Wednesday, 2 March 2016

Minister and Deputy Minister at odds over Department strategy

The minister of finance, Pravin Gordhan, announced in his budget speech that a further R475 million has been reprioritised to the Department of Small Business Development (DSBD) for assistance to small and medium enterprises and cooperatives.

The minister of DSBD, Lindiwe Zulu, has stated that this is not enough. In a small business portfolio committee meeting last Wednesday, it was clear there are deep divisions within the department between the minister and her deputy about the department’s strategy, and how their budget allocations should be spent.

The minister and director general, Edith Vries, agree with the recent strategic review recommendations from consulting firm SizweNtsalubaGobodo (SNG) to abandon or transfer sector specific programs and restructure the department using a value chain approach. This would mean transferring support for crafts back to the DTI, which the Deputy Minister ElizabethThabethe and some members of the department sharply disagreed with.

A large part of this budget allocation is to fund craft fairs in the US, Europe and Asia, which are jamborees for the deputy minister and her officials but they deliver precious little in terms of building sustainable overseas markets for the craft sector. No explanation has been offered for why this sector should be given preference over others within the department.

Furthermore, the SNG review did not include the Small Enterprise Finance Agency (SEFA) or the Small Enterprise Development Agency (SEDA) which account for 80% of the department’s budget, posing the question as to why this consulting report was compiled in the first place. SEFA's latest results show it costs R1.55 for every R1 loaned to small business, and 58% of its direct loans are impaired.

The Committee Chair Ruth Bhengu shared the DA view that the department cannot come to the committee with its house in disarray regarding strategy, and that an urgent review of SEFA and SEDA is required before we will accept that the additional funding for the department is justified and will be well spent. 

The DA support the recommendations to transfer crafts back to the DTI and maybe Deputy Minister Thabethe and her cherised staff with it.