Department of Small Business Development Incentives and Grants Unit - Black Business Supplier Development Program (BBSDP) Business Plan 2015/16 17/04/2017

Structure of the Business Plan DSBD Strategic Objective Legislative, Policies and Strategis Objectives/goals of the Incentives Unit Mission and Vision Unit Programmes Black Business Supplier Development Program (BBSDP) Cooperative Incentive Scheme (CIS) Youth, Women and People with Disabilities Business Development Program (YWPWD) Business Units Performance Plan Financial Plan Risks/Challenges/Areas of improvement Organisational Human needs Key projects 1 17/04/2017

Departments Strategic Objective DSBD Strategic Objective To Create an enabling environment for the development and growth of sustainable small businesses that would ensure that they contribute to the creation of employment and economic growth The Incentives Unit Alignment to DSBD To provide incentives programmes that promote broader participation in the mainstream economy by small businesses and co operative owned by individuals from historically disadvantaged communities and marginalised regions. 2 17/04/2017

Incentives Units Legislative, Policies and Strategies The Public Finance Management Act of 1999 and amended National Small Business Act of 1996 and as amended in 2004; The Co-Operatives Act of 2013 Broad Based Black Economic Empowerment Amendment Act, 2013 The Integrated Small Business Development Strategy (2004) The New Growth Path The Industrial Policy Action Plan National Development Plan The DSBD 2015-19 Strategic Plan The Medium Term Strategic Framework ( Outcome 4: Decent employment through inclusive growth) 3 17/04/2017

Functions of the Unit Implement incentives that support employment creation and support National Priorities Achieve an improved customer satisfaction Design and Implement Incentives programmes that support sustainability of SMME and Cooperative, competitiveness, job creation and equity Provide Post investment Support Build a strong organisational capability Build strategic business linkages that ensure mutually beneficial partnerships 4 17/04/2017

Rationale for Co-operatives Development Unit Vision & Mission Unit Rationale for Co-operatives Development Unit Vision & Mission: To administer a set of incentive instruments which are meant to stimulate and facilitate the development of sustainable, competitive enterprises through the efficient provision of effective and accessible incentive measures that support national priorities ( Unemployment, Inequality and Poverty) 5 17/04/2017

Rationale for Co-operatives Development Unit Unit Programmes Rationale for Co-operatives Development Unit Black Business Supplier Development Program (BBSDP) Cooperatives Incentive Scheme (CIS) Shared Economic Infrastructure Facility (SEIF) Youth, Women and People with Disabilities Business Development Program (YWPWD) 6 17/04/2017

Rationale for Co-operatives Development Unit Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit BRIEF BACKGROUND ABOUT BBSDP The current BBSDP was relaunched in 2010 in order to address the constraints that many black-owned small enterprises faced in participating in the mainstream economy. Start Date: 1 September 2010 End date : 31 July 2017 Program aligned with BBBEE policy Impact Study for 2 yrs. to be undertaken starting in the current financial year 7 17/04/2017

Rationale for Co-operatives Development Unit Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit BBSDP OBJECTIVE To fast-track existing SMMEs that exhibit good potential for growth into the mainstream economy. To grow black-owned enterprises by fostering linkages between black SMMEs, private and public sector entities.  To complement current affirmative procurement and outsourcing initiatives of corporate and public entities. To enhance the capacity of grant recipient enterprises to successfully compete for corporate and public sector procurement and outsourcing opportunities. 8 17/04/2017

Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit BBSDP OFFERING Eligible Enterprises can receive an incentive grant value up to R1 million The program provides grants to a maximum of R800 000 for tools, machinery and equipment and; R200 000 for business development and training interventions per eligible enterprise. 9 17/04/2017

Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit COST SHARING STRUCTURE For Tools , Machinery and Equipments, the BBSDP will offer a cost-sharing grant of 50% of the approved costs of qualifying interventions, and approved enterprises will contribute 50% of the necessary costs (for business development services and training). For Enterprise Support Services interventions, the BBSDP will offer a cost-sharing grant of 80% of the enterprises will contribute 20% of the necessary costs (for 10 17/04/2017

