1. brief on seda for the portfolio committee 9 march 2007
A.N. Damane, CEO

2. Presentation Overview
Small Business Environment
Development / Background
Strategic Thrust
Progress to date
Budget
Lessons Learnt
Conclusion

3. Presentation Overview1
Presentation Overview
The Small Business Environment
Small enterprises comprise 95% of all enterprises
Currently between 2,5 million to 3 million – equivalent to 7% in numbers per annum
Contribute +45% to GDP
Absorb +60% of formally employed labour
Enterprise density is higher in metropolitan areas of Gauteng
Year on year increase of 45% of close corporation registrations, 32% of companies and a massive increase in registration of cooperatives
Participation of small business in export trade is + 33% (rising steadily)
Only + 16% of entrepreneurs belong to business associations

4. Factors limiting entrepreneurial activity in SA
Small Business Environment 1
Factors limiting entrepreneurial activity in SA
Educational system does not encourage entrepreneurship as a career
Lack of financial resources available to start a business
Regulations create huge administrative burdens and high costs when starting a business.
SA is not entrepreneurial due to factors such as sanctions in the past.
Environment in which children grow up influences them to believe that it is better to find a job and be safe.
Starting a business is risky process that often involves cycles of failure.
Infrastructure and necessary skills required for development of entrepreneurship are lacking.
A paradigm of entrepreneurship does not exist - expectation is that big business, government and others should create jobs, rather than that one can create one’s own employment.
Competencies such as management and entrepreneurial skills are lacking Source: GEM 2006 South Africa Report

5. Development / Background2
Development / Background
seda Milestones
December 2004
Small Business Amendment Act merging Ntsika and NAMAC.
Appointment of the CEO
Appointment of the Interim Board
April 2005
Appointment of the Executive Team
Beginning of Provincial consultations and roll-out process
Population of seda structure

6. Development / Background2
Development / Background
seda Milestones (Cont)
17 August 2005
Launch of seda in North West Province
27 December 2005
Launch of seda in Northern Cape
27 January 2006
Launch of seda in Mpumalanga
8 February 2006
Launch of seda in KwaZulu Natal
16 February 2006
Launch of seda in Bisho, Eastern Cape
24 February 2006
Launch of seda in Free State

7. Development / Background2
Development / Background
seda Milestones (Cont)
April 2006
Incorporation of seda Technology
August 2006
Tri-nations Summit between seda, SEBRAE (Brazil) and NSIC (India)
November 2006
The dti Annual Summit on Small Business

8. 3 Strategic Thrust seda’s mandate seda was established
by the Small Business Amendment Act 29 of 2004
through merging Ntsika and NAMAC
to be the national service delivery entity for small enterprise development services
with the mandate
to implement the policy of the national government for small enterprise development
to design and implement a standard national delivery network uniformly applied throughout the country in respect of small enterprise development, integrating all government-funded small enterprise development agencies across all spheres of government
to design and implement small enterprise development support programmes

9. 3 The seda mission Strategic Thrust
to promote, develop and support small enterprises to ensure their growth and sustainability

10. 3 Strategic Thrust seda’s key outcomes improved:
competitiveness of small enterprises
sustainability of small enterprises
growth of small enterprises
access to the international and national markets for small enterprises
access to finance by small enterprises
more businesses established
increased capacity of service providers to serve small enterprises
improved and more equitable access of small enterprises to support services

11. Strategic Thrust : New Focus
Strategy
Seda will move:
from expanding the network to effective service delivery through the existing network
Why:
Financial constraints
Delivery model being reviewed (maybe mobile centres?)
Existing centres not fully equipped and ready (only 6 totally ready)
Existing delivery staff not fully capacitated
To avoid reputation risk

12. Strategic Thrust : New Focus
Strategy
Seda will move:
from centrally controlled organization to decentralized, flexible and customer-oriented organization
Why:
Existing model not customer oriented
Currently the decision making model and structures not efficiently facilitating effective delivery

13. Strategic Thrust : New Focus
Strategy
Seda will move:
from reliance on mono-funded approach to sustainable multi-sourcing of funds.
Why:
Current funding from the dti not enough for the mandate
Great uncertainties related to future level of the dti funding
Other Government departments/levels willing to participate
Opportunities for PPP
Clients willing to pay for the services

