Committed to Making a Difference
The Ministry of Small Business Development was established in 2014 marking a turning point in the 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 Department of Small Business Development (DSBD) has a set of funding programs that are targeting a wide range of micro, small and medium enterprises in line with DSBD Business Architecture. The funding programs are meant to stimulate and facilitate the development of sustainable, competitive enterprises through the efficient provision of effective and accessible funding support measures that support national priorities and enable these enterprises to become integrated into the main economy.
The State of the Nation Address (June 2019) highlighted economic transformation and job creation as one of the seven priorities of government. It stated a goal that the economy would grow at a much faster rate than the population and that two million more young people would be in employment. For economic growth to be a realised, there needs to be far greater focus on revitalising and expanding the productive sectors of the economy.
Further, in her budget vote speech on the 25 July 2019; the Minister for Small Business Development, Ms. Ntshavheni emphasised that focus must be given to SMMEs in cities townships and rural areas and that there is a need for market places to be created where small business owners are able to trade their products. SMMEs and Cooperatives must have access to strategic resources such as skills, knowledge networks, finance, and access to facilities/platforms, amongst others, that will enable them to nurture their innovative ideas.
DSBD presents the following programs: The Blended Finance Program, Shared Economic Infrastructure Facility (SEIF), Informal Micro Enterprise Development Program (IMEDP) and Small Business Innovation Fund in the current financial year.
PROGRAMS UNDER NATIONAL INFORMAL BUSINESS UPLIFTMENT STRATEGY (NIBUS)
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 and advances government priorities of speeding up economic growth and transforming the economy to create decent jobs and sustainable livelihoods through inclusive growth. The focus is mainly on designated groups, i.e. Women, youth
and people with disabilities, in townships and rural areas of South Africa.
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).
Department of Small Business Development (DSBD) has the Shared Economic Infrastructure Facility (SEIF) and Informal & Micro Enterprise Development Program (IMEDP) as the support instruments to uplifting enterprises. The programmes are aimed at assisting informal, micro and small black-owned enterprises (including cooperatives) with necessary support of enabling them to improving their competitiveness and sustainability, in order to become integrated into the main economy.
The new approach to infrastructure development is to be based on a stronger partnership between the public and private sectors, and with the local communities. The revision of the SEIF Guidelines is thus informed by the need for greater intergovernmental support for projects that are based locally.
SEIF as an instrument aims to encourage partnerships between national, provincial local government and private sector to accelerate public and or private sector investment through a provision of necessary infrastructure for small, medium and micro enterprises to unlock greater economic benefits (Refer to attached guidelines).
IMEDP is a 100% grant offered to informal and micro enterprises from the minimum grant amount of five hundred rand (R500) up to the maximum of ten thousand rand (R10 000) to assist them in improving their competitiveness and sustainability
(See the attached IMEDP Guidelines)
INTRODUCING THE BLENDED FINANCE PROGRAM
DSBD is introducing a new program called the Blended Finance Program (BFP) replacing both Black Business Supplier Development Program (BBSDP) and Cooperative Incentive Scheme (CIS).
BFP will be accessed through sefa which is the Department of Small Business Agency. sefa has a mandate to make funding accessible to small, micro, medium-sized enterprises (SMMEs) and co-operatives throughout South Africa. sefa has limited funding instruments through its direct lending channel, and currently, funding is solely through debt finance, with no quasi-equity instruments that typically form the equity base needed by a start-up enterprise. In light of the foregoing, the Blended Finance
BFP is a direct intervention aimed at lowering the effective cost of capital for SMMEs by blending loan funding from (priced at interest rates that are SMME risk-profile dependent, using ’s risk rating and pricing model) and the Department of Small Business Development (‘DSBD’) grant funding (priced at zero percent interest rate but conditional upon specific developmental impact deliverables by the SMME).
The end result to the qualifying SMMEs is a significantly reduced cost of capital. The conditional grant amount will make up to 50% of the total required funding but will be limited to a maximum of R 2 500 000.00. The conditional grant amount will be determined using a Development Impact Scorecard.