1. Department of Small Business Development ANNUAL REPORT 2014/15 1

2. Outline of the presentation 1. Vision, Mission and Values 2. Mandate 3. Strategic Outcome Oriented Goals 4. Organisational Structure 5. Legislative Mandate and entities Reporting to the Minister 6. Overview of Departmental Performance 7. Challenges 8. Concluding remarks 2

3. Establishment of the new dept. Proclaimed on 7 July 2014 Determined the founding principles Considered a structure to speak to the mandate Developed a Strategic Plan and APP based on existing programmes Review of programmes underway 3

4. Vision A radically transformed economy through effective development and increased participation of SMMEs and cooperatives in the mainstream economy. 4

5. Mission To create a conducive environment for the development and growth of small businesses and cooperatives through the provision of enhanced financial and non-financial support services, competitiveness, market access, promotion of entrepreneurship, advancing localisation and leveraging on public and private procurement. 5

6. Values Customer focused Integrity Honesty Efficiency Accessibility Commitment 6

7. Mandate The department will lead an integrated approach to the promotion and development of small businesses and cooperatives through a focus on the economic and legislative drivers that stimulate entrepreneurship to contribute to radical economic transformation (that will lead to increased employment, poverty reduction and reduced inequality). 7

8. Strategic Objectives To facilitate the development and growth of small businesses and co- operatives to contribute to inclusive and shared economic growth and job creation through public and private sector procurement; Facilitate radical economic transformation through increased participation of small businesses and co-operatives in the mainstream economy; 8

9. Strategic Objectives cont… Advocate for a conducive regulatory environment for small businesses and co- operatives to enable access to finance, investment, trade and market access in an equitable and sustainable manner; Facilitate partnerships with all spheres of government as well as the private sector to ensure mutual cooperation that will benefit small businesses and co-operatives. 9

10. Start-up structure 10

11. Legislative mandate In line with these responsibilities, the department’s mandate is guided by a broad legislative framework that includes:  National Small Business Act,1996 (No.102 of 1996) amended 2004,  Co-operatives Act, 2005 (No.14 of 2005) and other applicable prescripts as listed in the Annual Report. 11

12. Entities Reporting to the Minister 12 Name of Public EntityEnabling LegislationMandate and Purpose Small Enterprise Development Agency (seda) National Small Business Act, 1996 Mandated to implement government’s small business strategy; design and implement a standard and common national delivery network for small enterprise development; and integrate government- funded small enterprise support agencies across all tiers of government

13. Entities Reporting to the Minister 13 Name of Public EntityEnabling LegislationMandate and Purpose Small Enterprise Finance Agency ( Sefa) Section 3 (d) of the Industrial Development Corporation Act, No. 22 of 1940 (IDC Act). The development of sustainable SMMEs through the provision of finance. This agency will start reporting to the Minister from the 2015/16 financial year. Consideration of a reviewed strategy and programmes of SEFA in support of DSBD’s mandate is part of the review process.

14. Programme Performance  The department’s overall performance is reported within the context of government’s 14 Outcomes. The department contributes to outcome 4: Decent employment through inclusive growth; and Outcome 7: Vibrant, equitable, sustainable rural communities contributing towards food security for all  Takes into cognisance the in-year institutional changes that impacted on the services delivery 14

15. Programme Performance  For the duration of the 2014/15 financial year, the DSBD comprised of some of the programmes, that were under the Broadening Participation Division, of the dti. The majority of Broadening Participation Division programmes were transferred to DSBD, particularly those that were supporting small business and co-operatives development  During the course of the financial year, the department focused on establishing Programme 1 (Administration) and proposed 3 additional Programmes, namely, Co-operatives Development, Enterprise Development and Entrepreneurship, and Enterprise Competitiveness Support 15

16. Programme Performance Administration  Negotiated the organisational start- up structure with the Department of Public Service and Administration and National Treasury;  Commenced with a process to reconfigure and align some of the key programmes to support the new mandate  Engaged with Board of Directors of Small Enterprise Development Agency (seda) and Senior Management to start the process of aligning the mandate. 16

17. Programme Performance Human Resource 17 N O. OF PERSONNEL TRANSFERRED FROM THE DTI N O. OF PERSONNEL APPOINTED FROM OTHER INSTITUTIONS S TAFF COMPLIMENT AS AT 31 M ARCH 2015 14014154

18. Programme Performance Finance  The annual financial statements prepared by the dti also included the financial performance of DSBD as the two departments were recognised as one vote for the duration of the 2014/15 financial year;  In the opinion of the Auditor General, the financial statements were presented fairly, in all material aspects, the financial position of the department of Trade and Industry as at 31 March 2015 and its financial performance and cash flow for the year ended, in accordance with the MCS prescribed by National Treasury and the requirements of the PFMA. 18

19. Programme Performance  Programme 3 of the dti (Broadening Participation Division) was selected for evaluation and Auditor General did not identify any findings on the usefulness and reliability of the reported performance information (It should be noted that the majority of functions transferred to the DSBD were under this programme).  The overall report of the Auditor General expressed a clean audit as there were neither material findings on non- compliance nor any significant deficiencies in internal control matters. 19

20. Programme Performance  Progress recorded in 2014/15 financial year which includes  successful launch of two Centres for Entrepreneurship in March 2015 that have been established,  Implementation of an Integrated SMMEs and Co-operative Development Framework and Action Plan;  A pilot report on the Informal Traders Upliftment Programme (ITUP) was produced and tabled at the Project Steering Committee  783 SMMEs funded through Black Business Supplier Development Programme (BBSDP) and 207 cooperatives funded through Cooperatives Incentive Scheme (CIS)  The Department continued to support seda on the implementation of the Seda Technology Programme (stp) Programme 20

