REMARKS BY THE MINISTER OF SMALL BUSINESS DEVELOPMENT, MS LINDIWE ZULU, ON THE OCCASION OF THE PROVINCIAL SMALL BUSINESS AND CO-OPERATIVE SUMMIT

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1 REMARKS BY THE MINISTER OF SMALL BUSINESS DEVELOPMENT, MS LINDIWE ZULU, ON THE OCCASION OF THE PROVINCIAL SMALL BUSINESS AND CO-OPERATIVE SUMMIT DURBAN (6 MARCH 2015) Programme Director, MEC for Economic Development and Tourism, Mr Michael Mabuyakhulu, Deputy Mayor of Durban Metro, Cllr. Nomvuzo Shabalala Senior government officials across all spheres, Distinguished guests, Ladies and gentlemen I am honoured and humbled to be addressing you today. I am confident that all of us gathered here this morning are inspired by the possibilities and opportunities presented by government s new emphasis on small business and co-operative development. I have no doubt that many of you decided to embrace this process because you believe that, arising from today s engagement, will the emergence of concrete and practical programmes that will assist government across all spheres to respond effectively to the challenges that confront small businesses and cooperatives. We therefore do not have the luxury of turning this summit into a workshop. The entrepreneurs and aspirant businesspeople of

2 KwaZulu-Natal are keenly awaiting the outcomes of this summit. We dare not fail them. We must, out of this gathering, emerge with building blocks for robust and sustainable programmes that will firmly place SMMEs and cooperatives at the centre of accelerated economic growth and development. I am confident that the calibre of people who are attending this summit will assist us find creative and effective ways of ensuring that small businesses become the true centres of accelerated growth and development. Programme Director, a consistent theme that runs throughout the ANC Manifesto, the State of the Nation Address and the National Development Plan is the urgent need to focus on decisive action to grow the economy and create employment. Our collective responsibility is to mobilise the whole of government and the nation s resources in pursuit of this goal as we enter our Second Phase of our Transition. The National Development Plan articulates a vision of an economy that is inclusive, equitable and fast growing, with SMME contributing 90% of the jobs by There is, therefore, no doubt in my mind that we have to work smart in order create an inclusive economy where all citizens of the country enjoy the benefits of our freedom. On this note, we will continue to stress the need to foster closer working relations between big and small businesses. Through a genuine symbiotic relationship between big and small businesses, we can honestly declare that our economy is inclusive, equitable and fast growing.

3 I have decided to embark on a process of engagements with provinces. These summits seek to enhance co-ordinated and integrated support to small businesses and co-operatives. The summits provide a perfect opportunity to remind all three spheres of government of the challenges that confront small enterprises. As the department, we are determined to discharge our mandate of lead an integrated approach to the promotion and development of small businesses and cooperatives. There is acknowledgement across the globe that small business and entrepreneurship development is a vehicle for stimulating economic growth. We have examined countries that have excelled in propelling economic growth and concluded that these countries have achieved higher growth rates, created wealth and higher earnings per capita through a mind-set of lifting one another up. A healthy SMME sector has the potential to make a massive contribution to the economy by creating more employment opportunities and generating higher production volumes. In 2007, the contribution of SMMEs to GDP was 35%. Targets for future contributions to GDP range from 60% to 80% over the next 10 to 15 years. Recognising the importance of the SMME sector in dealing with our nation s economic challenges, which include poverty, high unemployment rates and inequality, our government made a decision to create the Department of Small Business Development (DSBD). In his State of the Nation Address, President Zuma placed small business at the centre stage of radical economic transformation when he asserted: Small business is big business. For us in the economic sector, this statement is a clarion call to action and a bold assertion

4 about the critical importance of small businesses and co-operatives in economic transformation, job creation and economic inclusion. The vision of the department is to see a radically transformed economy through effective development and increased participation of SMMEs and cooperatives in the mainstream economy. Emphasising that our economy needs a major push forward, the President shared with the nation government s nine point plan to ignite growth and create jobs. These are; Resolving the energy challenge. Revitalising agriculture and the agro-processing value chain. Advancing beneficiation or adding value to our mineral wealth. More effective implementation of a higher impact Industrial Policy Action Plan. Encouraging private sector investment. Moderating workplace conflict. Unlocking the potential of SMMEs, cooperatives, township and rural enterprises. State reform and boosting the role of state owned companies, ICT infrastructure or broadband roll out, water, sanitation and transport infrastructure as well as Operation Phakisa aimed growing the ocean economy and other sectors. Through the State of the Nation Address, the President has instructed us to unlock the potential of SMMEs, cooperatives, township and rural enterprises. We are clear that through this intervention, we will be able

