Department of Small Business Development

ABOUT US

The Ministry of Small Business Development was established in 2014 marking a turning point in history of SMME’s and Co-operatives development in South Africa, demonstrating Government’s commitment to place SMME’s and Co-operatives at the centre of economic growth and job creation.

The Department of Small Business Development (DSBD) was thereafter established as a standalone national department in accordance with the reorganisation of some national departments announced by the President in May 2014, following the national elections.

The mission of the Department of Small Business Development is to focus on enhanced support to small business and cooperatives, with an emphasis on programmes to advance entrepreneurship amongst women, the youth, and people with disabilities to contribute to job creation and economic growth.

The Department's objectives are to: facilitate the development and growth of small businesses and cooperatives to contribute to inclusive and shared economic growth and job creation through public and private sector procurement; facilitate partnerships with all spheres of government as well as the private sector to ensure mutual cooperation that will benefit small businesses and cooperatives; advocate for a conducive regulatory environment for small businesses and cooperatives to enable access to finance, investment, trade equitable and market access in an and sustainable manner; and facilitate radical economic transformation through increased participation of small businesses and cooperatives in the mainstream economy.

MANDATE

To support the radical transformation of the economy through the promotion and development of sustainable and competitive entrepreneurs, small businesses and co-operatives, that contribute to job creation and economic growth.

VISION

A vibrant culture of entrepreneurship and enterprise growth, where small businesses and co-operatives act as drivers of job creation and inclusive economic benefit.

MISSION

Working together to enable, develop and accelerate entrepreneurship and the growth of sustainable and competitive small businesses and co-operatives.

SERVICES

KEY SERVICE OFFERINGS BY THE DEPARTMENT

BLACK BUSINESS SUPPLIER DEVELOPMENT PROGRAMME (BBSDP)

The Black Business Supplier Development Programme (BBSDP) is a cost-sharing grant offered to black-owned small enterprises to assist them to improve their competitiveness and sustainability to become part of the mainstream economy and create employment.

THE PROGRAMME PROVIDES GRANTS TO A MAXIMUM OF R1 MILLION:

• R800 000 for tools, machinery and equipment on a 50:50 cost-sharing basis; and
• R200 000 for business development and training interventions per eligible enterprise to improve their corporate governance, management, marketing, productivity and use of modern technology on a 80:20 cost-sharing basis.

OBJECTIVES OF THE INCENTIVE SCHEME

• To fast-track existing Small, Medium and Micro Enterprises (SMMEs) that exhibit good potential for growth into the mainstream economy;
• To grow black-owned enterprises by fostering linkages between black SMMEs and corporate and public sector enterprises;
• To complement current affirmative procurement and outsourcing initiatives of corporate and public sector enterprises; and
• To enhance the capacity of grant recipient enterprises to successfully compete for corporate and public sector tenders and outsourcing opportunities.

QUALIFYING CRITERIA OF THE INCENTIVE SCHEME

• Fifty-one per cent black majority shareholding;
• R250 000 to R35 million turnover per year;
• One year in operation and trading as a business;
• Fifty per cent management positions held by black people (historically disadvantaged individuals);
• Enterprises formally registered for VAT;

Eligible to obtain funding to a maximum of R1 million:

• R800 000 for tools, machinery and equipment on a 50:50 cost-sharing basis; and
• R200 000 for business development and training interventions per eligible enterprise to improve their corporate governance, management, marketing, productivity and use of modern technology on a 80:20 cost-sharing basis; and
• Be operating and trading for at least one financial year – at the sole discretion of DSBD, an enterprise that has been operational/registered for less than a year may be considered for this incentive, provided that the enterprise can supply sufficient evidence to service a tender/contract.

In order to access the scheme we are using Network Facilitators.NB: Network Facilitators are independent contractors who act as honest brokers between DBSDB and black enterprises seeking assistance under BBSDP. A National list of Network Facilitators can be found on our website address shown below and you can call one from the list for assistance.

CO-OPERATIVE INCENTIVE SCHEME (CIS)

The Co-operative Incentive Scheme (CIS) is a 100% grant for registered primary co-operatives (a primary co-operative consists of five or more members). The objective of the CIS is to improve the viability and competitiveness of co-operative enterprises by lowering their cost of doing business through an incentive that supports Broad-Based Black Economic Empowerment.

OBJECTIVES

• Promote co-operatives through the provision of a matching grant;
• Improve the viability and competitiveness of co-operative enterprises by lowering the cost of doing business;
• Assist co-operatives to acquire their start up requirements;
• Build an initial asset base for emerging co-operatives to enable them to leverage other support; and
• Provide an incentive that supports broad-based black economic empowerment.

