The Department of Small Business Development this week tabled its budget vote for debate in the National Council of Provinces (NCOP) and delegates of the NCOP welcomed plans to support small businesses in townships and rural areas.
Minister Stella Ndabeni-Abrahams announced an allocation of R344 million for the Township and Rural Entrepreneurship Programme (TREP), which will be administered through the Small Enterprise Finance Agency (SEFA).
She told the NCOP that the department is aware that access to finance remains one of the key constraints for small businesses and cooperatives, particularly those owned by previously disadvantaged individuals and those in the start-up phase of the business lifecycle. “To address this, we have developed an SMME and Co-operatives Funding Policy to expand access to finance and early-stage investment. We will be tabling this policy to cabinet for final approval in this quarter.
“On the township and rural economy, to strengthen impact and accessibility to our Township and Rural Entrepreneurship Programme, we have reviewed our offerings to strengthen impact and make it more accessible,” the Minister said.
The department is partnering with various stakeholders including the Manufacturing, Engineering and Related Services Sector SETA, the Wholesale and Retail SETA, the National Skills Fund, and the Unemployment Insurance Fund, among others, to provide quality and detailed support for township and rural enterprises.
“An amount of R255 million is allocated to the Asset Assist programme, which is intended for business with less than R3 million annual turnover, and R45 million to general dealers as part of reclaiming the township and rural retail space. To ensure safe and decent space for SMMEs and cooperatives, we will spend an amount of R153 million to build new structures,” the Minister promised.
She also outlined plans to deal with fake products, which she said are destroying the local economy while also exposing people to harmful products. To address this, the Minister announced the establishment of the Township Economy Task Force, which will also help unlock access to local markets for quality local produced products and established supply chains.
The department will also develop the National Township Economy Policy and legislation to propose mechanisms for changing townships from dormitory economic spaces into productive and dynamic micro-economies.
Debating in support of the budget vote, Ms Sonja Boshoff, Democratic Alliance MP and Chairperson of the Select Committee on Economic Development and Trade, called on the department to assume a leading and coordinating role across the SMME support ecosystem. She also welcomed the passing of the Small Enterprise Bill, which she said will lead to the establishment of the office of the small enterprise ombuds to assist in tackling non-payment and unfair practices against SMMEs and cooperatives.
“We also support the draft Business Licensing Bill to be introduced to Parliament this year to repeal the outdated Business Bill of 1991. This new legislation will deal with the mushrooming of illegal (which includes domestic and foreign) and unregistered business across all municipal jurisdictions in the country,” said Ms Boshoff.
Ms Mapule Dhlamini of the African National Congress also supported the budget vote and commended the department for its commitment to offer both financial and non-financial support to township and rural businesses, cooperatives, startups, and small and medium enterprises. “We note that through various partnerships, 2 500 spaza shops and general dealers – the majority located in rural areas – will receive training for business development support.
“We appreciate this initiative but want to raise a concern that this space of spaza shops is dominated by foreign nationals and this could defeat the good and progressive initiatives of the department. We are not against foreign nationals trading in our country; however, we need to prioritise local people at all times. The plight of our people has to be at the forefront,” argued Ms Dhlamini.
Also taking part in the budget vote debate, Ms Mmabatho Mokoena of Mkhonto weSizwe Party believes while the department presented ideal plans that should empower and support small businesses, significant issues need to be addressed, such as challenges around access to funding and the foreign-owned spaza shops that outshine those owned by locals in the sector. “We need to curb that. We need to enable local people to be part of the supply chain in areas where they live – real economy is local economic empowerment,” she said.
Ms Mokoena also mentioned delayed payments as another big challenge for small businesses, adding that timely payments are crucial for maintaining cash flow and operational stability of small businesses. She also gave examples of corrupt practices in some instances where small businesses are expected to pay officials for their invoices to be paid within 40 days. This and demands for a certain portion of the contract amount is destroying small businesses, she said.
Meanwhile, the Economic Freedom Fighters rejected the budget and argued that there is no need to have the Department of Small Business Development separate from the Department of Trade and Industry. “We have always said there is no need for this department as a stand-alone one, no need to separate small business from trade and industry,” asserted EFF delegate Ms Nolubabalo Mcinga.
She further accused the ministry of failing to understand the realities of small business in South Africa, or to develop a vision to build sustainable small businesses that can grow the economy and create jobs.
“The budget does not address the real issues and lacks foresight. It fails to offer meaningful support to the small business sector. This budget is just mere words with no understanding of small business realities. We are particularly concerned about support for women in small business and there are no clear programmes to support women and persons with disabilities,” the EFF delegate said.
Sakhile Mokoena
31 July 2024
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