While the Small Business Development Department and its agencies reported an improvement in some of its support for SMMEs for the first quarter of this financial year, there are still some challenges, particularly on women-owned businesses and cooperatives. The department, the Small Enterprise Development Agency (SEDA), and its sister agency, the Small Enterprise Finance Agency (SEFA), met the Portfolio Committee on Small Business Development on Wednesday to report back on how they have performed.
SEFA reported an overall improvement in supporting black-owned, youth-owned, and township-based enterprises. SEDA reported an increase in supporting township and rural businesses, assisting businesses to access local and international markets, incubating businesses and training, mentoring and supporting businesses. According to SEFA, 7839 SMMEs were financed in the first quarter, and a total of R354 million worth of loans were approved.
It also spent R458 million on financing black-owned businesses, R190 million on women-owned enterprises, R163 million on township enterprises, and R125 million on youth-owned businesses. SEDA gave 3873 township and rural SMMEs financial and non-financial support. It revealed that a total of 456 SMMEs were supported to access local markets, and a total of 214 were supported to access international markets.
However, the department came under fire for not meeting its targets of supporting women-owned small businesses and cooperatives. The department revealed that out of an expected 500 women-owned businesses targeted to help gain access to international markets, only 327 businesses were assisted. The department’s Director-General Lindokuhle Mkhumane said that this was because women-owned businesses focused more on growing their businesses locally and not internationally.
No cooperatives received support, despite the department set a target of 500 for the first quarter. “The challenges that SEFA faces in this regard are the quality of applications, and the reluctance from cooperatives in taking blended finance support,” he said. “We have discovered that they usually prefer grants.” The department also recorded an underperformance in reaching its targets for township, rural, and startup businesses.
Mkhumane noted that the department had set a target to support 2500 startups, but only 940 received help. He said this was also because startups were opposed to blended financing options. Committee member Dumisani Mthenjane said that the department had to go back to the drawing board and change its money lending criteria.
“It makes no sense that we have a department that is set up to provide financial support, only to reject SMMEs because of their requirements,” he said. Mthenjane also told the department to take women entrepreneurs more seriously. “The issue of underfunding and undersupporting women is a thorn in the flesh because they bear the brunt of unemployment and a lack of support,” he said.