ELIGIBLE ACTIVITIES THROUGH THE GRANT:

• Business development services (e.g. feasibility studies; business, manufacturing and production systems; and production efficiency and improvement, etc);
• Technological improvements;
• Machinery, equipment and tools;
• Commercial vehicles;
• Infrastructure linked to the project (e.g. 3-phase electricity; boreholes, etc.); and
• Working capital.

WHO BENEFITS / ELIGIBLE CRITERIA:

Eligible entities should:

• be incorporated and registered in South Africa in terms of the Co-operatives Act of 2005;
• be emerging co-operatives with a majority black ownership;
• have projects in any of the different economic sectors;
• adhere to co-operative principles;
• be owned by historically disadvantaged individuals (HDIs); and
• be biased towards women, youth and people with disabilities.

SHARED ECONOMIC INFRASTRUCTURE FACILITY (SEIF)

The SEIF intends to leverage public sector investment that would provide necessary infrastructure by creating an enabling environment for businesses to crowd in investment, mostly in townships, rural areas and the inner city where there is clear business activity taking place.

OBJECTIVES OF INCENTIVE SCHEME

The objective of the programme is to encourage public sector partnerships for the establishment and improvement of the SEIF to support businesses with an intention to improve access, create local economic benefits and optimise the performance of businesses operating in those facilities.

BENEFITS

SEIF is a 50:50 cost-sharing grant made available on a reimbursable basis, where the dti contributes 50% towards qualifying infrastructure projects upon the completion of agreed project milestones.

The dti’s contribution is capped at a maximum grant of R5 million (vat inclusive) per qualifying applicant.

QUALIFYING INFRASTRUCTURE COSTS

Shared facility infrastructure refers to the structural foundations, upgrading and maintenance of a multi-purpose facility to be shared by the number of enterprises.

Qualifying shared infrastructure costs refer directly to the design; installation, construction and erection of the infrastructure and includes the following:

• Warehouse/storage facilities
• Lighting, water (including irrigation for farming) and ablution (including plumbing works)
• Parking, paving (entry and internal roads) and fencing (including walls)
• Shelter/stalls for trading area of vendors
• Cold storage for common use
• Common use tools, equipment and machinery
• Administration and information centre
• Exhibition spaces
• Child care facility for traders
• Business infrastructure (e.g. industrial facilities)

ELIGIBLE ENTERPRISES

The eligible applicant must be:

• A municipality of the Republic of South Africa;
• A municipal entity as defined in section one of the Local Government Municipal Systems Act, 2000; or
• A provincial government entity.

The provincial government can contribute towards the shared economic infrastructure project, but cannot be an applicant under this programme.

NATIONAL INFORMAL BUSINESS UPLIFTMENT STRATEGY

The National Informal Business Upliftment Strategy (NIBUS) is driven by the Department of Small Business Development to address the development void at the lower base of Small, Medium and Micro Enterprise (SMME) Development.

The NIBUS seeks to uplift informal businesses and render support to local chambers/business associations and Municipal Local Economic Development offices to deliver and facilitate access to upliftment programmes. The focus will mainly be on designated groups, i.e. women, youth and people with disabilities, in townships and rural areas of South Africa. The strategy advances Government’s priorities of speeding up growth and transforming the economy to create decent work and sustainable livelihoods through inclusive growth.

The strategy specifically targets entrepreneurs in the informal economy. This sector has been identified as critical in addressing the key developmental goals of the Government, namely sustainable livelihoods (poverty), job creation (unemployment) and equality (inequality). More than two million South Africans are making means in the informal economy, mostly as survivalist enterprises. There are also vibrant economic business activities that need support to graduate from survival to sustainability and performance.

The development and implementation of NIBUS has been through an extensive consultation and engagement process with various stakeholders, including national departments, provinces, municipalities, agencies, chambers, sector departments, Treasury, ESEC, MINMEC, NEDLAC and specifically COGTA, NHTL and SALGA at 2

national level. Other stakeholders include donors, national funding institutions, intermediaries, service providers, the private sector, informal business organisations/associations and civil society.

TARGETED INFORMAL BUSINESS BENEFICIARIES

Due consideration was given to, among others, the Government’s Programme of Action and the objectives and key targets of the National Development Plan. The strategy acknowledges that informal business activity cuts across economic sectors. From the national approach, the strategy prioritises five economic sectors for intervention; however, provinces and municipalities will identify their own priorities beyond the five, given their economic conditions.