Rationale for Co-operatives Development Unit Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit QUALIFYING CRITERIA Predominantly black-owned (51%).   Have a predominantly black management team (50%). R250 000 to R35million annual turnover. Operating or trading for at least one year. If operating for less than a year and or below the entry turnover threshold but has a valid tender or contract the applications may be considered at the sole discretion of the dsbd. 11 17/04/2017

Rationale for Co-operatives Development Unit Black Business Supplier Development Program (BBSDP) Rationale for Co-operatives Development Unit EXAMPLES OF SOME OF THE INTERVENTIONS THAT HAVE BEEN SUPPORTED ENTERPRISE SUPPORT SERVICES (ESS) - COST SHARING 80:20 Quality management system and assurance (e.g. International Organisation for Standardisation (ISO), certification, accreditation, grading costs); Patenting and intellectual property rights; Production and productivity improvements; Product improvements; BEE rating and certification; and Training MACHINERY TOOLS AND EQUIPMENTS TLB’s CNC machines , griding machines, Brick making equipments IT Servers Graders 12 17/04/2017

Rationale for Co-operatives Development Unit BBSDP APPROVALS 2011/12-2014/15 Rationale for Co-operatives Development Unit 3368 BBSDP approvals to the value of R 1.3 billion since 2011 to date 13 17/04/2017

Rationale for Co-operatives Development Unit GEOGRAPHIC SPREAD 2011/12-2014/15 14 17/04/2017

Rationale for Co-operatives Development Unit Sector Breakdown Rationale for Co-operatives Development Unit APPROVALS PER SECTOR   2011 to 2015 Sector Number Value (‘000) Construction 1174 R558 587 Services 1051 R312 925 Manufacturing 380 R148 449 Retail 391 R110 929 Agriculture 86 R31 298 Transport & Com 126 R48 359 Mining & Quarrying 73 R27 795 3688 1 29 342.00 15 17/04/2017

TOTAL APPROVALS: FEMALE-OWNED SMMEs Black Business Supplier Development Program (BBSDP) BBSDP: APPROVED FEMALE-OWNED SMMES TOTAL APPROVALS: FEMALE-OWNED SMMEs 2011/12 No Approvals :120 Value : 35 668 428 2012/13 Approvals: 409 Incentive: R155 605 144 2013/14 Approvals: 375 Incentives : R130 092 000 2014/15 Approvals: 250 Incentives : R100 458 Total value of value of female owned enterprises is R 421 824 No of Approved Projects for the periods under review is 1154 17/04/2017 16

Black Business Supplier Development Program (BBSDP) PROGRAM DISBURSEMENTS PERFORMANCE SINCE 2011 . Total value of claims paid over the duration under review is R 738 million vs Budget allocation of R 550 million Virement of R 249 million Cumulative Expenditure (Approvals) vs Disbursements over the duration under review is Approvals R1,3 billion vs R 738 million BBSDP Report on Jobs Supported 2011-2015 17/04/2017 17

BBSDP HIGHLIGHT PROJECT: EASTERN CAPE Black Business Supplier Development Program (BBSDP) BBSDP HIGHLIGHT PROJECT: EASTERN CAPE Tourism Sector Mentor Guesthouse in Queenstown Approved for signage and branding worth R21 000 Female owned BBSDP enterprises Signage increased the number of drive-by customers which now accounts for 20% of all customers Increase in customers enabled the owner to create four new, permanent jobs from a total 11 permanent and 4 part time jobs 17/04/2017 18

