The Invisible Minister Zulu

The following speech was delivered in Parliament today by the DA’s Shadow Minister of Small Business Development, Toby Chance MP, during the Budget Vote on Small Business Development.
Madam Speaker,
Before I continue, let me congratulate and welcome our new Deputy Minister, Honourable November, to her position. We wish you well in your important endeavours.
It is now abundantly clear, three years after the Department of Small Business Development was formed, that it is invisible to 97% of businesses in South Africa.
Let me repeat that. The Department of Small Business Development is invisible to 97% of businesses in South Africa.
How can I so confidently make that assertion?
Well, consider these facts.
When you run a business, you go to the Department of Trade and Industry (DTI) to register it, SARS to get a tax and VAT number, the Department of Labour to register for the Unemployment Insurance Fund (UIF) and to join a sector bargaining council. You approach your local municipality to get the required permits to operate, or any number of provincial boards to obtain further licences.
If you need some finance, chances are you will go to friends and family first, followed by your bank or a local money lender if you are operating in the informal sector.
To find customers, you will set up shop and advertise or knock on the doors of government or business to give you orders.
Where is the Department of Small Business Development in all this? It’s nowhere to be seen!
If you want a grant, a loan or advice on how to run your business, you may be lucky to stumble on an office of the Small Enterprise Development Agency (SEDA) or Small Enterprise Finance Agency (Sefa), both agencies of the Department.
But once there you have to wade through a mass of bureaucracy even to get an interview. Seda’s pre-consultation document checklist lists no fewer than 16 documents required to qualify.
As a small business, you apply to DTI to get a BEE rating, not Minister Zulu’s Department. Incredibly, neither Seda nor Sefa are BEE accredited which means businesses using their services do not get BEE points! It seems the Department is living in a different universe to the rest of us.
To further emphasise this point, the 2017 Enterprise and Supplier Handbook does not once mention the Department of Small Business Development. The new Small and Medium-sized Enterprise (SME) Fund set up by big business is by-passing the Department and dealing directly with Treasury. And the 2017 Global Entrepreneurship Monitor (GEM) Report, released this week, offers a dismal account of the Department’s role in stimulating small business.
So to continue my tradition in budget speeches, I hereby declare that hitherto, and with deference to Marvel Comics, Minister Zulu shall be re-named, the Invisible Minister!
According to varying estimates, including Stats SA, the DTI and SARS, there are up to 3 million businesses operating in South Africa. Of these, 95% are Small, Medium and Micro-sized Enterprises (SMMEs), the Department’s target market.
What positive impact is the invisible Minister Zulu and her department having on these businesses?
By the Department’s own reckoning, it supported around 80 000 businesses in the last financial year.
That’s 3% of all the businesses in South Africa. Yes, just 3%. Now you see what I mean when I say, invisible!
Through the National Gazelles Programme, the National Informal Business Support Programme, the Seda Enterprise Incubation Programme, the Cooperative Incentive Scheme, Sefa’s direct and indirect loan schemes and the Department’s other programmes, it is barely visible to the massive majority of businesses.
The department is too internally focused. It’s conducting its third strategic review in as many years. Its top management is staffed by more acting than permanent positions. This year it failed to spend 7% of its budget, and now Minister Zulu wants more money. To become more visible, Minister? Treasury flatly refused.
So what, actually, is the point of the Department of Small Business Development? What is its purpose? How should we make it visible?
The Department’s mandate is to create a conducive business environment for SMMEs, as well as cooperatives. This means all, not just the tiny handful it’s supporting directly.
To make it visible, the DA would provide leadership to the entire entrepreneurial ecosystem in South Africa, which is sorely missing. This would start by leading Cabinet along a path of regulatory and labour reform to stimulate investment, growth and job creation.
It would mean cracking the nut of local economic development and directing resources there, where it matters most.
We would equip potential entrepreneurs with the attitudes, skills and resources to start and grow new businesses, then support them through extensive mentorship and market development programmes.
As renowned entrepreneur, Vusi Thembekwayo, said in a recent eTV interview, real transformation begins in the mind, not in government handouts.
It requires a change in mind-set, from one of dependency and limited horizons to one of growth, ambition and excellence. This begins in school and early childhood and is nurtured in the first years of employment.
Research has shown that getting onto the jobs ladder and acquiring skills is the most important determinant of continuing in employment later on in life. It also increases the chances of someone starting a successful new business.
To maximise this opportunity we would channel resources and effort to cultivate a culture of entrepreneurship for the millions with little hope of finding employment.
We would radically reform the section 12J tax incentive to make it more attractive for angel investors to invest in start-up businesses, particularly in townships.
And we would embark on a skills and learnership revolution, to capacitate people with the will to start a business but without the knowhow to do so.
We would invest in infrastructure and support, such as Wi-Fi, free web hosting and places to do business, to overcome the disadvantages so many of our citizens face when starting and running a business.
Unfortunately, the ANC in the Portfolio Committee has also shown its colours and short-sightedness, by declaring the DA’s private member’s bill on Red Tape undesirable.
It has thus thrown away the first opportunity it had to make the Department visible to all businesses, not just the pathetically small 3% it reached last year.
The invisible Minister Zulu is now the champion of diverting 30% of public procurement towards SMEs. While we agree that building public and private sector supply chains around small businesses makes sense to grow the economy, government must not repeat the errors of BEE which has favoured only a small, connected elite.
Until the department unshackles itself from its misguided obsession with state-led development, South Africa’s economy will continue to stagnate.
Only a credible growth strategy will stave off a further ratings downgrade for South Africa. This growth strategy must put small business development at the heart of government policy, not at the fringes where it has minimal impact.
Under the invisible Minister Zulu’s leadership, there is precious little sign government or her department will deliver on its crucial mandate.
Only the DA has the vision, programmes and capacity to unlock the potential of our businesses and entrepreneurs to accelerate growth from its miserable 1% today to the 5% needed to defeat unemployment and provide sustainable livelihoods for millions of our desperate people.

