Small Enterprise Development Agency: briefing

Meeting report

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
13 April 2005
Small Enterprise Development Agency: BRIEFING

Acting Chairperson: Ms M Temba (ANC, Mpumalanga)

Documents handed out:
Small Enterprise Development Agency briefing

SUMMARY
The Committee was briefed on the incorporation of Ntsika and the National Manufacturing Advisory Centre (NAMAC) into the Small Enterprise Development Agency (SEDA). Members were also given an overview of SEDA’s objectives, current programmes and progress. The briefing also provided details on the current transitional period that had resulted from the incorporation of Ntsika and NAMAC.

Members raised concerns about SEDA’s external funding; its outreach to communities and provincial penetration; its limited number of pilot projects; the future of inherited staff and its interaction with the manufacturing sector.

MINUTES
Ms M Temba (ANC, Mpumalanga) said that she would be the Acting Chairperson for this meeting because the regular Chairperson, Ms Ntwanambi, was ill and therefore unable to attend.

Small Enterprise Development Agency briefing
Ms W Dawane (CEO) took Members through the rationale of the Small Enterprise Development Agency (SEDA) and informed them of the progress thus far. Achievements included the successful amendment of the National Small Business Act. The purpose of the amendment was to repeal any and all of the provisions pertaining to Ntsika. They had also succeeded in expanding the mandate of SEDA so as to include cooperative enterprises and SEDA had been established as a "juristic person."

SEDA was comprised of the incorporation of Ntsika and the National Manufacturing Advisory Centre (NAMAC). This merger was designed by the Minister of Trade and Industry as a way to more effectively aid small business development. Some of the specific objectives for SEDA were to design and implement development support programmes, and to promote service delivery networks to help small enterprises.

Ms Dawane outlined some of SEDA’s functions such as implementing government policy designed for small business enterprises. SEDA also functioned to design and implement small enterprise development programmes, particularly for the goals of fostering partnerships, increasing market access, increasing access to non-financial resources, and the development of service delivery networks. SEDA also served to establish the necessary Provincial structures that would ensure the effective implementation of its functions.

For the sake of accountability, the Board of SEDA must consult with the shareholders in its programmes at least once a year.

Funding for SEDA came from money appropriated by Parliament, from grants and donations, and from money that had been obtained legally from outside sources. She added that, due to the difficulty of attempting to merge Ntsika and NAMAC in the transition period, they had been granted an extended financial year for their budget.

The transitional arrangements included the liquidation of Ntsika, the deregistration of NAMAC, and the transfer of staff and assets from those two institutions into the singular entity of SEDA. Their strategic imperatives were to build and implement integrated service delivery and to build a mechanism to deliver small enterprise support in such areas as corporate governance, skills and staffing, overall structure, strategy, values, and goals.

With the incorporation of Ntsika and NAMAC, SEDA had inherited workers from both of those two bodies, but they had chosen to look externally as well as internally for executive staff. Ms Dawane added that SEDA strove to ensure that their workers were not put in a position so that they were worse off in SEDA than they were at Ntsika or NAMAC.

Their operations in place included the change of management. This referred to the effort to combine the activities of two organisations into one integrated entity. This effort had led SEDA to initiate staff workshops for all employees. Their second operation in place was the overall business process, which dealt with the financial, operational, and human resource aspects of the merger. Lastly, SEDA was working on the completion of their final business report. Their immediate tasks were to finalise the organisational structure for SEDA and to get their budget approved first by their Board and then by the National Treasury.

The critical matters for SEDA were the Provincial consultations with Ministers, departmental heads, local governments, and small business directories. These consultations were meant to ensure coherence between the programmes and initiatives enacted by SEDA, and the real situation on the ground. The integration of staff, systems, processes, and programmes were also critical insofar as to enable SEDA to efficiently manage the outcomes of the merger. Lastly, it was critical for SEDA to examine their outreach and impact. This referred to the question of what SEDA would do differently from the two previous institutions. SEDA sought to distinguish itself by working closer with small business and enterprises, and by coordinating their efforts at the Provincial and local levels. Ms Dawane concluded that SEDA intended to have a clear "footprint" in each province with 24 months.

Discussion
Ms Temba asked when the final business report would be completed and, since the Board had already been appointed, inquired about the gender and race makeup of the SEDA’s Board members.

Mr Z Kolweni (ANC, North West) stated that it was good to hear that SEDA had a clear vision and that it was focussed on working with its clients and with the Provinces. He added that they had been "thirsty" for an institution like this. He did, however, want further detail about specific programmes within SEDA. He also asked what experience they had gathered from the programmes that SEDA had inherited from Ntsika and NAMAC. He was concerned that the pilot programme for SEDA was only operating in four Provinces.

Ms Mohunu (IFP, Kwazulu-Natal) commented that SEDA needed to coordinate to a great degree with the manufacturing sectors. She asked what organisations and institutions SEDA was involved with.

Mr D Gamede (ANC, KwaZulu-Natal) asked if SEDA would get their own call centre number or if they would use the numbers for the centres they inherited. He inquired if there were plans to expend the pilot programme to the other Provinces, and if so, when they planned to do it. Lastly, he asked if one of SEDA’s critical matters was to expand outreach and impact, would the information they gathered be easily accessible to the people on the street?

