Seda’s fortunes turned around

2010-10-02 11:55

Small Enterprise Development Agency (Seda) chief executive ­officer Hlonela Lupuwana has turned around the fortunes of the once battling organisation.

In the 2009/2010 financial year Seda attracted 112 400 new clients and 63% of them were given ­access to the agency’s products and services.

This scenario is the antithesis of how the organisation had been run since its inception in 2004, when it became infamous for lacking ­internal financial controls and for infighting, instead of for helping small businesses.

However, the services of Lupuwana, who has brought stability to the organisation since she arrived in 2008, did not come cheap.

Her salary leapt from R603 351 to more than R1.2 million in the past ­financial year.

Defending Lupuwana’s substantial salary adjustment, Seda chairperson Linda Mngomezulu says the agency has to offer remuneration packages that display a commitment to retaining and attracting employees with scarce skills.

“Stability is created by people who have skills and the salaries we pay should express seriousness,” he says.

Mngomezulu appears to be also referring to the amount of money given to Seda directors in the past financial year, which increased from R2.7?million to R3.4?million.

These remuneration packages, coupled with the 60% of Seda’s budget allocation for staff salaries and high lease agree­­­ments that will run to up to R107?million, raised questions as to whether state-owned enterprise development institutions should rather merge to decrease the cost of servicing small businesses efficiently.

Lupuwana agrees that for the country to have similar enterprise development institutions, such as Khula and the National Empowerment Fund, running separately, is costly.

“This means there is a lot of money being spent on infrastructure and staff,” she says.

The small business development chief director at the department of trade and industry, Mojalefa ­Mohoto, says there exists a strong ­argument for the merging of funding institutions.

“If we look at other developing countries such as Brazil (and Australia), small businesses are being serviced by one agency,” he says.

Mohoto says if the merger is done it should first be implemented on a smaller scale to test whether it yields positive results.

Small business analyst Khethiwe Kubheka says merging institutions is a bad idea.

“A merger would centralise power, which could be easily abused by the few individuals who would control the organisation.

“At the end this could become detrimental to small businesses,” she says.

“It would also lead to a duplication of work functions, just like when the Umsobomvu Youth Fund merged with the National Youth Commission.”

Kubheka instead called for the creation of a central database system that could be used by enterprise development institutions to check the credit status of entrepreneurs who request funding.

“With the current system, you can find an entrepreneur squandering money that was awarded by the NYDA and then easily getting another loan from Seda, for instance,” she says.

She takes a swipe at the high salaries of Seda’s directors and management. She says they do not ­deserve the pay adjustments because they failed to help small businesses avoid closing shop last year due to the recession.

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