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A.N. Damane, CEO

brief on seda for the portfolio committee 9 march 2007. A.N. Damane, CEO. Presentation Overview. Small Business Environment Development / Background Strategic Thrust Progress to date Budget Lessons Learnt Conclusion. 1. Presentation Overview. The Small Business Environment

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A.N. Damane, CEO

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  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. 1 PresentationOverview 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. Small BusinessEnvironment 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. 2 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. 2 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. 2 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. Strategic Thrust 3 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. Strategic Thrust 3 The seda mission to promote, develop and support small enterprises to ensure their growth and sustainability

  10. Strategic Thrust 3 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 2007-2009 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 2007-2009 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 2007-2009 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. 4 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. 4 Our footprint in the provinces

  16. + 24 EICs seda Outreach : 14 973 Clients assisted 4.1 Roll-outEASTERN CAPE Existing Offices To be established in 2007/ 2008

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

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

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

  20. + 12 EICs seda Outreach : 11 750 Clients assisted 4.1 Roll-outMPUMALANGA

  21. + 4 EICs seda Outreach : 24 953 Clients assisted 4.1 Roll-outNORTH WEST

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

  23. + 8 EICs seda Outreach : 11 904 Clients assisted 4.1 Roll-outWESTERN CAPE Existing Offices To be established in 2007/ 2008

  24. + 24 EICs seda Outreach : 10 249 Clients assisted 4.1 Roll-outGAUTENG

  25. 4.1 Roll-out SUMMARY Geographical spread of seda offices

  26. 4.2 Key Programmes Information and Advice • 103 Enterprise Centres • 12 960 clients were assisted through seda website • 285 716 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

  35. 5 Presentation Overview Budget

  36. Major cost drivers • LBSC’s funded at R67 000 p.a. : EICs funded at R250 000 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

  37. Preliminary Financial Projections

  38. 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 R250 000 pa to R60 000 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.

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

  40. 6 Presentation Overview Lessons Learnt

  41. Lessons 6 • 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

  42. Lessons (continued) 6 • 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

  43. Lessons (continued) 6 • 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

  44. 7 Presentation Overview Conclusion

  45. What matters most 7 • 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

  46. Thank you

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