The Department of Small Business Development has come under fire from MPs who say over two years after being set up the department has little to show for itself.
During a briefing last month by the department's director general Edith Vries (pictured above) to the National Assembly's small business portfolio committee, the committee's chair Ruth Bhengu said the department needed to decide what its core business aim is.
She said the department had not made enough impact on the ground in assisting co-operatives and small enterprises and had made little inroads in improving co-ordination of small business support across departments, entities and municipalities.
"Here there is no problem at policy level, the problem is at implementation level," she said.
'Just 0.1% of budget'
DA MP Toby Chance added that the department's budget (of R1.3 billion or $96m in 2016/17) made up less than 0.1% of the government's total budget and suggested that if it could show more progress it could perhaps get an increased allocation from the Treasury.
He said the department needed a more co-ordinated approach so that it's easier for a small business owner to know where to go to get the right help.
The government, he said, allocates about R15.5bn annually to small business, spread out across various entities, departments and municipalities.
While the government's Co-operative Development Agency is to be incubated under the Small Enterprise Development Agency (Seda) during the current financial year, he asked whether the "appalling performance" of co-operatives (see this earlier post) was why the Treasury had not yet allocated any money for the rollout of the agency.
'Limited staff, budget'
In response Vries stressed that the department had limited staff (189 as of September 30, up from 159 as at March 31) and a budget that is too constrained.
She added that the department had received just R150 million in new allocations for the current financial year, of which R95m was to fund informal-sector support programmes, R50m for incubation support and R5m for salaries.
The department uses transversal agreements signed with other departments to ensure that outside its own deparmtnet it has some say in how small businesses are supported.
Vries said the department had set up a forum with 18 departments (including the Treasury) to co-ordinate small business support. She said the department is hoping to put out guidelines by the end of the March next year on how the R15.5bn would be spent.
However she said she could not comment on how the R15.5bn was currently allocated, but hinted that her department needed to step up its game.
"We'll have to demonstrate and generate the confidence that because we are there we are making a difference," she said.
Vries meanwhile also noted that a review is currently under way of the department's Black Business Supplier Development Programme and the Co-operatives Incentive Scheme and is expected to be completed by the middle of next year. The review includes testing new models with departments and private-sector partners.
The department has shut its Bavumile and the Mass Youth Enterprise Creation Programme and at the time planned to close its showroom for crafters in Atlanta, Georgia at the end of last month, after having spent R34m on the centre. An online selling platform has been created to replace the showroom.
In addition the department is still reviewing the National Small Business Act and earlier this year carried out a number of public consultations.
The department itself appears to acknowledge its challenges (in its annual report it singled out eight stalled interventions - see this post). But this may not be enough to get the Treasury to increase its budgetary allocation so that it can make a bigger impact.
Timm is a South African who writes on small business. For the minutes of the committee meeting click here. Follow Small Business Insight on Twitter at @Smallbinsight.
Stephen Timm is a