By: Anna Majavu
MPs have questioned whether the Department of Small Business Development has what it takes to build an entrepreneurial culture in South Africa, after hearing that it had failed to meet most of its targets over the past three months. Parliament’s Small Business Development Portfolio Committee criticised the department, and its Small Enterprise Finance Agency (Sefa) and Small Enterprise Development Agency (Seda), describing their performance over the last three months as “disappointing”, “really tragic” and “worrisome”.
Small Business Development Minister Stella Ndabeni-Abrahams told the portfolio committee upfront that the department had “not delivered”. The department’s director-general, Lindokuhle Mkhumane, said the department had not met its target of linking 100 SMMEs and co-operatives to the international market. Only 32 were linked. It had not appointed any persons with disabilities even though the target was 24%, and it had only supported 28 co-operatives when its target was 50.
The department had also not rolled out a “red tape reduction awareness programme” in the five municipalities that it had targeted. It was supposed to construct or renovate two new buildings for SMMEs and co-operatives, but had not done so, because of construction delays. The committee heard from Sefa CEO Mxolisi Matshamba that the finance agency had only approved R249-million in loans in the last quarter – just 37% of the funds it was meant to disburse.
Matshamba said that load-shedding and the high inflation rate had left many SMMEs unable to work a full day. Those who could only work between two and four hours a day because of electricity cuts often defaulted on their loan repayments and Sefa was only able to collect 35% of the repayments that it hoped for. “Our clients are really struggling to pay us. That then squeezed our cash flows because we had very little money to approve and to disburse into the economy” said Matshamba.
But MPs questioned this, with ANC MP and committee chairperson Violet Sizani Siwela saying “if they (SMMEs) are not being funded, then nothing will happen on the ground. They will simply die”. ANC MP Faiez Jacobs said that “we expected improved performance, not to come and make excuses”. “We want to create a culture where our communities are entrepreneurial and this department must lead. Does this department have the capacity to lead?”
DA MP Jan de Villiers said Sefa was one of the best ways for small businesses to access low-interest loans, so it was “really tragic” when they did not disburse the funds. But Matshamga said that Sefa would take small businesses to court if they never made a single payment on their loans, but did “not want to “nail people” and destroy small businesses that were experiencing hardships from load-shedding. “We can’t be chasing them and killing them,” he said.
The department announced that 54 products from SMMEs and co-operatives had been connected to a new retailer in Menlynn Mall, Pretoria, and that they had supported 832 women-owned businesses, 5540 township and rural businesses, and 3336 youth businesses. The biggest share of the R550-million that Sefa had loaned had gone to 194 businesses in Gauteng (R183-million) which received larger loans than businesses in the rest of the country.
In KwaZulu-Natal 4112 businesses received R73-million in loans, in Limpopo 6258 businesses also received R73-million, in the Eastern Cape 6288 businesses received R43-million, in the North West 6362 businesses received R41-million, and in Mpumalanga 532 businesses received R39-million. In the Northern Cape and Western Cape, fewer businesses were granted much larger loans with 16 Northern Cape SMMEs being granted R21.4-million and 25 Western Cape SMMEs being granted R63-million.