DEPARTMENT OF SMALL BUSINESS

DEVELOPMENT (DSBD)

RURAL AND TOWNSHIP INDUSTRIAL ECONOMY SUMMIT

19 JULY 2018

EAST LONDON, EASTERN CAPE

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1. BACKGROUND 2. OBJECTIVES OF THE LED CONFERENCE 3. CONFERENCE DECLARATIONS 4. RESOLUTIONS AND ACTIVITIES 5. AGREEMENT WITH COGTA 6. ACTIVATING THE RESOLUTIONS WITHIN DSBD 7. CONCLUSION

PRESENTATION OUTLINE

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It is necessary to recognise the tension in the mandate and strategic focus between supporting dynamic established SMMEs with growth-focussed efforts and poverty alleviation, which focuses on the poorest of the poor.

Growth-focussed Support

- Established SMMEs with scope to grow - Greater employment multiplier - Greater ROI and sustainability for

financing activities - Long-term higher impact on overall

mandate - Establishment of black industrialists - Eg Gazelles programme

Poverty Alleviation

- Focus on micro and informal enterprises - Priority is sustainable livelihoods for the

poorest in society (incl rural areas and priority groups – women, youth, people with disabilities)

- Focuses resources on the areas of greatest need

- Lower impact, lower employment multiplier

While the breadth of the mandate means that DSBD does not have the luxury of focussing purely one or the other, a balance must be found that ultimately prioritises the highest impact

opportunities.

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Mandate…

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• The mandate of the Department of Small Business Development (DSBD) entails the coordination of efforts towards a strong and sustainable community of SMMEs and Cooperatives to enable them to contribute positively to economic growth and job creation in South Africa.

• The SMMEs, Cooperatives and Informal businesses are located within a local sphere of government and in line with Intergovernmental Relations Framework Act, DSBD and other departments must collaborate with Municipalities

• In November 2017, DSBD in partnership with the Department

of Cooperative Governance and Traditional Affairs (COGTA) co-hosted an inaugural 2017 National Local Economic Development Conference

BACKGROUND

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• To provide strategic platform to engage on critical issues on stimulating local economies through proper implementation of LED

• Adopt a new inclusive local government agenda for LED;

• Reflect on radical socio-economic transformation and implications for stimulating local economies;

• The launch of the Economic Development Council of South Africa (EDCSA).

OBJECTIVES OF THE CONFERENCE

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LED is about the development and/or expansion of formal economic activity and employment at a sub-national spatial level. It is also a process in which partnerships between local governments, community-based groups and the private sector are established to manage existing resources to create jobs and stimulate the economy of a well-defined territory. Emphasis is on local control, using the potentials of human, institutional and physical resources

WHAT IS LED?

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RESOLUTION Resolution Activities

Red Tape Reduction and addressing

other inhibitors

• Simplify business licensing/registration processing

• Strengthen regulatory framework through LED

• Create red-tape awareness in municipalities

• Assessment of red-tape reduction guidelines

• Implement the recommendations of the assessment

• Strengthen the red tape reduction processes through legislation

• Develop simplified by-laws that are responsive to SMME development

• Streamlined and standardized guidelines on development of by-laws

• Review applicable legislation that impedes SMME development

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RESOLUTION Resolution Activities

Address enablers to growth and

development of Small Enterprises

• Create a virtual database for effective monitoring of SMMEs and Cooperatives and Informal Business

• Encourage the SMME sector to register on the database- (National Treasury CSD)

• Utilize the database for promotion and up-liftment of SMMEs, Cooperatives and Informal Businesses

Clarification of Role of Local

Government on Radical Socio

Economic Transformation

• Assess and determine the strength of the local economy

• Assess and determine the ownership of the local economy

• Identify opportunities for the participation of SMMEs, Cooperatives and Informal Businesses

• Create a framework for participation, monitoring and evaluation

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RESOLUTION Resolution Activities

Implementation of the revised National

Framework for Local Economic

Development

• Finalise the review of the Framework • Engage various stakeholders on the

singular interpretation of the framework and agree on roles and responsibilities towards its roll-out

• Implementation of core pillars that speak to DSBD mandate/function

• Develop an action plan for DSBD pillars

Establish new financial arrangements

for innovation capability and capacity

building in local spaces e.g. 4th

Industrial Revolution (4IR)

• Promote and advocate the role of innovation in LED

• Develop mechanisms for accessing support for innovation in LED

• Establish mechanisms for accessing the LED fund for innovation

• In collaboration with DST increase accessibility of Technology Platform Stations to local enterprises

• Monitor and evaluate the local/regional impact of DSBD’s funded incubators

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RESOLUTION Resolution Activities

Strengthen the role of traditional

leaders in economic development

• Capacity for Traditional leaders to understand LED

• Advocate for establishment of LED in the House of Traditional leaders

• To promote and support establishment of business oversight entities

• Encourage traditional leaders to participate in LED Forums

• Encourage municipalities to involve traditional leaders in LED Planning

Knowledge Sharing on Local Economic

Development good practice

Agreement

• Develop and package case studies on local and international best practice on LED

• Utilise LED forums to share experiences • Develop a system that captures best

practice for replication and adaptation by various users and stakeholders

• Create support systems for replication of best practice

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RESOLUTION LED Resolution Activities

