Department of Small Business Development

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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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 approved costs of qualifying interventions, and approved enterprises will contribute 20% of the necessary costs (for business development services and training). 10

12. 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 thedsbd. 11

13. 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

14. 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

15. Rationale for Co-operatives Development Unit GEOGRAPHIC SPREAD 2011/12-2014/15 14

16. Sector Breakdown Rationale for Co-operatives Development Unit 15

17. Black Business Supplier Development Program (BBSDP) BBSDP: APPROVED FEMALE-OWNED SMMES • Total value of value of female owned enterprises is R 421 824 • No of Approved Projects for the periods under review is 1154 16

18. Black Business Supplier Development Program (BBSDP) • 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

19. 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 • 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 18

20. 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 19

21. 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. 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. 20

22. 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 ThulaniMsimango 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) • 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

23. 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. 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. 22

24. 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. 23

25. 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% 24

26. 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 dsbdmakes 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. 25

27. 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 dsbdofferings • 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. 26

28. 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: 27

29. Unit Programs Rationale for Co-operatives Development Unit Products Pipeline : 28

30. Unit Performance Plan Rationale for Co-operatives Development Unit 29

31. Budget breakdown in terms of Programs and projects 30

32. Budget breakdown in terms of Programs and projects 31

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34. Workforce Profile according to Salary levels 33

35. 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) • Budgetary constrains (awaiting virements or transfers during the year) results in delays 34

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