Minister of Small Business Development Budget Vote Speech

Minister of Small Business Development, Ms Lindiwe Zulu, gave her Budget Vote Speech on the 22 July 2014

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Honourable Chairperson/ Madam Speaker;

Minister Davies and other Ministers;
Deputy Minister Thabethe;
Deputy Minister  Masina and other Deputy Ministers;
DG Mr Lionel October;
Acting DG Ms Pumla Ncapayi;
Honourable Members;
Chairmen and CEOs of State Owned Companies;
Distinguished guests;
Captains of Industries;
Ladies and gentlemen.

We have just returned from a flurry of activities responding to a call by our government to honour the birthday of the late Comrade Nelson Mandela. Thousands responded positively. I for one joined the Premier of the Free State Comrade Ace Magashule in cleaning and painting Pelenomi Hospital. We take the opportunity to thank all who positively responded to this noble call.This show of solidarity and responsibility Chairperson, Honourable Members, should extend beyond just honouring Comrade Nelson Mandela.

There are critical areas in the life of South Africa that need unity of purpose, one of which would be the support for the call by the ANC for radical economic transformation. Furthermore it is important to, that the ANC is not anti-business, however, it has a responsibility to radically respond to the needs of the people including strong protection measures against exploitation and unjust measures. The ANC stands for an economy that is inclusive equitable and fast growing.

Those still debating the concept of radical economic transformation should realize it’s a do-or-die situation for the majority black people of South Africa.  Government cannot forever be a buffer between the rich and poor, neither can it be a scapegoat for those who prefer to meander or sit on the fence and not contribute meaningfully to the socio-economic challenges facing our country; this country belongs to all of us.

Government must deliver on its promises and create a conducive environment for all to earn their living. Together we will move South Africa forward. The world is conscious of the deep wounds inflicted upon our people by the defeated apartheid regime, it is also aware of our efforts to heal, but the focus on us is no longer as it was 20 years ago. The world that supported us is going through its own challenges, with some now looking at us as competitors. We therefore need to step up and take responsibility of our destiny.

Honourable Members, we must focus on ourselves and our needs, while realizing our commitment to African development and to the better world we envisage. Our ultimate goal is to build a South Africa with decent employment, entrepreneurial opportunities, a vibrant economy and a high quality of life; a South African economy geared towards addressing the triple challenges of unemployment, poverty and inequality.

Honourable Speaker/ Chairperson it is an honour for me to present my maiden budget vote jointly with the Department of Trade and Industry (dti), a department that has been the custodian of Small Medium and Micro-sized Enterprises (SMMEs) and Cooperatives. I am ably supported by Deputy Minister Elizabeth Thabethe, in this regard.

Chairperson, honourable members,

In the past years, much has been done by the dti and  Department of Economic Development respectively to address SMMEs and Cooperatives. However, and due to the ANC’s recognition of the importance of this sector, as well as listening to the calls by SMMEs and Cooperatives for a stand-alone Department, the ANC-led government decided to create a Department to give undivided attention, with its own budget and structures to advance the interests of SMMEs and Cooperatives. 

Chairperson it is important for us to note the programmes considered by the dti during the previous financial year including:

• Through the Incubation Support Programme, the dti has to date approved support to 39 incubations amounting to R590 million focusing on agriculture, services and the manufacturing sector. In addition the Small Enterprise Development Agency (SEDA) Technology Programme has created 291 new Small and Medium Enterprises (SME) entrants, supported 1227 existing SMMEs and created 1258 employment opportunities.
• Centres for Entrepreneurship, the King Hintsa FET College in Eastern Cape focusing on agro processing as well as Ekurhuleni West College in Gauteng focusing on welding and waste management. In the current financial year we envisage establishment of two additional institutions to upscale our efforts on entrepreneurship.
  28 projects were approved through the Support Programme for Industrial Innovation (SPII) amounting to R76 million with beneficiaries from Gauteng, Western Cape and KwaZulu-Natal. Areas of focus include the green economy, ICT, energy, manufacturing as well as manufacturing.
• Through the dti, the review and amendment of the Cooperatives Act and National Cooperatives Strategy has been completed and these will allow for the establishment of new institutional arrangements such as the Cooperatives Development Agency and Cooperatives Tribunal. In addition a total of 243 projects amounting to R62 million were funded through the Cooperatives Incentive Scheme during the previous financial year, with 1897 beneficiaries of which 990 were female, 253 youth, 25 with disabilities and 629 as male beneficiaries.
• The new Small Business Development (SBD) department will continue collaborating with Provincial entities to advance the Cabinet Decision of 2007 which calls for 85 % procurement of ten specified products and services (set asides). Within this context I would like to commend KwaZulu-Natal, Eastern Cape and most recently Free State on their efforts to advance the initiatives of the cooperatives movement in South Africa.
• Furthermore the dti has approved the establishment of the Secondary Marketing Cooperatives as well as an incentive amounting to R10 million per cooperative, focusing on enhanced value-add in respect of goods and services, use of technology as well as improved logistics and infrastructure.
• In addressing measures for a conducive environment, the dti has recently launched the National Informal Business Uplifment Support which will enhance enterprise development support, and coordinate intergovernmental and stakeholder relations for broader participation of South Africa’s informal sector in the economy. In addition to this the implementation of the Integrated Small Medium Micro Enterprise and Cooperatives Development will allow for harmonisation and co - locating opportunities in the informal sector.
• Furthermore the Red Tape Reduction Measures for Municipalities were launched and rolled out in all 9 Provinces. These will allow for reducing red tape at local government and also serve as a means for local business environment monitoring mechanism.
• During the course of the previous financial year the dti approved a Youth Enterprise Development Strategy aimed at increasing the contribution of youth owned enterprises to South Africa’s GDP. The Youth Strategy envisages direct support schemes for young entrepreneurs with an objective of creating and managing sustainable and efficient business capable of providing decent permanent jobs. In this regard my department will take the lead in the implementation of these programmes in collaboration with other departments and this will serve as direct response to South Africa’s National Youth Policy.

Honourable Members, it became imperative to set up a focused centre to help create a conducive, legal and regulatory environment including support for infrastructure and mechanisms to assist SMMEs and Cooperatives to grow sustainably. This centre will scale up support and expand the number and viability of the sector to achieve the development vision.

The SBD aims to provide extensive support to small business and cooperatives, increase support through consolidated public agencies, enterprise coaching, mentorship, incubation and intensive support programmes.

We will build on the commitment in the social accords to bring black owned small business and cooperatives into the supply chain of large companies and the public sector.  We will also mobilize the private sector and state owned enterprises to support SMMEs and Cooperatives.

Chairperson, the National Development Plan (NDP) envisages a treble sized economy by 2030 with a target of 11 million job opportunities and SMMEs and Cooperatives can make a meaningful contribution to this objective. We believe SMMEs and Cooperatives are a critical means to empower our people, a mechanism to draw new entrants into the economy, strengthen inclusive growth, build the social economy, encourage solidarity and create large numbers of jobs.

We envisage a close collaboration with Ministers Davies, Patel and their Deputies and draw on their respective experiences. This will allow for a successful and complete migration of functions, programmes and projects that have been in their purview. A coordinated effort is important as we believe the work around SMMEs and Cooperatives cuts across almost all government departments.

Chairperson, we present the budget mid-year and also at a time when we are engaged in the process of configuring the department as well as fulfilling the government’s plans to implement the changes to effect the macro-organisation of the state.

We are conscious of the need to establish the department with high speed, SMMEs and Cooperatives cannot afford vacuums of any sort. Within this context we have been mindful of the end user and have considered business continuity as a principle of which recipients will continue to benefit whilst we configure our department.

We cannot afford to disappoint organisations such as Black Business Council, National African Federated Chanber of Commerce (NAFCOC), the Cooperatives movement in South Africa and many others including Mr Sandile Zungu and our Honourable Chairperson Ruth Bengu who's passion for cooperatives runs deep.

