Honourable MEC of Economic Development and Tourism in KwaZulu-Natal (KZN), Mr Mike Mabuyakhulu
Honourable Mayor of Umgungundlovu Municipality, Mr Yusuf Bhamjee
Honourable Mayor of Umsunduzi Municipality, Ms Zanele Hlatshwayo
Head of Department of Economic Development in KwaZulu-Natal, Ms Carol Coetzee
Officials from the three spheres of government
Sanibonani, Dumelang, good evening
A special welcome to members of the co-operatives, who have travelled from all the corners of our country to be here with us. To all the members of the co-operatives gathered here I want to quote the Minister of the Department of Trade and Industry, Dr Rob Davies from an interview in the Sunday Times, this past Sunday.
The Minister said, ”Co-operatives are a different form of enterprise and they have their own specific needs. They are accessible to the poorest of the poor and that makes them a form of enterprise that merits particular attention and priority. In the course of trying to bring about a number of administrative and delivery improvements within the Department of Trade and Industry, which is what I’m trying to do, that will be one of the key priorities.”
Honoured guests, the commitment has been made it is up to all of us to make the priority a reality. Before I start I want to pay tribute and acknowledge the contribution made by my predecessor, former Deputy Minister Elizabeth Thabethe, who worked tirelessly and passionately to put co-operatives on the agenda as an area for development. Like her I know we can do much more to assist communities in particular those in rural areas to build sustainable livelihoods.
Ladies and gentlemen, I intend to build on the good work done by Mme Thabethe. I also intend to ably assist Minister Davies in his vision of making co-operatives one of the Department of Trade and Industry’s key priorities.
Honoured guests our government has a renewed mandate to govern for the next five years. We need to increase the pace of delivery to our people. On Tuesday the budget of the department was presented at the National Assembly in Parliament.
In this budget we earmark funds for various initiatives. On Tuesday at I appealed to the officials of the Department of Trade and Industry to ensure that they, as the custodians of this budget must ensure that the money is spent wisely. We must increase our services to particularly, rural areas.
We cannot fall into the trap of claiming easy victories by giving statistics of attendance.
It is indeed an honour and privilege for the Department of Trade and Industry to once again host the event of this magnitude and importance. It is now the second time that South Africa hosts this event in such huge magnitude involving more than 500 co-operatives from all provinces, with 225 exhibitors. We are anticipating about 2 500 visitors to braise this occasion to either come to clinch deals with co-operatives as well as participate in this important event.
I would like to take this opportunity to thank all our partners who have agreed to co-host this event. The primary appreciation and thank you must go to the provincial government of KwaZulu-Natal in particular the Department of Economic Development, Umsunduzi and Umgungundlovu Municipalities, who have taken upon themselves to partner with the Department of Trade and Industry in financing and hosting this event. We also like to thank all other provinces for making this event a reality by providing logistical support to co-operatives from their respective provinces to attend this occasion.
Prior to 2008, the event was hosted on a very small-scale at the Department of Trade and Industry campus, which we decided to change this approach and ensure that this event is increased in magnitude involving all provinces and all co-operatives in South Africa. Moreover, the decision to host this event in such a magnitude is to ensure that South Africa celebrate this event in line with the International Co-operative Alliance (ICA)) prescription, which envisages these events to take place on a national scale. In 2008, we hosted this event in partnership with all the provinces and more than 2,000 participants attended the conference and adopted a number of resolutions, which amongst others include, development of a comprehensive booklet to centralise the publication of all support given to co-operatives across the country so as to make it easier for co-operatives to access such valuable information.
Facilitate the establishment of a national tertiary co-operative, a national body for the co-operative movement that will advocate and participate in shaping policy that affects the development of co-operatives in the country; to reform income tax for co-operatives to take into consideration the unique character and form of co-operatives and to facilitate the establishment of a co-operative college for South Africa that can provide education and training on co-operatives as well as set standards and accredit trainers of co-operatives.
