2014 was a big year for SMEs and will be remembered for many things, among which the establishment of the Department of Small Business Development (SBD). While the SBD’s mandate is a clear one -to create a favourable environment for SMEs to thrive and to support the goals of the National Development Plan (which hopes that 90% of jobs will be created by small and medium businesses); it’s evident from the six months that it has been in existence that achieving its goals will not be a simple task.
We take a look at the highs and lows of the ministry so far.
25 May – President Jacob Zuma announces new Ministry for Small Business Development
The new ministry, which is to be headed by Lindiwe Zulu is to take care of small business development. With President Zuma saying that the development of the small business sector is critical to economic development and transformation.
26 May- Stakeholders react to the new small business ministry
The new ministry receives a largely positive response with business stakeholders, including the South African Chamber of Commerce and Industry (Sacci) welcoming the department.
A statement released by Sacci advised that it would “engage a department that serves the development interests of small business and the economy.
It wasn’t all positive however, the new department also received criticism from some, like businessman Herman Mashaba who in an open letter argued that SMEs need less red tape not increased regulation. In it, Mashaba also asks about the power the new ministry would wield. “Would the new ministry have the authority to cut across the jurisdictions of other ministries to revise laws and regulations that obstruct the formation and operation of small enterprises?”
20 June – Focus on youth
Minister Zulu speaking at the Youth Business Forum in Pretoria called on those who are already in business to create opportunities for others, and also assist in the creation of employment, saying that government will also start to focus on procurement initiatives for youth enterprises to ensure that young entrepreneurs have opportunities to grow and develop their enterprises. The minister also talked about the need for the department to “unlock economic opportunities and achieve economic growth and sustainable employment” for women, youth and people with disabilities.
“Empowering young people is not an option, but a national imperative. Consistent with government’s commitment to place the economy and job creation at the center stage, the President established the Ministry of Small Business Development.”
Other issues touched on by the minister, according to a Fin24 report included:
– lack of a favourable legal and regulatory environment;
– lack of access to markets and procurement;
– lack of access to finance and credit;
– low skills levels;
– lack of access to information and
– shortage of effective supportive institutions.
21 July – Focus on legislative review
Minister Lindiwe Zulu at a pre-budget vote briefing, hinted at reviewing legislation and regulations that make it difficult for small businesses to survive.
“We will do this in consultation with all stakeholders. We will focus on creating an enabling environment for small business to grow and thrive,” she said.
22 July – Minister Zulu gives the Small Business Development Vote Speech
In her speech, Minister Lindiwe Zulu highlighted the work that had already been done by the Department of Trade and Industry in enterprise development and gave an outline of the tasks that lay ahead.
“We are conscious of the need to establish the department with high speed, SMMEs and Cooperatives cannot afford vacuums of any sort. Within this context we have been mindful of the end user and have considered business continuity as a principle of which recipients will continue to benefit whilst we configure our department.”
She also reiterated the SBD aims, to provide extensive support to small business and cooperatives, increase support through consolidated public agencies, enterprise coaching, mentorship, incubation and intensive support programmes.
24 July – Minister hopes small business department will get ‘big budget’
As part of the department’s Imbizo Focus Week programme, the minister met with small business forums and other key stakeholders in Khayelitsha where, according to a Business Day report, she is quoted saying she hopes for a big budget in October when Finance Minister Nhlanhla makes his medium-term budget review. “As a department, we do not have a budget and we are relying on the Department of Trade and Industry … we will start talking about a budget in October and we hope we get a big budget so that we can help people,” Zulu said.
September – Reports of SBD and DTI turf wars
Reports surfaced of a struggle between the SBD and ministries in the economic sector including the DTI and the Economic Development Ministry. According to a Business Day report, MPs on Parliament’s portfolio committee on small business development voiced concern that the ministry faced serious challenges in establishing its independence.
Almost a month later, the minister, was quoted saying the “turf war” had been resolved, and her ministry had now assumed functions targeting small and medium enterprises that were previously spread between the departments of Trade and Industry and of Economic Development.
21 October – SBD reaches 100 days
Minister Zulu accounts for the first 100 days in office. In a press briefing she outlines what her department has achieved thus far, these include setting up a structure to respond to the needs of SMMEs, developing a mission and vision, and consolidating the functions of the department.
23 October – Medium-term budget policy statement
In his review, Finance Minister Nhlanhla Nene made no allocation for the department. Nazeem Martin, MD of SME risk finance company Business Partners, explained in an interview that this could be because the ministry was established after budget was planned. “The die has been cast, the ministry was established in May, the budget was already cast in stone in February. It meant that she has to scrounge around I guess, persuading some of her colleagues to give her some of their budget, and that’s very difficult to do at the best of times” said Martin.
In the same interview Martin said hopefully the ministry would be accommodated for in the February 2015 budget. .
27 October – The inaugural National SMME Policy Colloquium
The three day National SMME Policy Colloquium was an initiative of SBD in partnership with the Small Business Development Institute (SBDI) and was hosted by the Industrial Development Corporation. The focus of the initiative was how SMEs should influence the policy decisions of the SBD, as well as the role of the ministry, with delegates deliberating the future of SME development, the mandate of the department, and its vision.
Resolutions from the colloquium focused on the need for government’s localisation strategy and associated procurement laws and regulations to be redrafted with an SMME focus, and the creation of an enabling regulatory and taxation environment for SMMEs.