1. Department of Small Business Development
BRIEFING TO THE PORTFOLIO COMMITTEE ON SMALL BUSINESS DEVELOPMENT
Briefing on the intervention plan on 400 cooperatives
24 May 2017

2. Presentation Outline Purpose Background
Approach to the intervention plan
Inclusion of coops in municipal IDPs
Preliminary findings
Lessons learnt and conclusions

3. Purpose
To brief the Portfolio Committee on the progress in respect of its intervention plan to report on the development status of the 400 Cooperatives funded by the Department since its establishment in 2014
This was required to present the report in the last Quarter of 2016/17, but the report was not available and the Committee has requested a progress report

4. Background
On the 27th until the 31st March 2017, the Portfolio Committee on Small Business Development conducted an oversight to Mpumalanga Province.
The aim of the oversight was to understand the status of 12 agricultural cooperatives, which form part of the 400 cooperatives funded through the Cooperatives Incentive Scheme since the inception of DSBD.
In its oversight, the Portfolio Committee observed, amongst other things, that all the 12 cooperatives were not known by the district and local municipalities and therefore could not benefit from any roll out of support by these institutions.
Further, these cooperatives had experienced various challenges ranging from lack of infrastructure, financial and non-financial support which hindered their development to an expected level.
The Committee recommended that the department should put together an intervention plan which would introduce and include the funded cooperatives to district and local municipalities’ Integrated Development Plans.
It is against this background that DSBD is briefing the Portfolio Committee on the developed intervention plan.

5. Approach to the Intervention Plan
Following the recommendations of the Portfolio Committee, DSBD developed a Project Plan which contained the following elements:
To engage key players (SEDA and District Municipalities) to work with the department in introducing and including the funded cooperatives in district and local municipality IDPs. In this respect, DSBD prepared letters and sent them to SEDA on the 8th March 2017 and District Municipalities on the 20th April 2017.
Accompanying the letters was a list of cooperatives broken down per district municipality and town so that each of the District Municipalities could consider including the cooperatives to their district and local municipality IDPs.
Some district municipalities have responded the request by seeking more information and this information was provided to them.
The process of following up with municipalities that did not respond was triggered in order to obtain their responses.
Over and above exploring the key aspect of including cooperatives to the IDP process, DSBD through its LED directorate also negotiated with municipalities to support cooperatives through other programmes.

6. Approach to the Intervention Plan (Cont.) (Cont.)
Seda, through its branch network, was requested specifically to establish and maintain strong working relations with district and local municipalities to leverage from their close proximity in supporting the cooperatives, jointly with the municipalities.
Further, an assessment tool was formulated and sent to SEDA to use to collate information on the developmental status and performance of the 400 funded cooperatives. This tool sought to collate information such as demographics, nature of business, nature of support received from DSBD and other partners, business infrastructure, market access and financial indicators.
Over and above this tool, the list of the 400 cooperatives per district municipality was sent to Seda so that each Seda branch can deploy its human resources to visit the cooperatives in their jurisdiction.
The reports were compiled by Seda branches and sent to Seda head office.

7. Inclusion of cooperatives in IDPs
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 1.
Eastern Cape
Alfred Nzo 3
Ms Avela (PA to the MM) confirmed on the 23rd May that the request was received and was being considered by the Head of LED
Amatole 10
Managers have been out of the office or in meetings. Follow ups will continue
Chris Hani 9
Same
Joe Gqabi
OR Tambo 47
Buffalo City 5
Ms Majiza confirmed on the 23rd May that the coops would be supported either under the IDP or other LED programmes.

8. Inclusion of cooperatives in IDPs (cont.)
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 2.
Free State
Mangaung 1
Managers have been out of the office or in meetings. Follow ups will continue.
Thabo Mofutsanyane
Same 3.
Gauteng
Sedibeng 3
West Rand 7
City of Tshwane 26
Ekurhuleni 14
City of Johannesburg 34

9. Inclusion of cooperatives in IDPs (cont.)
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 4.
KZN
Harry Gwala 1
We awaiting finalisation of the MOU
iLembe 3
The municipality has signed the MOU
King Cetshwayo 11
The request from DSBD was received and a response will be provided before end of May 2017
Ugu 7
The municipality has signed the MOU. A steering committee is scheduled for the second week of June 2017.
uMgungundlovu 2
A steering committee meeting is scheduled for 25 May 2017.
Umkhanyakude 4
All the cooperatives will be integrated in the IDP

10. Inclusion of cooperatives in IDPs (cont.)
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 4.
KZN
Umzinyathi 3
Managers have been out of the office or in meetings. Follow ups will continue.
Uthukela 1
The municipality requested further information on the coops and the info was submitted on the 23rd May.
Zululand 2
The request from DSBD was received and a response will be provided before end of May 2017
eThekwini 8
We awaiting the finalisation of the MOU 5. NC
John Taolo Gaetsewe
No response as yet 6.
Limpopo
Capricorn 5
Same

11. Inclusion of cooperatives in IDPs (cont.)
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 6.
Limpopo
Mopani 13
Managers have been out of the office or in meetings. Follow ups will continue.
Sekhukhune 27
Vhembe 70
The request from DSBD was received and a response will be provided before end of May 2017
Waterberg 1
Ms Molekwa requested further info on the coops and the infor was sent on the 16th May 7.
Mpumalanga
Ehlanzeni 12
No response as yet
Gert Sibande
The Municipality informed that they will include Mama Lizo Farming into their IDP on 24 May 2017

