Intro to the Small Business Development Ministry

Posted on September 29th, 2014
Business Skills & Planning


Three months have passed since the new Department of Small Businesses Development (SBD) was established and its first minister, Lindiwe Zulu, was sworn in.

Although much has been said of SBD, for entrepreneurs and those in the SME space there are still gaps regarding how is this department going to fulfill its mandate.

We unpack the functions and responsibilities, key players and contacts of the SBD Ministry.

Key playersMinister: Lindiwe ZuluDeputy Minister: Elizabeth ThabetheDirector-General (Acting): Pumla NcapayiDeputy Director-General (Acting): Mojalefa MohotoChief of Staff: Linton Mchunu

Minister Lindiwe Zulu
Zulu is no stranger to business development having traveled extensively on the continent learning how small businesses thrive in other countries during her tenure as Special Adviser of International Affairs to President Jacob Zuma.
Why was the SBD Ministry formed?
Government statistics show that SMMEs make up 57% of South Africa’s GDP and account for 56% of employment (77% of which are within the informal sector).
President Jacob Zuma, in the 2014 State of the Nation Address, said there was a strong feeling within government that small and medium enterprises were very important in the building of the economy, with the National Development Plan identifying small businesses as the key to reducing poverty, income inequality and unemployment,
The department also hopes to address the legacies of apartheid which are, among others, a lack of entrepreneurial culture or spirit and black economic exclusion.

Key performance areas
The success of the department lies in how it will manage to:
– Promote entrepreneurship
– Unlock potential through better business environments
– Promote more competitive small businesses

Key areas of focus
The department will provide support to SMEs by focusing on three business areas, namely:
– Micro enterprises
– Small business in high-growth sectors
– Black owned and managed small and medium enterprises.
Areas of focus also include support for township economies jointly with Economic Development departments, and the implementation of the entrepreneurship programme through centres for entrepreneurship (such as innovation and entrepreneurship hubs etc) based in all 9 provinces.

Mandate of the Department
The Department of Small Business Development is mandated to provide extensive support to small business and cooperatives through:
– Consolidated public agencies, including: Small Enterprise Development Agency (SEDA), Cooperatives Development Agency and Cooperatives Tribunal, and state-owned Companies
– Support enterprise coaching, including: Centres for Entrepreneurship and the Youth Enterprise Development Strategy
– Mentorship, including: National Business Uplifment Support
– Incubation, including: Incubation Support Programme
– Intensive support programmes, including: Support Programme for Industrial Innovation (SPII), Enterprise Development Programme, Gender and Women Empowerment Programmes and Cooperatives Incentive Scheme.
The Department undertakes to do this by taking into consideration the Preferential Procurement Policy Framework Act, and strategies to develop the empowerment of the youth, women and cooperatives. The department will continue collaborating with provincial entities to advance the Cabinet Decision of 2007 which called for 85% procurement of ten specified products and services in areas of focus that include the green economy, ICT, energy, manufacturing as well as manufacturing.
The department is also mandated to enhance coordination and transversal agreements, and to advance localisation, leveraging on public support in support of small business.

Members of the Portfolio Committee on SBD recently conceded that the ministry is faced with challenges with regard to the non-proclamation of the department – the department has not yet been officially gazzetted into law and hasn’t been allocated an operational budget. It only operates under a preliminary framework and a budget vote still needs to be approved. The department is still in the “process of configuration” and separation from Department of Trade and Industry (DTI).
These challenges touch on policy issues as well as the legislative elements, amid concerns of over regulation for small enterprises in South Africa. Much is still being put in place.

The Small Business Development department and the Department of Trade and Industry
It is yet to be seen whether the duties of SBD and that of DTI will not clash or overlap.
Although the two departments share similar goals, they have different mandates. The SBD has prioritised entrepreneurship and the advancement of small, medium and micro-sized enterprises as the catalyst to achieving economic growth and development, whereas the DTI provides financial support to qualifying companies in various sectors of the economy.
Essentially, this means  the SBD will plant entrepreneurial seeds and DTI will provide funding and support to grow the enterprise.

The budget
The SBD has been allocated a budget of R6.5 billion over three years, with proposed tax relief to reduce the tax burden on micro-enterprises.

Legislative framework underpinning SBD
The Department drew its legislation from the Small Business Development Act of 1980, the National Small Business Act of 1996, as amended in 2004, the Companies Act of 2010, the Cooperatives Act of 2013, the Industrial Development Corporation Act of 1940, the Broad-Based Black Economic Empowerment Act, and the National Empowerment Act.
Although the SBD Ministry is still under the wing of DTI, it will soon be an autonomous department with its own head offices.

Post: Private Bag X84 , PRETORIA, 0001
Street: The dti, Block A, 3rd Floor, 77 Meintjies Street, Sunnyside, Pretoria
Tel: 012 394 1813
Fax: 012 394 1006