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Address by the Minister for Small Business Development, Hon Khumbudzo Ntshavheni (Mp), on the Occasion of the Debate of Budget Vote 36 on Small Business Development

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Address by the Minister for Small Business Development, Hon Khumbudzo Ntshavheni (Mp), on the Occasion of the Debate of Budget Vote 36 on Small Business Development ADDRESS BY THE MINISTER FOR SMALL BUSINESS DEVELOPMENT, HON KHUMBUDZO NTSHAVHENI (MP), ON THE OCCASION OF THE DEBATE OF BUDGET VOTE 36 ON SMALL BUSINESS DEVELOPMENT 28 JULY 2020 (NCOP-VIRTUAL SITTING) Honourable Chairperson Deputy Minister Hon Pinky Moloi Chairperson of the Select Committee, Hon Mandla Rayi Honourable members MECs/ for Economic Development: Hon Thabo Mokone (Limpopo) and Hon Mosenogi (North West), Hon Dube-Ncube (KZN) and Hon Mvoko (EC) The acting Director-General, Mr Mkhumane Ladies and gentlemen, This era can best be described through the words of Charles Dickens in the Tale of Two Cities, when he wrote: “…It was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair…, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…” 1 Fellow South Africans These aptly describes this era as the time of extreme opposites without any in- betweens and the choice to come out on top is all within our means. Like the saying goes, never let a good crisis go to waste. In his address to the nation on the 21st April 2020, His Excellency, President Cyril Ramaphosa committed us “not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality…Our economic strategy going forward is to restructure the economy and achieve inclusive growth”. Specific to the mandate for the Department Small Business Development, the President has directed us to promote localisation and industrialisation, to strengthen the informal sector and “to forge a compact for radical economic transformation that advances the economic position of women, youth and persons with disabilities, and that makes our cities, towns and villages and rural areas vibrant centres of economic activity. Honourable members, the Budget we are tabling today seeks to deliver on the clear directives from our State President. Our priorities are five-fold: First, we have reprioritised the implementation of the Township and Rural Entrepreneurship programme; Second, our programme to strengthen the informal businesses is based on dedicated schemes; Third, localisation is focused on create markets for South African SMMEs and cooperatives produced products and services to drive industrialisation through targeted import substitution and supporting utilisation of local skills and services in the infrastructure build program 2 Fourth, ensure business viability of enterprises including cooperatives by supporting re-entry and restructuring of small enterprises into the new normal and new operating models; and Fifth, drive precise transformation targets for women and youth empowerment, including race as ordered by the high court. From the onset, we must acknowledge that our strategies for supporting entrepreneurs with disabilities are still yielding nothing to ride home about. The budget for the 2020/21 financial year to deliver on these five broad priorities is allocated follows: We must point out that the Department of Small Business Development was initially allocated R2.4 billion for the 2020/21 financial year which was reduced during the Special Adjustment Budget by R67 million to R2.3 billion. Transfers and subsidies consume 90.3% or R2.1 billion whilst operations are provided 9.7% or R227.7 million of the allocated resources. The R2.1 billion of transfers and subsidies provide for: o Seda’s allocation of R859.1 million, which is 40.7% of the transfers and subsidies. o Sefa’s allocation of R1.2 billion, which is 54.7% of the transfers and subsidies The Department administers the remaining R98.5 million through the incentives that are internally administered by the department which include the Cooperatives Incentive Scheme (R63.7 million), Black Business Supplier Development Programme (R13.7 million), Craft Customised Sector Programme (R11.1 million) and National Informal Business Upliftment Scheme (R9.8 million). Honourable Members, from sefa’s total budget allocation, an amount of R246 million does not form part of Budget Vote 36, as yet. It is transferred through 3 the Budget Vote on the dtic as sefa is a subsidiary of the IDC. The Department took a strategic decision to utilize the infrastructure and capacity of sefa in implementing financial support interventions hence the allocation of R1.2 billion of our budgets to them. We know they are not perfect but we will work with them in ensuring that we achieve the intended end outcomes which is the provision of affordable finance to SMMEs and Cooperatives. From the budget of R859.1 million allocated to