12. Inclusion of cooperatives in IDPs (cont.)
PROVINCE
MUNICIPALITY
CO-OPS
STATUS 7.
Mpumalanga
Nkangala 10
We spoke to Mr Matimba who requested further info on coops and info was supplied to him on the 18th May. 8
North West
Bojanala Platinum 35
Managers have been out of the office or in meetings. Follow ups will continue.
Ngaka Modiri Molema 5
The request from DSBD was received and a response will be provided before end of May 2017 9
Western Cape
Cape Winelands 1
No response as yet
Overberg
Same
City of Cape Town 6

13. Summary of the Seda findings
No.
PROVINCE
MUNICIPALITY
STATUS 1.
KZN
uThungulu
(14)
5 coops are operational and some of them are doing extremely well
6 are not operational
3 could not be reached
Ugu District
(7)
1 coop is operational, whilst waiting to secure funding to complete a structure sponsored by Dep of Agric
2 coops could not be reached
4 were not operational due to lack of access to markets, assets destroyed by a storm, lack of water
Harry Gwala
(2)
The list shows one coop supported through CIS and doing well
But the other not operational

14. Summary of the Seda findings (Cont.)
No.
PROVINCE
MUNICIPALITY
STATUS 1.
KZN
eThekwini
(8)
5 coops could not be operational 2.
Gauteng
City of Johannesburg
(34)
8 cooperatives (23%) are still operational
23 coops (68%) could not be reached
3 coops (9%) were not operational
City of Tshwane
(26)
14 coops are operational
10 could not be reached
Ekurhuleni
(14)
6 coops are operational
8 coops could not be reached
Sedibeng
(3)
1 coop operational, though equipment has not been delivered
2 coops could not be reached

15. Summary of the Seda findings (Cont.)
No.
PROVINCE
MUNICIPALITY
STATUS 2.
Gauteng
West Rand
(7)
2 coops are operational
4 coops could be reached
1 coop not operational due to lack of raw material 3.
Limpopo
Sekhukhune
(27)
16 coops are operational
2 could not be reached
2 coops were not operational due to lack of water
Waterberg
(1)
1 coop not operational due to incomplete work (chicken house)

16. Summary of the Seda findings (Cont.)
No.
PROVINCE
MUNICIPALITY
STATUS 4.
Mpumalanga
Nkangala
(9)
5 coops are operational and some of them doing exceptionally well especially the coop supported with a van
2 coops could be reached
2 coop not operational due to lack of raw material
Ehlanzeni
(12)
8 coops are operational
3 could not be reached
1 coop declined funding and applied for another project 5.
Northern Cape
John Taolo Gaetsewe
(2)
2 coops are operational and are receiving non-financial support from Seda

17. Summary of the Seda findings (Cont.)
No.
PROVINCE
MUNICIPALITY
STATUS 6.
North West
Bojanala District
(35)
15 are operational
13 were not operational
5 coops could not be reached/ from another province/ no status
Ngaka Modiri Molema
(5)
All 5 coops are operational, though 2 are struggling 7.
Western Cape
Cape Winelands
(1)
Status not specified, except that this coop and the other one in CT are reported to be one enterprise
Overberg
Coop is operational and employing 35 people with potential to export their products
City of Cape Town
(6)
3 are operational
3 could not be reached

18. Lessons learnt and conclusions
It is difficult to conclude on the status of the 400 cooperatives, given that not all information was made available by the time of preparing the presentation. The Eastern Cape and Free State is not included in the report.
Overall, the results are uneven as you have provinces such as Gauteng, Limpopo, North West, Western Cape and Northern Cape where coops are relatively profitable.
And coops in provinces such as Mpumalanga and KZN seem to be struggling.
It appears there were gaps in accessing all the cooperatives, given that Seda did not escalate the matter to the department in order to get numbers of other members.
There were gaps in the collection of information as some information was not collected, for example turnover of coops in some provinces.
There was clearly lack of post investment support and to some extent pre investment training.
Due diligence should be improved or done jointly with district and Seda branches.
Majority of the cooperatives are not profitable, given the challenges that range from lack of governance, limited funding which does not cover for all the requirements, lack of access to markets and lack of general business management skills.
Whilst CIS is viewed as a progressive intervention to assist start-ups and the only grant to support cooperatives, it has never been reviewed to assess its impact on cooperatives.

19. Way Forward The Department
Has introdcued a new Branch: Integrated Cooperatives Development, heeaded by an Acting DGG, who is a Chief Director
Functions such as CIS, Cooperatives training, Research (including M & E) and stakeholder relations, partnerships, planning etc, have been establsihed in the branch in order to forge an integrated approach
Though this Branch is not optimally resourced, it has additional human resources but no additional budget. Hence, innovations in the approach to cooperatives development with financail implications will be funded from the same budget. As such the department has applied for a deviation to use some of the CIS budget to funded the 3 pilots (Cluster appraoch). The implications is that less coops will then be funded through CIS
A formal review of CIS has been commissioned and the report is due in the last quarter
Developed a draft Integrated Cooperatives Development Strategy which has been presented to the Minister, for strategic and political guidance. Minister has met with the team twice. This strategy will be enhanced to embrace the Portfolio Strategic Approach, which will define the roles of the department and entities
This unit of work will be concluded before 30 June such that it can be part of the Department’s 2018/19 ENE budget bid

20. “
THANK YOU.