400 cooperatives supported since inception: DSBD progress report & intervention plan

Meeting report

Committee matters

The Chairperson asked for an amendment to the previous meeting’s minutes, but was asked by a Member that they be granted five minutes to look over them.

Mr N Capa (ANC) signaled for the minutes to be amended, which was followed by a host a grammatical corrections being made by various Members. Subsequently matters arising from the minutes were deliberated upon.

Mr T Chance (DA) asked when the mid-term programme would be made available. He asked whether the Chairperson had consulted with the Minister and Director General in this regard.

The Chairperson indicated she had not consulted with the Minister or the Director General, and said she would inform Mr Chance when she had had the chance to interact with them.

Rev K Meshoe (ACDP) asked when the Committee would receive feedback concerning the investigations into allegations of corruption in the Department.

The Chairperson said the Department and the Committee had separate processes to conduct such an investigation, and would have a responsibility to present them when they had been completed.

Mr H Kruger (DA) referred to the Small Business Act, and wondered how programmes from different sectors which were related to small businesses such as agriculture and tourism, would be integrated into the Act.

Department of Small Business Development: Progress report

Ms Edith Vries: Director General: Department of Small Business Development (DSBD), introduced the various members of her delegation, saying that it was imperative that frontline staff should be present in order to appreciate the work done by the Portfolio Committee. On 24 May 2017, the Committee had been not happy with the report about cooperatives which it had received, as it had been incomplete at different levels. This situation had arisen because cooperatives had had their own unit only since April 1 2017. The report to be presented would dwell on what had been done, the approach and what was intended to be done in relation to the Department’s cooperatives programme.

Mr Mzwanele Memani, Deputy Director General: Cooperatives, DSBD outlined the Department’s objectives, which included increasing employment, reducing poverty and inequality, as well as creating an enabling environment through policy development, advocacy, coordination, monitoring and evaluation and impact assessment. He gave details of the Cooperative Incentive Scheme and the approach used to implement it which included cooperative training and market access.

He said that in the past, evaluations were done in a manner which looked at whether cooperatives had done well or not, but not in a comprehensive manner, so assessments would now be done after two years to provide a long term approach to the evaluation. In the past cooperative assessment had been undertaken by the Small Enterprises Development Agency (SEDA), but the reports they had provided were disappointing. He provided a list of the number of cooperatives which had been supported, totaling 400, and the amount which had been disbursed to them, which was R124.7 million.  

Mr T Khoza (ANC) interjected and queried the figures presented, because his calculations were different from those that had been provided.

Mr Memani, after a short reflection, acknowledged that the figures were wrong, and apologised to the Committee. The Department would rectify the mistake.

He proceeded to provide a progress report on the number of cooperatives operating in each province. The DSBD would conduct the full assessment of cooperatives on its own, since SEDA has done a poor job in the past. It would conduct these assessments in collaboration with provinces and municipalities, who would deploy supervisory teams. The provinces would be engaged, based on the number of cooperatives they had in each province. The assessment would entail the appointment of the project leader and project manager, carrying out fieldwork with all 400 cooperatives in all the provinces, writing the report, making it available to the Director General and Minister, as well as making it available upon approval to the Portfolio Committee.

Mr Memani analysed the project tool and explained to the Portfolio Committee how it would obtain information on the demographics (members and addresses) of the cooperatives. The project tool would also aim to find out if cooperatives had a business plan, governance structures, business infrastructures, financial accountability and market access. The project tool would also aim to identify the challenges with which the cooperatives were confronted.

Ms Vries said the project tool would include information such as the date of registration of the cooperatives, as well as what the cooperatives’ core business was, related to market access. She gave a brief explanation of the situation in the different provinces and expressed the desire to establish a database in order to track cooperatives which were active and inactive.

Discussion

Mr Kruger had a concern about the provision of the cooperative bank’s account details, as outlined in the project tool, as he believed this would make the cooperatives and their members susceptible to hackers. He wondered if their information would be protected.

Mr Khoza asserted that the inaccurate statistics provided during the presentation were the result of hurried work, and was of the opinion the Department was not doing its work with diligence, but rather to satisfy the Committee. He wanted to know if the Committee would obtain reports from the Department on the dates which they had stipulated, as he believed the Department was acting without a sense of urgency.

