By: Anna Majavu
The Small Business Development Department was hauled over the coals in Parliament on Wednesday by opposition parties for failing to provide a list of the small businesses to which it disburses grants and funding to. This after the department’s director-general Lindokuhle Mkhumane told the Portfolio Committee on Small Business Development that the department’s impairments, or permanent reduction in the value of their assets, had risen to R1 billion last year from R800 million in 2021.
This, he said, was because small businesses who had been granted loans were “living a very comfortable lifestyle … they don’t want to pay the money that was advanced to them”. Mxolisi Matshamba, CEO of the department’s Small Enterprise Finance Agency (Sefa) said that small business owners in rural areas always repaid their loans, but city-based businesses who borrowed millions were often reluctant to pay the money back.
“We looked at the failure rate of these businesses and went to the credit bureau and what we picked up is they are siphoning the money out of the business to fund their lifestyle,” Matshamba said. But furious MPs accused the department and Sefa of funding the “wrong people” and demanded that Mkhumane hand over the list of businesses the department had funded. EFF MP Dumisani Mthenjane said business owners were repeatedly rejected when they applied for funding, yet the department was funding “people who didn’t ask for the money for doing business but to live a luxury life”.
“This department is not doing anything to help our youth. They come here and are rejected. This department is acting like our racist banks who cannot give you money if you are black,” he added. DA MP Jan de Villiers backed the call, saying “there is a shroud of secrecy around who these beneficiaries are”.
It was the third year in a row that MPs had called for transparency around funding, said the EFF’s Babalwa Mathulelwa, who added that without transparency, the committee could assume that some of the beneficiaries may be ‘ghosts’ or the family members of Cabinet ministers. She accused the department of failing to start a project to supply small-scale poultry farmers with reliable energy to maintain temperature control in their chicken warehouses during load-shedding.
And DA MP Henro Kruger said the department had neglected co-operatives and small-scale rural farmers who needed help to start electricity generation projects in “small dorpies that are busy dying in South Africa”. Mkhumane told the committee that the department had simplified the process for the township and rural entrepreneurs to apply for funding and this had been successful.
The department was also improving its services to co-operatives, with R14.4-million disbursed to them in the third quarter of 2022/23, and another R21-million in grants that would be approved by the end of this month. The department was also making an extra effort to cut the red tape that small businesses faced from municipalities, particularly the delays by municipalities in granting licences to trade.
Currently, licence fees can be as much as R3000. “Most municipalities are really failing businesses in not providing these licences”, he said, adding that a licence or permit fee must only cover the administrative costs of issuing it.