Integrated Small Enterprise Development Strategy: Implementation Update

1. INTEGRATED SMALL ENTEPRISE DEVELOPMENT STRATEGY: IMPLEMENTATION UPDATE PORTFOLIO COMMITTEE ON TRADE AND INDUSTRY 20 FEBRUARY 2008 Mandisa Manjezi, Chief Director Enterprise Development Unit, EIDD Hlonela Lupuwana, Chief Operating Officer, EIDD Mojalefa Mohoto, Director, Enterprise Development Unit, EIDD Tel: 012 3941617/1849

2. Background Outline Enterprise Development Strategy Update –Priority areas Landscape of Enterprise Development support Landscape of Support; Non-financial support services Landscape of support; Financial support services Government Preferential Procurement-for small enterprise products and services Step up compliance measures – 30 days payment cycle Improve coordination

3. BACKGROUND STRATEGY IMPLEMENTATION UPDATE • Presentation made to the Portfolio Committee in June 2007 • Presentation made to Cabinet, October and Nov 2007 CABINET RESOLUTIONS • Feedback to the Trade and Industry Portfolio Committee • Step up government procurement from all forms of small enterprises • Step up measures for government compliance to the 30 days payment cycle • Improve coordination

4. ENTERPRISE DEVELOPMENT STRATEGY IMPLEMENTATION UPDATE - PRIORITY AREAS • Capacity building of SAMAF and its lending financial intermediaries, • Addressing the financial gap between R10 000-R250 000, • Upscale support measures and needed institutional capacity for cooperatives development, • Promote sector strategies across other government line departments aligned with the National Small Enterprise Strategies, • Scale up government investment in small enterprise development using the preferential procurement lever to increase demand and increase funding levels for institutions responsible for small enterprise development, • Strengthen coordination and co-funding arrangements across government, specifically giving effect to the implementation of an integrated service delivery network plan, and • Establish an annual reporting system to Cabinet on progress made in the implementation of the national small enterprise strategy

5. LANDSCAPE OF ENTERPRISE DEVELOPMENT SUPPORT

6. LANDSCAPE OF ON NON-FINANCIAL SUPPORT SERVICES -SEDA PROGRESS REPORTS Budget 2006/07: R 378 million combining R311m State funding and partnership funds Budget 2007/08: R 364 million, Combining R253m State Funding and target for partnership funds

7. LANDSCAPE OF NON-FINANCIAL SUPPORT SERVICES Micro, Very small, Small sized enterprises 80% Medium sized Enterprises Business Associations 20% • Seven Basic Services: • Business registrations 2. Business planning • 3. Market Access 4. Access to finance • 5. Cooperatives support 6. Access to technology • 7. Training and mentoring March 2007 EICs (102) Mobile Units (4) seda Branches (39) • Sector Programmes: • - Manufacturing and Services (dti/DOL) • - Construction (DPW),- Agribusiness (DOA) • Mining and beneficiation (DME),- Tourism and cultural • industries (DOAC) • Government Policy Programmes • Government Procurement Support • Special Projects from Provincial and Local Government • Seda network management seda Provincial Offices (8) seda Technology Centres(23) seda National Office

8. LANDSCAPE OF FINANCIAL SUPPORT SERVICES IDC Industrial Finance NEF Exclusive for Bee finance SAMAF Development Micro finance, not lending directly R0 R10K R250K R1m R3m+ Khula SME Finance, not lending directly Khula Budget 2006/7- R34 090 000 2007/8- R73 495 000 2008/9 - R 69 932 000 Approvals March 2007 = R746 000 000 Samaf Budget 2006/7 – R130 000 000 2007/8 – R 83 999 000 2008/9 – R 88 093 000 Approvals March 07 = R55 200 000

9. LANDSCAPE OF MICRO, SMALL AND MEDIUM FINANCE • Khula: up to R 3m • Credit indemnity – average loan (R 264K) • Business loans – (R 80K) • JV Funds – (R 1m) • Property Finance – research & development (not available) • Factoring (new product) Key utility purpose - Expansion Medium Key utility purpose - Bridging Finance Small Key utility purpose - Start- up funding • Samaf: up to R10K • Poverty Alleviation • Network Capacity building • Micro enterprise loans – Micro & Survivalist Key utility purpose - Start- up funding

