FUNCTIONING OF THE MARKET ACCESS UNIT FOR SMMEs AND COOPERATIVES

1. FUNCTIONING OF THE MARKET ACCESS UNIT FOR SMMEs AND COOPERATIVES 31 JANUARY 2018

2. Introduction Market Access Opportunity Challenges DSBD’s Approach to Market Access Market Access Components Public Sector Market Access Components Current Initiatives and Pipelines within DSBD

3. Access to market opportunities is one of the key enablers for coporrates to implement Supplier DevlopmentProgrammes to benefits enterprises in a real way, for the sustainability of Small, Medium and Micro Enterprises (SMMEs) and Cooperatives. With limited market access opportunities, small enterprises will have no means of generating revenue and therefore difficult to survive. • Governments worldwide has sought to increase the involvement of the private sector in the delivery of public services. It is also generally recognized that partnerships with public and private sector offer a long term, sustainable approach to enhancing the value of public assets, supporting SMME’s and Cooperatives through procurement value chain. • Public Procurement is one of the core government levers that is key to addressing the redress of the historical economic imbalances. Procurement within the South African government is governed amongst others by the Constitution (Section 217), Preferential Procurement Regulations 2017, 30% set aside etc. In the private sector the Broad Based Black Economic Empowerment (B-BBEE) Codes of Good Practice takes precedence as a lever for access to markets. • Partnerships are voluntary and collaborative relationships between various parties, both public and non-public, in which all participants agree to work together to achieve a common purpose or undertake a specific task and, as mutually agreed, to share risks and responsibilities, resources and benefits. • There are many demonstrated benefits from working through public and private bodies and these include: • Avoiding duplication of investment or activities; • Increased economies of scale; • Sharing or reducing risks; • Leveraging on resources (crowd funding) within partnerships; • Sharing of knowledge, expertise and resources to improve effectiveness.

4. Mandate: The mandate of the Department of Small Business Development (DSBD) and its entities collectively is defined as: “to support the radical transformation of the economy through the promotion and development of sustainable and competitive entrepreneurs, small businesses and co-operatives, that contribute to job creation and economic growth”. • Market access is an expression of our mandate to coordinate and leverage in the interest of SMMEs and cooperatives • The Department’s approach to SMMEs and Cooperative development goes beyond providing funding and early-stage mentorship. DSBD has identified a need to help entities gain access into various markets and form part of the broader supply chain. • Enabling SMMEs and Cooperatives to actively participate in the supply chain of major industries will contribute to building sustainable small businesses, which could then become larger enterprises.

5. 5. Elements of the small enterprise ecosystem The small enterprise ecosystem framework (“the framework”) consists of eight best practice pillars that create a conducive and supportive ecosystem for small enterprises.

6. Partnership collaborations seek to address the following market challenges faced by small businesses and cooperatives: • Limited market opportunities to SMMEs, especially where SMMEs are subjected to supplying non-core products and services into the supply chains; • Limited market intelligence capacity within Government departments to support and deal with challenges facing SMMEs; • Enterprise and Supplier Development (ESD) projects that are not intended or structured to derive positive impact; • Lack of readiness by entities to access available opportunities; • Lack of appreciation of the Government developmental imperative (transformation) agenda with regards to inclusive procurement by both public and private sectors; • Expectations by Corporate Companies that DSBD should fund the entire cost of collaborative ESD Programmeswithout tangible contribution from the Corporate entities; • Lack of a comprehensive database of previously supported enterprises • Lack of clear ESD strategies and implementation capacity within Corporate Companies; • Delay in committing to partnerships especially by Government’s Departments and • Insufficient development funding resourceswithout adhering to the inherent risk of SMMEs and cooperatives lack of funding • Risk mitigation to government and enterprises

7. The Department’s approach in galvanizing support from partners is informed by the Constitution (Section 217), our mandate, Preferential Procurement Regulations 2017, 30% set aside, Broad Based Black Economic Empowerment (B-BBEE) Codes of Good Practice, etc. • Based on this, the Department has established a dedicated function that is responsible to develop, implement and monitor market access strategy and programmes for cooperatives and SMMEs. • Functions of Business Units mandated to run with this body of work include: • Identify market access opportunities and coordinate the implementation of Private and Public Supplier Development Framework/ guidelines. • Unlock private and public sector procurement through various policy levers for SMEs and Cooperative. • Develop programmes to improve the quality of products and assist local suppliers to expand production capacity. • Mobilisation of resources to contribute towards additional funding. • Create networks (partnerships) to support the SMME, Cooperative and Informal Business Eco Systems.

8. Access to Markets Opportunities: Corporate companies will offer a guaranteed market for small businesses in the company’s value chain as suppliers of core and non-core products and services. DSBD will provide a repository of SMMEs that have been supported through incentives that could also be linked to the Enterprise and Supplier Development programme. • International market platforms such as CISMEF-SMMEs can be globally competitive, • DPW has Small Contractor Programme benefiting from the human settlement opportunties • Where opportunities emerge DSBD develops capable SMMEs and cooperatives that can play part • Access to Finance: Mixed model (Loans and Grants) – Corporate companies will offer interest free loans to small enterprise suppliers currently as suppliers of corporates. DSBD will support identified small businesses through the accessible incentive schemes within DSBD in accordance with qualifying criteria and adjudication processes. • Access to Business Support Interventions: Needs analysis and diagnosis, designing of appropriate interventions, and Monitoring and Evaluation. • 8

9. Transversal Agreements: Since the Proclamation of the Department of Small Business Development (DSBD) in 2014, the Department is mandated to enter into Transversal Agreements with public sector institutions and private sector to leverage on available efforts for small businesses and co-operatives development. • The Department is proactively approaching strategic Departments and Government Entities in order to identify critical areas of collaboration that will provide procurement opportunities for SMMEs and Cooperatives, particularly within the core products and services. • However, most of these are more bilateral agreements that unlocks the potential opportunities of the trilateral parties e.g. Department of Rural Development that rope in the other players. In terms of (SPLUMA), the Department of Rural Development can establish district planning committees that assist in unlocking these opportunities • The Department of Telecommunications and Postal Services (DTPSA) can unlock an agreement with SETA, this tripartite relationship is already active and formalized • GOGTA/District municipalities with DSBD as lead of the agreement • The Department has cumulatively entered into 29 bilateral agreements (Memorandum of Agreement (MOA) and Memorandum of Understanding (MOU). Institutions that have been targeted encompass public sector institutions (including National Departments, Public Agencies, Skills Education Training Authorities, Municipalities and Centres for Entrepreneurship). 9

10. The development of a Market Access Framework to support SMMEs and Cooperatives. • Working towards streamlining and aligning initiation and implementation of partnerships/engagements with our Agencies (SEDA and SEFA). • Development of a Partnership Accelerator Programme, i.e. ring-fencing of budget dedicated to leverage support from public and private sector partners. • Pipeline initiatives are envisaged with the following organisations before the end of the financial year : • National Treasury : Office of the Chief Procurement Officer • Department of Agriculture, Forestry and Fisheries • Department of Cooperative Governance and Traditional Affairs • Barloworld • SANTAM

15. THE END