1. Seda Annual Performance Plan 2018/19 – 2020/21
Presentation to the Portfolio Committee on Small Business Development
Ms Mandisa Tshikwatamba, CEO 2 May 2018

2. Key Insights on the SMME Sector
PRESENTATION OUTLINE
Key Insights on the SMME Sector
Major considerations during the 2017/18 strategic planning cycle
Alignment with the DSBD through the Portfolio Strategy Framework
Seda’s Strategy Architecture
Seda’s Balanced Scorecard and Performance Indicators
Seda’s Budget and Implications

3. KEY INSIGHTS ON THE SMME SECTOR
The number of SMMEs decreased by 3.9% (y-o-y): 2.34 million (16Q3)  2.25 million (17Q3). A sharp decline in 17Q3 as more people opted to work for a salary.
Number of formal sector SMMEs also declined by 3.9% y-o-y, while informal sector SMMEs contracted by 2.6%. The decline in SMME numbers occurred as more formal sector job opportunities were created during these four quarters.
Total employment provided by SMMEs declined by 5.6% between 16Q3 and 17Q3 to 9.1 million.
By main economic sector, fewer SMMEs operated in construction in 17Q3 vs 16Q3, and more in the trade & accommodation and manufacturing sectors.
The SME* share in the total turnover of all enterprises# crept up by 0.5 % pts to 41.7% in the four quarters up to 17Q3.
This decrease is not felt by the Seda network, as demand for services continues to rise with each year, with 71,691 potential and existing SMMES attracted to Seda network in 2017/18 for the first time.
Seda client base continues to be predominantly informal and very small enterprises, with about 85.9% employing less than five people.
Despite this challenging situation, 73% of assisted Seda clients registered an increase in turnover and 44% an increase in number of people employed.
Seda’s clients tend to mirror the general market sectors, with incubators in key sectors such as construction and manufacturing.
# Excluding agriculture, financial intermediation, insurance and government institutions
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

4. The SMME sector: formal & informal, 2017Q3
KEY INSIGHTS ON THE SMME SECTOR
The SMME sector: formal & informal, 2017Q3
69% of SMME sector is informal  87% of own account workers are informal
60% of SMME employers are in the formal sector
9.1 million workers/owners active in SMME sector (55% of total employment)
Although most SMMES are in the informal sector, most of the jobs are created by formal SMMEs. Seda needs to graduate SMMEs it assists from informal to formal businesses, for the job creation potential to be realised. Interventions in areas such as productivity improvement, market access, etc. need to be scaled up to reach a sizeable number of SMMEs
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

5. SMME industry structure by province, 2017Q3
KEY INSIGHTS ON THE SMME SECTOR
SMME industry structure by province, 2017Q3
Most provinces have similar SMME industry structures
Except Gauteng & Western Cape with relatively larger financial services sector ...
... and Northern Cape with relatively larger agricultural sector
Free State, Eastern Cape, Limpopo, Mpumalanga, KZN, North West have larger trade & accommodation sectors
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

6. KEY INSIGHTS ON THE SMME SECTOR
SMME owners by sector
SMME owners by province
Trade & accommodation activities are by far the most important, also ito value added; community & financial services and construction, 2nd largest
Manufacturing’s importance increases ito value add > 20% (for SMEs)
Gauteng, KZN, Limpopo & Western Cape host most SMME owners
This information, and the geo spatial exercise Seda has done with CSIR will provide a good basis for future network establishment, especially colocation and working with SALGA.
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

7. SMME owners by age group, 2017Q3
KEY INSIGHTS ON THE SMME SECTOR
SMME owners by age group, 2017Q3
Majority of SMME owners are older than 40 years
Previously growth, now contraction in SMMEs occurred in older age groups (50-59)  loss of experience
Also some attrition in younger age groups (25-34)
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

8. Enterprise age of SMMEs, 2017Q3
KEY INSIGHTS ON THE SMME SECTOR
Enterprise age of SMMEs, 2017Q3
Key hurdle for SMMEs is to be in operation longer than 5 years
Also, many SMMEs do not make it beyond first or second year
Number of SMMEs tapers off notably after they reach 20 years of age  most likely due to retiring owners
SMME Quarterly Update, 2017Q3 : BER, Stellenbosch University