As some of you may be aware, strides have been taken in implementing these resolutions and many lessons have been learnt in the process as well. One key lesson is that government has to work in partnership with the co-operative movement and other key players if the implementation of such resolutions is to be realsed. Some of these noted comments were incorporated in the strategy, which was tabled at National Economic Development and Labour Council (Nedlac) and is now ready for parliamentary processes. I must thank you for taking time and effort to provide us with these valuable inputs which most of them have been included in our strategy that is anticipated for parliamentary and cabinet approval this year.
In light of the international conference that was held in KwaZulu-Natal in February this year and in order to accommodate some of the challenges raised by co-operators in last year’s event, the format of this year’s event differs significantly from last years’. The event last year took the form of a full blown conference for co-operatives along side a mini exhibition. The 2009 event, whose theme is ‘driving sustainability through co-operatives, takes the format of a full blown Mega Exhibition with presentation being made for support given to co-operatives and awards given to those co-operatives with outstanding stalls. The key aim here is to provide access to markets to co-operatives through a national pavilion of this magnitude to link co-operatives from the rural and peri-urban areas with the mainstream market while simultaneously exposing our communities to learn and appreciate this form of an enterprise so as to emulate for themselves.
While access to markets is one of the key drivers to economic sustainability, lack of access to markets is always identified as one of the key challenges faced by emerging co-operatives. The event is just but one intervention by government to promote and ensure sustainability of co-operatives. Through this event, we are certain that co-operators will identify key trading partners; sign long-term trading contracts; and learn from the best practice of other co-operators within South Africa. The theme is anchored within the seventh principle of co-operatives, co-operation among co-operatives.
Through practicing this principle, the co-operative sector will thrive through all adversities, including even the current economic crisis gripping our country at the moment. Hence, we as government we support fully the global theme for the International Day of Co-operatives that has been adopted by the ICA and United Nations for 4 July 2009, which entails driving global recovery through co-operatives. It is a proven truth that, co-operatives, that are truly compliant with the international principles of co-operatives, have a tendency of being more resilient, especially during times of economic crisis, when compared with other forms of business. In fact, some economies have recovered through co-operatives even after destruction by wars. The examples are plenty, just to suggest a few; they include Europe and Japan after the economic and social devastation of the Second World War.
Ladies and gentlemen, we cannot ignore the fact that this event takes place in the midst of a global economic crisis, which has also negatively affected South Africa in many ways, unemployment, inequality, poverty has increased sharply as a result, which in turn is also contributing to an unacceptable rise of criminal activities. HIV/AIDS remain stubborn and continue to plague our country affecting the fabric of our society.
Some of the critical sectors of our economy saw a dramatic decline and these involve, amongst others, agriculture, mining and manufacturing, which have saw massive job losses affecting our communities negatively. Moreover, we have also witness an increase in our trade and current account undermining the stability and resilient of our economy.
More importantly, household indebtedness has recently increased reaching worrying levels and inflationary pressures are mounting affecting mostly poor and marginalised families. Although, we have turned the corner, on this one, the severe energy shortages that erupted last year inducing blackouts affected our communities and firms negatively.
House prices have been declining affecting negatively those that have invested in this commodity, but the prices for the material to build houses particularly for the poor have climbed up making it difficult to house the poor. In the automobile sector, we have seen dramatic decline of vehicle sales resulting in unacceptable job losses in the sector as well, thus forcing government to consider some form of bailout to keep the sector afloat. Moreover, manufacturing production has slowed, the mining sector is shrinking further, and retrenchments are on the increase.
The preliminary Gross Domestic Product (GDP) estimates for the first quarter of 2009 decreased by an annualised rate of 6,4 percent compared with the fourth quarter of 2008. A total of 208 000 people living in South Africa lost their jobs between the last quarter of 2008 and the first quarter of 2009. The job losses occurred in both the formal (88 000) and the informal sector (96 000).
However, the year-on-year picture hardly shows any movement in employment levels as the number of people employed remained virtually unchanged at 13, 6 million. The main contributors to the decrease in economic activity for the first quarter of 2009 were the manufacturing industry (-3, 3 percentage points); the mining and quarrying industry (-1, 7 percentage points) and the finance, real estate and business services industry (-0, 5 of a percentage point).