21. National Informal Business Upliftment Strategy (NIBUS) Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth OutputPerforman ce Indicator Annual Targets for 2014/15 Actual OutputReasons for Variance Corrective Action Finalisation and implementation of the National Informal Business Upliftment Strategy (NIBUS) Reports produced on the pilot implement ation of the NIBUS Pilot implementat ion of the NIBUS and a report produced Preliminary pilot report on Informal Traders Upliftment Programme (ITUP) was produced and tabled at the Project Steering Committee. N/A 21

22. Centres of Entrepreneurship Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual OutputReasons for Variance Corrective Action Supported the establishment and functioning of centres of Entrepreneurship Number of MOAs to establish centres of entrepreneurshi p Two (2) MOAs for approval to establish centres of entrepreneu rship Two Centres for Entrepreneur ship have been established and launched in March 2015 N/A 22

23. Programme Performance 23 Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Actual Performance Against Target Reasons for Variance Corrective Action TargetActual BBSDP Implemented Number of enterprises approved for BBSDP 1 280783Fewer applications received and processed Simplified application process Partnerships with the other spheres of government Capacity building for Seda and Sefa branches

24. Part 2: Performance Information Grants and Incentives support  The department supported 783 eligible enterprises through the Black Business Supplier Development Programme (BBSDP) and 207 through the Co-operative Incentive Scheme (CIS);  Whilst the performance is below target, the department has devised a strategy to address the under-performance, which includes actions such as:  Training SEDA and Sefa branches on the department’s incentives  Proactive engagements with SMMEs and Cooperatives  Partnerships with the private sector, provincial government, agencies and municipalities  Simplification of application processes and guidelines  Review of the guidelines and simplication of the application process 24

25. Implementation of Cooperatives Act as amended SG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual Output Reasons for variance Corrective action Implement ation of the Co- operative Act as amended Implementation report produced on the phased – in operationalisatio n of the Co- operative development agency (CDA and Co Operative Tribunal) Phased-in operationali zation of the CDA and Tribunal and implementat ion report produced Target not met.This function was moved to the new department and no budget was allocated for this output. DSBD decided to defer this activity to the new financial year 2015/16 The Cooperatives Business Unit to motivate for additional allocation to fund this output during the mid- term expenditure adjustments estimates during Q2 2015/16 financial year. 25

26. National Strategic Framework on Gender and Women Economic Empowerment Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual OutputReasons for Variance Corrective Action Implement the National Strategic Framework on Gender and Women Economic Empowerment Submit for approval the National Strategic Framework on Gender and Women Economic Empowerment Finalise and re- submit the National Strategic Framewor k on Gender and Women empower ment to Cabinet for approval Target not met.National Strategic Framework not submitted to Cabinet for approval. The department has decided to change focus from framework to strategy 26

27. Youth Enterprise Development Strategy Strategic Outcome-Oriented Goal 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual Output Reasons for Variance Corrective Action Finalisation and implementation of Youth Enterprise Development Strategy (YEDS) Implementation report on YEDS produced Pilot implementation of the YEDS and report produced Target not met. The YEDS was migrated with the Youth Directorate to the Department of Small Business Development, and approval by EXCO and Minister delayed. Programme to be rolled out during the 2015/16 financial year in partnership with Provinces 27

28. Seda Technology Programme SG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual Output Reasons for variance Corrective action Implementation of the seda Technology Programme (stp) Number of jobs created through stp. 1650 1963 Higher than expected performance of the construction and agriculture sector. N/A Number of established incubators supported through stp. 48 (inclusive of 6 new) The stp supported 48 established incubators, and 6 new incubators N/A 28

29. Seda Technology Programme SG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual Output Reasons for variance Corrective action Implementation of the seda Technology Programme (stp) Number of clients assisted through technology transfer programme 63 42 Insufficient funds to assist qualifying clients Motivation for an increase in budget allocation in the next financial period. 29

30. Integrated SMMEs and Cooperatives Development Framework Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth OutputPerformance Indicator Annual Targets for 2014/15 Actual OutputReasons for Variance Corrective Action Implement an Integrated SMMEs and Co-operatives Development Framework and Action Plan Integrated SMMEs and Co- operatives Development Framework and Action Plan Implement Integrated SMMEs and Co- operatives Development Framework and Action Plan and report produced. The task team meeting held on all four quarters and quarterly reports produced that reflect on the implementation of the framework. N/A 30

31. Summary of Challenges The programmes are still structured as per the dti’s strategic objectives and the report is therefore aligned to the dti’s strategic objectives, going forward we will be aligned to the new mandate Delays in the transfer of functions from the dti to the Department of Small Business Development In certain instances functions were transferred without funds. Budget was centrally controlled with Intra-transfer of funds within the dti and this had a bearing on the expenditure patterns and allocation. Own budget only given this year Other functions were dependent on the dti capacity which is centralised through particular business units e.g. research, procurement, etc The transitional process affected delivery

32. Budget DirectorateBudgetExpenditureVariance Current payments130 722100 88329 839 Compensation of employees 83 95773 75310 204 Goods and services 46 76527 13019 635 Transfers and subsidies998 315998 29421 BBSDP288 342288 3366 CIS65 00064 96634 SEDA Technology programme126 368 0 SEDA Agency502 282 0 SAWEN16 320 0 Households322-19 Payment for capital assets 4 683 1 6113 072 TOTAL 1 133 7201 100 78832 932

33. THANK YOU 33