1. Department of Small Business Development
Presentation to the Portfolio Committee on small Business Development
Remedial Action in response to the Recommendations of Reports on the Oversight Visits to KwaZulu Natal, Limpopo and Mpumalanga
Date: 15 November 2017

2. Presentation Outline 3. Remedial Action Plans (Slide 8-14)
Purpose (Slide 3)
2. Key Recommendations in the Reports
(Slide 4-7)
3. Remedial Action Plans (Slide 8-14)
4. Way Forward (Slide 20)

3. Purpose
The purpose of the presentation is to present the Portfolio Committee (PC) on Small Business Development with a Remedial Plan in response to the Recommendations contained in Committee’s Reports in respect of the Oversight Visits conducted in KwaZulu Natal, Limpopo and Mpumalanga.

4. Key Recommendations

5. Key Recommendations of Oversight Reports
That the Department should
Coordinate, guide and monitor all Departments in supporting the establishment, development and sustainability of SMME’s and Cooperatives.
Provide comprehensive support to SMMEs and Cooperatives, as funding alone does not ensure sustainability.
Strengthen its intergovernmental (IGR) coordination, particularly with the municipalities where these cooperatives are located

6. Key Recommendations of Oversight Report (cont.)
That the Department should
Review the approval procedures for the Cooperatives Incentive Scheme (CIS) to address the shortcomings identified by the PC. Key factors that determine the viability of the cooperatives were not considered such as access to land, electricity, water and relevant infrastructure.
Eliminate the prevalence of corruption identified by the PC. It recommended that a forensic investigation be conducted to ascertain that facts and accordingly implement corrective action.

7. Key Recommendations Of Oversight Report (cont)
That the Department should
Strengthen its Marketing and Advocacy efforts particularly in other spheres of government to facilitate the implementation of the 30% procurement policy.
Conclude Transversal Agreements with other Departments and spheres of Government to facilitate the development of SMMEs and cooperatives.
Intensify efforts in respect of reducing red tape that hinders the sustainability of Cooperatives and SMMEs

8. Remedial Action Plan

9. Remedial Action Plans For Addressing Recommendations
Coordination of the public sector to support the growth and sustainability SMMEs and Coops
The Department has established and institutionalised an Interprovincial Coordinating Committee and a National Inter-Departmental Coordination Committee comprising all National Departments. These structures, chaired by the DG, foster advocacy, coordination, a sense of common purpose and monitoring of other Departments in their support of Cooperatives and SMME’s.
It is a platform where the Department can lobby and influence other state institutions to advance the support and development of Cooperatives and SMME
The National Inter-Departmental Coordination Committee is championed by and reports to the DGs Economic Sector, Employment and Infrastructure Development (ESEID) Cluster

10. Remedial Action Plans For Addressing Recommendations
Coordination of the public sector to support the growth and sustainability SMMEs and Coops (cont.)
The Minister, with the support of several MECs for Economic Development, is in the process of establishing a Small Business Development (SBD) MINMEC as the current arrangement of an Economic Development MINMEC coordinated by the Minister for Economic Development has not advanced the small business development mandate.
The existing Interprovincial Coordinating Committee, which meets quarterly, will become the Technical Committee supporitng the SBD-MINMEC. The inaugural SBD-MINMEC is scheduled for March 2018

11. Remedial Action Plans For Addressing Recommendations
B. Review of the Integrated Strategy for the Promotion and Development of Cooperatives
The Department is in the process of process reviewing the Integrated Strategy for the Promotion and Development of Cooperatives which will culminate with ushering in of a new Strategy and Integrated Model of Cooperative Development in the 2018/19 financial year.
This process will, amongst other, address the following:
Integrated financial support for the Cooperatives, including a review of the CIS
Market Access opportunities for Cooperatives.
Intergovernmental Coordination for the support of Cooperatives.
Skills and capacity building for the Cooperatives
Review of the Cooperatives Development Act
Implementation of the institutional arrangements provided for in the Act

12. Remedial Action Plans For Addressing Recommendations
C. Strengthening IGR with District and Local Government structures
The Department has commenced a process of introducing the cooperatives to other structures of government particularly the local municipalities to enable these cooperatives to draw support from these structures
As such the DG wrote to all District Municipalities (DMs) and provided them with a list of funded cooperatives in their districts in order to solicit support. There has been very little response to this intervention.
In respect of the KZN Abalimi Cooperatives, there has been several meetings with affected DMs and municipalities. A number of draft agreements are in place to ensure that they are included in the IDPs and they can access support from the Municipalities.

