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Purpose Government intervention in the small business sector Initial Small Business Policy

Purpose Government intervention in the small business sector Initial Small Business Policy Respective Acts Small Business Development Act Financial support for small business Technology Platforms.

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Purpose Government intervention in the small business sector Initial Small Business Policy

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  1. Purpose • Government intervention in the small business sector • Initial Small Business Policy • Respective Acts • Small Business Development Act • Financial support for small business • Technology Platforms

  2. To appraise the Select Committee for Economic and Business Development on the existing policy perspective on small business development and financing to support economic growth, innovation and employment.

  3. In March 1995 the new government released a policy on small business promotion, the country’s first as the initial realisation of the importance of the small business sector. • The initial policy was reviewed in 2005 and culminated with the Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises, which led to the establishment of Seda • The Cooperatives Development Strategy was also adopted in 2005 and led to the transfer of cooperatives Act from the Department of Agriculture

  4. Primary legislation • Small business Development Act (Act 112 of 1981) • National Small Business Act 1996, amended 2004 • Companies Act, 2008 • Cooperatives Act , 2013 • Industrial Development Corporation Act 1940 • Financial Advisory and Intermediary Services Act (37 of 2002) Supplementary legislation & other policy measures • BBBEE Act • National Empowerment Act, • Preferential Procurement Policy Framework Act • Youth strategy • Women Development empowerment strategy • Coops strategy • Innovation and technology Strategy

  5. SEDA’s mandate is to provide non-financial business development and support services for small enterprise in partnership with other role players. Strategic Objective 1: Enhance competitiveness and capabilities of small enterprises through coordinated services, programmes and projects. Strategic Objective 2: Ensure equitable access to business support services. Strategic Objective 3: Strengthen the organization to deliver on its mission.

  6. Seda as a non financial support programme Cont. 5

  7. Seda as a non financial support programme Cont.

  8. SEFA's mandate is to foster the establishment, survival and growth of SMMEs and contribute towards poverty alleviation and job creation. The Small Enterprise Finance Agency provides funding through: • Delivering Wholesale and Direct Lending credit facilities or products; • Providing credit guarantees to SMMEs; • Supporting the institutional strengthening of Financial Intermediaries so that they can effectively assist SMMEs; • Creating strategic partnerships with a range of institutions for sustainable SMME development and support; • Monitoring the effectiveness and impact of our financing, credit guarantee and capacity development activities; and • Developing (through partnerships) innovative finance products, tools and channels to speed up increased market participation in the provision of affordable finance.

  9. BREAKDOWN OF THE 46 407 SMMEs FUNDED AND THE R822 MILLION DISBURSED SINCE INCEPTION • 10, 291 were youth owned enterprises with loan funding support to the value of R157 million; • 44, 302 were women owned businesses with funding support to the value of R362 million; • 36, 729 were rural-based enterprises with a total funding of R429 million; and • 43, 643 were black owned enterprises funded to the value of R599 million.

  10. NEF Mandate Established by the National Empowerment Fund Act No 105 of 1998, the NEF is a driver and a thought-leader in promoting and facilitating Black economic participation through the provision of financial and non-financial support to Black empowered businesses, as well as by promoting a culture of savings and investment among Black people

  11. NEF Mandate Over the years the NEF has implemented this mandate through two core divisions, namely Fund Management and Asset Management, whose respective functions and outputs are outlined below:

  12. The Department of Trade and Industry (the dti) and The Independent Development Corporation(IDC) entered into a Memorandum of Agreement dated on or about the 11 December 2006 (the MoA) pursuant to which the dti mandated the IDC to manage the budget support amount of 46 300 000 Euros (forty six million three hundred thousand euros) (“Risk Capital Facility 2, RCF2) on its behalf

  13. The Risk Capital Facility (RCF) objectives were/are to support the development of HDP controlled small and medium size enterprises (SMEs) with a significant HDP job creation impact, including female employment.

  14. RCF2 PORTFOLIO • Geographic Spread • Gauteng : R123 million (27) • Western Cape : R 72 million (24) • Northern Cape : R 47 million ( 5) • Eastern Cape : R 41 million ( 7) • North West : R 8 million ( 5) • KwaZulu Natal : R 18 million ( 8) • Free State : R 11 million ( 3) • Mpumalanga : R 10 million ( 4) • Limpopo : R 2 million ( 1) Priority Areas Value : 41% Number: 39%

  15. RCF2 PORTFOLIO • Sector Exposure • Agro : R113 million (15) • Chemicals : R 46 million (13) • ICT : R 7 million ( 3) • Textiles : R 18 million ( 4) • Construction : R 28 million ( 9) • Franchising : R 11 million (13) • Green Industries : R 21 million ( 7) • Wood & Paper : R 9 million ( 3) • Media : R 34 million ( 4) • Transportation : R 7 million ( 2) • Metals : R 40 million (13) • Jobs • 2,953 • 600 • 139 • 700 • 391 • 409 • 1,891 • 189 • 221 • 193 • 640 • Total Jobs - 8 326

  16. The dti manages an array of incentives schemes which are grant funding in nature • Amongst these incentives are those tailor made to support small businesses: - Black Business Supplier development programme - Inceptive schemes for BPO programme • Incentives scheme related to Creative industries i.e film

  17. Black Business Supplier Development Pprogramme 2012-Septemmber 2014 3 Years Historical Performance

  18. Cooperatives Incentive Scheme Subprojects under BBSDP

  19. Total approval as at 30 September 2014 • 53 Applications Approved • Qualifying South African Spend (QSAPE) = R 1,5 billion (R 1, 558, 258 048) • Incentive payable = R 409million (R 409, 246 880) • Payments as of 30 Sep = R164million (R 164, 125 101)

  20. Over the years technology platforms have been established for small businesses. Among these are Technology for Women in Business, Technology For Human Resource and Industrial Innovation, Special Project for Industrial Innovation, Seda Technology Programme (STP) and Technology Venture Capital the latter being funded through RCF reflows • The aim of these platforms is to create a conducive environment and fund innovation and new inventions.

  21. The aim of THRIP is to facilitate Enhanced industry competitiveness and broadened collaborations generating skills and technologies • Leveraging collaborative partnerships on a cost-sharing basis, for research and development in science, engineering and technology, to produce highly skilled human resources and technology solutions, for improved industry competitiveness

  22. The mission of the Seda Technology Programme is to develop innovative technology – based platforms that result in the creation of sustainable, globally competitive SMMEs that contribute towards the accelerated growth of our economy.

  23. The Aim of SPII is promoting technology development and commercialization in South Africa • Provides financial assistance for the development of commercially viable, innovative products and/or processes and facilitate commercialization of such technologies

  24. Implemented parallel to the Seda Technology Programme (Stp) is the Incubation Support Programme (ISP). • ISP was launched in September 2012 to encourage private sector partnerships with government to foster collaboration between small and big businesses; whereby big businesses assist SMMEs with skills and technology transfer; supplier development and market opportunities for SMMEs • 42 applications have been approved with an approximate value of over R681 million. The value of claims paid is over R52 million. The number of claims paid is 24. Most approvals have been in the manufacturing and agriculture sectors

  25. Seda Technology Programme Q1 2014/15 performance • The STP supported 2 349 clients compared to a targeted 1710 • 43 incubators were supported • 344 jobs were created during the quarter under review • 20 clients supported under the Technology transfer programme • 139 clients trained on national and international standards

  26. This is a new programme created with the aim of providing a platform for technology innovations that are at the level of prototype development and commercialisation • The programme is funded through RCF Reflows

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