Remarks by the Minister of Small Business Development, Ms Lindiwe Zulu, At the SME Ministerial during the Global Enterpreneurship Conference, Milan
In his State of the Nation Address, President Zuma placed small business at the centre stage of our national effort to banish poverty, reduce inequality. He reminded our nation about the critical importance of small businesses when he boldly asserted: “Small business is big business”. For us in the economic sector, this statement is a clarion call to action and a bold assertion about the critical importance of small businesses and co-operatives in economic transformation, job creation and economic inclusion.
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.
The country’s high rate of unemployment, poverty and extreme inequality call for bold and far-sighted interventions. We are of the firm view that supporting the development of micro, small and medium-sized enterprises offers an important vehicle for sustainable social and economic inclusion as well as national cohesion. The President established the Ministry for Small Business Development as part of government’s commitment to place the economy and job creation at the centre stage. Government is convinced that through this intervention, we will be able to unlock economic opportunities and thus achieve inclusive economic growth and sustainable employment, particularly for women, youth and people with people with disabilities.
A healthy SMME sector can make a massive contribution to the economy. 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. SMMEs have the potential to increase exports and introduce innovation and entrepreneurship skills. SMMEs have the potential to create and expand employment opportunities, develop entrepreneurial skills and enhance market opportunities.
The National Development Plan anticipates that about 90% of jobs will be created through small and expanding companies by 2030. 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.
As the Ministry, we remain open and receptive to new policy ideas that will help accelerate the formation of new businesses and sustainability of existing one. We see the GEC as a powerful platform to learn what other successful nations are doing to promote and sustain enterprise development.
As South Africans and government, we remain concerned that small businesses have an exceedingly high failure rate, and the majority of the casualties are black and women-owned businesses. Statistics tell us that small businesses have limited chances of surviving their first few years. We are confident that a gathering such as this can assist us to find appropriate answers to this complex question and to help to reverse this trend through insightful research and analysis.
Government is aware that to address the current problems confronting our economy and to reverse the unemployment rate will require a radical policy shift that recognises that small and medium businesses are the 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 pay focused attention on providing financial and non-financial support to small businesses. Our ultimate goal is to reduce obstacles to doing business wherever possible and to expand access to economic opportunities for historically excluded and vulnerable groups. SMMEs and Cooperatives are critical to unlocking economic opportunities and to achieve inclusive economic growth.
Government recognises that the small business and co-operative sector face constraints in growing and sustaining their enterprises as a result of lack of business opportunities in both the public and private sectors. Government has taken a decision to set aside 30% of appropriate categories of state procurement for purchasing from SMMEs, co-operatives, township and rural enterprises. 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 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. Government is keen to ensure co-ordinated support to small businesses. Indeed, each government department or agency has something to offer to small businesses and co-operatives.
We will also mobilize the private sector to support SMMEs and Co-operatives. We will pursue partnerships with the private sector to ensure that small businesses and co-operatives are assisted and empowered to grow into viable and thriving enterprises. We will ensure that our funding agencies are informed by our vision of radical economic transformation. The department will also develop a business rescue strategy aimed at supporting SMMEs and Co-operatives in financial distress and a framework to strengthen and regulate the informal business sector.
The President recently unveiled government’s 9-pont plan to rejuvenate the economy. 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.
Together with players within and outside government, we want to create a culture of entrepreneurship in our country. We must consciously strive to build a nation of entrepreneurs and not a nation of job-seekers. We are painfully aware that fostering a culture of entrepreneurship is not something that blossoms over a short period of time. It takes a long time to develop and flourish. We seek promote entrepreneurship as a viable career path as we continue to build a nation of entrepreneurs. We want to inculcate an understanding that starting a business is not something you do because you have run out of options and you find yourself unemployed. Entrepreneurship must be conscious and solid decision.
Given the current state of unemployment and poverty in our country, the question is not whether we should encourage our people to look in the direction of entrepreneurship, but rather, can we afford not to? Our partnerships with FET Colleges will inculcate the spirit of entrepreneurship within the education system. We want to accelerate this effort through the Startup network because we believe that our interventions should have strong industry linkages.
Over the last 20 years, the South African government has provided many forms of support to SMMEs ranging from policies, strategies and programmes. I have consistently argued that there is no need for new policies. Since 1994 a wide range of policies have allowed black South Africans to participate meaningfully in the economy, but more still needs to be done.
The government, with its regulatory and economic policies, including provision of infrastructure, notably energy, is going to be the greatest role player and facilitator for innovation and entrepreneurship in South Africa. Easing the regulatory burden and reducing red tape is going to be key if we truly want to unlock the economic and job creation potential of SMMEs. The slow business registration process, late payment of small businesses, licensing procedures and small business taxation are some of the issues.
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.
I thank you.