Mr S Mncwabe (NFP) referred to the Department taking over the cooperatives’ assessments from SEDA, and asked to be informed about the steps taken to ensure that other entities, like the provincial and municipal authorities, were compliant with them. He was complimentary about the comprehensive nature of the project tool.

The Chairperson intervened by questioning how one could expect SEDA to do quality work on difficult tasks such as data collection if they had been so poor in relation to providing reports.

Mr Chance raised concern about obtaining cooperation from municipalities in conducting their assessments, because in the past this had not been possible. He asked whether the report would be done by the Department in time, and whether the data would be obtained from the field through phone calls because the shortage of time. In the area of finance, the DSBD had to find out whether the cooperatives had other sources of finance in order to prevent “double dipping”. He said that the assessment tool should be applied to all initiatives and businesses supported by the Department.

The Rev Meshoe believed that the assessments being conducted after two years was too long, and should be shortened to between six and 12 months. The Department had stated there were 400 cooperatives involved in their scheme, but he had done a recount and found it was 384. He asked how the cooperatives would appear on the database.

Mr Mabasa suggested that cooperatives should be able to show each other how they related to each other and should not work in isolation, in order to facilitate their survival and growth. Cooperatives had to assist in direct and indirect job creation.

Ms Vries said she had engaged with SEDA in May, and the Director General was not happy with the reports received from regional managers. The poor quality of the report had been because the report done in March and April had not reached the regional managers. In addition, Mr Memani had been away and been ill on his return. She apologised about the wrong information, and said that it would be corrected.

She said that since Committee had contacted the Department in September, the number of cooperatives had increased to 436. Regarding the methodology, from March to April the DSBD’s approach had been to engage with municipalities. It now had to provide a report on the municipalities and their cooperation with the Department.

The Department had the banking details of the cooperatives as a control mechanism to confirm whether the initial account details matched with the current information given. It was also a way of seeing if the cooperatives were still functioning.

The Department would conduct fieldwork, because work had to be done by them. SEDA had volunteered to provide fieldworkers, and would provide the experience needed to conduct such an exercise.

Responding on whether SEDA could be trusted, she said that the CEO was not happy with the lack of feedback they had received from the regional managers, and this explained the poor reports which had been transmitted to them. She would determine how much the Department would rely on SEDA and would put relevant controls in place to regulate its interaction with them.

Ms Vries said that carrying out assessments every two to three months would not allow the DSBD to assess any real impact, and carrying them out after two years would allow it to see progress over a longer period of time. This did not mean that in between this period the Department would not engage with the cooperatives in the short-run. The long-term assessment would allow the Department to see whether the cooperatives’ objectives and goals were being pursued.

Mr Memani stressed the importance of the database, as it enabled them to verify the cooperatives. In order for the cooperatives be on the database, they had to submit a form for adjudication to the committee, which would be sent through the value chain system to the point of disbursement, and then verified on the database.

Ms Vries guaranteed that the reports would be submitted to the Committee by 31 July.  She confirmed that the Department and cooperatives had a relationship with the South African Bureau of Standards (SABS), but they intended to deepen this in order to improve cooperative sustainability and ensure quality assurance.

The Chairperson thanked the Department for the report and expressed her satisfaction that the Committee and the Department were coming together and building a good working relationship. Nonetheless, she was dismayed that the Committee had asked for this report in September 2016, so it had taken nine months to provide a report on the status of the cooperatives. She asked for more diligence when a report was asked for, as it helped to assess what had and had not been done. Such delays would prevent the Department from achieving the goals aligned to Vision 2030.

The Chairperson provided statistics from the Department of Trade and Industry which stated there were 43 000 cooperatives in South Africa, with 32 296 (75%) involved in agriculture. However, 88% of these cooperatives had failed. Considering that poverty and unemployment were most prevalent in rural areas where agriculture was a core activity, it was important to ensure that cooperatives were working and that resources were not being wasted. She was worried that the Department was not using the inter-governmental department framework, nor did it have learnership programmes such as the Expanded Public Works Programme (EPWP).

The meeting was adjourned.