14. Presentation Overview4
Presentation Overview
Progress to Date
The seda Roll-out and Operations
seda Key Programmes
Information and Advice
Export
Training and Mentorship
Manufacturing Support
Financial Management
HR Issues

15. footprint in the provinces4
Our
footprint in the provinces

16. + 4.1 Roll-out EASTERN CAPE 24 EICs seda Outreach :
Clients assisted
Existing Offices
To be established in 2007/ 2008

17. + 4.1 4 Roll-out FREE STATE 9 EICs seda Outreach :
6 269 Clients assisted

18. Roll-out KWAZULU-NATAL
4.1
Roll-out KWAZULU-NATAL
9 EICs +
seda Outreach :
5 951 Clients assisted

19. + 4.1 Roll-out LIMPOPO 11 EICs seda Outreach : 6 599 Clients assisted
Existing Offices
To be established in 2007/ 2008

20. + 4.1 Roll-out MPUMALANGA 12 EICs seda Outreach :
Clients assisted

21. + 4.1 Roll-out NORTH WEST 4 EICs seda Outreach :
Clients assisted

22. Roll-out NORTHERN CAPE
4.1
Roll-out NORTHERN CAPE
3 EICs +
seda Outreach :
3 117 Clients assisted

23. + 4.1 Roll-out WESTERN CAPE 8 EICs seda Outreach :
Clients assisted
Existing Offices
To be established in 2007/ 2008

24. 4.1
Roll-out GAUTENG
24 EICs +
seda Outreach :
Clients assisted

25. 4.1 Roll-out SUMMARY Geographical spread of seda offices 2006/2007
Target
Achieved
Provincial Offices
Branches 38
EICs
103
2006/2007
Province
Branches
EICs
Limpopo 3 11
Mpumalanga 5 12
Gauteng 1 24
North West 4
KZN 7 9
Free State
Eastern Cape
Northern Cape
Western Cape
Total 38
103

26. 4.2 Key Programmes Information and Advice 103 Enterprise Centres
clients were assisted through seda website
clients visited the seda website
219 Radio Programmes implemented (including community radio)
20 Print media programmes implemented
4 TV programmes implemented

27. 4.2 Key Programmes Export Readiness Programmes
Export promotion training – 716
ABSA International Trade Bureau
Technonet Africa
Trade Point Programme (3)
Tshwane (Tshwane Municipality)
Johannesburg (JICC)
Durban (Durban Chamber of Commerce)
National Procurement Support, accessible through all seda branches

28. 4.2 Key Programmes Technology Support (sTP) Technology Incubators
Technology Transfer Fund
Business Hives

29. 4.2 Key Programmes Training and mentorship
Mentorship (SA Plato) – Flanders in Belgium
UNIZO Ntataise (“handholding” of SMMEs in SA) between Flanders in Belgium and SA
Productivity training with NPI
Western Cape Chamber of Industries – seda has in partnership with WCCI successfully conducted a mentorship programme to 28 SMEs from various sectors. The success of this project was attributed to the role played by mentors from both Chambers and private sector companies.

30. 4.2 Key Programmes Manufacturing Support
National Industrial Chamber – project to support small manufacturers to supply big retailers, eg Massmart that will result in income generations of R70m and a creation of 188 new jobs in initial stage
Shintsa - Furniture making programme, targeting young people in partnership with 5 FET colleges (40 learners per college / total 200 learners). Support will be given in seda branches where FET colleges are found.
Port Elizabeth
Motheo
Northern Cape
Umgungundlovu
Cape Town

31. 4.3
Financial Management
Unqualified audit report in the first year of operation
Internal control environment strengthened through additional capacity in the finance department
Full capacity to spend allocated funds
Moratorium was placed on new funding commitments because of inadequate funds

32. 4.4
HR Issues
Total staff complement - 464

33. 4.4 HR Issues All staff from merged institutions successfully placed
Three outstanding CMMA cases
Performance Management System

34. targets 2007/08 Some key indicators Targets 07/08 Clients assisted
New business stared and operational
4 000
New jobs facilitated
6 000
Growth of turnover of assisted SMMEs
10%

