Department of Small Business Development

Department of Small Business Development Performance Report Q3 2015/16 17 February 2016

Presentation Outline • Background and Purpose • Executive Summary • Programmes Performance Reports • Programme 1 • Programme 2 • Programme 3 • Concluding Remarks & Recommendations

Background and Purpose • Overview of the activities of the department and agencies in line with Treasury Regulations 26.1.1, 26.1.2 and 30.2.1 and the Public Finance Management Act 1 of 1999; • The report provides progress made on the implementation of set targets against outputs; • Reasons for variance as per the requirements contained in the DPME’s Framework for Strategic Plans and Annual Performance Plans; • Key challenges faced by the department in implementing the mandate; • Planned actions to mitigate implementation challenges.

Q3 Performance: Executive Summary • Performance Statement: • The department has 26 Performance Indicators and is reporting against 31 Quarter 3 Milestones

Year-to-date overall performance (%)

Q3 Performance Summary Highlights • 1897 invoices from eligible creditors were received and processed within 30 days; • 20cooperatives in GP, MP, NW and KZN have been selected to participate in the SAB Women in Maize programme; • 136 Primary Cooperatives received training in understanding management, governance and bookkeeping; • 14 Co-operatives and SMMEs funded and linked and/ or exposed to market opportunities – attended the Food Wine & Design Fair in Johannesburg; • 93 Cooperatives approved for funding; • 230craft enterprises – market access, 144craft enterprises – product development support; 102craft enterprises participated in Enterprise Development programmes;

Q3 Performance Summary… Highlights • The Durban University of Technology (DUT) Centre for Social Entrepreneurship was launched on 27 November 2015, • 18 co-location points established; • 19 youth enterprises supported through the Cooperatives Incentive Scheme; • 52 women-enterprises supported through the Cooperatives Incentive Scheme; • 65 women-enterprises supported through the Black Business Supplier Development Programme; • Roll out of red-tape reduction guidelines conducted for 30 municipalities.

Q3 Performance Summary Under-Achievements • Higher Vacancy rate (24.39%) affecting department’s performance. Recruitment drive in progress. • The Incubation support programme - The Incubation Support Programme (ISP) remains under the budget vote of the dti. DSBD only plays a coordinating role and therefore has no influence in the adjudication of ISP applications or revision of the guidelines or application requirements. • Tabling of areas for national Small business act amendment – delayed; No proposed areas of amendment were identified for tabling during the quarter under review due to the delay in embarking on stakeholder consultations in Q1 and Q2.

Q3 Performance Summary… Under-Achievements • Micro franchise: The procurement process was delayed due to concerns raised by the Bid Adjudication Committee, which needed to be addressed. The department will ensure the process is sped up in the coming reporting quarters. • Establishment of new and upgrading of existing infrastructure: only the tshakhuma fruit market submitted a form (which was incomplete). the department continues to engage with the makhado municipality (and other municipalities). • no sites were launched. • The department has revised the guidelines of the Shared Economic Infrastructure Facility in order to attract the private sector; guidelines were approved.

Q3 Performance Summary… Under-Achievements • The bavumile skills development programme did not have enough funds to reach its q3 target – trained 25 of the planned 75 women entrepreneurs. • Funds were moved (shifted) from budget items that were under-spending to the Bavumile Skills Development Programme. • Issuing of the practice note and monitoring of effective implementation of the 30% set-asides programme. • The NT could not issue the practice notes in October 2015, National Treasury tabled proposals on interim measures to implement the 30% set-aside programme whilst the process for developing a Procurement Act is underway.

Q3 Budget Performance

Q3 Expenditure Performance • Expenditure as at 31 December 2015 was R810.5 million or 71.9% of the adjusted budget of R1 127.5 billion. • The year-to-date projection was R883.6 million resulting in an under expenditure of R73.1 million or 8.2%. • 88% (R712.8 million) of the YTD expenditure of R810.5 million was for transfer payments. Compensation of Employees at 8.3%, goods and services at 3.5%. • Under spending on Cooperatives Incentive Scheme (R16.3 million) and Black Business Supplier Development Programme (R30.5 million) was due to a delay in the commencement of application adjudication process during the period under review.

Q3 Expenditure Performance… • As a result of the movement of the CIS programme from the dti to DSBD, the standing adjudication committee had to be dissolved as the dti appointed committee was no longer eligible to adjudicate over the applications of DSBD. • The new adjudication committees for CIS and BBSDP were appointed in June 2015 and July 2015 respectively. • To date, several adjudication meetings have been held which resulted in 177 applications being approved for CIS and 536 for BBSDP. • Payment of R4.7 million to IDC Isivande Women's Funds was not processed – Department is finalizing the process of transferring the programme from IDC to Sefa. • The funding to be transferred before the end of the financial year on completion of the transfer of functions process.

PERFORMANCE REPORT PROGRAMME 1

Programme 1: Administration Performance against target:

Programme 1: Administration… Performance against target:

Expenditure Pattern: Programme 1 • The under expenditure is largely due to: • High vacancy rate under Programme 1. • Delayed phase one of the ICT migration project • The department anticipates to receive and process the Invoices before the end of the financial year

Programme 2: Cooperatives Development Performance against target:

Programme 2: Cooperatives Development… Performance against target:

Programme 2: Unplanned High Impact Initiatives • African Development Bank approved grant funding – R9 426 672 towards the Enterprise Development Pilot Project; • Engagements started with MacSteel, SMMEs to manufacture steel products utilising the MatjhabengIndustrial Park; • MoU with the Department of Public Enterprises, R19 million was pledged towards the enterprise and supplier development facility; • The department is working with external stakeholders to investigate solutions that will assist enterprises withbulk-buying & community ownership of warehousing for the high-flying goods; • One of the solutions is being piloted in Soweto in partnership with Costilogix and Seda;

Programme 3: Enterprise Development & Entrepreneurship Performance against targets

Programme 3: Unplanned High Impact Initiatives • UNIDO will provide technical assistance on institutional capacity building and addressing the needs of the Centres for Entrepreneurship, which include training and infrastructure requirements; • The Entrepreneurship and Franchising unit is contributing to the national scholar bicycle programme (Shova Kalula) with the Department of Transport (DOT) aimed at mobilising small enterprises to run bicycle maintenance shops across the country. • The Enterprise Development unit has secured a partnership with ILO on monitoring the implementation of municipal Red Tape Reduction guidelines in four piloted municipalities situation in the Free State and KZN provinces.

concluding remarks and recommendations

concluding remarks and recommendations • The performance of the department has improved in q3 • The department continues to be capacitated with critical and other important posts • the department commits to address areas of under-achievement • It is recommended that the portfolio committee on small business development notes the 2015/16 q3 performance report of the Department.

Department of Small Business Development