Wednesday, 18 May 2016

Declaration on the Appropriations Vote - Small Business Development

This evening in the debate on the budget votes for all government departments I made the following declaration on behalf of the DA:

The Department of Small Business Development can rightly be accused of fiddling while South Africa burns.

The DA will support all efforts and money spent on policies and programmes which deliver real, measurable and positive returns.

This Department has not yet demonstrates these returns, therefore we cannot support its budget.

Minister Zulu’s announcement on Friday to the Standing Committee on Appropriations that she has initiated a review of government funding for small business is an admission that all is not rosy in this crucial area of small business support.

Is this an admission, at last, that unemployment for 8,9 million South Africans is a national disaster and needs to be urgently addressed?

Sefa’s performance shows consistently and worryingly high levels of loan impairments, while its job creating impact is woefully short of what the economy needs to make a significant dent in unemployment.

Seda, which consumes half the department’s budget, is unable to report on the impact of its half a billion rand expenditure. All it can report is how many businesses it supported in its various programmes.

The crucial information missing from both Sefa and Seda’s budgets, as well as the Department’s as a whole, is the impact on beneficiary performance in real, tangible terms: new enterprises formed, turnover and profit increase, taxes paid, new products introduced, patents registered, export earnings achieved, jobs created, salaries paid, etc.

And this information must be longitudinal, i.e. it must track each beneficiary over time so the long-term impact of support and financing can be assessed.

Until this is done it will be impossible to say whether Minister Zulu’s department is spending money wisely.

Other shortcomings of the budget are the inadequate provisions for red tape reduction. The strategic review of the Department released in November made this a top priority, though to date the department has not recognised this and will be unable, with the resources budgeted, to have a meaningful impact on red tape reduction where it matters most, at local level.

On its own, the Minister and her Department will have minimal impact on creating an environment conducive to doing business unless they takes a stronger stand on broad regulatory reform. This must include advocating reform of labour markets to stimulate job creation.

The DA does not support this budget.

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