Question NW2912 to the Minister of Small Business Development

Reply:

I have been advised that;

aThe key lessons learnt by the Department Small Business Development (DSBD) from the COVID-19 period in terms of its role in supporting informal businesses located in townships and rural areas can be categorised according to the needs of these businesses as short-term and long-term needs.

Short-term needs relate to the support that was required by informal businesses to recover from the impact of the COVID–19 pandemic and related lockdown measures which are:

1. Financial support – more than half of informal business owners indicated that they were in need of financial support just to be able to remain in business.
2. Support with marketing and customer acquisition – a large number of informal businesses sought ways to market their businesses and to increase their customer base under the prevailing circumstances.
3. Help to comply with hygiene standards – many of the businesses were looking for ways to keep their businesses safe and hygienic and to comply with the COVID-19 regulations.
4. Mentoring and training – some of the informal businesses that received support also requested to receive ongoing mentoring and further training.

Formal businesses during the COVID-19 pandemic were more likely to receive support from Government programmes while entrepreneurs in the informal economy relied mainly on Social Grants. Long-term needs indicated to us as the DSBD that the COVID-19 pandemic has opened multiple opportunities to strengthen informal and micro businesses in the long term in the following areas:

1. Use of digital channels and technology – many informal businesses see potential in the use of social media for marketing but the high cost of data remains the leading obstacle.
2. Collaboration with peers and more established organisations – many would like to sell products or services to more established businesses while others feel they will benefit from introductions and advice on how to work with them.
3. Transitioning from the informal to the formal economy – many would register their informal businesses if it helped them to access funding and grow their customer base.
4. Improve overall infrastructure and create an enabling environment – a number of informal businesses reported poor access to basic infrastructure while others reported challenges with authorities around places where they operate their informal businesses.

b) The COVID-19 pandemic has opened multiple opportunities to strengthen informal businesses in the long run. The Department continues to address the lessons learnt through its current programmes and by developing appropriate responsive interventions within the Small Business Development Portfolio (DSBD, Small Enterprise Development Agency and Small Enterprise Finance Agency) and through partnerships.

1. The Department of Small Business Development designated the informal business sector as a significant contributor to the country’s gross domestic product (GDP), employment creation, sustainable livelihoods and local economic development in the country. The National Informal Business Upliftment Strategy (NIBUS) was developed as a responsive strategy to this position. The Strategy is aimed at supporting informal businesses, which are mostly based in township and rural areas, to ensure that they become part of the economic mainstream of the country and to receive all the necessary support to ensure their growth and well-being.
2. The Informal and Micro Enterprise Development Programme (IMEDP), Shared Economic Infrastructure Facility (SEIF), Township and Rural Entrepreneurship Programme (TREP) and others are instruments of the Department that were developed as part of the Strategy continue to play a role in dealing with current challenges faced by informal businesses and in achieving the objectives of government where support to informal businesses is being prioritised. The instruments of the DSBD together with its programmatic interventions as implemented by the DSBD and its entities, Seda (non-financial support) and sefa (financial support) will continue to be positioned and used as interventions to ensure that the DSBD will always be in a position to assist informal businesses during natural disasters and at all other times.