PRESENTATION
BY THE
Department of Small Business
Development (DSBD) – Informal Business
Support
VUKILE NKABINDE AND TEAM
At the National Workshop on the
Implementation of R204
23 May 2017
2
The Presentation
1. Brief Evolution of the DSBD and its mandate
2. Brief Background (Evolution) and Purpose –
National Informal Business Upliftment
Strategy (NIBUS)
– Development process (2012-2014)
– Pillars and Key interventions (answering the
brief above)
– Brief Incentives/grants of the DSBD
3. Status/Comparison of R204 & NIBUS
3
Evolution of the Department of Small
Business Development
• DSBD was proclaimed – July 2014
• the dti incubated DSBD until March 2015
• Transferred functions from the dti
– Broadening Participation Divisional functions:
• Enterprise Development Unit (SMME, with SEDA)
– Informal Business and Chamber Support Directorate
•
•
•
•
Cooperatives Development Unit
Local Economic Development
Women Empowerment & Youth
Broadening Participation incentive schemes (BBSDP &
CIS)
• SEFA & Township economy (from EDD)
4
Where does the mandate of DSBD come
from??
• Constitution of South Africa
• National Small Business Act, (No.102 of 1996) National Small Business Amendment Act (No. 29
of 2004)
• Co-operatives Act, 2005 (No. 14 of 2005)
• The National Development Plan (Vision 2030)
• Electoral Mandate
• Medium Term Strategic Framework : a
government strategic plan for 2014-2019
(Outcome 4 & 7)
• 9 Point plan towards reviving the economy
– Unleashing the potential of SMMEs and Cooperatives
Mandate
The department will lead an integrated
approach to the promotion and development of
small businesses and cooperatives through a
focus on the economic and legislative drivers
that stimulate entrepreneurship to contribute to
radical economic transformation.
Vision and Mission
VISION
A radically transformed economy through effective
development and increased participation of SMMEs
and Co-operatives in the mainstream economy.
MISSION
To create a conducive environment for the
development and growth of small businesses and
cooperatives through the provision of enhanced
financial and non-financial support services and
leveraging on public and private partnerships.
8
Mandate…
It is necessary to recognise the tension in the mandate and strategic focus between supporting
dynamic established SMMEs with growth-focussed efforts and poverty alleviation, which focuses
on the poorest of the poor.
Growth-focussed Support
Established SMMEs with scope to grow
Greater employment multiplier
Greater ROI and sustainability for
financing activities
Long-term higher impact on overall
mandate
Establishment of black industrialists
Eg Gazelles programme
Poverty Alleviation
- Focus on micro and informal enterprises
- Priority is sustainable livelihoods for the
poorest in society (incl rural areas and
priority groups – women, youth, people
with disabilities)
- Focuses resources on the areas of
greatest need
- Lower impact, lower employment
multiplier
While the breadth of the mandate means that DSBD does not have the luxury of focussing
purely one or the other, a balance must be found that ultimately prioritises the highest impact
opportunities.
2015 | 9
1
Value Chain Model of Delivery
Value Chain Continuum
Legislatio
n and
Regulatio
n
Formulati
on
Policy
and
Strategy
Formula
tion
Researc
h and
Program
me
Review
Program
me
Design
Role of the DSBD – Provide thought leadership
Piloting of
the
program
mes
Partnership
Implement
ation
Agency
Monit
oring
Evaluati
on
Implementer
DSBD
The model proved to be effective in the task of delineating the roles and responsibilities
between DSBD and the Agencies with respect to the rollout of the programmes. Broadly
speaking almost all programmes articulates roles of each player within the model with few
programmes requiring some adjustments
2015 | 10
10
KEY TARGET GROUPS AND MAINSTREAMING:
Cooperatives, SMMEs, Informal Businesses
& Potential Entrepreneurs
1. Women – 50%
2. Youth – 30%
3. People with Disabilities – 2%
4. Townships – 50%
5. Rural Areas – 30%
Though no percentages it is interesting to note:
- Military Veterans
- Mining towns and
- Labour sending areas
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2. The Evolution of the National
Informal Business Development
Strategy (NIBUS)
12
3. Relations of NIBUS with
Recommendation 204
Preamble
I.
