SPEECH BY THE MINISTER OF SMALL BUSINESS DEVELOPMENT, MS LINDIWE ZULU, AT THE HOOKUP DINNER 2 ND ANNIVERSARY

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1 SPEECH BY THE MINISTER OF SMALL BUSINESS DEVELOPMENT, MS LINDIWE ZULU, AT THE HOOKUP DINNER 2 ND ANNIVERSARY JOHANNESBURG (1 AUGUST 2014) Programme Director, Distinguished guests, Ladies and gentlemen I am honoured and delighted to be part of this exciting occasion this evening. In your invitation, you specifically asked me to unpack the agenda of the new Ministry of Small Business Development and to engage with you on the aims and challenges of our new department. I shall endeavour to do exactly that! Programme Director, a consistent theme that runs throughout the ANC Manifesto, the 53 rd Conference of the ANC, 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, civil society and the entire nation in pursuit of this goal as we enter the Second Phase of our Transition. 1

2 Consistent with the ANC s commitment to place the economy and job creation at the centre stage, the President established the Ministry for Small Business Development. Through this intervention, we are determined to unlock economic opportunities and thus achieve inclusive economic growth and sustainable employment, particularly for women, youth and people with people with disabilities. The nation expects our department to make urgent and decisive interventions to grow the economy. It is self-evident that to defeat the triple challenges of poverty, unemployment and inequality requires radical and bold steps. It must trouble our collective conscience as a nation that, twenty years since our freedom, the participation of black people in the country s economy still leaves much to be desired. This is largely a result of constraints and obstacles placed in the way of black and women economic empowerment. My department carries a responsibility to help correct this historical injustice. Our key mandate is to enhance support to small businesses, informal businesses and cooperatives, with emphasis on programmes that would advance entrepreneurship amongst women, people with disabilities and youth, to effectively contribute to job creation, economic growth and economic inclusion. In fulfilling our mandate, we will seek to promote a co-ordinated and integrated support across government spheres and institutions for SMMEs. 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. 2

3 In this regard, the department will focus on enhanced support to Small Business and Cooperatives development with an emphasis on programmes to advance entrepreneurship amongst women, people with disabilities and youth to effectively contribute to job creation and economic growth. Support mechanisms will include access to finance, business skills development, market access, competitiveness, easing regulatory environment, advancing localisation, leveraging on public procurement. The department will also foster financial inclusion as well as create market access for small business and co-operatives. Through enhanced co-ordination and transversal agreements, the department will advance localisation, leveraging on public procurement while ensuring measurable accountability of state institutions in support of small business. The National Development Plan states that about 90% of jobs will be created through small and expanding companies by To achieve this requires a radical policy shift that recognises the urgent need to invest in small and medium businesses because they are key drivers of economic growth and job creation. We are convinced that if we are to make an impact on the job creation front, the common problems faced by SMMEs must be addressed. We will work with all our partners to address, among other challenges, the lack of access to markets and procurement, lack of access to finance and credit, low skills levels, lack of access to information. We will also make it easier and faster to register businesses by ensuring that all services are provided under one roof. 3

4 In line with the action plan on radical economic transformation, we will focus on providing effective support to small businesses and to ease the regulatory and compliance burden on the part of small businesses and to expand access to economic opportunities for historically excluded and vulnerable groups. We will review the current policy and legislative environment governing the small business sector in order to remove whatever constraints that undermine their success and to open the way to co-ordinated and integrated support to small businesses. Government has introduced a programme to reduce red tape affecting small businesses at the local government level. A partnership between the dti, CoGTA and SALGA resulted in the development of guidelines to reduce red tape. These guidelines serve as a practical implementation tool intended to assist local government, small business practitioners and small businesses themselves to further improve the small business environment. The guidelines were rolled out to all the 9 provinces with the aim of institutionalizing them in their annual plans. We will also pursue Youth Set-Asides in procurement across the three spheres of government to ensure that young entrepreneurs have abundant opportunities to grow and develop their enterprises in an environment that nurtures the development of these enterprises and enhances their job creation potential. We will work with the DTI to ensure that the revised BBBEE Codes are used as an additional measure to encourage private sector to pursue measures that are aimed at growing youth enterprises and cooperatives. 4

5 We continue to encourage partnerships between small and big businesses. One such instrument is the Incubation Support Programme. The Incubation Support Programme was launched in 2012 to encourage the private sector (especially big businesses) to develop new enterprises by transferring skills to these enterprises and providing them with procurement opportunities in their specific value chains. It is important that small businesses are not viewed as providers of non-core activities such as catering, cleaning, security and so on, but that they should be involved in the core activities of big businesses. Early this year, Cabinet approved the Informal Business Upliftment Strategy targeted at informal, township and rural businesses. The informal business strategy proposes two instruments. One such instrument is the Shared Economic Infrastructure Facility which seeks to foster partnerships with local municipalities to refurbish, renovate and build infrastructure for small businesses. The second instrument, the Informal Business Upliftment Facility, is going to support individual informal businesses directly. This scheme will invest in upgrading the skills of informal business owners as well as provide them with support to acquire tools, equipment and machinery for their businesses. When government deploys its resources in support of informal businesses our strategic objective is to graduate the informal businesses to become micro, small and some will even become medium size enterprises. That is why I call this sector the bedrock of entrepreneurship because it will breed entrepreneurs and nourish them to grow bigger and better. Our point of departure is that small businesses and co-operatives are the key drivers of economic growth and job creation in South Africa. 5

6 We have a collective responsibility to inculcate a culture of entrepreneurship in our country. The sad reality about our country is that we have one of the lowest rates of entrepreneurship activity in the world. Apartheid has decimated the culture of entrepreneurship amongst our people, meaning that young Africans are unlikely to have grown up in households with business people who would have shaped their understanding of market opportunities, their access to networks and know-how. It is critical that we understand this context so that our programmatic responses to encourage youth enterprise development are sensitive to the challenges we face as a country. We will lead a massive entrepreneurship drive in order to create a nation of entrepreneurs. We are working with the Department of Basic Education to help institutionalize entrepreneurship education from primary school level. Our ultimate goal is to inculcate a culture of entrepreneurship in our country. The Department of Higher Education has commissioned a study to assess how government institutions can improve the effectiveness of entrepreneurship training in South Africa. There are also initiatives to partner unemployed university graduates with informal and township businesses so that these parties should share skills and experience. We are also empowering small businesses with an array of services such as accounting software, human resource and legal templates as well as the supporting small business owners to develop their own websites through WOZAONLINE. In addition, small business owners have an opportunity to register for business courses from a certificate to a masters degree for free if they pursue their studies on-line through Regenesys Business School. 6

7 The economic empowerment of our people cannot be postponed. History has placed a responsibility on the shoulders of this generation to find a path that will find lasting solutions to our country s socio-economic challenges. Working together, no challenge is insurmountable. I wish to challenge each one of you to seize opportunities created by the 1994 democratic breakthrough in order to create a better life for yourselves and your fellow citizens. I thank you 7

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