The identified five sectors are:

• Retail: Seventy-eight per centof informal business activities are in this sector. Increasing the trader’s (street traders, spaza shops, general dealers and those in markets) competitiveness through skilling and infrastructure upgrade is paramount. One of the goals is for the growth and transformation of the sector into activities such as bulk buying, warehousing and distribution;
• Manufacturing: A value-creating economy is important beyond simply buying and selling. The need has been identified to support enterprises in this sector as it has a potential to create more jobs and greater contribution to the country’s Gross Domestic Product (GDP). This further advances the objectives of the Industrial Policy Action Plan (IPAP) and the National Growth Path (NGP);
• Services: Most township businesses are in this sector, which include, amongst others, auto body repairers (panel beaters, spray painters, etc.), mechanics, car washers, hairdressers, tourism, day-care centres;
• Agriculture: The strategy identified this sector given its rural base. Both primary and secondary (agro-processing) activities are being targeted; and
• Construction and maintenance: Given the country’s focus on Strategic Infrastructure Projects, building a force of artisans who are entrepreneurs is critical.

STRATEGIC INTERVENTION PILLARS

• Strategic Pillar One: Creating an Enabling Legal and Regulatory Environment
• Strategic Pillar Two: Upliftment through Enterprise Development
• Strategic Pillar Three: Facilitate of Intergovernmental Relations for Delivery
• Strategic Pillar Four: Partnership and Stakeholder Management, e.g. Business Associations, civil society organisations etc.
• Strategic Pillar Five: Empowerment through Information (Knowledge) Management

IMPLEMENTATION APPROACH

The Informal Business Upliftment Programme will comprise the following instruments (incentives):

• Shared Economic Infrastructure Facility (SEIF)
• This will cover the funding of a common Infrastructure that is new, upgraded or maintained and shared by an number of informal businesses, SMMEs and co-operatives, e.g. markets, township industrial parks, etc
• Offering: 50:50 cost-sharing grant to a maximum of R5million
• Disbursements: To be disbursed as per agreed milestones
• Administration: Administered under the Critical Infrastructure Programme (CIP), which is one of Department of Small Business Development's incentive schemes

INFORMAL AND MICRO ENTERPRISE SUPPORT PROGRAMME

To target informal businesses and prioritizing women, youth and people with disabilities who own businesses based in townships, rural areas and depressed areas in towns and cities.

Eligible activities:

• Skills development (technical, business and computer skills 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.
• Tools, machinery and equipment (heavy, fixed and immovable) Basic compliance (Business Registration at municipalities or CIPC, Tax, UIF, PAYE, Accreditation, licensing etc.)

Eligible activities

• Organisational development support
• Governance (memorandum and articles of association, constitution and training etc.)
• Management Training
• Operational systems and policy development (HR, finance, legal, compliance – SARS , PAYE, UIF, SDL, VAT, tax returns)
• IT (membership database system, website, etc.)
• Projects support (linked to the Department of Small Business Development’s incentives, etc.)
• Basic office infrastructure and technology (computer, printer, software, internet and landline connectivity desk, storage, etc.)

INFORMAL TRADERS UPLIFTMENT PROJECT (ITUP)

ITUP is a pilot project emanating from IMESP as a Pilot. The aim is developing the capacity of informal traders/retailers to increase the competitiveness of local traders and develop decent jobs within the sector. It is a 50/50 partnership between Department of Small Business Development’s and the W&RSETA.

Project Goals

The project goal is to identify, train, coach, mentor and provide infrastructure support to 1000 informal traders including capacity building for Informal Trader Organisations in all nine provinces over 18months in partnership with relevant stakeholders.

Project Objectives

• Introduce mind-set shift for South African Informal, Small and Micro Enterprises/Co-Operatives in the Retail Sector to grow and run vibrant businesses
• Increase the competitiveness of these businesses through appropriate measures such as business training and infrastructure improvements.
• Reduce the incidence of businesses that are driven out of the market by competition
• Develop the internal capacity of Informal Trader Organisations and similar support bodies by providing Organisational Management Skills training.
• Develop partnerships with other stakeholders to implement the project.

Project Impact

• Increase in Profits
• Job Creation
• Business Sustainability and Expansion
• Growth in Asset Base
• Eligibility for Intermediary and Advanced Programs
• Business Formalisation

Requirements

• South African Citizen
• Registered/ Not Registered
• Local Resident
• Basic Literacy and Numeracy
• Growth Plan

Main Activities

The main activities for ITUP involves the provision of training on attitudinal, business and retail operations skills and provision of infrastructure support to the following target market especially from depressed and poor communities:

• Spaza and Tuck shops
• Street Traders
• General dealers
• Permanent and Temporary Markets
• Informal Traders Organisations

Training Programme

The following are areas of development informal traders will be trained on by the training providers:

• Introduction to Entrepreneurship
• Advertising and Promotion
• Customer Care and Service
• Basic Financial Management
• Purchasing Skills
• Legal Issues i.e. by-laws and compliance
• Health and Food Safety incorporating personal hygiene
• Merchandising incorporating stock rotation and stock receipts & taking
• Point of Sale