Objectives and scope (NIBUS)
II.
Guiding principles (NIBUS)
III.
Legal and policy frameworks (Pillar 1 of NIBUS)
IV.
Employment policies (Pillar 1 - Gap)
V.
Rights and social protection (Pillar 1- Gap in action)
VI. Incentives, compliance and enforcement (Pillar 1&2)
VII. Freedom of association, social dialogue and role of
employers and workers organizations (Pillar 4 – Process
in action – Chamber Support Programme)
VIII. Data collection and monitoring
(Pillar 5 – Process
in Action – Database Development and M&E processes)
IX. Implementation (Pillar 5 - driver of all pillars –
institutional arrangements, service delivery - ITUP)
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PROCESS – DEVELOPMENT OF NIBUS
- 2012-2013 - Study, interviews, desk top,
benchmarking, consultations – draft strategy
- IGR Structures consulted
-
Technical MinMEC
Economic Sector and Employment Cluster (ESEC)
NEDLAC
Cabinet endorsement (EDD, SAPS, DOL – February
2014)
- Unveiling of Strategy & Pilot – March 2014,
E Cape (PSJ) – Minister Rob Davis
14
Definition: Informal Economy (v/s NIBUS)
• Informal economy – workers and economic units
(enterprises) that are not or insufficiently covered by legal
or regulatory arrangements – International labour
organization, definition.
Basic profile of Economic units (entrepreneurial/income generating activities)
targeted by NIBUS - Informal businesses
• People involved in income generating activities to try and sustain their lives
(families, communities) - PIU
• Mostly are survivalist and micro enterprises in nature but with potential (given
support)
• Might be/not registered with the municipality/local authorities
• Mostly not registered with CIPC, SARS (PAYE, UIF, SDL, VAT, etc)
• Mostly use personal account for banking thus no financial statements of the
business or no account at all
• Though there is lot of experience acquired, there s mostly lack of business skills,
finance management, lack of tools of trade, etc to grow their businesses
• 1-5 people involved in running the business (mostly family members, neighbours,
etc) – mostly no formal employment relations
• Mostly low levels of formal education
• Limited access to empowerment information, resources and help
• Spread across various sectors of the economy, etc
Challenges of the Informal
Economy/Sector – from consultations
– Being seen as a nuisance instead of an economic role player
– Lack of proper infrastructure to store goods (secured places) and
to sell products (stalls, etc)
– Security of tenure – most traders are expected to renew licenses
month by month
– Lack of basic services such as ablution facilities in trading places
– Not taken seriously by government support agencies
– Lack of access to markets, e.g. government procurement
– Lack of reliable Informal trader organizations (leadership, capacity,
etc)
– Poor recognition of Informal trader organizations, especially in
policy development by municipalities. Most by-laws are not user
friendly and need repeal
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Challenges of the Informal Economy/Sector
(Cont)
– Lack of a central information gathering and management system
on the Informal economy/sector (beyond street traders)
– Lack of National Informal sector Framework/Guideline for an
integrated approach for Informal sector development
– Lack of access to information on what government support
services are that can support the Informal sector
– High cost of formal registration for Informal traders to be able to
access government services
– Need for dual registration (business licence at local municipality
level and national registration through CIPC) – to be considered
formal
– Lack of access to skills development and technology
– Poor linkage between law enforcers and Local economic
development officials. (law enforcers do not have the
developmental approach)
– Traders not adhering to the agreed rules and regulations
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Challenges of the Informal Economy/Sector (Cont)
– Flooding of illegal (counterfeit goods) in the market
– Big companies (formal sector) invading the streets
(informal sector) with their goods and create heavy
competition and informal work
– Barriers to access finance to grow business – collateral,
blacklisting, not being registered
– Harassment by the law enforcement agencies (unfair
regulation – unfair by-laws)
– Crime and drugs
– Lack of proper infrastructure to manufacture or sell
products and to safely store goods (or where available
the cost is high)
– Lack of support for indigenous businesses like
tra traditional medicines, etc
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Challenges of the Informal Economy/Sector (Cont)
•
Foreign informal business traders taking over businesses
(perception/reality) in townships and rural areas, etc
– They gang up against the locals through uncompetitive behaviour so that they fix the
