SMD

Annual Report 2023/2024

Matters raised by the Portfolio Committee Department’s response

The Department chose to continue operating on the interim arrangements for operational reasons, which include: % To allow for completion of operational and APP targets that senior managers contracted to at the start of the 2022/23 reporting period. % To allow for the placement process to unfold without interruptions to operations. That is, employees were informed on placement but only moved to the new post effective 1 April 2023 to contract for the new financial year. % To allow for the appeals process to unfold and be concluded prior to advertisement of vacant or new posts.

The approved structure allowed for a hundred and forty-six (146) new posts. For the 2023/24 financial year, the Departmental structure moved from 211 to 299 posts, meaning that eighty-eight 88 new posts were created. It should however be noted that the vacancy rate still remains high. For the 2023/24 APP target the Department has committed to a 5% vacancy rate towards filling the organisational structure. To date the majority of the senior management positions have been advertised and are at recruitment stage.

The Department has managed to decrease the vacancy rate by 5.7% (35.5% at the start of the reporting period [April 2023] to 29.8% at 30 October 2023). At present, the Department has eighty-three (83) vacancies of which forty-four (44) are in the recruitment process and not impacted by the cost containment measures (except for securing authorisation codes to allow the Department to appoint as soon as offers are accepted). This will move the Department to a 73% capacity rate. The DSBD has also consulted with the Minister for Public Service and Administration (MPSA) to allow for thirty-four (34) critical posts to be filled, however DPSA has only granted concurrence for twenty-nine (29) posts to be filled. In addition, the Director-General post was advertised on 12 January 2024 and the interviews was scheduled for February 2024. The process with regards to the appointment of the Director-General is being finalised.

The Department has embarked on policy review and has come up with an overarching strategic Framework through the NISED as mentioned. The legislation as mentioned is also being processed through Parliament to bring one stop entity that will enhance the development of small enterprises in the country and provide for some remedial actions in areas of injustices through the office of the Ombud. Furthermore, the Department is finalising the SMME and Co-operatives Funding Policy, which is being processed through structures such as NEDLAC, Economic Cluster and ultimately Cabinet in order to effectively be implemented in the next 2024/25 financial year.

It is noted that the Department was successful in finalising the organisational organogram, nonetheless, chose to place staff on the approved structure while continuing to operate on the interim structure until the conclusion of the 2022/23 financial year. The

Department reported a vacancy rate of 10 percent, missing its vacancy rate target by 0.1 percent. However, this is an improvement compared to the previous year’s 16.5 per cent vacancy rate. The Committee is optimistic that bringing the vacancy rate to lower levels will bring

much-needed stability after years of operating under a start-up structure, which was largely responsible for the high vacancy rate at the senior management level. While the moratorium on filling of vacancies was lifted in the current year, National Treasury has

nevertheless, issued a guide on cost containment that might negatively affect the filling of vacancies by the Department. The Committee will monitor the

Department’s commitment of reducing vacancy rate to less than 10 percent.

On the area of policy and legislation the Committee notes that, even though the National Small Enterprise Amendment Bill was not achieved during the financial year under review, the Bill has since been introduced in Parliament during quarter one of 2023/24 financial year where it is currently being processed in accordance with Parliamentary processes. Other notable areas of progress are SMME and Funding policy, which was gazetted for public comments in April 2023, so is the National Integrated Small Enterprise Development Strategic Framework where the Department embarked on

consultations session with key role players in the small enterprise ecosystem to solicit inputs to the finalisation of the NISED Strategic Framework.

82

Department of Small Business Development • GOVERNANCE • Part C