5 to unlock economic opportunities and thus achieve inclusive economic growth and sustainable employment, particularly for women, youth and people with people with disabilities. Indeed, SMMEs and Cooperatives are critical to unlocking economic opportunities and to achieve inclusive economic growth. We are convinced that if we are to make an impact on the job creation front, we have to invest in SMMEs and co-operatives because they are the key drivers of economic growth and job creation. We have no doubt that the much-needed economic growth and employment opportunities will come from a practical policy that enables small businesses to thrive and grow into profitable enterprises. Consistent with the message of the President, our policy interventions will seek to ensure that small businesses thrive and are able to grow into profitable medium-sized business. We are determined to make them the main drivers of economic growth and poverty eradication. They cannot remain small forever. It is envisaged that these SMMEs and Cooperatives will be drawn from the historically disadvantaged areas. The department will, through Cabinet, explore measures to strengthen the regulatory and policy framework for the informal business sector. In addition, we will expedite the implementation of the National Informal Business Upliftment Strategy (NIBUS) to drive government s support to township and rural enterprises. In addition, the Department of Small Business Development will work with local government on the review of by-laws affecting SMMEs and Co-operatives. We are confident that the National Informal Business Upliftment Strategy is a practical and

6 effective response to the President s marching orders as articulated in his reply to the State of the Nation Address debate. We will ensure a practical framework to strengthen and regulate the informal business sector. We will pursue an aggressive entrepreneurship drive and create an enabling environment that will make it easy for South Africans, particularly the youth, to start and sustain their businesses. As government, we have to pay particular attention to small businesses and co-operatives in underdeveloped areas such as townships and rural communities where there is lack of adequate infrastructure and appropriate policies to protect informal businesses. Government recognises that the small business and co-operative sector faces constraints in growing and sustaining their enterprises as a result of lack of business opportunities in both the public and private sectors. Government will set-aside 30% of appropriate categories of state procurement for purchasing from SMMEs, co-operatives, township and rural enterprises. National Treasury will issue the Practice Notes to all spheres of government to implement the set-asides programme. The implementation of the public procurement programme, especially the set-asides, will ensure an increased contribution to the GDP, sustainable livelihoods and creation of job opportunities by the small business sector. We recognise that we cannot work in isolation to bring up the SMME sector to function at its optimal levels, hence our keen approach towards collaboration and partnering with both the public and private sector. We will also mobilize the private sector to support SMMEs and Cooperatives. We will pursue partnerships with the private sector to ensure

7 that small businesses and co-operatives are assisted and empowered to grow into viable and thriving enterprises. Let us remember that big companies have for a long time managed to crowd out small businesses through their financial muscles, cash reserves and economies of scale. It is easier for big companies to sell products at lower prices and in the process squeeze out small businesses when competing for government procurement opportunities, especially because government considers the lowest price when procuring goods. In fulfilling our mandate, we will seek to promote a co-ordinated and integrated support across government spheres and institutions for SMMEs. Government is keen to ensure co-ordinated support to small businesses and co-operatives because each government department or agency across all three spheres has something to offer to small businesses and co-operatives. The department that I have the honour to lead will enter into transversal agreements with other government departments and government agencies across all spheres to implement requisite support measures for SMMEs and Co-operatives. The critical benefits of transversal agreements is that they will assist us to avoid duplication, utilise scarce resources optimally and give concrete expression to co-ordinated and integrated governance and service delivery. As we continue to seek better ways of supporting small businesses and co-operatives, we must appreciate the need for synergy between national, provincial and local government programmes. Policy harmony is critical if we are to unlock the potential of SMMEs and cooperatives.

8 In order to ensure access to finance for small businesses and cooperatives, the Small Enterprise Finance Agency will migrate to the Department of Small Business Development so as to ensure a more integrated approach towards extending support to SMMEs and cooperatives. We will ensure that the work of our funding agencies is informed by our vision of radical economic transformation. It is incorrect for a funding agency operating is a developmental state to adopt approaches that contradict the nation s agenda of working towards an inclusive economy that benefits all. We will ensure that SEFA adopts policies that respond to the economic aspirations of the historically oppressed and marginalised. This we must do because our struggle for liberation was for the economic emancipation and empowerment of our people. We will also develop a business rescue strategy aimed at supporting SMMEs and Cooperatives in financial distress. Working together we can do more. Let the robust discussions begin! I thank you