BBSDP HIGHLIGHT PROJECT: WESTERN CAPE Black Business Supplier Development Program (BBSDP) BBSDP HIGHLIGHT PROJECT: WESTERN CAPE NK CHARTERS COMPANY BACKGROUND Nonkululeko Charters was established and formed Mr Esa Yacoob in 2009 because of the love of boats. The company offers leisure boat trips V & A Waterfront in the Western Cape. Popular routes include the Robben Island tourist destination. Other services that the business offers are: Leisure boat trips to , Private chartered trips , School boat trips.  The company received a grant through BBSDP to the tune of R 848 500 to wards acquiring new faster engine, heat exchanger and navigations system. SUCCESS STORY: Through the BBSDP grant approved for Nonkululeko Charters for, tools and machinery to purchase, they were able to create jobs for previously unemployed people. Currently they are standing at 13 from 7, meaning a 6 employee increase. Turnover increased with R528, 532.00 Female owned BBSDP enterprises 17/04/2017 19

BBSDP HIGHLIGHT PROJECT: GAUTENG Black Business Supplier Development Program (BBSDP) BBSDP HIGHLIGHT PROJECT: GAUTENG The Kitchen and Cupboard Warehouse (KCW)   COMPANY BACKGROUND KCW is a professional woodworking company specializing in fitting store fronts and complex kitchen environments which they started in 1989 and operates from its own premises in Village Main in Gauteng. Their main clients are the banks and the general public. Received a grant to the value of R 821 100 for various wood working tools/equipment such as spray booth, panel saw, wheel feeder, spindle moulder etc.     Female owned BBSDP enterprises SUCCESS STORY: Increase staff from 20 Staff members to 28 staff members. Planning to add 4 new employees when their turnover increases further. Turnover has increased from Feb 2014 to Feb 2015 by R914,655-00. Their entity was the first to have a truck spray booth in the motor industry and have used the equipment to service the Etekwini Municipality Tender. 17/04/2017 20

BBSDP HIGHLIGHT PROJECT: GAUTENG Black Business Supplier Development Program (BBSDP) BBSDP HIGHLIGHT PROJECT: GAUTENG SEZISIIZE t/a 5 STAR CARWASH Located in Mofolo Soweto Started in 2008 by sole member Mr Thulani Msimango with 2 buckets and 3 tins of polish. The company has since grown to employ over 30 local youths and has opened a second branch in Naturena The company has benefited R473 000 from BBSDP over 2 applications (R86 000 for marketing and signage as well as R387 000 for Equipment) Female owned BBSDP enterprises Services offered include Fleet carwash, Valet Carwash as well as Executive Carwash. Mr Msimango Vision is to become a preferred service provider to insurance companies, local municipality and the public at large

BBSDP HIGHLIGHT PROJECT: SOWETO Black Business Supplier Development Program (BBSDP) BBSDP HIGHLIGHT PROJECT: SOWETO The Kitchen and Cupboard Warehouse (KCW)   COMPANY BACKGROUND KCW is a professional woodworking company specializing in fitting store fronts and complex kitchen environments which they started in 1989 and operates from its own premises in Village Main in Gauteng. Their main clients are the banks and the general public. Received a grant to the value of R 821 100 for various wood working tools/equipment such as spray booth, panel saw, wheel feeder, spindle moulder etc.     Female owned BBSDP enterprises SUCCESS STORY: Increase staff from 20 Staff members to 28 staff members. Planning to add 4 new employees when their turnover increases further. Turnover has increased from Feb 2014 to Feb 2015 by R914,655-00. Their entity was the first to have a truck spray booth in the motor industry and have used the equipment to service the Etekwini Municipality Tender. 17/04/2017 22

Rationale for Co-operatives Development Unit Cooperative Incentive Program Rationale for Co-operatives Development Unit PROGRAM OBJECTIVE To improve the viability and competitiveness of a co-operative by lowering the cost of doing business.  To assist the co-operatives to acquire their start up equipment.  To build an Initial asset base for emerging co-operatives to enable them to leverage other support. ELIGIBLE CRITERIA Incorporated and registered in South Africa in terms of the Co-operatives Act of 1999. Emerging co-operatives with a majority black ownership. Have projects in any of the different economic sectors. Adhere to co-operative principles (have at least five members: Be owned by a historically disadvantaged individual (HDI). Be rural or semi-urban based. 17/04/2017 23