prices (dropping prices so that South African do not compete with them)
– They sell substandard products (Fong-kongs, food without expiry dates, no standard
testing’s, no adherence to food quality standards as some are manufactured by
themselves, etc)
– They deal with drugs and use the shops as a front
– They are unhygienic - they sleep inside the shops with the food they sell to the public
– Don’t pay tax
– Don’t bank in our system
– They do not contribute to societal development
– They have a support base through wholesalers who give them goods at discounted
prices (on credit) that locals don’t have
– Some are working for these wholesalers (big companies) and they are just fronts
pushing the stock of the big guys
– South Africans were never allowed to trade when they were in exile as refugees in their
countries
– Most are illegal (undocumented) in the country (there’s a need for monitoring of our
borders, addressing corruption at the department of Home Affairs)
– They do not employ local people, i.e. they do not add value to the job creation agenda
of the country at large, etc
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Challenges of the Informal Economy/Sector
Summarized/clustering
• Legal and Regulatory constraints (by-laws, business registration, social
protection, foreign trader invasion, illicit goods, Intellectual Property,
etc)
• Poor Intergovernmental coordination preventing strategic
interventions into the sector
• Lack of enterprise development support for the sector–
– Skills development & Mentorship,
– Financial products and services,
– Access to Markets (quality and standards),
– Enterprise infrastructure, etc
• Lack of recognition and support for Informal Business organizations (&
local Chambers) and stakeholder management beyond government
• Lack of coordinated information about and communication to the
sector. No internal research and products geared to the sector
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PURPOSE, VISION, MISSION, OBJECTIVES AND
GUIDING PRINCIPLES OF NIBUS
Purpose
The purpose of the strategy is to support the Informal Business
Sector (mostly enterprising poor) to be part of the economic
mainstream of the country through various policy and
programmatic interventions.
21
VISION AND MISSION
Vision
A developed and sustainable sector that is integrated into the
economic mainstream of the country.
Mission
To mobilize stakeholders, resources, and develop interventions
that will support and enable the Informal sector/economy to
graduate so as to contribute to economic growth, selfsustainability, poverty reduction and employment creation.
22
Guiding Principles (NIBUS)
• Responsive to the country’s priority agenda of
addressing Inequality, Poverty and
Unemployment
• Mainstreaming Informal Businesses Upliftment to
be an integral part of the government’s Enterprise
Development Strategy) – i.e. feeding into the
SMME and Cooperatives Development strategies
• The strategy will not support economic activities
considered illegal, e.g. contrabands, Counterfeits,
drugs, etc
23
Guiding Principles (NIBUS, Cont.)
• In line with other national policies and strategies - the
programmes and interventions contained in this strategy aim
to prioritize designated/vulnerable groups women, the
people with disabilities, youth, enterprising military veterans,
people from rural areas and townships in order to address the
disparities that exist
• That the strategy will integrate in it processes and already
existing initiatives, by National departments, Provinces,
Municipalities and other stakeholders in the sector
• Being responsive to indigenous business activities and
Innovation
24
PRIORITY SECTORS TARGETED BY NIBUS
- Trade/Retail - spazas, street vendors, car wash, general dealers,
waste collectors, etc – 50 - 78% of Informal Business activities –
W&R SETA
- Manufacturing - clothing and textiles, steel gate makers, welders,
arts & crafts, bush mechanics (mathula tsatsing), panel
beaters/spray painters chemicals, furniture, etc – development of
Black Industrialists – IPAP - merSETA
- Services – beauty & hair saloons, car wash, funeral parlours,
events/entertainment, financial services, e.g. stokvels, Mashonisa,
etc – Mostly Township Businesses – Services SETA,
- Agriculture – Primary and agro-processing – Rural Development AgriSETA
- Construction and maintenance, etc –plumbers, painters, tilers,
builders, etc – SIPS, RPL (Artisans) - CETA
(Provinces and Municipalities will prioritize from their
economic conditions)
25
26
5 Strategic Pillars of Intervention (NIBUS):
 Enabling Legal & Regulatory Environment:
– Business Licensing/reg (Red Tape Reduction - National Municipal based registration
database – Pre CIPC, sector registrations)
– Alignment of by-laws to be responsive to the developmental agenda of info. Bus’s , Enf
– Foreign Traders (Upliftment of locals, partnerships and regulations)
– Illicit goods - counterfeits, illegal, etc.
