a.n. damane, ceo
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brief on seda for the portfolio committee 9 march 2007. A.N. Damane, CEO. Presentation Overview. Small Business Environment Development / Background Strategic Thrust Progress to date Budget Lessons Learnt Conclusion. 1. Presentation Overview. The Small Business Environment - PowerPoint PPT PresentationTRANSCRIPT
A.N. Damane, CEO
brief on seda
for the portfolio committee 9 march 2007
Presentation Overview
1. Small Business Environment
2. Development / Background
3. Strategic Thrust
4. Progress to date
5. Budget
6. Lessons Learnt
7. Conclusion
PresentationOverview
The Small Business Environment• Small enterprises comprise 95% of all enterprises
• Currently between 2,5 million to 3 million – equivalent to 7% in numbers per
annum
• Contribute +45% to GDP
• Absorb +60% of formally employed labour
• Enterprise density is higher in metropolitan areas of Gauteng
• Year on year increase of 45% of close corporation registrations, 32% of
companies and a massive increase in registration of cooperatives
• Participation of small business in export trade is + 33% (rising steadily)
• Only + 16% of entrepreneurs belong to business associations
1
Factors limiting entrepreneurial activity in SA
• Educational system does not encourage entrepreneurship as a career
• Lack of financial resources available to start a business
• Regulations create huge administrative burdens and high costs when starting a business.
• SA is not entrepreneurial due to factors such as sanctions in the past.
• Environment in which children grow up influences them to believe that it is better to find a job and
be safe.
• Starting a business is risky process that often involves cycles of failure.
• Infrastructure and necessary skills required for development of entrepreneurship are lacking.
• A paradigm of entrepreneurship does not exist - expectation is that big business, government
and others should create jobs, rather than that one can create one’s own employment.
• Competencies such as management and entrepreneurial skills are lacking.
Source: GEM 2006 South Africa Report
1 Small BusinessEnvironment
Development / Background
2
December 2004
– Small Business Amendment Act merging Ntsika and NAMAC.
– Appointment of the CEO
– Appointment of the Interim Board
April 2005
– Appointment of the Executive Team
– Beginning of Provincial consultations and roll-out process
– Population of seda structure
seda Milestones
Development / Background
2
17 August 2005– Launch of seda in North West Province
27 December 2005– Launch of seda in Northern Cape
27 January 2006– Launch of seda in Mpumalanga
8 February 2006– Launch of seda in KwaZulu Natal
16 February 2006– Launch of seda in Bisho, Eastern Cape
24 February 2006– Launch of seda in Free State
seda Milestones (Cont)
Development / Background
2
April 2006– Incorporation of seda Technology
August 2006– Tri-nations Summit between seda, SEBRAE (Brazil) and NSIC (India)
November 2006– The dti Annual Summit on Small Business
seda Milestones (Cont)
seda was established by the Small Business Amendment Act 29 of 2004 through merging Ntsika and NAMAC to be the national service delivery entity for small enterprise
development services with the mandate
• to implement the policy of the national government for small enterprise development
• to design and implement a standard national delivery network uniformly applied throughout the country in respect of small enterprise development, integrating all government-funded small enterprise development agencies across all spheres of government
• to design and implement small enterprise development support programmes
seda’s mandate
3 Strategic Thrust
to promote, develop and support small
enterprises to ensure their growth and
sustainability
The seda mission
3 Strategic Thrust
• improved:
competitiveness of small enterprises
sustainability of small enterprises
growth of small enterprises
access to the international and national markets for small enterprises
access to finance by small enterprises
• more businesses established
• increased capacity of service providers to serve small enterprises
• improved and more equitable access of small enterprises to support
services
seda’s key outcomes
3 Strategic Thrust
Seda will move: from expanding the network to effective service
delivery through the existing network• Why:
• Financial constraints• Delivery model being reviewed (maybe mobile centres?)• Existing centres not fully equipped and ready (only 6 totally
ready)• Existing delivery staff not fully capacitated• To avoid reputation risk
Strategy 2007-2009
Strategic Thrust :
New Focus
Seda will move: from centrally controlled organization to
decentralized, flexible and customer-oriented organization
• Why:• Existing model not customer oriented• Currently the decision making model and
structures not efficiently facilitating effective delivery
Strategy 2007-2009
Strategic Thrust :
New Focus