Rationale for Co-operatives Development Unit Cooperative Incentive Program Rationale for Co-operatives Development Unit ELIGIBLE GRANT Qualifying enterprises are eligìble to receive a maximum of up to R350 000 grant Cost Structure is as follows: Matching Grant = 100% Maximum Grant R 350 000 Minimum Grant R10 000 ELIGIBLE PROJECTS Business Development Services Feasibility Studies /Market Research Production Efficiency Technological Improvement Projects Plant and Machinery: 60% Start-up requirement (discretion of AC) Working Capital (Opening stock-start ups): 40% 17/04/2017 24

Shared Economic Infrastructure Facility (SEIF) Rationale for Co-operatives Development Unit PROGRAM OBJECTIVES The programme is aimed at supporting enterprises by stimulating and encouraging Public and or Private sector investment through efforts of lowering infrastructure costs. The programme intends to leverage both public and private 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 business activity is taking place PROGRAM OFFERING The programme is a 50:50 cost-sharing grant made available on a reimbursable basis, where the 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. 17/04/2017 25

Rationale for Co-operatives Development Unit Operations and Stakeholder Management Functions Rationale for Co-operatives Development Unit Operations and Stake Holder Management Functions Function is to provide strategic and operational support to the Incentive Unit with regard to the facilitation, establishment, maintenance and growth of strategic partnerships for beneficiaries of dsbd offerings To provide support services to Incentives Unit on Reporting, Strategic and Business planning, Knowledge management, Governance, Risk, Compliance and Internal controls To facilitate the dissemination of information on DSBD incentives as well as provide business advisory services to potential and existing clients Strategic linkages targeted: Eskom Holdings Supplier Development Program, Transnet Supplier Development Program, Small Enterprise Finance Agency (sefa), Small Enterprise Development Agency (seda) and Isivande Women’s Fund. 17/04/2017 26

Rationale for Co-operatives Development Unit Product Development Support Unit Rationale for Co-operatives Development Unit Product Development Functions To develop and review incentive programs to support the National Development Plan (NDP), New Growth Path (NGP) and sector strategies to address identified market failures. The product development function will cater for the development of new incentive schemes as well as the review of existing incentive programs within dsbd. The plans is as follows: 17/04/2017 27

Rationale for Co-operatives Development Unit Unit Programs Rationale for Co-operatives Development Unit Products Pipeline :   Incentive Program/ Project Description Type Status Project/ Purpose Miles stones and Completion Dates 1 Youth, Women and People with Disabilities Business Development Scheme (YWBDS) Incentive Ready In progress to provide support to youth, people with disabilities and women-owned enterprises in order to increase their capacity to access economic opportunities, enhance competitiveness and improve skills. with turnovers from R60k to R 500k Q1-Ministers Guidelines Submission Approval, Board Members Appointment and Launch Q2-Q4 implementing the program 2 Shared Economic Infrastructure Facility (SEIF) Ready- In progress As part of a process of continuing to strengthen economic development through broadening participation in the economy, a new robust programme is thus provided to unlock public and private sector investment by providing infrastructure that is critical and necessary to crowd-in investment mostly in townships, rural areas and inner city where there is clear business activity taking place. Q1 Guidelines Approval and Launch Q2-Q4 – Implementing program 5 Informal Business Upliftment Facility Conceptual Stage IBUF is a 100% grant offered to informal and micro enterprises to assist them in improving their competitiveness and sustainability in order to become part of the mainstream economy with turnovers from Ro to R 60k Q1 – Set up project team , Need Analysis - Stakeholder consultations , Draft Guidelines ,Ministers Guidelines Submission Approval 6 Cooperative incentive Scheme Amendment To make Amendments to existing CIS program Q4 to be completed 8. Creative Industries Incentive Program To design and develop a new incentive program for the creative industries Q1 – Set up project team , Need Analysis Q2 - Stakeholder consultations , Draft Guidelines Q3- Bench making with other countries Q3 – Ministers Guidelines Submission Approval 17/04/2017 28

