SMD

Annual Report 2023/2024

not in accordance with the National Credit Act (NCA). sefa has established an action plan in response to the interest charges, sefa engaged with these institutions and there is a proposal in place to consider further reductions of charges to the micro entrepreneurs. The engagement with DBSD on the matter of the interest rate support is still ongoing. Lastly, a cost to end-user exercise has been conducted on the retail finance intermediaries under the SME Wholesale Lending and this revealed that Retail Financial Intermediaries (RFIs) lend within the limits of NCA. Furthermore, cost of funding to end-users will be included in the facility loan agreements for all RFIs. commercial crime unit. The Committee fully supports the Board’s no-nonsense approach to tackling corruption. sefa welcomes the Committee’s support to tackle malfeasance and corruption. Furthermore, sefa has joined a forum of companies in the financial services sector, whose objective is to share the best fraud practices locally and internationally. forensic companies to conduct various investigations in the agency. Accordingly, four cases have since been referred to law enforcement authorities, specifically the Committee’s findings. The Committee will monitor the action plan and ensure that its recommendations are incorporated in the 2024/25 annual performance plan. The Committee learnt and welcomes the report that sefa hired or placed in its database a panel of 27

Matters raised by the Portfolio Committee Department’s response

All sefa’s Micro Finance Intermediaries are registered entities with the National Credit Regulator and compliant with the National Credit Act in respect of their charges to their end user clients. The developmental Credit providers using the Grameen Bank group methodologies serving the very poorest clients all charge significantly less than the maximum limits provided by the Act. Notwithstanding the fact that the sefa Micro Finance clients are well within the limits of the National Credit Act in respect of their

During the 2023/24 financial year, the DSBD began to develop the Energy Support Scheme (ESS) for informal and micro enterprises using the Informal and Micro Enterprise Development Programme (IMEDP) approach for the provision of power supply tools and equipment e.g. generators, Photo-Voltaic Cells, etc. through improved collaboration with provinces to provide complementary support focusing on access to alternative power. Micro enterprises that fall above the ESS threshold that is geared for informal enterprises are to be supported by Seda with higher output energy support tools and equipment such as solar panels, etc. The proposed packages for rolling out the Energy Support Scheme, including the required resources, Guidelines and Standard Operating Procedures (SOPs), have been packaged and presented to internal DSBD stakeholders and to targeted external role players and are awaiting confirmation of funding from National Treasury. The DSBD expects to commence roll-out of this much anticipated scheme during the first quarter of 2024/25 once all the required financial resources are made available to the Department. The only other programme that has an element of energy relief is the proposed Product Market where seven SEIF structures will be fitted with alternative energy supply. Funding for this intervention was only secured during the 2023 AENE processes approved by Parliament in January 2024. Funds will be transferred to Seda in January and February 2024.

The Committee takes note of the fact that on 17 January 2023, the Department announced that it was

immediately working on an energy relief package for the small, medium, informal, and micro sectors in partnership

with its agencies and various stakeholders within and outside government. The contents of the package, as well as the requirements and avenues for applying for

relief, were to be revealed almost straightaway. Not much headway has been made in this regard.

In March 2023, the Committee conducted an oversight visit in the North West province where a number of

concerns were raised concerning governance issues such as loan origination, lack of monitoring financial intermediaries and their performance, and high interest rates charged by intermediaries that were

Part C • GOVERNANCE • Department of Small Business Development

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