Ms S Mabe (ANC, Free State) asked if SEDA’s approach to reach out to small enterprises would be initiated from the Provincial or local level. She also asked for the specifics on the composition of SEDA’s structure.

Mr J Sibiya (ANC, Limpopo) questioned if they had a strategy or framework for how exactly they would help small businesses compete internationally. He also asked if there was a strategy or framework for how SEDA would undertake community public enterprises.

Mr D Mkono (ANC, Eastern Cape) asked if SEDA had a specific client group that they were targeting for their outreach. He also wanted to check that no one on SEDA’s staff would be in a worse off position than they were at either Ntsika or NAMAC.

Ms J Terblanche (DA, North-West) asked if there was a time frame for the pilot programme expansion and added that her Province was not one of the four in which the pilot project was being run.

Ms H Lupuwana (Chief Executive Officer, Department of Trade and Industry) stated that the two Boards of Ntsika and NAMAC had combined to make up the Board for SEDA when the merger took place. However, SEDA had now initiated an act to redesign the Board so that nine of the fifteen seats would be reserved for a representative from each of the Provinces. She added that the Provincial structures for SEDA had come from the Provincial level.

She said that SEDA had done a staff audit to ensure that they placed the right people that they had inherited in the right places. Ultimately, the staff members most affected by the merger were the two CEOs of Ntsika and NAMAC. They could not be absorbed into SEDA because SEDA intended to have its own executive staff. Therefore, the two CEOs were given the option to move into the public or private sector.

Ms Dawane pointed out that the pilot project that the Members had shown concern about was in regards to a specific programme. However, SEDA was ready to start rolling out its programmes and in doing so, would be using existing structures, like advisory centres, as a starting point with the intention of spreading out from these pre-existing centres. These structures were available to SEDA in all the Provinces, and since they would be utilising these already established centres, they believed that they would be able to spread their programmes throughout the Provinces with a fair degree of speed. The major hindrance to this swift spread of SEDA programmes was that they had to make sure that the pre-existing structures were up to SEDA standards.

On community public enterprises and development, Ms Dawane said that SEDA had first looked into the community to evaluate what it would be able to produce and then they worked with the community by bringing in private investors and helping to form cooperatives. SEDA helped small businesses compete internationally by utilising an export opportunities programme that had been previously established by Ntsika. Furthermore, their interaction with communities and local government would be enhanced once they had deployed people to the Provinces for the purpose of keeping SEDA informed of different local business conditions.

SEDA would have its own call centre number and they were advertising this number via radio messages. She added that they interacted with the manufacturing base a great deal because the manufacturing base had established many satellite manufacturing advisory centres throughout the country and these centres would be used as the new SEDA advisory centres.

Through their experience with the programmes that had been inherited from Ntsika and NAMAC, SEDA had first tried to eliminate any duplication by consolidating like-minded programmes between the two previous institutions. The result of this would be fewer overall programmes, but these programmes would be better managed and better funded.

They planned to use information provided by the Provinces to look for gaps where outreach needed to be directed. They would also promote outreach by improving information and advice services; helping enterprises with the export readiness programme; serving as a small business incubator; and creating learning centres to teach trainers in business skills.

Mr Kolweni said that he would like more notes on the logistics of the programmes and initiatives that SEDA had undertaken.

Ms S Cheng (DA, Gauteng) said that SEDA’s commitment to staff training and staff workshops was good. She asked if, since the Board of SEDA only had to meet once a year with its shareholders, there was a working committee that met more often than once a year. They needed a "one stop service" for information from the Department of Trade and Industry (DTI) and its services.

Mr K Sinclaire (NNP, Northern Cape) said that he was concerned about the funding for this project, and requested a breakdown of SEDA’s budget. He also asked where the grants and donations came from. He said that they needed to reduce the amount of red tape surrounding their programmes in order to make it easier for people to access their services, since, after all, this was a service meant to help small business and enterprises that were owned by common people.

Ms Lupuwana said that the once a year required meeting with the shareholders was an "over and above meeting." The Board would be meeting regularly on its own affairs, but this required meeting was meant to ensure that the Board met with its shareholders in the Provinces.

Ms Dawane said that on the issue of red tape, SEDA was working across the board with DTI, which would make it easier for people to access services. Also, access points would bring information closer to the people. She added that it was important to get the people with the right skills in these advisory and access centres so that the information they conveyed to people would be useful and accurate.

She said that outside funding came from international donations for programmes that SEDA had inherited. As for SEDA’s budget, they had been given extra time by DTI to assess their budgetary needs. Based on the extended fifteen months fiscal year that they would be operating on, the budget would come to about R222 million. She added that within six months SEDA would be able to deploy people into the Provinces.

Ms Temba requested that the additional information that Members had asked for from SEDA be provided by Friday.

Ms Mohunu made the final suggestion that, given the high levels of unemployed youths, SEDA should have a service to deal with the youth specifically. It would be beneficial for the youth to grow up with the possibility of self-employment.

The meeting was adjourned.