13. Remedial Action Plans For Addressing Recommendations
C. Strengthening IGR with District and Local Government structures (cont)
Following the Action Research Project to determine the developmental status of the 400 DSBD funded Cooperatives, the Department has concluded the report which was presented to the Committee. A number of commitments were made and the Department committed to providing the Committee with updates
An MoA has been finalised with the Local Government SETA, which will be signed on 9 November 2017

14. Remedial Action Plans For Addressing Recommendations
C. Strengthening IGR with District and Local Government
structures (cont)
The Department will co-host a National Local Economic Development Summit with COGTA 9-10 November 2017
Arrangements for the Summit is advanced, with the Ministers approving the Concept Paper and draft agenda on 24 October
The Summit will, amongst other, address :
Advocacy and lobbing for the development of Cooperatives and SMMEs in local Government.
Advocating for inclusion of the Cooperatives in the agenda and IPDs of the Municipalities.
Advocacy of the reduction of red tape which hinders the sustainability of cooperatives.

15. Remedial Action Plans For Addressing Recommendations
Root-out Fraud and institute Disciplinary Action
against officials
The Department has adopted a zero-tolerance of fraud and corruption. While it has a Fraud Prevention Policy, Strategy and Plan, more must and will be done to popularise these instruments. It also has a Whistle-Blowing Policy
The Department could not act against officials named in the MP report. It is required to conduct a proper investigation into the matter. The corrective measures that will be taken by the Department will be informed by the results and the recommendations of the investigation.
The Department does not have investigative capacity. The DTI had previously assisted the Department with investigations, however it could no longer extend this service.
The Department has approached the office of the AG, however it transpired that it was going to take longer to conclude the pre-engagement processes before the investigation could commence. Hence the Department is in the process of sourcing the service through the transversal contract from National Treasury, following which the investigation will be completed and the report provided to the PC.

16. Remedial Action Plans For Addressing Recommendations
D. Root-out Fraud and institute Disciplinary Action against officials (cont.)
The Department is also planning a comprehensive review of its incentive programmes the CIS and BBSDP. This review will assist in properly analyzing the shortcomings identified in the CIS to ensure that these are corrected in the reviewed programme.
While awaiting this review, the Department immediately after receiving the MP report, initiated a review of the Standard Operating Procedures of CIS to strengthen controls to address the obvious weaknesses. Several stakeholder workshops have been conducted to inform the amendment of the CIS SOPs to close the loopholes and address the shortcomings identified by the PC. The review of these SOPs will address the problem in the short term.

17. Remedial Action Plans For Addressing Recommendations
E. Strengthen Marketing, Branding and Advocacy
The Department has developed a draft Marketing Stakeholder Plan. This plans includes advocacy in respect of the 30% procurement requirements for Cooperatives and SMME’s as well as market access.
However, the department has not been able to implement this plan as it is hamstrung by resource constraints both in terms of human resource capacity and budget

18. Remedial Action Plans For Addressing Recommendations
f. Transversal Agreements
The signing of Transversal Agreements is the priority for the Department and is provided for in the Annual Performance Plans (APPs).
In line with the DSBD objective of “Sustainable partnerships to support the SMME and cooperatives development agenda,” the Department has defined targets in respect of the following:
Rand Value of resources leveraged through partnerships with sector stakeholders per annum, and
Number of partnership agreements signed.
Transversal agreements entered into make provision for the specific procurement of goods and services from Cooperatives and SMME’s in all spheres of Government.
The Department is monitoring the implementation of past and current agreements through its Partnerships Directorate.
Agreements prioritized for the next 4 months include: COGTA, DAFF, NT and

19. Remedial Action Plans For Addressing Recommendations
G. Red Tape Reduction
Red tape reduction is provided for in the APP of the Department. In addition to analysing and re-engineering the administrative procedures and local government level, this has been extended to national government. This is one of the efforts by the Department to address red tape.
A comprehensive research study will also be concluded on the Red Tape at provincial level of government during the 2017/18 financial year.

20. Way Forward
A detailed matrix (tracking tool) has been completed with all the recommendations from the PC’s oversight reports. The Department will monitor progress based on this matrix.
The Documents as requested by the PC will be provided to the Committee Secretariat.
The report back will be provided following the completion for the investigation into indicents of corruption as identified by the PC and by the department.