Seda, R160.3 million will go to the Seda Technology Programme, R16.2 million is allocated to the Capacity Building Programme for Economic Development, and R682.6 million is allocate to the agency to ensure that the entity has branches throughout the country that are supporting small enterprises and Cooperatives to access non-financial support services. From the R1.2 billion allocated to SEFA: Instrument Budget allocation Debt Relief R141 million Business Growth R20 million Tshisanyama and cooked food R50 million Spaza Shops Support Programme R138.5 million Bakeries and confectionaries R100 million Autobody repairers and R225 million mechanics Personal Care Service R90 million Clothing, Textile and Leather R105 million Fruit and vegetable Hawkers R135 million Small Enterprise Manufacturing Programme R150 million Total R1.2 billion 4 Township and Rural Entrepreneurship Programme is part of the commitments we made in the 2019/20 financial year, when we tabled our maiden budget vote and it was part of delivering on the undertakings of the State President to resuscitate the township economies. Last year we committed ourselves to a dedicated programme to transform and integrate opportunities in townships and rural areas into productive business ventures. I must indicate that Cabinet approved a 5-year programme under this initiative and our view is that opportunities created by the Covid-19 pandemic creates conducive environment for township and village enterprises to thrive when people are required to minimise travelling to avoid the spread of the virus. Through this programme, the Department in partnership with its two agencies (SEFA and SEDA) it is implementing the following schemes: (a) Autobody Repairers and Mechanics Scheme (b) Bakeries and Confectioneries Support Scheme (c) Butcheries Support (d) Tshisanyama and cooked food Support Through the Autobody Repairers and Mechanics, we intend to supporting 15,000 motor mechanics, panel beaters, auto fitment centres and auto spares shops in our townships and villages as follows: EC= 2055; FS = 885; GP =3045; KZN = 3095; Lim = 1800; MP = 1320; NC = 436; NW = 1095; and WC = 1620. This work to ensure that mechanics and panel beaters in townships and villages are assisted to can qualify to service vehicles that are covered by insurance companies. In addition, these businesses are being assisted to ensure improved quality of service to their clients whilst assisting them with improved business and financial management for the profitability of their businesses. In addition, last financial year we commenced with discussions with the Minister of Police 5 on the possibility of servicing SAPS vehicles through young motor mechanics, panel beaters and fitment centres in the townships and villages. In this financial year, we should conclude the necessary agreement and thus provide a lucrative market for these entrepreneurs and boost our initiative to support 100 thousand young entrepreneurs. We are already processing applications under this scheme. Last year we implemented the Small Business and Innovation Fund which was mainly targeting innovative youth entrepreneurs and through this instrument, we were able to approve support to 2372 enterprises to the tune of R409 million that managed to create/sustain 14496 jobs. The Department is also supporting Bakeries and Confectioneries with a target of 3500 across the country. It must be noted that many of the bakeries in townships and villages are mostly owned by cooperatives and our work is aimed at ensuring that the school feeding schemes, hospitals and Social Development food parcels source their bread from these bakeries as these will imply increasing government spending in businesses as part of boosting the township and village economy. Similarly, we are already processing applications under the Scheme. Next week, the Department will launch the scheme to support 10, 000 Butcheries that are based in the townships and villages. This scheme is linked to the work we are doing with the Department of Agriculture, Land Reform and Rural Development to ensure that both the smallholder farmers, subsistence farmers and feedlots become suppliers to the beneficiaries of this scheme. Of this target, EC=1370; FS = 590; GP =2030; KZN = 1990, Lim = 1200; MP = 880; NC = 290; NWest = 730 and WC = 1080. 6 Similarly, next week the Department will launch the support scheme for Personal Care Services although it will be limited to support those in the hair and beauty care services including hairdressers, nail technicians, make-up artists and body massage. This will support those who operate from their homes, salons/ spas – including those who rent chairs, and those in mobile services. Our target is 5000 enterprises. Through this scheme, we will also create a market for the hair and beauty products manufactured
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