Dedicate effective and efficient support for

SMMEs, Cooperatives and Informal Business

particularly on education

• Promote continuous education throughout the life-cycle stages of a business

• Monitor the implementation of the National skills Development strategy as it relates to SMMEs and Cooperatives

• Afford educational opportunities to employees of SMMES

Delineation of roles and responsibilities

between spheres of government on driving

the LED Agenda

• Clearly define the roles and responsibilities between spheres of government and government as a collective

• At a national level engage and agree on the roles of DSBD, COGTA and EDD so that we replicate the same to provinces

• Restructure allocation of resources from National and Provincial sector departments to be allocated at local level

• Utilize provincial and local forums to regularly review and agree on roles and responsibilities

• Clear delineation across sector departments to address duplication and misalignment

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RESOLUTION Resolution Activities

Explore establishment of LED Fund and

ensure that local government provides

adequate resources for LED processes

• Draw lessons from the previous LED fund • Develop Terms of Reference for

establishment of LED fund • Participate in municipal planning sessions

and engagements on specific projects and advice on budgetary and resource allocation

• Identify potential sources of funding e.g. National Treasury, international donors, private sector, etc

• Engage relevant stakeholders on resourcing the funds

Increase collaboration between researchers

and policy makers in the design and

programmes to address migration challenges

• Include research on migration on the research agenda of government

• Assign research bodies to conduct current and relevant research as required

• Develop appropriate plan to address migration issues as they unfold in LED

• Engage with Universities to assist with research as they are always looking for research topics and are willing to offer it for free

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RESOLUTION LED Resolution Activities

Facilitate sharing of national and

international models on good practices in

developing and promoting cooperatives

• Develop and package case studies on local and international best practice on LED

• Utilise LED forums to share experiences • Develop a system that captures best practice

for replication and adaptation by various users and stakeholders

• Create support systems for replication of best practice

• Use international events like International Cooperatives Day to share best practices

Support the Economic Development Council

of South Africa (EDCSA) in strengthening

and enhancing capacity of LED practitioners

• Promote and advocate the Professional body among LED officials

• Align the body to relevant units and any other LED related structures

• Update and engage EDCSA on government programmes on LED and milestones for planning purposes

• Facilitate interaction between ECDSA and targeted municipalities

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RESOLUTION Resolution Activities

Dedicate effective and efficient support

for SMMEs, Cooperatives and Informal

Business particularly on education

• To provide business management training skills to Cooperatives, SMMEs and informal businesses by end of the 2019/20 financial period.

Build and strengthen collaboration

between local government, the scientific

community and agents of innovation to

foreground innovation in LED

• Promote and advocate the use of science and technology to advance LED

• Create mechanisms and structures to link science and technology providers with municipalities

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• Collaboration with Municipalities • Capacity building for Red tape reduction • Collaboration with COGTA - Agrarian Revolution • Partnership with Seta's- LGSeta, Services Seta • Partnership with other provincial and national departments for

public procurement • Partnership with the House of Traditional Leaders • Partnership and collaboration with private sector for ESD and

market access • Financial and Non-Financial support programmes ( Seda and Sefa ) Shared Economic Infrastructure Facility (SEIF) Seda and Sefa CIS and BBSDP

ACTIVATING THE LED RESOLUTIONS WITHIN DSBD

DSBD Interventions (PROGRAMMES)

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Name of Program Brief Description of the Program

Informal and Micro Enterprise

Development Program (

IMEDP)

The Informal and Micro Enterprises Development Programme is a 100% grant

offered up to R80k to informal and micro enterprises to assist them in improving their

competitiveness and sustainability in order to become formal businesses and part of

the mainstream economy with turnovers from R1k to R200K.Being phased-in R9k

Shared Economic

Infrastructure Facility (SEIF)

The programme is a 50:50 cost-sharing grant made available on a reimbursable

basis, where DSBD makes a contribution of 50% towards the qualifying infrastructure

project upon the completion of agreed milestones. The programme is capped at a

maximum grant of R5 million (VAT inclusive) per qualifying applicant.

Black Business Supplier

Development Program

(BBSDP)

The program aims to leverage the competitiveness of black owned enterprises

through the provision of machinery, tools, equipment’s and business development

services. The program provides a R1 million match grant which is broken into a

maximum of R800 000 for tools, machinery and equipment and R200 000 for

business development and training interventions per eligible enterprise.

Cooperative Incentive

Scheme (CIS)

The program aims to promote the development and competitiveness of sustainable

co-operatives that promotes equity and greater participation by black persons,

women, persons with disabilities and youth. The scheme provides financial support in

the form of grants to co-operatives. The maximum grant that can be offered to one

co-operative entity under the CIS is R350, 000-00

Enterprise Incubation

Program ( EIP)

A programme has been designed with distinct elements to best respond to the

specifications placed by firms in opening markets for enterprises in their supply

chains. The program is being finalised

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• Municipalities are at the core of economic development and

transformation

• More effort should be dedicated towards supporting this sphere of

government

• Closer collaboration with other government structures in supporting

municipalities is critical

• DSBD will drive the agenda of ensuring proper community economic

development through strategic partnerships

• The department depends on support and cooperation from other

stakeholders including the private sector, tertiary institutions, labour,

faith-based organisations, etc

• Appropriate skills at the local government level is critical

CONCLUSION

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