Seda will move: from reliance on mono-funded approach to
sustainable multi-sourcing of funds.• Why:
• Current funding from the dti not enough for the mandate• Great uncertainties related to future level of the dti funding• Other Government departments/levels willing to participate• Opportunities for PPP • Clients willing to pay for the services
Strategy 2007-2009
Strategic Thrust :
New Focus
Presentation Overview
Progress to Date1. The seda Roll-out and Operations
2. seda Key Programmes
1. Information and Advice
2. Export
3. Training and Mentorship
4. Manufacturing Support
3. Financial Management
4. HR Issues
4
footprint in the provincesOur4
Roll-outEASTERN CAPE
Provincial Office:Bisho
Amathole East London
Chris HaniQueenstown
O R TamboMthatha
Nelson MandelaPort Elizabeth
Alfred NzoMount Ayliff
UkhahlambaBarkley East
CacaduJeffrey’s Bay
4.1
Existing Offices
To be established in 2007/ 2008
seda Outreach :
14 973 Clients assisted
24 EICs+
Roll-outFREE STATE
Provincial Office:Bloemfontein
Fezile DabiKroonstad
Thabo MofutsanyaneBetlehem
XhariepTrompsburg
MangaungBloemfontein
LejweleputswaWelkom
4
seda Outreach :
6 269 Clients assisted
4.1
9 EICs+
Roll-outKWAZULU-NATAL
Provincial Office:Durban
UthukelaLadysmith
UthunguluRichards Bay
AmajubaNewcastle
UmgungundlovuPietermaritzburg
UguPort Shepstone
SisonkeKokstad
EthekwiniDurban
seda Outreach :
5 951 Clients assisted
4.1
9 EICs+
Roll-outLIMPOPO
Provincial Office:Polokwane
VhembeThohoyandou
MopaniTzaneen
CapricornPolokwane
SekhukhuneGroblersdal
ModimolleWaterberg
Existing Offices
To be established in 2007/ 2008
seda Outreach :
6 599 Clients assisted
4.1
11 EICs+
Roll-outMPUMALANGA
Provincial Office:Nelspruit
BohlabelaBushbuckridge
NkangalaWitbank
Gert SibandeSecunda
EhlanzeniNelspruit
NkomaziMalelane
seda Outreach :
11 750 Clients assisted
4.1
12 EICs+
Roll-outNORTH WEST
Provincial Office:Mafikeng
BophirimaVryburg
SouthernKlerksdorp
BojanalaRustenburg
CentralMafikeng
MadibengBrits
seda Outreach :
24 953 Clients assisted
4.1
4 EICs+
Roll-outNORTHERN CAPE
Provincial Office:Kimberley
Pixley ka SemeDe Aar
NamakwaSpringbok
KgalagadiKuruman
Frances BaardKimberley
SiyandaUpington
seda Outreach :
3 117 Clients assisted
4.1
3 EICs+
Roll-outWESTERN CAPE
Provincial Office:Cape Town
EdenGeorge
BolandStellenbosch
City of Cape TownBelville
Central KarooBeaufort West
(satellite)
OverbergBredasdorp
West CoastMooreesburg
Existing Offices
To be established in 2007/ 2008
seda Outreach :
11 904 Clients assisted
4.1
8 EICs+
Roll-outGAUTENG
Provincial Office:?
TshwanePretoria
seda Outreach :
10 249 Clients assisted
4.1
24 EICs+
Roll-out SUMMARY
2006/2007
Target Achieved
Provincial Offices 0 0
Branches 38 38
EICs 103 103
2006/2007
Province Branches EICs
Limpopo 3 11
Mpumalanga 5 12
Gauteng 1 24
North West 5 4
KZN 7 9
Free State 5 9
Eastern Cape 4 24
Northern Cape 5 3
Western Cape 3 7
Total 38 103
Geographical spread of seda offices
SERVICE DELIVERY: URBAN vs RURALUrban29%
Rural71%
4.1
Key Programmes
Information and Advice
• 103 Enterprise Centres
• 12 960 clients were assisted through seda website
• 285 716 clients visited the seda website
• 219 Radio Programmes implemented (including community radio)
• 20 Print media programmes implemented
• 4 TV programmes implemented
4.2
Key Programmes
Export Readiness Programmes
• Export promotion training – 716
• ABSA International Trade Bureau
• Technonet Africa
• Trade Point Programme (3)
– Tshwane (Tshwane Municipality)
– Johannesburg (JICC)
– Durban (Durban Chamber of Commerce)
• National Procurement Support, accessible through all seda branches
4.2
Key Programmes4.
2
Technology Support (sTP)
• Technology Incubators
• Technology Transfer Fund
• Business Hives
Key Programmes
Training and mentorship
• Mentorship (SA Plato) – Flanders in Belgium
• UNIZO Ntataise (“handholding” of SMMEs in SA) between Flanders in Belgium
and SA
• Productivity training with NPI
• Western Cape Chamber of Industries – seda has in partnership with WCCI
successfully conducted a mentorship programme to 28 SMEs from various
sectors. The success of this project was attributed to the role played by mentors
from both Chambers and private sector companies.
4.2
Key Programmes
Manufacturing Support• National Industrial Chamber – project to support small manufacturers to
supply big retailers, eg Massmart that will result in income generations of R70m and a creation of 188 new jobs in initial stage
• Shintsa - Furniture making programme, targeting young people in partnership with 5 FET colleges (40 learners per college / total 200 learners). Support will be given in seda branches where FET colleges are found.
– Port Elizabeth
– Motheo
– Northern Cape
– Umgungundlovu
– Cape Town
4.2
• Unqualified audit report in the first year of operation
• Internal control environment strengthened through additional capacity in
the finance department
• Full capacity to spend allocated funds
• Moratorium was placed on new funding commitments because of
inadequate funds
Financial Management4.