I am pointing out this context not only to paint a picture of gloom to you, but also to express the importance on all of us to work together to turn the tide around. Government is not only seeing our reality as gloomy, but we also see an opportunity that must be seized by the co-operatives. It is our view as government that this reality provides an opportunity for new ways of thinking and a space for new types of ownership to emerge, of which co-operatives are but one of them.
Our government has prioritised and continues to work tirelessly to strengthen and develop the co-operative movement as part of its effort to turn the gloomy tide by creating massive employment, livelihoods, reduce poverty, and contribute to the growth of country’s economy, as well as, assist in the empowerment and uplifting of the marginalised segment of our population located mainly in the second economy.
Our government has prioritised the promotion of co-operatives for simple socio-economic reasons, among other things. Co-operatives can offer huge potential benefits to South Africa in that they can mobilise and develop marginalised communities and households. They can mobilise savings, foster a culture of self help, self reliance and solidarity within and amongst the marginalised communities and therefore contribute in raising their standard of living.
In addition, investment within co-operatives circulates and remains within the respective communities for a longer period thus contributing to economic revival of such communities. Social services, which otherwise would not be easily accessible to the communities, become easily accessed through co-operatives. More importantly, co-operatives are naturally inclined to promote education and training among members, which invariably cascade towards the entire community. One of the important reasons for members to join co-operatives is to learn from others in order to innovate jointly. In joining a co-operative, small-scale producers also further benefit by obtaining legal protection and limited economic liability.
Independent entrepreneurs, rural and urban households and workers can use joint purchasing (i.e. bulk-buying) and marketing strength using co-operatives to improve their bargaining power in the market place. Due to the risk-sharing between members, co-operatives are tendentiously more stable than individual enterprises; hence, government has dedicated itself to actively promote them.
In the past few years, since the adoption of the Co-operatives Act, Number 14 of 2005, substantial progress has been made by our government in the area of promoting co-operatives in our country. In May 2007, with the Presidential proclamation of the Co-operatives Act, No.14 of 2005, South Africa, for the first time, in its history, saw the number of newly registered co-operatives rise up and reaching a peak of 12 000, which represents an impressive 72 percent growth rate when contrasted with the number of co-operatives that were registered over the previous 82 years (i.e. 1922 until 2004). The majority of these newly registered co-operatives were mainly black women owned with the youth owned co-operatives beginning to emerge albeit at a lower base.
In the area of financial support for co-operatives, the proclamation of the co-operative legislation has encouraged all our national and provincial financial agencies (e.g. Umsobomvu Youth Fund; National Development Agency; the Micro Agricultural Finance Scheme of South Africa; National Empowerment Fund and the South African Microfinance Apex Fund (SAMAF); ITHALA, LIBSA), and others to develop unique financial products tailor-made to respond to the financial challenges facing co-operatives. These financial products are also being scaled up and tweaked in response to the current economic crisis so as to effectively provide the requisite support to aid co-operatives in their battle to withstand the battering from the current economic crisis.
Similarly, the Co-operatives Incentive Scheme (CIS), a funding instrument designated for start up co-operatives, which has managed, last year alone, to assist 102 start-up worker co-operatives with an average membership of five natural persons, to the value of R16.4 million, thus creating almost 510 direct jobs, is also being scaled up as well as tweaked to respond to the current crisis in aiding emerging and start-up co-operatives. The budget allocated for disbursement for this financial year is in the vicinity of R35 million.
In the last financial year, the South African Microfinance Apex Fund, has spent R5.9 million to provide operational support and build capacity for Financial Intermediaries (FI) and has increased the number of funded FIs to 38, thus creating a national delivery network. Out of the 38 FIs, 24 of them are Financial Services Co-operatives (FSC).
SAMAF has also disbursed on-lending funds to the amount of R27.7 million, thus ensuring that the poor household and survivalist and micro co-operatives have access to financial services. As already noted the products within this agency are also scaled up and tweaked to enable the institution to support the FIs including households and micro enterprises to respond to the economic crisis.