9. MAJOR CONSIDERATIONS DURING THE 2017/18 STRATEGIC PLANNING CYCLE
Continued refinement of the Seda corporate level scorecard and development of divisional level scorecards.
Reduction in budget of R123 million over the next three years and implications on programme delivery.
Partners no longer continuing to fund part of the running costs of branches that were jointly established.
The drive towards the professionalisation of business advisory services.
Establishment of the Entrepreneurship and Cooperative Development Institute under the Services SETA.
Improved governance, especially in the areas of ethics and ICT.
Engagements and feedback from the Portfolio Committee and other stakeholders.

10. ALIGNMENT WITH THE DSBD THROUGH THE PORTFOLIO STRATEGY FRAMEWORK

11. ALIGNMENT WITH THE DSBD THROUGH THE PORTFOLIO STRATEGY FRAMEWORK
Portfolio Strategic Framework 2015/16 – 2019/20 seeks to align the plans of the DSBD, Sefa and Seda and will feed into a larger Sectoral Strategy Framework that will be used to coordinate the entire SMME sector.
The Framework has five Strategic Outcome Oriented Goals that are linked to the National Development Plan and the MTSF Sub-Outcomes, which are:
Policy and planning coherence in the sector, that promotes an enabling ecosystem for SMMEs and co-operatives.
Equitable access to responsive and targeted products and services that enables the growth and development of SMMEs and co-operatives.
An enhanced contribution to socio-economic development outcomes by the sector.
Sound governance and the optimal utilisation of available resources.
A professional and capacitated Small Business Development Sector.
In terms of working together, Seda and Sefa have established a framework that goes beyond colocation, but includes a technical team that looks at better managing referrals, training of Seda staff on Sefa products as well as training of Sefa staff on Seda diagnostic tools.

12. ALIGNMENT WITH THE DSBD THROUGH THE PORTFOLIO STRATEGY FRAMEWORK
Over an above ensuring alignment of the Seda APP 2018/19 – 2020/21 to the Portfolio Strategic Framework 2015/16 – 2019/20 , Seda will also contribute to the five Strategic Outcome Oriented Goals by prioritising the flowing:
Strategic Outcome Oriented Goals
Seda Contribution and Role
Policy and planning coherence in the sector, that promotes an enabling ecosystem for SMMEs and co-operatives.
Being part of ecosystem development initiatives such as the ECDI under the Services SETA and SABTIA.
Seda will prioritise new access points (based on budget and partner willingness) in underserviced areas.
Equitable access to responsive and targeted products and services that enables the growth and development of SMMEs and co-operatives.
Seda has harmonised its demographic indicators and targets with those of the Portfolio Strategy Framework
Partnerships will be entered into to improve the level of support to people with disabilities.

13. ALIGNMENT WITH THE DSBD THROUGH THE PORTFOLIO STRATEGY FRAMEWORK
Strategic Outcome Oriented Goals
Seda Contribution and Role
An enhanced contribution to socio-economic development outcomes by the sector.
Seda has partnered with SALGA to prioritise SMME support to small towns, while also working on a model to assist township enterprises
Sound governance and the optimal utilisation of available resources.
Seda has implemented the balanced scorecard system to ensure sound management and optimal resource allocation
A professional and capacitated Small Business Development Sector.
Seda continues to work with partner institutions towards the development and professionalization of the small business development sector such as IBASA

14. SEDA’S STRATEGY ARCHITECTURE
Vision – To be the centre of excellence for small enterprise development in South Africa.
Goal – Ensure that the small enterprise sector grows and increases its contribution to sustainable and equitable social and economic development, employment and wealth creation.
Mission – To promote entrepreneurship and develop small enterprises and cooperatives by providing customised non-financial business support services that results in business growth and sustainability in collaboration with other role players
Values – Customer centricity, Nurturing, Innovation and Responsible conduct