3
Staff complement in the provinces
Managers13%
Support staff47%
Technical Staff40%
HR Issues4.4
Total staff complement - 464
• All staff from merged institutions successfully placed
• Three outstanding CMMA cases
• Performance Management System
HR Issues4.4
Some key indicators Targets 07/08
Clients assisted 300 000
New business stared and operational 4 000
New jobs facilitated 6 000
Growth of turnover of assisted SMMEs 10%
targets 2007/08
Presentation Overview
Budget
5
Where From Where to
2004/5 2005/6 2006/7 2007/8 2008/9 2009/10
Budget R120 million R200 million R378 million R455 million R630 million R695 million
Staff 247 351 464 490 554
(30)
602
(30)
Core Network
* National 2 1 1 1 1 1
* Provincial 8 6 8 8 9 9
Satellites / Branches
17 27 40 40 48 54
LBSCs / EICs
61 + 4 87 103 103 200 284
Total Network
92 121 152 153 258 348
Major cost drivers
• LBSC’s funded at R67 000 p.a. : EICs funded at R250 000 p.a. (funding model to change)
• Increase in number of branches
• Increase in number of seda permanent staff
• Enhancement of products and services
NB : Timing of establishment of branches and EICs bewteen FY 2005/06 and FY 2006/07
Preliminary Financial Projections FY 06/07 FY 07/08 FY 08/09 FY 09/10 FY 10/11
R'000 R'000 R'000 R'000 R,000
EXPENDITURE:
OPERATIONS:
- Products and Services 77,000 145,000 205,000 225,000 250,000
- Other Operational 94,000 112,000 200,000 220 000 240,000
Total Operations: 171,000 257,000 405,000 445,000 490,000
OTHER EXPENDITURE:
-Staff cost, 177,000 143,000 160,000 175,000 190,000
- Admin and overheads 25,000 30,000 45,000 50,000 55,0000
- Capital cost 5,000 25,000 20,000 25,000 30,000
Total National Office: 207,000 198,00 225,000 250,000 275,000
TOTAL EXPENDITURE 378,000 455,000 630,000 695,000 765,000
INCOME:
DTI 311,000 444,000 520,000 545,000 555,000
FINNNISH GOVERNMENT 27,000 11,000 10,000 0 0
PROVINCES/DISTRICTS/LOCAL GOVERNMENT 9,000 50,000 75,000 110,000
OTHER INCOME 31,000 50,000 75,000 100,000
TOTAL INCOME 378,000 455,000 630,000 695,000 765,000
Notes on Financial Projections• For the 07/8 Financial year, only the existing 40 centres will be made fully operational whilst
negotiations are started to get additional funding from Provinces/Districts/Local Government.
• At the funding level of R455 million, the following risks still exist:
– The planned new branches for Western Cape (3), Eastern Cape (3) and Limpopo (2) will not materialise in FY07/08 because of budgetary constraints and this has serious reputational risks as negotiations with the provinces had already started in anticipation of more funding
– The opening of a provincial office and five (5) branches in Gauteng province (targeted for FY07) is also compromised because of the budgetary constraints. This also has serious implications since as an economic hub of South Africa, Gauteng’s small enterprise community needs seda’s intervention with respect to development and support
– Under the current budgetary constraints, the EIC outreach programme will not be achieved because of the reduction in the retainer from R250 000 pa to R60 000 and due to the moratorium on the establishment of a further 110 EICs which will affect both outreach and impact of services
– Inability to participate in/or support the upscaling of sector specific and other national programmes, for example, ASGISA related programmes, Expanded Public Works Programme, etc.
• For the 08/09 Financial Year, mild expansion will be done to bring the branches to 48 branches whilst Provincial/District/Local governments start making funding contributions. Efforts will also be made to source funding from other institutions and/or organisations.
• For the 09/10 financial year, the full delivery model will be in place and hopefully Provincial/ District/ Local Government will be making meaningful funding contributions.
• For the 10/11 financial year the network would have been stabilised as well as the funding streams secured for future sustainability.
Plans 2007/08
• Additional staff at the branch level
• IT infrastructure
• Capacity building
• Monitoring and evaluation system
Presentation Overview
Lessons Learnt
6
Lessons
• Government funding located in different pockets with different
decision making processes
• Compounded by legislation that impedes transfer of funds from lower
tiers of government to higher tiers
• No short-cuts to find win-win solutions
• Role clarification very critical
6
Lessons(continued)
• Slow approval processes even in areas where buy-in exists
• Scarce SMME support skills commanding private sector salaries
• Negative perception regarding delivery track record of national
entities
• Emotional attachment to programmes
• Myth of the “experienced” business advisor
6
• Expansive geographic space and scale that has to be covered requires
large investments
• Unrealistic expectations
• Balancing the political expectations with what entrepreneurs need
• Different levels of capacity of our partners, NGOs, etc.
• Acknowledgement is very critical in a partnership
Lessons(continued)
6
Presentation Overview
Conclusion
7
• Entrepreneurs want solutions to their problems, not long stories about
available programmes, eg
• Quick turn-around times
• Simple language
• Simple processes
• Listen to the Entrepreneur
What mattersmost
7
Thank you