1. INTEGRATED SMALL ENTEPRISE DEVELOPMENT STRATEGY: IMPLEMENTATION UPDATE
PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY
20 FEBRUARY 2008
Mandisa Manjezi, Chief Director Enterprise Development Unit, EIDD
Hlonela Lupuwana, Chief Operating Officer, EIDD
Mojalefa Mohoto, Director, Enterprise Development Unit, EIDD
Tel: /1849

2. Outline
Background
Enterprise Development Strategy Update – Priority areas
Landscape of Enterprise Development support
Landscape of Support; Non-financial support services
Landscape of support; Financial support services
Government Preferential Procurement- for small enterprise products and services
Step up compliance measures – 30 days payment cycle
Improve coordination

3. BACKGROUND STRATEGY IMPLEMENTATION UPDATE
Presentation made to the Portfolio Committee in June 2007
Presentation made to Cabinet, October and Nov 2007
CABINET RESOLUTIONS
Feedback to the Trade and Industry Portfolio Committee
Step up government procurement from all forms of small enterprises
Step up measures for government compliance to the 30 days payment cycle
Improve coordination

4. ENTERPRISE DEVELOPMENT STRATEGY
IMPLEMENTATION UPDATE -
PRIORITY AREAS
Capacity building of SAMAF and its lending financial intermediaries,
Addressing the financial gap between R R ,
Upscale support measures and needed institutional capacity for cooperatives development,
Promote sector strategies across other government line departments aligned with the National Small Enterprise Strategies,
Scale up government investment in small enterprise development using the preferential procurement lever to increase demand and increase funding levels for institutions responsible for small enterprise development,
Strengthen coordination and co-funding arrangements across government, specifically giving effect to the implementation of an integrated service delivery network plan, and
Establish an annual reporting system to Cabinet on progress made in the implementation of the national small enterprise strategy

5. LANDSCAPE OF ENTERPRISE DEVELOPMENT SUPPORT
Driver
Category
No. of enterprises
Characteristics
Nature of Demand noted
Non-financial support services
Financial Support Sources
Opportunity driven, Entrepreneurial
Necessity driven, survival
N.B. Estimates show that the are approx. 1m unregistered informal micros
Medium
Aprox.
3000
Up to 200 employees
Turn over >R25m per annum
Developed technical & business skills
Medium – long term debt & equity finance
over R250K
Asset base, working capital, property finance, etc.
Regulatory compliance, incubation-quality control and productivity and franchising and market intelligence.
Corporate
Banks, financial institutions
Private equity/ venture capitalist
Khula, IDC, NEF, other DFI's
Small
5000
up to 50 employees
turn over < R25m per annum
developed technical/ limited bus. skills
Short – medium term debt
Asset base & working capital finance
up to R80K
Technical diagnostic, business mgt training/incubation, mentorship and access 2 markets
Own resources
Banks & corporate
Khula & provincial DFI's
Micro
Aprox.1m
Up to 5 employees
Turn over < R 150K per annum
Some technical and very limited bus. skills
Short tern loans
Up to R 10K
Working capital finance
Business start advice, information, registration, & business planning
Own & family resources
Micro lenders & banks
Samaf & provincial DFI’s
Survivalist
Approx 1.2m
Owner self employment
turn over < R50K per annum
Limited bus. & technical skills
Short term loans
Up to R3k
Stock purchase finance
Business start advice and information
Own and family resources
Micro lenders
Samaf

6. LANDSCAPE OF ON NON-FINANCIAL SUPPORT SERVICES - SEDA PROGRESS REPORTS
Budget 2006/07: R 378 million combining R311m State funding and partnership funds
Budget 2007/08: R 364 million,
Combining R253m State Funding
and target for partnership funds
Network spread per province – March 2007 EC FS
GAU
KZN
LIMP
MPU NW NC WC
EICs
(Enterprise information Centres) 24 9 11 12 4 1 8
Branches 6 7 3 5

7. LANDSCAPE OF NON-FINANCIAL SUPPORT SERVICES
Micro, Very small, Small sized enterprises
80%
Medium sized Enterprises
Business Associations
20%
Seven Basic Services:
Business registrations 2. Business planning
Market Access Access to finance
5. Cooperatives support Access to technology
7. Training and mentoring
March 2007
EICs (102)
Mobile Units (4)
seda Branches (39)
Sector Programmes:
- Manufacturing and Services (dti/DOL)
- Construction (DPW),- Agribusiness (DOA)
Mining and beneficiation (DME),- Tourism and cultural
industries (DOAC)
Government Policy Programmes
Government Procurement Support
Special Projects from Provincial and Local Government
Seda network management
seda Provincial Offices (8)
seda Technology Centres(23)
seda National Office

8. LANDSCAPE OF FINANCIAL SUPPORT SERVICES
IDC
Industrial Finance
NEF
Exclusive for Bee finance
SAMAF
Development Micro finance, not lending directly R0
R10K
R250K
R1m
R3m+
Khula SME Finance, not lending directly
Khula Budget
2006/7- R
2007/8- R
2008/9 - R
Approvals March 2007 = R
Samaf Budget
2006/7 – R
2007/8 – R
2008/9 – R
Approvals March 07 = R

9. LANDSCAPE OF MICRO, SMALL AND MEDIUM FINANCE
Khula: up to R 3m
Credit indemnity – average loan (R 264K)
Business loans – (R 80K)
JV Funds – (R 1m)
Property Finance – research & development (not available)
Factoring (new product)
Key utility purpose -
Expansion
Medium
Key utility purpose -
Bridging Finance
Small
Key utility purpose -
Start- up funding
Samaf: up to R10K
Poverty Alleviation
Network Capacity building
Micro enterprise loans –
Micro & Survivalist
Key utility purpose -
Start- up funding

