Monday, 29 September 2014

Business Day picks up on the problems facing the Department of Small Business Development

Today's Business Day has a page 2 article quoting me extensively on the problems facing the Department of Small Business Development.

The full text of my statement can be read below.

Department of Small Business Development being slowly strangled at birth

 MPs at Friday’s session of the Portfolio Committee on Small Business Development’s strategy workshop in Kempton Park listened in shock as Minister Lindiwe Zulu described her new-born department’s struggles to draw breath and establish its independence. 

It appears the Departments of Trade & Industry and Economic Development are doing all they can to strangle their younger sibling at birth with potentially tragic consequences for small and medium enterprises, which are expected to create 90% of the 11 million jobs the NDP says we need by 2030.

In my budget debate speech in Parliament in July I characterised Ministers of Trade & Industry and Economic Development, Rob Davies and Ebrahim Patel, as the two ugly sisters, with new Minister Lindiwe Zulu playing the part of Cinderella in the fairytale that was her department.

Friday’s workshop pulled the veils from the turf war which now threatens the department’s viability.

Two key functions presumed to migrate to Small Business Development – providing access to funding and incubation of new businesses – are being contested by the ugly sisters. Under the watch of these these two ministers, both senior members of the South African Communist Party and known for their interventionist stance, policies and support for small business have failed miserably, hence the optimism from many quarters when the new department was announced.  

It seems incredible that Economic Development can hang on to the Small Enterprise Finance Agency and Trade & Industry can retain the Incubation Support Programme, but that is what they are proposing. Even more bizarre, Small Business Development is planning to establish its own incubation support programme, adding unnecessary duplication and costs. 

SEFA, currently an agency of the Industrial Development Corporation, has had precious little impact on small business finance and its five year plan projects it creating only one and a half jobs for every small business financed, most of them micro-enterprises. Meanwhile over two years after it was formed, the Incubation Support Programme has succeeded in establishing less than ten functioning business incubators out of its five-year target of 250.

Small business only accounts for 10% of the DTI’s budget and has been dwarfed by the Industrial Policy Action Plan, Davies’ flagship policy for industrialising the  economy. Making things worse for Minister Zulu is that the Treasury has refused any extra funding, meaning there is little hope her department will be able to move out of the DTI campus in Pretoria where it has been squeezed into an area it claims is totally inadequate to its needs. 

Unless it breaks free from the DTI’s shackles and establishes its independence, and a strong voice for small business, Minister Zulu’s department will struggle to make an impact.

She appears to recognise the urgency of a radical shake-up in small business development and was visibly frustrated at Friday’s workshop with the obstacles being put in her way. 

It is intolerable that support for small businesses be threatened by departmental wranglings. I have written to Minister in the Presidency, Jeff Radebe, requesting him to intervene and broker an agreement which results in the Department of Small Business Development being given the freedom and resources to do its job. 

Should this not happen, Minister Zulu’s five year term in office will see the fairytale becoming a nightmare and yet another ANC plan to help small businesses and job creation will come to nothing.

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