10. SAMAF PERFORMANCE REPORT

11. KHULA PERFORMANCE REPORT Khula: Improving Access to Loans in the range of R10K-R3m, with particular emphasis to facilities between R10K - R250k R’mil

12. GOVERNMENTPREFERENTIAL PROCUREMENT FOR SMALL ENTERPRISE PRODUCTS AND SERVICES STRATEGIC FOCUS • Strengthen trade in services supply chains for small enterprises • Strengthen manufacturing chains for small enterprises • Encourage enterprise clusters and cooperatives as suppliers for bigger contracts • Stimulate labour absorptive activities in small enterprises • Identify and classify supply requirements that are not capital intensive and do not demand high technology requirements • Expand public sector procurement from all forms of small enterprises to high value spend areas • Expand public sector procurement from all forms of small enterprises to high frequency spend areas • Aligned government –wide strategy for small enterprise support through preferential procurement targeting all forms of small enterprises • Create a pool of small enterprises that has capacity, capability and experience for increased small enterprise participation open market procurement opportunities.

13. GOVERNMENTPREFERENTIAL PROCUREMENT CONSULTATION OUTCOMES • Renaming the programme refraining from “ set-asides” to Targeted Preferential Procurement for Small Enterprises (10 products) to minimize potential of challenges on grounds of constitutional compliance • SMME – BBBEE Procurement data analysis using a sample of 29 Departments combining all national departments and a sample of provincial departments - identification of 10 Products from a short list of 59 product categories • Provisions to step up measures for government compliance to the 30 days payment cycle • Procurement hotline call centre to step up 30 days payments compliance monitoring and redress to unpaid suppliers • Government supplier database integration • Targeted supplier support financial and non financial support programme- Tender Advice and Contract Based Lending

14. CABINET APPROVAL GOVERNMENT PROCUREMENT FROM SMALL ENTERPISES 10 PRODUCTS 1.Advertising, Media and Communication 2.Interior and exterior cleaning services and cleaning products supplies 3.Clothing and textiles 4.Computer equipment and consumables supplies 5.Interior and exterior furniture and décor 6.Events coordination and management 7.Maintenance and repairs; construction, office space, furniture, computers and vehicle body works 8.Travel coordination and shuttle services, 9.Food perishables supplies 10.Stationery supplies and printing

15. FOCUS ON THE CABINET APPROVALSMALL ENTERPRISE PROCUREMENT TARGETING-10 PRODUTCS • THRESHOLDS • 85% procurement of identified products from Small Enterprises • Minimum target achievement of 70% in the first 18 months upon cabinet approval • Target procurement in the contract size range up to R500k, however, policy applies to • procurement contracts across price range with emphasis on subcontracting and • partnerships for contracts above this price range • Follow up with Provincial workshops – Inputs for the implementation and monitoring guidelines • Implementation practice guidelines to be issued by National Treasury –April • Annual reporting and monitoring mechanisms to be established - April • Government Conference on Small Enterprise Procurement targeting to beheld in May 2008 to launch the programme implementation for all government departments and other state organs

16. FOCUS ON THE CABINET APPROVALSMALL ENTERPRISE PROCUREMENT TARGETING – 30 DAYS TIMELY PAYMENTS • The accounting officers will incorporate the small enterprises timely payment in their Key Performance Agreement schedules beginning from 2007/08 financial year. Their performance shall be measured accordingly. • Establishment of a call center hotline to which small enterprises can report payment delays. Call Centre hotline to be managed by seda. – May 08 • Call Centre received complaints will be referred to relevant departments for corrective actions and reports. Call centre support desk to be established in the procurement supply chain management • Call Centre report will be sent to accounting officers and Auditor General as baseline reports for internal audit and Auditor General’s Audits. • Annual reports and internal audit reports of all Departments and state agencies will have a component giving a payments schedule and findings relating to payments not compliant to the 30 days payment cycle. • Final discussions with National Treasury and Auditor General

17. IMPROVE COORDINATION • Establishment of a National-Provincial- Local government integrated • service delivery plan based on – • Review of small enterprise development support enabling framework • ( Policies, strategies, legislation, coordination structures) • Coordinated institutional arrangements, • Joint plan for outreach to under serviced areas, • Clear target setting to track outreach, • Co-funding arrangements • Virtual, physical co-location and integration option under a common • brand Annual joint evaluation of progress made in small enterprise • development support ( the dti and Provincial Economic Affairs)

18. THANK YOU