35. Presentation Overview5
Presentation Overview
Budget

36. Where From Where to 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 Budget
R120 million
R200 million
R378 million
R455 million
R630 million
R695 million
Staff
247
351
464
490
554
(30)
602
Core Network
* National 2 1
* Provincial 8 6 9
Satellites / Branches 17 27 40 48 54
LBSCs / EICs
61 + 4 87
103
200
284
Total Network 92
121
152
153
258
348

37. Major cost drivers
LBSC’s funded at R p.a. : EICs funded at R p.a. (funding model to change)
Increase in number of branches
Increase in number of seda permanent staff
Enhancement of products and services
NB : Timing of establishment of branches and EICs bewteen FY 2005/06 and FY 2006/07

38. Preliminary Financial Projections
FY 06/07
FY 07/08
FY 08/09
FY 09/10
FY 10/11
R'000
R,000
EXPENDITURE:
OPERATIONS:
- Products and Services
77,000
145,000
205,000
225,000
250,000
- Other Operational
94,000
112,000
200,000
240,000
Total Operations:
171,000
257,000
405,000
445,000
490,000
OTHER EXPENDITURE:
-Staff cost,
177,000
143,000
160,000
175,000
190,000
- Admin and overheads
25,000
30,000
45,000
50,000
55,0000
- Capital cost
5,000
20,000
Total National Office:
207,000
198,00
275,000
TOTAL EXPENDITURE 
378,000
455,000
630,000
695,000
765,000
INCOME:
DTI
311,000
444,000
520,000
545,000
555,000
FINNNISH GOVERNMENT
27,000
11,000
10,000
PROVINCES/DISTRICTS/LOCAL GOVERNMENT
9,000
75,000
110,000
OTHER INCOME
31,000
100,000
TOTAL INCOME

39. Notes on Financial Projections
For the 07/8 Financial year, only the existing 40 centres will be made fully operational whilst negotiations are started to get additional funding from Provinces/Districts/Local Government.
At the funding level of R455 million, the following risks still exist:
The planned new branches for Western Cape (3), Eastern Cape (3) and Limpopo (2) will not materialise in FY07/08 because of budgetary constraints and this has serious reputational risks as negotiations with the provinces had already started in anticipation of more funding
The opening of a provincial office and five (5) branches in Gauteng province (targeted for FY07) is also compromised because of the budgetary constraints. This also has serious implications since as an economic hub of South Africa, Gauteng’s small enterprise community needs seda’s intervention with respect to development and support
Under the current budgetary constraints, the EIC outreach programme will not be achieved because of the reduction in the retainer from R pa to R and due to the moratorium on the establishment of a further 110 EICs which will affect both outreach and impact of services
Inability to participate in/or support the upscaling of sector specific and other national programmes, for example, ASGISA related programmes, Expanded Public Works Programme, etc.
For the 08/09 Financial Year, mild expansion will be done to bring the branches to 48 branches whilst Provincial/District/Local governments start making funding contributions. Efforts will also be made to source funding from other institutions and/or organisations.
For the 09/10 financial year, the full delivery model will be in place and hopefully Provincial/ District/ Local Government will be making meaningful funding contributions.
For the 10/11 financial year the network would have been stabilised as well as the funding streams secured for future sustainability.

40. Plans 2007/08 Additional staff at the branch level IT infrastructure
Capacity building
Monitoring and evaluation system

41. Presentation Overview6
Presentation Overview
Lessons Learnt

42. 6
Lessons
Government funding located in different pockets with different decision making processes
Compounded by legislation that impedes transfer of funds from lower tiers of government to higher tiers
No short-cuts to find win-win solutions
Role clarification very critical

43. 6
Lessons
(continued)
Slow approval processes even in areas where buy-in exists
Scarce SMME support skills commanding private sector salaries
Negative perception regarding delivery track record of national entities
Emotional attachment to programmes
Myth of the “experienced” business advisor

44. 6
Lessons
(continued)
Expansive geographic space and scale that has to be covered requires large investments
Unrealistic expectations
Balancing the political expectations with what entrepreneurs need
Different levels of capacity of our partners, NGOs, etc.
Acknowledgement is very critical in a partnership

45. Presentation Overview7
Presentation Overview
Conclusion

46. 7
What matters
most
Entrepreneurs want solutions to their problems, not long stories about available programmes, eg
Quick turn-around times
Simple language
Simple processes
Listen to the Entrepreneur

47. Thank you