– Social Protection (Decent Work Agenda)
– Intellectual Property – indigenous products and services
 Enterprise Development and Support (Financial and non-Financial):
– Infrastructure (shelter, storage, trolleys, ablution facilities, business parks, spaces in
malls, etc.) – Municipalities, etc
– Access to Finance and related services - SEFA
– Access to Markets (product & quality development, local procurement) – 30% - DSBD
– Training and Development (with mentorship), incubation & Technology, etc. – SEDA, etc
 Inter Governmental Relations (horizontal & vertical): National, Provincial, Local including
agencies, e.g. SETAs – Transversal agreements
– coordination system - policy development, resources, programme development and
implementation)
 Stakeholder/Partnership Development (Private sector, Business Associations, civil society,
FORUMS, international agencies,, etc.)
 Information (Knowledge) Management: Research, communication, product development,
database management system, One-stop-shops, capacity development, etc.
DSBD Interventions (PROGRAMMES)
Name of Program
Brief Description of the Program
Informal and Micro Enterprise The Informal and Micro Enterprises Development Programme is a 100% grant
Development Program (
offered up to R80k to informal and micro enterprises to assist them in improving their
IMEDP)
competitiveness and sustainability in order to become formal businesses and part of
the mainstream economy with turnovers from R1k to R200K.Being phased-in R9k
Shared Economic
The programme is a 50:50 cost-sharing grant made available on a reimbursable
Infrastructure Facility (SEIF)
basis, where DSBD makes a contribution of 50% towards the qualifying infrastructure
project upon the completion of agreed milestones. The programme is capped at a
maximum grant of R5 million (VAT inclusive) per qualifying applicant.
Black Business Supplier
The program aims to leverage the competitiveness of black owned enterprises
Development Program
through the provision of machinery, tools, equipment’s and business development
(BBSDP)
services. The program provides a R1 million match grant which is broken into a
maximum of R800 000 for tools, machinery and equipment and R200 000 for
business development and training interventions per eligible enterprise.
Cooperative Incentive
The program aims to promote the development and competitiveness of sustainable
Program
co-operatives that promotes equity and greater participation by black persons,
women, persons with disabilities and youth. The scheme provides financial support in
the form of grants to co-operatives. The maximum grant that can be offered to one
co-operative entity under the CIS is R350, 000-00
Enterprise
Program ( EIP)
Incubation A programme has been designed with distinct elements to best respond to the
specifications placed by firms in opening markets for enterprises in their supply
chains. The program is currently up to R10 Million (can be flexible)
28
Informal Business Upliftment Instruments mostly
in townships and rural areas:
The informal Business support consists of the following two instruments:
1.
Shared Economic Infrastructure Facility (SEIF)
– Covers the funding of a common Infrastructure that is either new, upgrading or
maintenance and shared by a certain number of businesses. 50/50 contribution with
municipality, up to R5 million
2.
Informal and Micro Enterprise Development Program (IMEDP)
– It is targeted to informal businesses prioritizing:
• Women, Youth and People with disabilities owning businesses mostly based in
townships, rural areas and depressed areas in towns and cities. Business Skills
and infrastructure support (tools, equipment, etc) up to R 80k.