Chairperson, facts and figures indicate that:SMMEs contribute 57% of South Africa’s GDP and account for 56% employment (77% with Informal sector). In an attempt to benchmark South Africa’s performance, there are three countries of interest, Brazil, Chile and India whose SMMEs and coops have approximately contributed 20% to their country’s GDP and employs 60 million people. This highlights the significant contribution by SMMES and cooperatives towards economic growth.

The department, guided by this understanding, will have to ensure a concerted effort focusing on enhancing areas such as policy, regulatory environment, advancing localization as well as leveraging on public procurement, financial and non-financial support, human capital, skills development, competitiveness, access to markets and entrepreneurial culture.

These elements will be achieved through enhanced coordination and transversal agreements with government entities and State-owned Enterprises whilst ensuring measurable accountability of State Institutions in support of SMMEs and Cooperatives.

Chairperson, Honourable Members, in advancing the initiatives of the SBD, we will be looking at up-scaling the identified interventions, enhancing existing partnerships to enable a structured approach to the envisaged  transversal agreements with government departments and State-owned entities. Furthermore there shall be a concerted effort in our engagement with the private sector and labour to sustain the gains and advance the common objective of supporting this sector. These will be considered as parallel and important processes whilst we configure the department.

With this in mind my department will focus on :

• Active participation of SMMEs and Co-ops in the priority sectors  as identified in National Development Plan ,  Industrial Policy Action Plan and New Growth Path as well as the priority areas for public procurement.
• Implementation of the entrepreneurship programme through Centres for Entrepreneurship in all 9 Provinces.
• SEDA Technology Programme in the 9 provinces.
• Incubation Support Programme.
• Increased and expanded demand for goods and services produced by Small Businesses and Cooperatives.
• Implementation of programmes to enhance secondary cooperatives for inclusion into value chains.
• Implementation of National Informal Business Uplifment Support.
• Collaboration with the dti on implementation of Export Villages.
• Support for township economies  jointly with Economic Development

Lastly Chairperson and Honourable Members I thought it would be important to indicate and for the record the migrating functions, programmes and projects which will include:

• Cooperatives Strategy;
• Gender and Women Empowerment Programmes;
• Incubation Support Programme;
• Support for Township business;
• Enterprise Development Programme;
• Centres for Entrepreneurship;
• Small Enterprise Finance Agency (SEFA);
• SEDA; and
• Financial incentives within the dti that have supported SMMEs as well as Cooperatives.

We have also taken note of the views to include Cooperatives to our department’s name and we will consider this through the relevant processes and structures for possible amendment.

Chairperson, I wish to thank the Portfolio Committee, Deputy Minister Thabethe for her unwavering support and valuable leadership, the staff in my Office, staff Broadening Participation Division, and my family represented by my son, who has made it possible for me to deliver on this budget vote.  

In conclusion my department will work tirelessly towards advancing the radical economic transformation as expressed in the Manifesto of the ANC and through our accepted blue print, the NDP, which advocates for the objectives of a developmental State.

Honourable Chairperson I hereby pronounce on Budget Vote 36 as collectively presented by the leadership of the dti and the SBD, which have focused on the elements that are aimed at advancing our mandate as the department.

 

Deputy Minister for the Department of Small Business Development, Ms Elizabeth Thabethe gave her Budget Vote Speech on 22 Jul 2014

Honourable Speaker;
Minister Zulu, Minister Davies and other Ministers present
Deputy Minister Masina and other DM’s
Members of the National Assembly;
MEC’s and Heads of Departments;
Acting DG Ncapayi and officials from the Department of Small Business Development
DG October and officials of the Department of Trade and Industry and its Council of Trade and Industry Institutions (COTII);
Leadership of SAWEN represented by Acting CEO, Ms Ruth Masokoane and Chairperson of the board, Ms Gail Dawning
Leaders of Organised Business and Labour;
Distinguished guests;
Ladies and gentlemen.

I would like to specifically recognise:
My Technogirls competition winners from Photani Secondary school in Malamulela, Limpopo province.

As we begin the 5th term of Parliament, we are more eager to move South Africa forward and strongly believe that our products and services as the new department will respond to the needs and aspirations of our Entrepreneurs.

