was still implementing programmes that were transferred from the dti; –Governance and corporate services functions operated uder the auspices of and throuhg a Cooperation Agreement with the dti –In the second semester DSBD established its own policy regime, Audit Committee and Internal Audit function; Risk Committee and risk management function; and appointed the Office of Chief Executive Officer, etc. Hence the department organised itself to functions as an autonomous and effective administration with effect 1 April 2016

6. Programme Review 6 The department inherited a package of programmes conceptualised at different times at the dti; It did not inherit a ready-made and full solution to deliver the small business development and co-ordinating mandate of a department; Hence it commissioned an objective scientific Programme Review determine the relevance and impact of the existing programmes to the mandate of the DSBD; The DSBD adopted most of the findings and recommendations that emanated from the review, which informed our strategy, value chain service delivery model and programme structure; Consequently, this new business model informed to a great extent the department’s strategic plan and APP; From a strategy perspective, the Programme Review assisted the department to understand clearly its mandate, which we are geared to deliver with the available resources.

7. Strategic goals, objectives & budget 7 Strategic Goal 1: A N EFFECTIVE AND EFFICIENT ADMINISTRATION Strategic Goal 2: A N ENABLING ENVIRONMENT FOR COMPETITIVE SMALL BUSINESSES AND COOPERATIVES Strategic Goal 3: S USTAINABLE SMALL BUSINESSES AND COOPERATIVES IN RURAL & TOWNSHIP COMMUNITIES. Strategic Objectives (R118 mil – 9%) Strategic Objectives (R26.1 mil – 2%) Strategic Objectives (R1 181 mil – 89%) 1.1 To promote compliance and good governance 2.1 To conducive legislative and policy environment for SMMEs and cooperatives 3.1 To design and implement targeted programmes to support new and existing small and medium enterprises in townships and rural towns 1.2 To drive sound financial management and controls 2.2 To drive integrated planning and monitoring for SMMEs and cooperatives development 3.2 To increase participation of SMMEs and Cooperatives in the mainstream economy 1.3 To maintain a sound performance planning, reporting and monitoring and evaluation system 2.3 To drive a comprehensive research agenda 3.3 To coordinate and maximise support for SMMEs and cooperatives through public and private partnerships 1.4 To build human resource capability and promote culture of high performance 2.4 To develop and implement a relevant international relations strategy 1.5 To promote external and internal communication on the work of the department

8. Programme Structure 8 PROGRAMMESSUB-PROGRAMMES 1. ADMINISTRATION: R118.080 million 1.1 Ministry : R26.133 million 1.2 Departmental Management: R18.950 million 1.3 Corporate Services: R47.027 million 1.4 Financial Management: R14.972 million 1.5 Communications: R10.998 million 2. SMMEs & COOPERATIVES: POLICY AND RESEARCH: R26.105 million 2.1 Policy and Research: R18.536 million 2.2 Monitoring and Evaluations: R7.569 million 3. SMMEs & COOPERATIVES: PROGRAMME DESIGN AND SUPPORT: R1.181 billion 3.1 Competitiveness Support: R108.657 million 3.2 Enterprise Development: R656.918 million 3.3 Market Development and Stakeholder Relations: R8.284 million 3.4 Cooperative Development: R62.562 million 3.5 SMME Development Finance: R344.833 million

9. Expenditure performance 2016/17: Programme 1 9 Performance and expenditure trends for Programme 1: Administration- R118 million. The spending focus for the financial year in Programme 1: Administration will be on the sub-programmes Management, Corporate Services, Financial Management, and Communications. The bulk of the budget (61.8%) is allocated for the Corporate Services; Financial Management & Communications. Under economic classification, compensation of employees and goods and services make up the most of the budget with 54.9% and 43.7% respectively. The personnel numbers are expected to increase in the medium term with the filling of critical vacant positions to ensure strong leadership, management and support functions to the Minister, Deputy Minister, Director-General and the Department.

