On Friday the Department of Small Business Development presented its 2016/17 fourth quarter report to the Standing Committee on Appropriations.
Under close questioning by members of the Committee, the Director General and her officials revealed the full extent of the under-performance that has characterised this Department since its formation over three years ago.
For the full financial year it underspent by R120 million, or close to 10% of its budget. This was mainly due to a disastrous agreement with the Wholesale and Retail Seta to train informal business owners, which never materialised, and to the delayed launch of the enterprise incubation programme.
Even where money has been spent, there is wastage and failure. Over 80% of the cooperatives supported under the Cooperatives Incentive Scheme have closed down. 47% of loans made by the Small Enterprise Finance Agency, which reports to the Department, were not paid back, and it costs Sefa R1,50 for every R1 it earns in income, which is a constant drain on government finances.
The biggest expenditure is on the Small Enterprise Development Agency, around R740 million. But after repeated demands from the Committee to show proof of impact, it is unable to do so beyond giving bland statements of number of businesses supported and levels of client satisfaction.
The Democratic Alliance did not support the formation of this department, fearing it would not live up to its promise. After three years of dismal performance we have been proved right.
The department should be closed down followed by a fundamental shift in government policy towards small business development focusing primarily on creating an enabling environment for business to thrive.