– Support for Delivery partners (municipalities & chambers) – currently working on it
2.1
Informal Trader Upliftment Project (Pilot) – 1000 Nationally
– A partnership programme with the W&R SETA that offers skills and infrastructure
support for entrepreneurs (informal retailers) who are Street traders, home based
(spazas) retailers and those trading in markets
1. SHARED ECONOMIC INFRASTRUCTURE
FACILITY (SEIF)
• Eligible infrastructure: New, upgrading or maintenance of
infrastructure (amongst others)
–
–
–
–
–
–
–
–
Warehouse/ storage facilities
Lighting, water and ablution
Parking, paving and fencing
Shelter for trading area of vendors
Administration & information centre
Exhibition spaces
Child care facility for traders
Business infrastructure (e.g. industrial facilities)
• Eligible Applicants
– Municipality of the Republic of South Africa
– A municipal and Provincial entities (Agencies)
30
31
Informal Business Upliftment Instruments mostly
in townships and rural areas:
The informal Business support consists of the following two instruments:
1.
Shared Economic Infrastructure Facility (SEIF)
–
Covers the funding of a common Infrastructure that is either new, upgrading or maintenance and shared by a certain
number of businesses. 50/50 contribution with municipality, up to R5 million – READY FOR TAKE UP!!
2.
Informal and Micro Enterprise Development Program (IMEDP)
– It will be targeted to informal businesses prioritizing:
• Women, Youth and People with disabilities owning businesses
based in townships, rural areas and depressed areas in towns
and cities. Skills and infrastructure support (tools, equipment,
etc) =R80k.
– Support for Delivery partners (municipalities & chambers)
2.1
Informal Trader Upliftment Project (Pilot) – 1000 Nationally
–
A partnership programme with the W&R SETA that offers skills and infrastructure support for entrepreneurs (informal
retailers) who are Street traders, home based (spazas) retailers and those trading in markets
2. INFORMAL AND MICRO ENTERPRISE
DEVELOPMENT PROGRAM (IMEDP)
• Target group:
Informal businesses prioritizing women, youth and people with
disabilities owned based in townships, rural areas and depressed areas in towns
and cities.
• Eligible activities:
•
– Skills development (technical skills, Business skills, Computer skills etc.);
– Basic compliance (Business Registration at municipalities or CIPC, Tax,
UIF, PAYE, Accreditation, licensing, etc);
– Marketing and Branding (Promotional material such as in construction,
CIBD, brochures, signage etc);
– Product improvements (standards, quality, recipes, manuals, etc);
– Technology support (software procurement, installation, point of sale, etc);
– Stock, raw materials, supplies, etc. and;
– Tools, machinery and equipment (heavy, fixed and immovable)
Eligible Business Enterprises
– South African Citizens
– Should be in business for at least 6 months
33
Informal Business Upliftment Instruments mostly
in townships and rural areas:
The informal Business support consists of the following two instruments:
1.
Shared Economic Infrastructure Facility (SEIF)
–
Covers the funding of a common Infrastructure that is either new, upgrading or maintenance and shared by a certain
number of businesses. 50/50 contribution with municipality, up to R5 million – READY FOR TAKE UP!!
2.
Informal and Micro Enterprise Support Program (IMEDP) –
–
It will be targeted to informal businesses prioritizing:
•
Women, Youth and People with disabilities owning businesses based in townships, rural areas and depressed areas in
towns and cities. Skills and infrastructure support (tools, equipment, etc) =R60k. HOW DO WE PARTNER TO
RESOURCE AND DECENTRALISE??