10. SAMAF PERFORMANCE REPORT
Province
Delivery Network
Approvals/ Committed
On-lending
Disbursements
Capacity
Borrowers
No. of savers
North West 4
R 6,
R 1, 071,000
R 700,000
352
3 810
Eastern Cape 3
R 17,400,000
R 700,000
R 400,000
310
330
Free State 2
R 2,600,000
R 360,000
R 512,500
469
684
Gauteng 6
R 7,950,000
R 3,960,000
R 6, 855,000
1 093
556
Kwa-Zulu Natal
R 5,200,000
R ,000
R 310,000
142
4 801
Limpopo
R ,000
R 759,000
440
1 965
Mpumala
nga
R 1,748,000
699
1 157
Western Cape
R ,000
R 535,600
841
1 050
Northern Cape
TOTAL 31
R55,200,000
R9,059,000
R10,772,100
4 346
14 353

11. KHULA PERFORMANCE REPORT
Khula: Improving Access to Loans in the range of R10K-R3m, with particular emphasis to facilities between R10K - R250k
R’mil
Portfolio Spread
44% White
32% female
2004/5 – No of facilities approved
56% Black
68% Male
2005/6 – No of facilities approved

12. Strengthen trade in services supply chains for small enterprises
GOVERNMENT PREFERENTIAL PROCUREMENT FOR SMALL ENTERPRISE PRODUCTS AND SERVICES
STRATEGIC FOCUS
Strengthen trade in services supply chains for small enterprises
Strengthen manufacturing chains for small enterprises
Encourage enterprise clusters and cooperatives as suppliers for bigger contracts
Stimulate labour absorptive activities in small enterprises
Identify and classify supply requirements that are not capital intensive and do not demand high technology requirements
Expand public sector procurement from all forms of small enterprises to high value spend areas
Expand public sector procurement from all forms of small enterprises to high frequency spend areas
Aligned government –wide strategy for small enterprise support through preferential procurement targeting all forms of small enterprises
Create a pool of small enterprises that has capacity, capability and experience for increased small enterprise participation open market procurement opportunities.

13. GOVERNMENT PREFERENTIAL PROCUREMENT CONSULTATION OUTCOMES
Renaming the programme refraining from “ set-asides” to Targeted Preferential Procurement for Small Enterprises (10 products) to minimize potential of challenges on grounds of constitutional compliance
SMME – BBBEE Procurement data analysis using a sample of 29 Departments combining all national departments and a sample of provincial departments - identification of 10 Products from a short list of 59 product categories
Provisions to step up measures for government compliance to the 30 days payment cycle
Procurement hotline call centre to step up 30 days payments compliance monitoring and redress to unpaid suppliers
Government supplier database integration
Targeted supplier support financial and non financial support programme- Tender Advice and Contract Based Lending

14. CABINET APPROVAL GOVERNMENT PROCUREMENT FROM SMALL ENTERPISES
10 PRODUCTS
1.   Advertising, Media and Communication
2.   Interior and exterior cleaning services and cleaning
products supplies
3.   Clothing and textiles
4.   Computer equipment and consumables supplies
5.   Interior and exterior furniture and décor
6.   Events coordination and management
7.   Maintenance and repairs; construction, office space,
furniture, computers and vehicle body works
8.  Travel coordination and shuttle services,
9.  Food perishables supplies
10.Stationery supplies and printing

15. Annual reporting and monitoring mechanisms to be established - April
FOCUS ON THE CABINET APPROVAL SMALL ENTERPRISE PROCUREMENT TARGETING-10 PRODUTCS
THRESHOLDS
85% procurement of identified products from Small Enterprises
Minimum target achievement of 70% in the first 18 months upon cabinet approval
Target procurement in the contract size range up to R500k, however, policy applies to
procurement contracts across price range with emphasis on subcontracting and
partnerships for contracts above this price range
Follow up with Provincial workshops – Inputs for the implementation and monitoring guidelines
Implementation practice guidelines to be issued by National Treasury –April
Annual reporting and monitoring mechanisms to be established - April
Government Conference on Small Enterprise Procurement targeting to be held in May 2008 to launch the programme implementation for all government departments and other state organs

16. Final discussions with National Treasury and Auditor General
FOCUS ON THE CABINET APPROVAL SMALL ENTERPRISE PROCUREMENT TARGETING – 30 DAYS TIMELY PAYMENTS
The accounting officers will incorporate the small enterprises timely payment in their Key Performance Agreement schedules beginning from 2007/08 financial year. Their performance shall be measured accordingly.
Establishment of a call center hotline to which small enterprises can report payment delays. Call Centre hotline to be managed by seda. – May 08
Call Centre received complaints will be referred to relevant departments for corrective actions and reports. Call centre support desk to be established in the procurement supply chain management
Call Centre report will be sent to accounting officers and Auditor General as baseline reports for internal audit and Auditor General’s Audits.
Annual reports and internal audit reports of all Departments and state agencies will have a component giving a payments schedule and findings relating to payments not compliant to the 30 days payment cycle.
Final discussions with National Treasury and Auditor General

17. IMPROVE COORDINATION
Establishment of a National-Provincial- Local government integrated
service delivery plan based on –
Review of small enterprise development support enabling framework
( Policies, strategies, legislation, coordination structures)
Coordinated institutional arrangements,
Joint plan for outreach to under serviced areas,
Clear target setting to track outreach,
Co-funding arrangements
Virtual, physical co-location and integration option under a common
brand Annual joint evaluation of progress made in small enterprise
development support ( the dti and Provincial Economic Affairs)

18. THANK YOU