1. Briefing on the Assessment of the revised Strategic Plans and 2017/18 Annual Performance Plans
Portfolio Committee on Small Business Development
Department of Planning , Monitoring and Evaluation
Date: 02 May 2017

2. Feedback on DSBD 2017/18 2nd Draft APP: Overview
DPME conducted performance assessment for 2016/17 financial year.
An assessment of the 2017/18 second draft APP of the Department of Small Business Development (DSBD) was done in conjunction with National Treasury.
The assessment covered the following areas:
Alignment to the MTSF
Alignment to the Budget
Technical Compliance to Planning Principles (Framework for Strategic and Annual Performance Plans and Framework for Managing Performance Information), including measurability of plans and alignment to the core functions of the department

3. MTSF Performance Assessment: Outcome 4
Action
Indicator
MTSF 2016/17 target
Progress (3rd Quarter)
Measure and reduce delays and unnecessary red tape around authorisations needed for provincial investments
Findings on national legislative and regulatory protocols
Research report on legislative and regulatory protocols impeding SMMEs concluded
Preliminary report on legislative and regulatory protocols concluded on 15 December 2016.
Township and rural economies supported and report on the impact in terms of the number of business supported, value of the grant approved, and geographic location of the supported businesses
The total number of enterprises supported by the Department of Small Business Development is from Townships.
The total number of enterprises supported by the Department of Small Business Development are from rural areas
50% (4110 out of 8220) of the total number of enterprises supported by the Department of Small Business Development are from Townships
30% (2466 out of 8170) of the total number of enterprises supported by the Department of Small Business Development are from rural area
95.7% = 1388 of 1450
(181 [DSBD], 1207 [SEDA]) of the total enterprises
33.8% = 294 (280 [DSBD] and 14 [SEDA]) of the total enterprises
Provide coaching, incubation, intensive support and financing to sustain existing small businesses and cooperatives as well as expand the sector
Develop a business rescue strategy aimed at supporting SMMEs and Co-operatives in financial distress)
Number of small business and co-ops supported
7000 informal businesses supported through the Informal Micro Enterprise Development Programme
370 co-operatives supported through Cooperatives Incentive Scheme (CIS)
1120 informal businesses were supported through the refresher.
48 cooperatives were supported.
EIAs – reconfigured some of the provincial departments,

4. Performance Assessment (1)
While big businesses and large corporations remain a significant source of employment, the largest job creators across the world are SMMEs.
SME Growth index reveals that, contrary to the global trend, smaller companies in SA are showing stagnation in turnover and employment growth.
Township enterprises have been particularly hard-hit, due not only to lower economic activity and purchasing power in these areas, but also to deficiencies in access to finance, skills in running new enterprises and high barriers to entry in many markets for instance.
Within some sectors, the skill deficits have hindered the growth of local SMMEs.
DSBD programs government has increased SMMEs support that drive towards empowerment and transformation, placing a renewed focus on building township economies and on public procurement as a lever to drive growth.
Government has done this by ensuring that at least 30% of the total procurement expenditure goes to SMMEs.

5. Performance Assessment (2)
To give effect to the implementation of the 30% set aside, National Treasury has reviewed the Preferential Procurement Policy Framework Act Regulations and gazetted amendments in January 2017.
However, this may not be an effective solution from the onset there are critical issues that needs to be taken into consideration:
Capacity of the State to manage sub-contracting agreements and mitigation of disputes that arise between the contractor and subcontractor.
Currently departments are struggling with contract management, cash flows management of one party in general and adding another layer of sub-contacting has to be thought through.
Effective payments of suppliers within 30 days as stipulated in the PFMA and related Regulations to sustain the SMMEs and Cooperatives.
Capacity of the SMMEs (costs and efficiency) for the delivery of Goods and Services especially for urgent need of goods and services by organs of State.
Government payment system prevents an up-front payment of even a portion of the tender, bearing in mind that some small businesses cannot carry the cost until first delivery of goods or services
EIAs – reconfigured some of the provincial departments,

6. Recommendations:
Township and rural economies and rural enterprises supported, DSBD and the dti need to speed up transfer of systems and support which will result in improvements in delivery
Public sector procurement opportunities have the capacity to stimulate the growth of township economies, however training and development are required to improve numbers if these opportunities are to be leveraged sufficiently.
Strategic collaboration is crucial to the development of SMMEs and to the development of much needed skills and capacity.
With regards to the implementation of the revised regulation an implementation evaluation and Social Economic Impact Assessment System (SEIAS) need to be conducted.

7. Feedback on DSBD 2017/18 2nd Draft APP
DSBD quality of plans has slightly improved in terms of the planning principles and measurability compared to its first APP when the department was established, however there are still some areas that require improvement which are:
Misalignment between the APP and the revised SP:
The annual performance plan (APP) must be aligned to the strategic plan (SP) as the APP outlines how the department’s strategy will be implemented and measured.
Alignment of SP and APP creates the link between the strategic goals and objectives in the SP and the measurements (indicators and targets) and the associated budget in the APP.
For example, the department has revised its strategic goals and objectives in the SP which reflect the new strategic direction being embarked on, however the revisions are not reflected in the APP.
This will distort monitoring and reporting of the SP and the APP.

8. Feedback on DSBD 2017/18 2nd Draft APP
Performance indicators not well defined:
Performance indicators should be well defined to reflect measurability of the intended outcomes and outputs to be achieved.
Some of the indicators in the DSBD plan are not clearly crafted and this makes it difficult to understand and monitor what is being measured and may result in disjuncture between the strategic intent reflected in the SP and what is being measured in the APP.
The indicator “Progress in pilot to develop profiles” is an example of an indicator that is not well defined, as it not clear what is seeks to achieve.
Misalignment between indicators and targets:
Alignment of performance indicators and targets ensures consistency between what is being measured and the level of performance targeted for the purposes of reporting on planned outcomes and outputs.

9. Feedback on DSBD 2017/18 2nd Draft APP
Ensuring all performance indicators have technical indicator descriptions
Compilation of technical indicator descriptions assists departments to ensure:
there are proper and sufficient systems in place for collection of data of all performance indicators and
provides detailed information on how the APP indicators link and contribute to government wide priorities.

10. Feedback on DSBD 2017/18 2nd Draft APP: Performance Dialogues
DPME, in collaboration with National Treasury hosts performance dialogues with national departments, to discuss amongst other issues:
financial and non financial performance,
progress towards achievement of the MTSF and
the development of corrective measures for performance improvements and interventions thereof.
A performance dialogue was held with DSBD in November 2016, and the following issues were discussed amongst others:
duplications between the work performed by the department and its entities;
lack of guidance and direction to its entities and overseeing the work of the provincial departments for small business development as well as;
failing to cascade the impact the department needs to have in the sector into measurable components

11. Feedback on DSBD 2017/18 2nd Draft APP: Performance Dialogues
The performance dialogue assisted the department to ensure it focuses on its core mandate by:
strengthening its public entity oversight role to address issues of duplications with regards to programmes implemented
considering revising its Budget Programme Structure to reflect its core functions which relate to coordination and oversight of the sector
Focusing on its contribution and that of its entities towards the priorities of the economic sector as reflected in the Medium Term Strategic Framework and the National Development Plan.
The refocus in the strategic direction led to:
the revision of the department's 2017/18 APP and
the development of a Portfolio Strategic Framework document; which is meant to guide and provide strategic direction for the Small Business sector (i.e. DSBD, SEDA and SEFA).

12. Thank you