10. Expenditure performance 2016/17: Programme 2 10 Performance and expenditure trends for Programme 2: SMMEs and Cooperatives Policy and Research: R26.1 million Programme 2 is allocated R26.1 million for the 2016/17 financial year The Policy, Research and Legislation sub-programme has 71% (R18.5 million) of the budget Monitoring and Evaluation – allocated the rest of the budget (R7.6 million) The spending focus over the medium term for Programme 2 will be on: Reviewing the Strategy for SMME development and entrepreneurship Research on inhibitive legislative and regulatory protocols Collaborative and Integrated planning with provinces and local governments Developing and implementing a robust research agenda Developing the International Relations Strategy

11. Expenditure performance 2016/17: Programme 3 11 Performance and expenditure trends for Programme 3: SMMEs and Cooperatives Programme Design and Support: R1.181 billion The programme is allocated R1.181 billion for the 2016/17 financial year. The bulk of the estimated expenditure (93.6% or R1.105 billion) is allocated for transfers and subsidies to the department’s entities that provide financial and non-financial small business support services. Seda is funded under the Enterprise Development programme. The BBSDP and CIS are funded under the SMME Development Finance sub- programme. Compensation of employees is allocated R57.7 million (4.9%) and the remaining 1.5% of the budget allocated to payments for goods and services and capital assets.

12. Key partnerships for effective support to SMMEs 12 Partnerships between DSBD and entities in both the public and private sectors are aimed at leveraging the resources of all parties and working towards the realisation of the NDP strategic goals of employment creation, poverty eradication and economic equity through SMMEs and co-operatives. The National Department of Tourism (NDT): Areas of collaboration include capacity building for SMMEs and co-operatives, access to market opportunities within the sector, provision of financial support for SMMEs and co-operatives. Department of Social Development (DSD): The partnership involves identifying existing/and/or facilitating establishment of new cooperatives, providing financial and non- financial support for cooperatives as well as opening procurement opportunities Department of Defense (DOD): Opening up procurement opportunities for SMMEs and co-operatives. Both parties are currently developing a joint Implementation Plan that will give direction to the execution of programmes and projects in the 2016/2017 financial year.

13. Key partnerships for effective support to SMMEs… 13 Manufacturing, Engineering and Related Services Seta (MERSETA): Collaboration on training of informal businesses, SMMEs and co- operatives. Agri-Seta: Collaboration in the area of rural agriculture infrastructure funding has been agreed upon. SAB Miller: 15 Co-operatives participating in “Women in Maize” Programme are to be assisted with the Co-operatives Incentive Scheme (CIS) funding for crop rotation. Monitoring of the programme is currently underway. Pick n Pay: Both parties are committed to supporting SMMEs and co- operatives through programmes such as Pick n Pay Enterprise and Supplier Development Programme and the Pick n Pay Entrepreneurial Academy Training Programme.

14. Support Programmes to Improve Growth and Sustainability 14 ENTERPRISE INCUBATION PROGRAMME The programme will incentivise incubators that will nurture small enterprises and cooperatives to gain competitive technical and business development skills and mentorship to facilitate the fulfilment of supply chain quality requirements. This holistic approach is offered in the arrangement of an incubator, which will offer the appropriate atmosphere for the application of diversified technical services and provide small businesses and cooperatives targeted expertise on packaged business and quality and productivity improvement to enable sustainability. The programme will also implement a market-driven approach to identify incubation opportunities in driving the enterprise development agenda of the department. A market-driven incubator will assist with the identification and guaranteeing of specific markets and provide focus and direction to the incubator’s work of preparing entities to supply local markets

15. 15 Annexure: Pulbic Entities Implementing Agencies

16. AGENCIES – SEDA, SEFA SEDA: Non-financial services 1.Business information & advice 2.Business Management 3.Training and Mentoring 4.SEDA Technology Programme SEFA: Financial services Micro Enterprises: R500 – R50 000 SME Financing: R50 000 – R5 000 000 1.Direct Lending 2.Wholesale Lending 3.Credit Guarantees 4.Pre and Post Loan Business Support 16

17. ACCESSIBLITY OF AGENCIES (Seda) 17

18. ACCESSIBLITY OF AGENCIES (Sefa) 18