On top of these financial support instruments, the government through the National Treasury working in partnership with the Department of Trade and Industry (dti) has promulgated the National Co-operatives Banks Act aimed at regulating and supporting the development of co-operatives banks. The Act also establishes the formation of the Co-operatives Banks Development Agency tasked with the responsibility to develop and support co-operatives banks that are handling deposits are above 2 million and less than 10 million or with more than 200 members. Co-operatives Bank above 10 million deposits will be regulated by the Reserve Bank of South Africa.
In the area of business support services to co-operatives, last year (2008 financial year); the Small Enterprise Development Agency (seda) through their co-operative support programme supported 479 co-operatives. They have also supported four community co-operatives projects involving 6420 people. In addition, seda, in partnership with the Presidential National Commission on Information Society and Development (PNC on ISAD) identified and mobilised 460 young people from rural and peri-urban areas and provided them with the training on information communication technology (ICT) related skills, pre-incorporation and business related support. Out of this process, 46 e-co-operatives belonging to young people were newly established and registered through Companies and Intellectual Property Registration Office (CIPRO) and were supported with funding from the co-operatives incentives scheme.
Over and above the success stories that I have highlighted and in order to further deepen the growth and development of co-operatives in all the sectors of our economy as well assist in the effort to deal with the current economic crisis gripping the country, our government intends to submit to Cabinet for final approval the integrated strategy on the promotion of co-operatives and collective entrepreneurship, which I alluded earlier on. Through this strategy, government intends to put in place a number of additional support mechanisms aimed at taking this sector to greater heights of development.
We also intend to amend the Co-operatives Act through submitting a bill to parliament for approval. The bill is designed to remove constrains and deal with existing regulatory gaps that impact on the growth of co-operatives in the economy.
Just to give you few examples of such constraints, worker co-operatives are currently exempted from complying with the Basic Conditions of Employment Act and Labour Relations Act. What is now happening is that companies who do not want to comply with these noted Acts are now abusing the clause by converting all their employees to be members of worker co-operatives in sectors such as clothing and textiles especially in this province to dodge compliance thus reducing labour standards. Our Act currently requires all co-operatives including the survivalist and micro co-operatives to undertake full auditing of their co-operatives, which may be extremely expensive and burdensome. A favourable regime is considered to deal with this aspect to minimise the burden to these noted co-operatives.
Our government also intends this year to announce the nominated members of the co-operatives advisory board in line with the prescript of the Co-operatives Act, No 14 of 2005. The task of the board will be to advise the Minister of Trade and Industry on policy gaps requiring closing relevant to the development of co-operatives in the country. Such a body will also play a meaningful role in further strengthening the monitoring mechanisms for the implementation of co-operatives development.
Our government is also working closely with the co-operative movement to revive and strengthen the National Tertiary/Apex Body that will represent and play and advocacy role for the development and support for co-operative movement in South Africa. This body in line with our global commitment as South Africa will also be a member of the International Co-operative Alliance (ICA).
Moreover, our government also intends to launch this year a programme referred to as One Municipality One Product (OMOP). Through, this programme, which originates in Japan as One Village One Product (OVOP), government aims to create competitive products with strong local content within our districts and local municipalities. The programme which is supported by all the national departments within the economic cluster is aimed at intervening in our local economies so as to assist in economically growing economies at municipality level as well as create jobs targeting primarily poor and marginalised local communities and households. These designated products are intended for export purposes through international pavilions and are expected to contribute towards increasing the basket of our exports. Co-operatives will be the main vehicle used in the implementation of OMOP.
In conclusion, ladies and gentleman, I would like to further emphasise that we will be working in partnership with all of you to ensure that co-operatives are encouraged and supported in the best possible way to ensure their sustainability. This is more critical given the current economic crisis gripping our economy, which also affects negatively the growth and development of our co-operatives. Undoubtedly, together we can achieve more.
Finally, I would also like to wish you all the best deliberations in the coming few days. I also would like to wish our exhibiting co-operatives to clinch as many deals and contracts as possible.
I thank you.
Issued by: Department of Trade and Industry
1 July 2009
Source: Department of Trade and Industry (http://www.thedti.gov.za/)
