DSBD & SEDFA Q1 2026/27 Performance; Progress on Spaza Shops Support Fund and allegations

Video The Portfolio Committee was informed that the Department on Small Business Development (DSBD) had achieved 85% (23 of its 27) Quarter 1 targets for 2026/27. All targets under Administration and Sector Policy and Research were achieved, while lower performance was recorded in Integrated Co-operatives and Micro Enterprise Development and Enterprise Development, Innovation and Entrepreneurship. DSBD reported progress support for municipalities, market opportunities for micro, small and medium enterprises (MSMEs), policy development and strategic partnerships. Four targets were not achieved due to delays in programme approvals, equipment deliveries and the finalisation of close-out reports, as well as outstanding deliveries under the Asset Assist Programme. Corrective measures would be implemented during the second quarter. DSBD gave a progress report on the implementation of the Spaza Shop Support Fund, which was intended to address challenges faced by spaza shop owners, including limited access to finance, high operating costs, limited bulk purchasing opportunities and food safety concerns. The Fund provided qualifying businesses with inventory support of up to R40 000, Point of Sale devices, infrastructure refurbishment and training. A joint action plan had been developed with other government structures to improve the registration of informal and micro businesses, while 7 685 spaza shop records from four provinces had been validated as an initial dataset. By 31 July 2026, 5 327 complete applications had been received and 5 064 assessed, with 1 386 applications approved at a value of R83.9 million. Training and Point of Sale devices had been provided to 1 026 spaza shops. However, municipal licensing remained a significant constraint, with 38% of applications still lacking valid licences or permits. Disbursements stood at R57 million, and the Department identified accelerating approvals, improving municipal licensing assistance and strengthening beneficiary support as immediate priorities. The Small Enterprise Development Finance Agency (SEDFA) reported 62% of its targets achieved during the 2026/27 first quarter, supporting 32 331 MSMEs, disbursing R453 million to small enterprises and facilitating 13 645 jobs. Strong performance was recorded in ecosystem development and business development services, including township and rural enterprise support, incubation, training, mentorship and market access. However, the Lending and Investment Programme recorded mixed results, with lending approvals and credit guarantees exceeding targets while disbursements, the number of enterprises financed and job creation remained below target. Delays were attributed to slow uptake of loan facilities, outstanding approval processes and disbursement delays. SEDFA corrective measures included greater engagement with funded institutions, additional resources and improvements to turnaround times. Its financial position remained positive, with total assets of R8.94 billion and net profit after tax of R185.5 million against a budget of R85.5 million. During the discussion, Members expressed concern about the slow implementation of the Spaza Shop Support Fund, the relatively low number of beneficiaries reached and the lack of sufficient information on the allocation of public funds. Questions were raised about the registration and licensing of spaza shops, the validation of applicants, incomplete applications and the extent to which municipalities were assisting with licensing requirements. Members also sought clarity on the eligibility and verification of beneficiaries, particularly where concerns had been raised about foreign ownership and compliance with immigration and business licensing requirements. They called for greater transparency on beneficiaries and funding, stronger coordination between national, provincial and local government, improved outreach in rural and under-served areas, and mechanisms to ensure that funding produced sustainable businesses and employment rather than merely meeting numerical targets. Concerns were raised if DSBD had sufficient staffing and if its digital transformation initiatives were sufficiently effective in reducing administrative barriers. The Department and SEDFA responded by explaining that several measures were being implemented to address these concerns. DSBD reported that it was developing a consolidated digital platform for business registration and licensing to streamline processes and reduce duplication. It clarified that outreach activities were being conducted across provinces and applications were being delayed where businesses could not be verified, information was inconsistent or valid licences were unavailable. A recruitment plan was in progress to address vacancies and strengthen capacity. On beneficiary eligibility, it explained that the Fund was restricted to qualifying South African citizens and that verification processes were being undertaken. Concerns about foreign-owned businesses were being addressed through an inter-ministerial process, while basic health, safety and hygiene requirements remained non-negotiable. SEDFA reported that its risk unit was conducting verification and that branches and planned mobile offices would be used to improve access to services, particularly in rural communities. In conclusion, the Committee noted that a number of issues on the Spaza Shop Support Fund, beneficiary verification, municipal licensing, programme implementation and accountability remained outstanding and would require further attention. DSBD and SEDFA were expected to continue strengthening verification, outreach, digital systems and intergovernmental coordination to improve access to support and ensure that public resources achieved meaningful economic outcomes. The Deputy Minister said that outstanding matters would be addressed during subsequent engagements.