Rationale for Co-operatives Development Unit Unit Performance Plan Rationale for Co-operatives Development Unit Programme 3: Enterprise Development And Entrepreneurship     Programme Performance Indicator Audited/ Actual Performance Estimated performance 2014/15 Medium-Term Targets 2011/12 2012/13 2013/14 2015/16 2016/17 2017/18 Support number of Enterprises approved for the Black Business Supplier Development Scheme (BBSDP). 306 1212 1066 783 600 700 Support number of Enterprises approved for the Women Business Development Scheme (WBDS). 200 Support number of youth enterprises funded through the Youth Black Business Supplier Development Programme (YBBSDP). Number of Primary Co-operatives receiving funding, training and access to markets. 182 314 243 270 214 683 822 Establishment and upgrading of shared economic infrastructure through Partnership Agreements with Provincial and Local Governments. 5 7 17/04/2017 29

Financial Plans 30 Budget breakdown in terms of Programs and projects Categories Allocated Budget R’000 Women Owned Business Owned Support Programs - Women incentive Program R 30 000 Youth Business Support Programs - Youth Incentive Program Informal Business Support Programs Shared infrastructure Facility Program - Informal Business Incentive Program R 50 000 Black Business Supplier Development Program (BBSDP) R 113 000 Cooperative Incentive Program R 75 000 Micro Franchising Project R 2 000 Total R300 000 17/04/2017 30

Financial Plans Economic classification Allocated Budget R’000 Budget breakdown in terms of Programs and projects Economic classification   Allocated Budget R’000 Compensation of employees R 19,292 Goods & services R 2,861 Transfers & subsidies R 300 000 Payment for capital None Total R 322 153 17/04/2017 31

Risks/Challenges/Areas of Improvement No Risk name/description Current control Impact Likelihood Actions to improve management of the risk Action Owner Due date 1 Non performance of Supplier Post investment inspections High   Responsible Program Manager(s) Continuous 2 Applicants and stakeholders defrauding the dsbd by submitting false information on applications and claims Intense interrogation of each application and claim Conduct regular inspections to applicants, Service Providers and Network Facilitators to verify information submitted by them. 3 Non performance of applicants Submission of rapid assessment Clients to show proof of payment of their contribution. 4 Slow Uptake of Applications for newly Launched Program SEIF , YWPDP Develop road shows and Stakeholder sessions Unit , Policy Units All the four Quarters 17/04/2017 32

Organisational Resources Workforce Profile according to Salary levels Levels Filled Vacant Total New Additional Deputy Director-General   Chief Director  1 Director 2 Deputy Director 6 4 Assistant Director 1 8 Personal Assistant Level 1-8 29 30 15 TOTAL 43 3 46 31 17/04/2017 33

Rationale for Co-operatives Development Unit KEY CHALLEGES FROM THE UNIT Rationale for Co-operatives Development Unit Applications and Claims Processing Average turnaround times in the processing The entire claims process is completely manual (NO IT Support) Deliverable inspections can be only be conducted once a month for economic reasons not as and when claims are ready Budgetary constrains (awaiting virements or transfers during the year) results in delays The entire claims process is completely manual (NO IT Support) 17/04/2017 34

KEY PROJECTS 35 Description of the project Total Budget R’000 (In case of multi-year projects Budget for 2015/16 R’000 Period Informal Business Upliftment Scheme - W& R Seta , MER Seta  R 50 000  R 000 2nd Quarter 2015/16 and on going Youth and Cooperatives Projects Installation of Solar panels in EC National Youth Venture Capital Support Program  R 30 000 R 000  2nd Quarter 2015/16 Seda partnership and rollout CIS and YWBDS June / July 2015/16 and no end date IT Adaptation of IEMS Under DSBD 3rd Quarter 2015/16 Micro Franchising Project 5 projects R2 000 31 March 2016 Isivande Strategic Partnership R 000 July 2015 partnership in place and ongoing Sefa Strategic Partnership 17/04/2017 35

THANK YOU 17/04/2017