Department of Small Business Development ANNUAL REPORT 2014/15 1

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Department of Small Business Development

ANNUAL REPORT 2014/15

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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

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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

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Vision

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

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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.

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Values

• Customer focused• Integrity• Honesty• Efficiency• Accessibility• Commitment

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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).

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Strategic Objectives• To facilitate the development and growth of small

businesses and cooperatives 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;

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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.

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Start-up structure

Minister of Small Business Development

Deputy Minister: Private Office

Department of Small Business Development

1 Director-General L 16

Minister: Private Office

Deputy Minister of Small Business Development

Chief Directorate

Finance

Chief Directorate Corporate

Management

CD: Strategic Management and Executive Support

Branch: Co - operatives

DDG CD: Primary Cooperatives Development CD: Incubation Support and Supplier Dev CD: Market Access Support

Branch: Enterprise Development and Entrepreneurship

DDG CD: Enterprise Development and Supplier Development CD: Entrepreneurship, Intellectual Property and Indigenous Knowledge Systems & Franchising CD Gender, Youth and People with disabilities CD: National Informal Business Upliftment Strategy

Branch: Enterprise Competitiveness Support

1 DDG

CD: Local Economic Development and Government Relations

CD: Incentives, Grants and Loan CD: Research M & E CD: Special Projects CD: Communication and Marketing

Directorate Internal Audit

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.

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Entities Reporting to the Minister

Name of Public Entity Enabling Legislation Mandate 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

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Entities Reporting to the Minister

Name of Public Entity Enabling Legislation Mandate 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.

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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

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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

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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.

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Human ResourceNO. OF PERSONNEL TRANSFERRED FROM THE DTI

NO. OF PERSONNEL APPOINTED FROM OTHER INSTITUTIONS

STAFF COMPLIMENT AS AT 31 MARCH 2015

140 14 154

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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.

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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.

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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

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National Informal Business Upliftment Strategy (NIBUS)

Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growthOutput Performan

ce Indicator

Annual Targets for 2014/15

Actual Output Reasons for Variance

Corrective Action

Finalisation and implementation of the National Informal Business Upliftment Strategy (NIBUS)

Reports produced on the pilot implementation of the NIBUS

Pilot implementation 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 N/A

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Centres of EntrepreneurshipStrategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growthOutput Performance

IndicatorAnnual Targets for 2014/15


Corrective Action

Supported the establishment and functioning of centres of Entrepreneurship

Number of MOAs to establish centres of entrepreneurship

Two (2) MOAs for approval to establish centres of entrepreneurship

Two Centres for Entrepreneurship have been established and launched in March 2015

N/A N/A

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Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growthOutput Performance

IndicatorActual Performance Against Target

Reasons for Variance

Corrective Action

Target Actual BBSDP Implemented

Number of enterprises approved for BBSDP

1 280 783 Fewer applications received and processed

Simplified application process

Partnerships with the other spheres of government

Capacity building for Seda and Sefa branches

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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

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Implementation of Cooperatives Act as amendedSG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growthOutput Performance


Actual Output Reasons for variance

Corrective action

Implementation of the Co-operative Act as amended

Implementation report produced on the phased –in operationalisation of the Co-operative development agency (CDA and Co Operative Tribunal)

Phased-in operationalization of the CDA and Tribunal and implementation 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.

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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 growthOutput Performance



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 Framework on Gender and Women empowerment 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

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Youth Enterprise Development Strategy Strategic Outcome-Oriented Goal 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growthOutput Performance


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

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Seda Technology ProgrammeSG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growthOutput Performance



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 N/A

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Seda Technology ProgrammeSG 3: Facilitate broad-based economic participation through targeted interventions to achieve more inclusive growth

Output Performance Indicator



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.

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Integrated SMMEs and Cooperatives Development Framework

Strategic Outcome-Oriented Goal 3: Facilitate broad- based economic participation through targeted interventions to achieve more inclusive growth

Output Performance Indicator



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 N/A

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

Budget

Directorate Budget Expenditure Variance

Current payments 130 722 100 883 29 839

Compensation of employees83 957 73 753 10 204

Goods and services46 765 27 130 19 635

Transfers and subsidies 998 315 998 294 21 BBSDP 288 342 288 336 6 CIS 65 000 64 966 34 SEDA Technology programme 126 368 126 368 0 SEDA Agency 502 282 502 282 0 SAWEN 16 320 16 320 0

Households 3 22 -19

Payment for capital assets 4 683 1 611 3 072

TOTAL 1 133 720 1 100 788 32 932

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THANK YOU

Documents

Department of Small Business Development ANNUAL REPORT 2014/15 1