A constructive start to the Small Business Development Portfolio Committee - with some riders

Today it was the turn of the Small Business Development Portfolio Committee to sit. We did so in the intimate surroundings of Committee Room 315 in the Marks Building, which is where all Opposition parties have their offices. No need for breakfast earlier for all committees are amply provided with food and drink (no alcohol) which we snacked on before things got under way. Lots of hugging and shaking of hands as we assembled, the Minister and her Deputy Elizabeth Thabethe both greeting me as they entered the room. I had a brief chat with Minister Zulu who repeated her invitation for us to meet, which we are doing tomorrow morning. This was a good start to proceedings.

Minister Zulu began by outlining the rationale for the formation of the department, which she said was overwhelmingly supported by all sections of society. It was somewhat difficult to follow because she did not use slides and there was no handout so I furiously scribbled down notes.

She ran through a laundry list of things the department would focus on including policy, access to finance, business support, moving Seda from the DTI, the informal sector, entrepreneurship, incubation, technology transfer, financial inclusion, job creation, taxation and soft loans, business training and procurement. She said the department would connect to provincial and local structures and try and avoid duplication, enabling a member of the public to access all services from one point. She would take workstreams from the DTI and ED into the DSBD and reconfigure them.

Job creation, economic inclusion and equity were her priorities, by addressing historical imbalances created by apartheid. She wanted an integrated strategy along with other ministries. 57% of the economy, she said, was made up by small business and 55% of employment, indicating the importance of her mandate. She repeated the NDP's estimate that 90% of new jobs between now and 2030 will come from small and medium enterprises.

She stressed the importance of forming partnerships with big business and of working with other government departments, which I found encouraging.

When she finished she handed over to her Acting Director General Pumla Ncapayi whose presentation was illustrated with slides.

The department's mandate is as follows:

The department will focus on enhanced support to Small Business and Cooperatives development with an emphasis on programmes to advance entrepreneurship amongst women, people with disabilities and youth to effectively contribute to job creation and economic growth. Support mechanisms will include access to finance, business skills development, market access, competitiveness, easing regulatory environment, advancing localisation, leveraging on public procurement.

She summarised the legislative environment the department operates within and its primary vision:

To enhance the support of small and informal business development as well as cooperatives through entrepreneurship. To foster financial inclusion as well as create market access for small business and cooperatives.

Its secondary vision is:

Through enhanced coordination and transversal agreements, advance localisation leveraging on public procurement while ensuring measurable accountability of State institutions in support of small business.

Then she described what she called the SBD business streams, being its main functions and activities including:

• Research, policy, monitoring, evaluation & intergovernmental relations
• Innovation, intellectual property and indigenous knowledge
• Incubation and technology programme
• Customised interventions/programmes
• Enterprise development
• Cooperatives development
• National informal business upliftment support
• Incentive programmes
• Impact assessment

The department's support functions were to be the standard ones of admin, finance, IT, HR, legal and communications and marketing.

Key milestones:

• Configuration of the department
• Migration of functions
• Consolidation of polity measures
• Develop transversal agreements
• Establishment of financial institutions

The budget allocated to the department includes the R1 billion earmarked for the DTI's Broadening Participation Division less the allocation for BEE included in that budget which was undetermined at this stage. In addition, an amount will be transferred from the Small Enterprise Finance Agency (SEFA) which is currently part of the Economic Development Department. SEFA are presenting to the SBD committee tomorrow afternoon.

Finally, Ncapayi mentioned the challenges the department faces - largely timelines and dependencies including the proclamation process.

After this the Chair opened questions to the Members. I began by saying the DA supported the formation of this department, even though when it was mooted before the election there were some in the party who criticised the idea. I said we regarded small business development as critical to the economy and it had been swamped in the DTI and needed its own voice.

I raised a number of points that I believed the department should focus on:

• Defining the sector - what exactly is a small, medium and micro business in terms of number of employees, turnover and other measures? Interventions must be designed differently depending on their stage in the growth cycle. 
• The need to expand the incubator support programme and scale it up so it can make a significant contribution to job creation. With the NDP estimating 90% of the 11 million jobs we need to create between now and 2030 coming from small business, there is a huge task ahead and incubators will play a big part in kick-starting and nurturing micro enterprises that can grow into small and medium businesses.
• The focus on localisation should not just be about buying SA products over imported ones, but localising supply chains in townships and per-urban areas. I mentioned Soweto where there are at least five glistening shopping malls but the one business park in Orlando West lies crumbling and neglected. There needs to be more of a focus on production not consumption.
• The Dept of Labour was conspicuous by its absence in the list of departments SBD would interact with - I referred to the need for the Minister to push for exemptions for small business from regulations that take time and make it difficult for them to trade. I referred to a lady in Diep River who called me to complain that her business, employing 4 people with a turnover of R5 million, has recently been unionised which is placing a heavy burden on her. (What I did not mention is that the union has a right to have meetings on her premises, she has to deduct union dues from their salaries, there is constant nagging about work conditions, they take sick leave all the time, etc etc. She gets the feeling they are just trying to make life difficult for her and she is thinking of closing her business).
• I commended the Acting DG for referring to the prevalence of voluntary guidelines rather than mandatory directives when it came to measures to support small business, and suggested the Minister immediately bring back the National Small Business Act to committee so we could amend it to give it teeth.
• Tax and tax incentives need to be reviewed to make it more attractive for angel investors to take small businesses under their wing and finance/mentor them.
• I was concerned at capacity constraints in the department and recommended the Minister look to the private sector for assistance. I said the ANC government had developed a reputation in some quarters for being anti-business and this was hindering constructive engagement between the parties. 

The Minister and Deputy Minister, and the Acting DG, all responded in their own ways to these and points raised by other Members and it was clear they took umbrage at my comments about the ANC being anti-business. The Chairperson spoke at length about the ANC's pro-business policies, supported by large investments in this country by international business, delegations of business taken on foreign missions by government, the good relations government had with the Black Business Council etc. She was backed up energetically by Deputy Minister Thabethe who adopted a similar stance towards me as Ebrahim Patel did yesterday. Defensive, accusatory, not at all admitting there might be something in what I said.

Later, after tea, there was another round of questions including one from the Rev Meshoe from the ACDP who mentioned the problem of spaza shops in Tshwane closing down under pressure of competition from foreigners, and from the Committee Whip the Hon Mabasa (who hails from Soweto) who also chided me for my comments on the ANC being anti-business.

I responded by recounting a meeting I'd had with some small businesses in Soweto on Monday who were also complaining about local spaza shop owners being pushed out by Pakistani traders who bought in bulk and undercut the locals. There were accusations of collusion with the police who turned a blind eye on foreigners who in many cases were illegal immigrants and trading without a license. I called upon the Department to investigate: the threat of xenophobic attacks is real, and anti-competitive behaviour needs to be weeded out.

I could not let Mabasa go un-challenged on the ANC anti-business denial so gave two examples. First, when the then-CEO of Anglo American, Tony Traher, wrote in the annual report that there were risks of political instability in SA, President Thabo Mbeki tore strips off him, deliberately trying to humiliate him by saying how dare he enter the realm of politics. Then more recently Chairman of Nedcor, Reuel Khoza, criticised the ANC for lack of leadership, unleashing a barrage of invective from ANC Secretary General Gwede Mantashe who said Khoza, as a beneficiary of BEE had no right to criticise the ANC. I said this showed the ANC was intolerant of criticism and this was why people said they were anti-business.

More castigations followed from the Chair and Deputy Minister. The DM accused me of trying to score cheap political points. It was as if I had touched off a particularly sensitive nerve. What is it about ANC people that they are unable to take criticism, which in my case was very constructive and not at all aggressive? They take on an air haughty superiority, of condescension, saying we are out of order. It was the same when Thandi Modise expelled Julius Malema from the House for saying the ANC government had killed the Marikana miners. He was right, but even if he wasn't he was entitled to express his opinion.

I had what I thought would be the last word when I put my hand up to speak for the final time.  I said the phrase we should be thinking about is the' trust deficit' that was commonly spoken of in business circles. The Chair said I should not attempt to represent a particular interest in Committee (she said I represented business) but represent Parliament. She said I referred to isolated incidents only, as if this somehow disqualified them which of course it doesn't. I thought better of putting my hand up yet again - we have five years of this to look forward to and lots of time for debate and discussion.

The fact is I do not represent anyone on this committee apart from the DA. And so far as representing business, if anything I am much closer to small than big business, and I shout loudly for them. Parliament is THE place where uncomfortable issues must be tabled and discussed. We are not all a happy family where we agree on everything. The Chair said we need to push for economic growth (I agree) and a common understanding (yes, but if we disagree we should say so and why). The DA has a responsibility to speak out on issues even though we might upset the status quo or ANC orthodoxy which it is trying to make the country's orthodoxy. Yet again, confusing party and state.

I sincerely hope my fellow ANC committee members are not reduced to fawning sycophants but offer critical and intelligent contributions to our discussions. One of them, who shall remain nameless, spent the entire meeting playing with his/her cell phone and tablet, not making a single note, hardly looking at the presenters, still less asking a question. This is unacceptable, and I hope the culprit is held to account by the Chair. Attendance is another thing we need to be vigilant about - one ANC member offered his apologies and the NFP member was absent without apology.