Submission to the Portfolio Committee on the National Small Business Amendment Bill :

This submission is made on-behalf of the Services Sectoral Education and Training Authority.

A Schedule of 29 Industries covered within the scope of the Services SETA, including a list of Stakeholder Organised Business and Organised Labour constituencies is attached in Appendix 1.

The Services SETA represents in-excess of 60 000 member companies, where 91% of those are Small (employing less than 19 people).

Submissions :

Marginalisation of the Services Sector SME :

It is the submission by the Services SETA that neither the Bill in-question, nor the National Small Business Act of 1996, properly caters for the needs of truly small business, in the context of the South African business environment.

The effect of both the current and proposed legislation is "benign" i.e. in doing nothing for the average "small" business within the scope of the Services SETA, this legislation becomes destructive i.e. it fails to cater either to the needs of these Industries for recognition and identity, nor does it serve to draw or attract any supply-side incentives, currently available to the traditionally larger-sized Industries preferred for incentives, by the Department of Trade and Industries.

In-short, our Industries have been marginalized, and considered inconsequential by DTI, to the extent that DTI have labeled them "downstream" Industries, and have dealt with them, and continue to deal with them, in an offhand manner. Any interaction to-date has purely been at the behest of the Industries themselves rather than proactively by DTI.

The DTI does not understand the Services Sector, and hence avoids it like the plague. It prefers to categorise Services as Tourism and Hospitality, which it is not. In-spite of this sector contributing an enormous amount to the fiscus, and including the Labour Recruitment Industry, Contract Cleaning Industry and 27 other Industries including Hairdressing, Marketing, Marketing Research and the Funeral Industry, where this sector employs in-excess of 2 million workers in South Africa, DTI has chosen to have no focus whatsoever on our Sector but instead to concentrate on Mining, Manufacturing and the-like. This, despite the fact that the fastest growing economic trend in South Africa is outsourcing and between the Labour Recruitment Industry and the Project Management Industry within the Services Sector, the Services Sector own the outsourcing trend.

Incomplete Composition of the "Council"

In this respect, it is the submission of the Services SETA that the "Council" as contemplated in Act 102 of 1996, MUST make allowance for the proper representation of representatives from truly "small" business, namely from the 29 Industries included in the Services Sector, where in-excess of 91% of those companies employ less that 19 staff. (This statistic has been extrapolated from Levy-paying companies, where there are 60 000 which have registered with the Services SETA). The Act currently does not make such allowance and hence the "Council" operates to the exclusion of the Services Sector.

3. Deficiencies with the "Agency"

Where the Act makes allowance for the recognition of Ntsika as the official and singular "Agency", it is the submission of the Services Sector, that despite Ntsika having been conferred with this status in 1996, absolutely no advantage has been gained, conferred nor offered by-way of benefits to any Industry within the Services Sector by this "Agency". In-fact Ntsika is regarded by the Services Sector as absolutely irrelevant. It has proven to be a waste of scarce financial resources and totally ineffective in any attempts to establish its range of services. It does not understand our Sector, nor has it made any attempts whatsoever to engage with our sector to attempt to understand it, or benefit it.

Proposal for the recognition of additional "Sectoral-specific Agencies"

It is the proposal of the Services Sector, that the Bill be changed to make allowance for the introduction of Sectoral-specific Agencies to operate with the same delegated authority as Ntsika, which currently operates as an exclusive "Agency".

Such Sectoral-specific Agencies would be positioned to integrate sectoral-specific SETA’s (Sector Education and Training Authorities) into their structures, and in so-doing would be in a better, more directed and focused position to deliver on the functions as contemplated in 10 (1) (2) and (3) of Act 102 of 1006, in-particular those functions which make reference to :

Information Dissemination and Collection

Provision for the financing of these functions has already been made through the Skills Development Levies Act and the Skills Development Act.

To entrust such functions with Ntsika, as the Act currently does, and the Bill continues to promote, does not make sense given the presence, impact and penetration which SETA’s, listed as Statutory Authorities under the Minister of Labour, are expressly responsible for these functions. The fact that Ntsika has not penetrated Sectors where SETA’s are present is a testimony to this problem. If anything there is a clear conflict between Act 102 0f 1996, and the Skills Development Act. These functions clearly fall within the domain of SETA’s which are eminently more qualified to execute them proficiently due to their structure and delegated competencies.

It is suggested that such Sectoral-specific Agencies would need to be composed primarily of "Organised" Business and Labour from the respective sectors, as SETA governing structures are currently composed. In-addition, it is suggested that the Bill be changed to make provision for Economists, Marketing Professionals, and a Chartered Accountant to be standing members of governing structures of Agencies.

These Agencies would be in an ideal position to ensure proper "organization" of the respective sector for purposes of SME representation.

Recognition of Sectoral-specific Agencies :

It is proposed that the role of the "Council" be extended to incorporate the functions of recognition / accreditation and Quality Assurance amongst all Agencies, based on it’s (the Council) establishing acceptable criteria and terms of reference which should include but not be restricted to:

Evidenced representivity of the body making application, in the respective Sector.
An expressed mandate from the respective sectoral constituency
Equity in the composition of any proposed governance and operational structure
A proposed Business and Financing Plan
Evidenced attempts at the integration of structures within the Sector including such structures as Bargaining Councils, SETA’s, Employer Associations, Trade Unions, Export Councils, Statutory and Professional Bodies, etc.

The proposed role of Ntsika :

It is proposed that Ntsika continue to operate as an accredited Agency in-respect of emerging, non-formal entrepreneurs.

In this respect, Ntsika will have to operate by structuring Memorandums of Understanding between itself and Sectoral-specific Agencies to ensure a smooth path for these emerging SME’s towards formalization and hence transition into formalized Sectors.

Responsibility for the "Schedule"

It is the submission of the Services Sector that the "Schedule" as it is currently composed is too rigid and does not make allowance for the variance between different Sectors. In its current form it is insulting to Small Business of the kind covered within the Services Sector. It is the submission of the Services SETA that it is not based on valid or reliable research within the Services Sector, and thus probably in any other sector.

It is proposed that Sectoral-specific Agencies be charged with the responsibility of executing relevant sectoral research annually, for submission to the Council, which would in this way, give credence, meaning and validity to this "Schedule" as published from time-to-time.

This function is critical, because it appears that it is on the basis of the information provided in this schedule, that DTI relies for its processes of prioritization in-terms of incentive provisions and scheme changes.