Die ANC is ʼn praat sonder daad politieke party

The following speech was delivered in Parliament today by the DA Shadow Deputy Minister of Small Business Development, Henro Kruger MP, during the Budget Vote on Small Business Development.
Huis Voorsitter,
Die ANC is ʼn praat sonder daad politieke party.
Ja, praat sonder daad.
Die Komitee Voorsitter, Agbare Ruth Bengu, het op 3 Mei 2017, die mandaat van die Departement van Kleinsake-ontwikkeling aan die komitee meegedeel. Volgens haar is die mandaat van die Departement soos volg:

  1. Toegang vir almal tot die ekonomie en welvaart van Suid-Afrika.
  2. Verantwoordelik vir 90% van die skepping van 11 miljoen volhoubare werksgeleenthede wat teen 2030 geskep moet word.
  3. Die vermindering van hoë regulatoriese nakoming wat op kleinsake van toepassing is.

Dit is baie duidelik die ANC tot dusver gefaal het in hierdie mandaat.
Die ANC praat sonder daad.
Gun my asseblief die geleentheid om die afgelope 3 jaar se vordering in hierdie verband uit te lig.
88% van alle nuwe korporasies wat gestig word met die hulp van die Departement en sy agentskappe, die Small Enterprise Development Agency (SEDA) en Small Enterprise Finance Agency (SEFA), faal tragies, ten koste van miljoene rande vir die rekening van die belastingbetaler.
Voorsitter, die vermoede bestaan dat min van hierdie lede word ooit opgevolg of opgespoor. Op ʼn vraag aan Minister Lindiwe Zulu deur Agbare Toby Chance, in verband met huidige bydrae van korporasies tot die nasionale bruto produk, was die antwoord 0.12% – weglaatbaar klein, maar tog verkies die ANC om aanhoudend hieroor te praat, duidelik sonder daad.
SEDA en SEFA, kleinsake se hoop tot ontwikkeling en finansiering, beplan onderskeidelik nie naastenby genoeg aktiwiteite vir die 2017/2018 finansiële jaar om enigsins vordering te maak nie.
SEDA beplan om bykans R757 miljoen te spandeer op kleinsake ontwikkeling gedurende die 2017/18 finansiële jaar, wat gelyk is aan ʼn baie klein munisipaliteit se begroting.
SEFA aan die anderkant beplan om deur middel van hulle ingryping 59 000 werksgeleenthede te skep. Duidelik, Agbare Voorsitter, is daar nie ʼn daadwerklike politiese wil om genoegsame werksgeleenthede teen 2030 te skep nie.
Die ANC praat sonder daad.
Voorsitter, die derde mandaat van die Departement, volgens die Komitee Voorsitter, is die vermindering van die regulatoriese rompslomp wat kleinsake ondervind. Net meer as ʼn week gelede, het die komitee die geleentheid gehad om ʼn wetsontwerp, wat rompslomp sal verminder, goed te keer. Helaas, die ANC het ʼn politiese besluit geneem om nie hierdie weg te volg nie.
Die ANC is inderdaad praat sonder daad.
Die “Red Tape Impact Assessment Bill” sou vir die ANC regering ʼn geleentheid gebied het, om te bewys dat hulle ernstig is om werk te skep, armoede te verminder en inklusiewe toegang vir almal tot die ekonomie te verseker. Met die afkeuring van die wetsontwerp het die ANC ʼn geleentheid om die speelvelde vir kleinsake meer gelyk te maak verhoed, en as ware verseker dat hindernisse soos rompslomp voort sal gaan om ekonomiese groei en werkskepping te rem.
Navorsing het bewys dat rompslomp tot 10% wegvreet in die daaglikse omset van kruideniersware winkels se omset. Tot soveel as R30 per kop word aan rompslomp gespandeer vir ʼn troue, en dit kos die restaurant eienaar 5% ekstra om vir jou ʼn ete op te dis by jou gunsteling uiteet plek.