In this regard, the Department of Small Business Development will aggressively explore opportunities for SMME’s and Cooperatives locally and across the globe.  We have begun work and will move our people out of poverty and help create the six (6) million job opportunities that the President spoke about during the launch of the ANC Manifesto.

I can assure you, Honourable Members that we are already working towards achieving this goal by supporting our entrepreneurs in all sectors of the economy that have potential to create jobs as they increase production, hence my emphasis on access to markets despite many other challenges faced by SMME’s including access to finance, skills development and so forth.

A week ago, I led a delegation of women and few men to Santa Fe in New Mexico to one of the world’s biggest Folk Art Markets. The Folk Art Market attracts buyers from many countries and this year’s participation was even greater. The project, though small in scale compared to other missions, provides crafters from the most rural areas, an opportunity to present to modern day collectors of traditional artwork some of the country’s earliest ornaments and houseware that symbolises the diversity of the ethnic clans and groups. In the three days of their participation in the market, they made what most crafters would do in a year.

It is an incredible market where buyers never question the price but the quality of the product. We have also ensured that we deal with the issue of consultants who act and represent our people in these celebrated markets. Many of them have been reaping off our people with extreme situations where a product is bought for 200 rands and sold in these markets for 200 dollars. 

This is one of the reasons our people work twice as hard for far less than they deserve and we wonder why our economy is slow to create jobs. We intend to eliminate these middlemen in the crafts sector and want our people to represent themselves in all these platforms.

We have also re-established a permanent showroom in Atlanta, USA showcasing Home Décor Lifestyle products from this beautiful country. The products displayed in our showroom are primarily produced by cooperatives and small businesses owned by women. We have also ensured that they represent our diverse culture and rich heritage.

I’m proud to share with you that we received the HASHTAG and the Atlanta Market Favourite awards for Ottomans made by Ozzy’s Eco Decors owned by YOLANDA MSUTWANA from East London. These are the two primary awards that are offered by a third party to identify the most impressive/ unique/ inspiring products in ALL of the 2014 July market! It is quite prestigious for exhibitors to win even one of these awards, but to win two of them is quite an exciting honour.

While South Africa and Africa as a whole, have an abundance of creative talents and handicrafts, it is sad that out of the ten leading craft and arts exporting economies, only three were from developing economies namely; China, the Republic of Korea, and India with the rest being made up of Belgium, Turkey, United States, Italy, France, the Netherlands and the United Kingdom.  No African economy features in this top ten. This is definitely a niche market that the department should explore.

Our continued participation in Santa Fe Folk Art Market and establishing South Africa’s showroom at AmericasMart with a focus on arts craft and design for home décor is thus informed by the knowledge that there is a global market and demand for South African products, South Africa is endowed with both indigenous and contemporary craft and design talent and that South Africa must also be at the forefront in not only meeting this demand, but ensuring that it does so in a manner that would benefit the rural and indigenous communities of South Africa.

Honourable members, allow me to share with you some statistics reflecting the potential for these sectors where the majority of participants are cooperatives and our very small enterprises.

The value of world exports of creative-industry goods and services reached $592 billion in 2008 up from $267 billion in 2002, according to United Nations Conference on Trade and Development (UNCTAD).  During this same period, the creative industries gained shares in global markets, growing at an annual rate of 14%. This upward trend is likely to continue, given the positive prospects for global demand even in turbulent times.

The global market for art crafts is definitely expanding and clearly it is not negligible; wherein world exports increased by 8.7 per cent, from $17.5 billion to $32 billion, during the period 2002-2008.  Art crafts are the most important sector of the creative industry for export earnings in developing countries, and a major one for developed countries as well, but with Asia and Europe being the main exporting regions for art crafts.

Indeed, we have begun work and will move our people out of poverty. We are conscious of our business environment and it continues to be a challenge we face as government that our people with disability are not participating in the main stream of the economy. The previously disadvantaged individuals especially our young people and women are still not adequately represented in the small business sector.

Things have to change, and that is why we believe that radical measures must be employed to fast track and change the pace of small business development.
We cannot continue to support SMME’s and Cooperatives the same way we did in the past and expect different results. 