–
Support for Delivery partners (municipalities & chambers)
2.1
INFORMAL TRADER UPLIFTMENT PROJECT (PILOT) – 1000 NATIONALLY
– A partnership programme with the W&R SETA that
offers skills and infrastructure support for
entrepreneurs (informal retailers) who are Street
traders, home based (spazas) retailers and those trading
in markets
Informal Traders Upliftment Project
Overview of Training PROGRAMME
Module
1. Intro to Entrepreneurship
2. Marketing
3. Customer Care
4. Financial Management
5. Purchasing Skills
6. Legal and Compliance
7. Merchandising
8. Health and Food Safety
9. Point of Sale
35
36
Vuvuzela Graduation Model:
Development Continuum
MSME: VUVUZELA GRADUATING MODEL
SUPPORT
FOCUS
SECTORS
MEDIUM
SMALL
MANUFACTURING
INFORMAL
& MICRO
Graduating to
Graduating to
Graduating to
Gradu
ating
as
Large,
Coope
ratives
& Pty
compa
nies
(SMEs)
38
CONTEXT TO THE NIBUS STRATEGIC IMPLEMENTATION ROADMAP
The Vuvuzela Graduation Model describes the development continuum of the NIBUS,
reflecting the intent to uplift informal enterprises and to facilitate their progressive graduation
towards formality:
 By promoting and supporting
the upliftment of informal
businesses, the consequence
will be the transitioning of
informal businesses to higher
levels of the graduating model.
 The intention is not, and cannot
be, to eradicate informal
businesses.
 Government and its partners will therefore invest in the upliftment of informal businesses
but not force transitioning to formality. Certain informal businesses may prefer to remain
where they are.
 However, a cornerstone of the NIBUS is that the upliftment programme will result in informal
businesses realising the benefits of transitioning; where they will be able to benefit from the
incentives and SME programmes
39
Vision of Enterprise Development & Support by
IMEDP
Current Spaza
Future Spaza
Vision for Resource Allocation (Decentralisation):
NATIONAL
NATIONAL
PROVINCE
Transform
PROVINCE
LOCAL
LOCAL
3. Relations of NIBUS with
Recommendation 204
Preamble
I.
Objectives and scope (NIBUS)
II.
Guiding principles (NIBUS)
III.
Legal and policy frameworks (Pillar 1 of NIBUS)
IV.
Employment policies (Pillar 1 - Gap)
V.
Rights and social protection (Pillar 1- Gap in action)
VI. Incentives, compliance and enforcement (Pillar 1&2)
VII. Freedom of association, social dialogue and role of
employers and workers organizations (Pillar 4 – Process
in action – Chamber Support Programme)
VIII. Data collection and monitoring
(Pillar 5 – Process
in Action – Database Development and M&E processes)
IX. Implementation (Pillar 5 - driver of all pillars –
institutional arrangements, service delivery - ITUP)
44
2016/17 Intervention
• IMEDP – 7585 trained – partnerships, UN
Women, SEDA, TVET colleges, LEDs and
Informal Business Organizations
• SEIF - Approved 6 infrastructure projects (EC,
KZN, LP, etc)
• Signed agreement with DOL & ILO
Challenges – infrastructure roll-out
• ITUP around 400 not received
• IMEDP all still to receive
47
2017/18 Intervention
• Year of infrastructure Roll-out (ITUP+IMEDP)
• SEIF implementation
• NIBUS roll-out (Provinces & Municipalities EC)
• Finalize and Pilot Chamber Support
Programme
• Launch and Implementation of the Micro-loan
by SEFA – working with IBOs – R24 Million
• Implement agreements with DOL & ILO
48
3. TOWARDS DISCUSSION – Q&A
-
-
Growing our own Timber is key!
Is Informal Economy = Township economy?
Is CIPC registration = to formalization?
Is it about job creation or creation of abilities to generate
income – Entrepreneurship promotion?
Advance and support innovation and creativity in township
and rural areas
Advance and defend organic initiatives (& indigenous
businesses) - Stockvels, Transport industry (taxis), crafts, etc
Conditions for Malls – trading stalls, shops for local
entrepreneurs, etc
Economic Consciousness (literacy) and Mobilization, e.g.
economies of scale, power in numbers, buy local, from
consumer to producer, etc –Be Aware of our surroundings!
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THANK YOU
WISHING YOU THE BEST THROUGHOUT THE
SESSION AND COOPERATION MOVING
FORWARD WILL BE APPRECIATED
DISCUSSION, INPUTS, QUESTION AND
ANSWERS
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