With South Africa’s cooperatives performing at a level lower than what is expected when compared to other countries, the Minister of Small Business Development, Stella Ndabeni-Abrahams, has outlined interventions to enable cooperatives to thrive.
These include providing financial support, cutting red tape, enabling access to markets, equipping co-operative members with the necessary business acumen and skills as well as making co-operatives more bankable.
“We must cut the red-tape for co-operatives. This includes our own red-tape within [the] Small Enterprise Development and Finance Agency (SEDFA) to reduce the turnaround times for those who are applying for support.
“This is something I have asked the board to prioritise. Digital systems and new forms of credit ratings will help enormously. Digital platforms will allow for easy registration, compliance, and access to the suite of financial and non-financial support across the eco-system,” she said.
Ndabeni-Abrahams was addressing an International Day of Cooperatives event at Sun City Resort on Thursday.
According to the Minister, South Africa has an extremely concentrated economy, with high barriers to entry for new entrants.
“Here we are working with the public and private sector to co-create markets for small enterprises, including co-operatives. We have noted that co-operatives do not benefit enough from Enterprise Supplier Development in terms of taking up localisation opportunities in corporate and government supply chains. We must also ensure that our exporter development programme also targets co-operatives.”
This as the regulations of the Public Procurement Act are soon to be gazetted and they are expected to open markets for co-operatives. The Act establishes a single framework that regulates public procurement, including preferential procurement, by all organs of state and promotes the use of technology for efficiency and effectiveness.
President Cyril Ramaphosa signed into law the legislation in July last year.
“We must ensure co-operatives are ready to serve these markets. We must equip our co-operative members with the necessary business acumen and skills to ensure more co-operatives succeed.
“Through SEDFA, we have established more than 120 incubators and digital hubs, which also need to service co-operatives,” the Minister said.
Government has numerous skills programmes with relevant Sector Education and Training Authorities (SETAs), including bringing in commerce graduates to scale the provision of business skills.
“Co-operative members must be business smart, innovative and entrepreneurial. Co-operatives are competing with other private business entities and need to produce quality products and services at the right price,” the Minister said.
Compliance and support
Ndabeni-Abrahams emphasised the importance of ensuring co-operatives are bankable.
“One of the weaknesses that has been identified for co-operatives is around compliance and corporate governance. This must be attended to. This is why our Co-operatives Development Support Programme now has a strong business development component, besides also providing financial support.”
As part of ongoing efforts by government to provide financial support for cooperatives government will this year disburse R61.368 million to co-operatives through the SEDFA.
Of this amount the Eastern Cape will receive R7 977 840, an amount of R7 364 160 is earmarked for the Free State and Gauteng will get R6 136 800.
Limpopo will receive R8 591 520; Mpumalanga will receive R5 523 120; the Northern Cape R4 909 440; the North-West will get R7 364 160 and the Western Cape will receive R6 136 800.
Development Fund
“Besides this dedicated Cooperatives Development Support Fund, co-operatives can also apply for the other financial products we offer through SEDFA’s Development Fund and Commercial Fund.
“The SEDFA Development Fund for example will this year disburse R792 million in financial support, and R2.95 billion over the Medium-Term Expenditure Framework (MTEF). This includes the Township and Rural Entrepreneurship Programmes (TREP), for which we will disburse R843 million this year,” the Minister said.
In terms of the Development Fund, rural provinces like the Eastern Cape and Limpopo are targeted to each receive R118.8 million for 2025/26; KwaZulu-Natal will get R102.96 million; the North- West R95.04 million; Mpumalanga and the Northern Cape R79.2 million each; the Western Cape R71.28 million; Gauteng R71.28 million, and the Free State R55.44 million.
Fund of Funds
Through the Micro, Small, and Medium Enterprises (MSMEs) and Co-operatives Funding Policy, the Department of Small Business Development is also advocating for a Fund of Funds.
The department is working with the Department of Trade, Industry and Competition (the dtic) on the R100 billion Transformation Fund, which will also support co-operatives.
“We must look at how we develop a pipeline of capital ready co-operatives to draw down this fund. We are also looking at how to scale co-operative banking, now that we have the Cooperative Banks Development Agency as part of SEDFA. We are also pushing for recognition of a moveable asset registry, and alternative credit rating system,” Ndabeni-Abrahams said. -SAnews.gov.za