We will be establishing the Cooperatives Academy in partnership with the Department of Higher Education to ensure that our coops are better trained and their members have a holistic view and understanding of this model of a business. We will also be establishing the Cooperatives Agency and the Tribunial.

Honourable members let me talk about Youth unemployment and believe me when I say; many commentators believe that the only caveat out of this is entrepreneurship. While under the dti, we developed a Youth Enterprise Development Strategy and we believe that enhancing youth economic participation through entrepreneurship and other relevant integrated interventions cannot be achieved by our efforts alone but call on the private sector to join forces with us. We believe that the private sector has the muscle to mobilise resources in order to invest in entrepreneurship development and contribute towards efforts aimed at preparing the next generation.

As the minister has already mentioned, I had the opportunity to launch the two
wonderful centres of Entrepreneurship operating in FET colleges in the Eastern Cape and Gauteng.

We view these centres as catalysts to empower young minds and develop local communities. They will continue to grow in serving entrepreneurs in their areas and also serve as hubs for information and training.

Honourable members, I am first to admit that a deeper understanding of entrepreneurship is required as we look beyond the constraints of traditions to find new opportunities for young people. It is this assertion that heightens my confidence that Entrepreneurship development remains a critical tool for economic development.

It is further important to note that how we support, celebrate, and develop the culture of entrepreneurship will determine that base and ultimately the future of our economy. It is against this backdrop that efforts are directed at addressing entrepreneurship development and to ensure that education is driven in such a way that business venture can become a choice rather than a last resort for students. Investments geared towards developing entrepreneurship should lead students on a path to self-sufficiency and become productive citizens.

It is true that we have begun work and will move our people out of poverty!

We are here, to assure South Africa that we know what needs to be done. We know what we did in the past; we know what worked and what didn’t.

The South African Women Entrepreneurs Network (SAWEN) continues to represent the majority of our women in business and we must thank the dti for affording them opportunities to participate in many of their programmes.
SAWEN together with the Corporate and Consumer Regulation Division (CCRD) and the Gender Unit have trained 170 women through the Institute of Directors and were awarded certificates in Corporate Governance Development
As we continue to support women owned enterprises, it is evident that skills development is fundamental to enhance the quality of their products and ensure sustainability.

The Bavumile Skills Development programme is designed to contribute to economic empowerment of women and targets the clothing and textiles as well as arts and craft sectors and offers training to women to upgrade their skills in the manufacturing of their products. We are also reviewing the guidelines to include non-SAWEN members; participants without formal (registered) businesses, more than 10 participants per province and more than 7 days of training.

Women economic empowerment through enterprise development remains a catalyst for job creation, economic growth and equity.

Honourable members, we have also been celebrating women participation in the economy through the Ligugu lami awards and their eagerness to close the digital gap in South Africa through Technology for Women in Business programme (known as TWIB) which is promoting the culture of technology utilisation and has increased the number of women using technology as an enabler in their businesses through innovation and invention.

Honourable members, when women utilise technology to do business it means access to much wider markets. Technology can bring about change and create new markets and businesses from international and regional collaboration, thus helping the social and economic standing of women to rise. Investing in women is recognised not only as the right thing to do but also the smart thing to do, because women’s economic advancement promotes economic growth.

Believe me when I say, as we move South Africa forward, it is the women of this country who should be ready to lead the move.

Ba re mmago ngwana o tshwara thipa ka bogaleng.
Nna ke re ke kgale thipa tse di resega,
We no longer feel the pain; we are ready to move our country forward!

In closing, government will continue to intensify its efforts to unlock the potential of the SMME sector particularly for people with disability, youth and women’s enterprises, by creating a business environment that encourages more and more big corporations to do business with this vulnerable sector of our economy and benefit from the diversity, innovation and brand value-add that these businesses bring. While taking heart from the strides that have been made, we must keep on working harder and smarter to create a vibrant and growing inclusive economy.

Together with my Honourable Minister, we are ready to take the bull by its horns and hope that you will support this budget.

Wathintha bafazi, wathinti imbokodo!

I thank you.
Malibongwe!