15. SEDA’S SERVICE OFFERINGS
For survivalist and micro enterprises
Entrepreneurship awareness
Jumpstart/Pitching
Business start-up training
Business planning
Business registrations
Basic Business Skills
For small and medium enterprises
Access to local markets
Access to export opportunities
Incubation
Access to technology
Supplier Development
Manufacturing support
Quality and standards testing, advice and implementation
National Gazelles
Business mentoring and Coaching
Facilitation of access to finance
For collectively owned enterprises
Social facilitation and mobilisation
Cooperatives development and registration
Access to local and export markets
All other relevant products and services still apply
For people with disabilities
Programmes with specialist associations and organisations

16. SEDA’S DELIVERY NETWORK AS AT END MARCH 2018
Seda branches
Supported incubators
Colocation points
Mobile units
Kiosks
Eastern Cape 5 10 9 -
Free State 3
Gauteng 2 18 6
KwaZulu Natal 13 8 1
Limpopo
Mpumalanga 25
Northern Cape
North West
Western Cape 14
TOTAL 53 64 7 17

17. OUTCOME –ORIENTED GOALS AND STRATEGIC THEMES OF SEDA
Government Outcome 4: Decent employment through economic growth
Government outcome 7: Vibrant, equitable, sustainable rural communities contributing towards food security for all
Ultimate Outcome (Impact)
Increased contribution of small enterprises and cooperatives
to the SA economy, and promotion of economic growth, job creation and equity.
Intermediate Outcomes
Increase in turnover of assisted small enterprises and cooperatives
Increased number of people employed in assisted small enterprises and cooperatives
Reduced mortality rate of assisted small enterprises and cooperatives
Seda’s Strategic Themes
Increased service delivery
Improved operational excellence
Increased stakeholder partnering

18. SEDA’S BALANCED SCORECARD

19. SEDA’S PLANNED PERFORMANCE
Seda’s planned performance is broken down to three divisions, namely:
Enterprise Development Division
Seda Technology Programme
Administration
Details of each division and planned performance per division are detailed in the Annexure

20. SEDA’S BUDGET ALLOCATION
INCOME
FY 16/17
FY 17/18
FY 18/19
FY 19/20
FY 20/21
Audited figures
Draft
R'million
Seda - DSBD from ENE budget
481.5
575.8
610.2
648.2
677.7
STP - DSBD from ENE budget
152.3
176.5
159.2
167.7
External earnings
108.0
63.0 -
12.0
Other income
12.6
5.0
TOTAL INCOME
754.4
820.3
774.5
832.9
871.2
EXPENDITURE
Compensation of employees
300.2
330.3
352.6
376.4
401.8
Goods & Services
453.6
472.0
403.1
436.8
448.8
Depreciation
18.3
18.0
18.8
19.7
20.6
Interest
TOTAL EXPENDITURE
772.1

21. SEDA’S BUDGET ALLOCATION PER PROGRAMME
Programmes
2016/17
2017/18
2018/19
2019/20
2020/21
Audited outcome R'000
Approved budget R'000
Estimated budgets R'000
Administration
147,658
171,300
174,400
184,638
195,494
Enterprise Development
440,410
451,587
440,841
480,536
499,159
Seda Technology Programme
184,076
197,419
159,211
167,687
176,514
Total expenditure
772,144
820,306
774,452
832,861
871,167

22. IMPLICATION OF SEDA’S BUDGET ALLOCATION ON PROGRAMME DELIVERY
The MTEF budget allocation has been reduced by R123 million which is 5% from 2018/19 to 2020/21.
Seda has also experienced reduced funding from partner institutions.
Most of the fixed costs like office rental, goods and services increase with rates that are mostly above the rate of inflation
This results in the amount available for programmes and projects being reduced accordingly as the total budget amount is limited.
As a result, a number of strategic initiatives that had to be scaled down or postponed in previous financial years such as incubation expansion, the one municipality one product (OMOP) programme, and promotion of Seda’s interventions in the key growth sectors will be delayed or postponed due to limited resources.
Seda is a service organisation and as such, needs to allocate adequate funds to the compensation of employees. The current allocation to compensation of employees is below the industry benchmark, due to available financial resources.

23. Thank you