Elke sent wat rompslomp besigheid ekstra kos, as gevolg van ʼn regering wat nie omgee nie, maak die entrepreneur ontsettend seer. Hierdie onnodige uitgawes vir kleinsake kan eerder tot werkskepping aangewend word.
Die DA is die enigste party met wetsontwerp wat toegespit is om ʼn vriendelike omgewing vir kleinsake ondernemings en korporasies te skep, wat die sukses van kleinsake sal vergemaklik. In die Wes-Kaap, waar die DA regeer, het ‘n soortgelyke beleid reeds 85% van 6 000 rompslomp sake opgelos.
Die President en die Ministers praat gereeld oor die vermindering van rompslomp, maar dit is alles praat sonder daad.
Voorsitter, 2019 is om die draai, dan sal die DA deur middel van goed deurdinkte regverdige beginsels ʼn omgewing vir die kleinsake gemeenskap skep wat geleenthede vir almal sal beteken en tot die welvaart van alle Suid Afrikaners sal lei.
Die DA voeg die daad wat hy praat.

Department of Small Business Development to underspend by between R96 and R125 million

In the Portfolio Committee on Small Business Development this week, it was revealed that the Department of Small Business Development is projected to underspend on its 2016/2017 budget by between R96 and R125 million due to incapacity, poor programme implementation and problems with transferring functions from the Department of Trade and Industry.
This projected underspend represents a staggering 7% to 9% of its budget. Recent statements by Minister of Small Business Development, Lindiwe Zulu, claiming that she needs more money to fulfil her mandate are absurd if she cannot even spend what has already been budgeted.
Furthermore, the department has failed to deliver on 79% of the recommendations made by the committee, most of which the department agreed with, since the committee implemented a tracking system on its reports and minutes.
The fact of the matter is that Minister Zulu should be focussing her efforts to ensure that her budget is spent on supporting and assisting small businesses so that they can, in turn, create employment for the millions of South Africans who have given up hope of ever finding a job.
The affected programmes are the National Small Business Upliftment Scheme, the Enterprise Incubation Programme and the Cooperative Incentive Scheme.
In meetings with the Department of Performance Monitoring and Evaluation (DPME) and Treasury, the mandate and strategy of the department came into question. The DPME subsequently initiated a review of the department’s strategy by an independent consultant which is due to report in December 2017, further delaying the urgent need for the department to have an agreed strategy and Annual Performance Plan.
Both the DPME and Treasury are pushing for the department to play a greater role in co-ordinating and monitoring overall government expenditure on Small and Medium-sized Enterprises, of which the Department’s own budget represents less than 30%.
Until the department gets to grips with its mandate, strategy and under-capacity issues, it will continue to fail small businesses and therefore continue to fail in creating employment.
The DA will continue to push for the department to assist small businesses and spend the money they have so they can be the job-drivers they’re meant to be.