Address by the Honourable Minister of Telecommunications and Postal Services, Dr. Siyabonga Cwele at the South Region Fair of the Small Business Indaba
Thank you Programme Director,
Ladies and Gentlemen.
I am pleased to speak to you this afternoon at the South Region Fair of the Small Business Indaba. Just yesterday I delivered the policy statement on the Budget Vote for the Department of Telecommunications and Postal Services. We are ready top rollout our programmes as a Department that will fast track South Africa’s radical socio-economic transformation as we fight back create jobs to eradicate poverty and create an inclusive society.
Economies around the world are experiencing slower growth and increasing debt. Unemployment, particularly amongst the youth remains high and South Africa is no different. The figures released by National Treasury points that our economic growth is at 2% and we have a 25% unemployment rate. It is critical that as government we intensify efforts to address economic constraints by improving our growth performance and creating work opportunities as we broaden economic participation.
The development of the small business sector has been prioritised by the South African government for this purpose. The importance and need for growing the sector stems from the potential it has in bridging the gap between the first and the second economy through poverty reduction, employment creation, economic empowerment and innovation.
Small businesses currently contribute 35% to Gross Domestic Product (GDP). They also contribute 54% to formal private sector employment. Given the statistics, this gives an indication that the SMMEs play a pivotal role in resolving the country's development challenges such as employment and economic growth. The ICT sector provides a fertile ground for small business incubation, development and promotion.
During my Budget Vote policy statement, I outlined out commitment as the ANC government to connect all government offices to the internet through rolling out broadband in line with our targets in vision 2020 and vision 2030 for a connected society. President Jacob Zuma at his 2015 State of the Nation Address announced the 8 districts where we will be piloting broadband rollout. We will develop a plan that will enable us to rollout this high speed internet to all government offices and ultimately connect all South Africans.
Broadband or high speed internet is important to our service delivery mandate as a government as it is one of the greatest enablers of economic activity and development which has a big role to play in South Africa’s overall development. The broadband we speak about will go a long way to improve the lives of ordinary South Africans.
Broadband is a key programme of the Industrial Policy Action Plan (IPAP) in the current medium term 2015-2017 which supports the implementation of the Industrial policy of the country. In this programme, my Department is working with the Department of Trade and Industry to implement various incentives to support investments in the broadband technologies from both demand and supply side measures.
The broadband project is not earmarked only for big business but for small businesses as well. Our Broadband policy framework supports the development of new markets and new types of services where small businesses should thrive. We aim to promote competition in the services market. This is where we see opportunities for small businesses in particular.
The programme of action in this pillar will include the development of a comprehensive Digital Entrepreneurship programme aimed at supporting all businesses to embrace digital technologies and exploiting social media, big data, cloud and mobile. Small businesses need to adopt the use of ICTs to improve their business operations.
Through ICTs, a car wash in Umlazi can be able to use the internet to use internet sites such as social media to advertise its business, make orders of stock online for discounts and even host a Wi-Fi hotspot that can offer additional income for the business.
There is a need to create an enabling environment that will support the growth of small businesses. There are a number of programmes that we have as government that will contribute to this agenda.
Government is exploring means through which we can set aside business for SMME’s that will stimulate growth within ICT SMME’s. BBE sector codes have also been developed by the Department of Trade and Industry which speak set asides by big corporates Investment in the ICT sector requires large amounts which small businesses do not have.
The Department has a schools connectivity project targeting over 32 thousand schools in the country to supply computer hardware and related applications for e-learning. This calls for our country to build local capacity for manufacturing and supply these technology tools. The larger benefit will not only include increase in our technology trade agenda but should also help us to create the much needed jobs.
Certain technology products already received content quota designation in order to support our local electronics industry manufacturing base. This incentive will include local component manufacturing and IPad, laptop, Tablet, set-top-box technologies. There is a study which is currently underway as part of the Industrial Policy Action Plan and the recommendations and findings thereof will be interrogated for the purpose of implementation.
Digital opportunities also come in the form of ICT applications development. In order to enjoy complete benefits we supporting the implementation of software engineering programmes for applications development and also supporting the Department of Science and Technology policy on the National System of Innovation aimed at promoting the Research, Development and Innovation (RDI) in the country. Of particular interest to us will be measures that support e-government across the board including, e-Health and e-Education, and other online services.
The IPAP programme is also supported by the Electro-magnetic Manufacturing Strategy of the Department which was adopted by government in 2013/2014 financial year. The Department of Trade and Industry has dedicated Special Development Zones for ICT development and trade.
We believe that South Africa can reach the status of electronics component manufacturing capacity for local consumption and export market by government and the private sector working together to increase research, development and innovation investment in the country beyond the less than 1 percent of GDP to follow on examples of Korea and Japan and others.
The capacity for innovation is thus a critical factor for small enterprises’ success as well as for improved national performance in today’s global economy.
Innovation encompasses virtually any new development in a business. It can involve creating or re-engineering products or services to meet new market demand, introducing new processes to improve productivity and incorporating new forms of management systems and techniques to improve operational efficiency.
Experience from highly innovative countries has taught us the important need to engender a climate where SMME innovation can thrive, creating a more vibrant economy and greater employment opportunities.
Let me acknowledge upfront that public policies and attitudes that constrain creativity and risk-taking can particularly affect SMMEs. It is for these reasons that Government has prioritised the issue of creating an enabling environment for innovation in the country.
The approval of the ICT Research, Development and Innovation (RDI) Implementation Roadmap, which is a plan to guide the implementation of national ICT research, development and innovation strategy demonstrate government’s commitment accelerate innovation.
The DTPS will continue to work with the Department of Science and Technology to facilitate the realisation of the objectives of the Roadmap. This Roadmap is driven by the potential to deliver socio-economic impact, and presents a sound case for increased public and private investment in ICT RDI, including enhancing SMME innovation.
We have identified a number of key policy impediments to innovation by SMMEs in the country. These are further highlighted and confirmed by the ICT Policy Review Panel, which handed its final recommendations report to the Department on 23 April 2015.
Given the importance of research and development to innovation, and the limited resources within many SMMEs for carrying out R&D, access to finance is justifiably a primary concern.
Another key issue for SMMEs is their ability to keep abreast of the latest developments affecting their sectors and markets. We believe that timely information can be crucial to the success of businesses. Furthermore, inadequate knowledge about or access to new technologies and know-how is a fundamental concern for many small enterprises.
In the current environment there is very little or non-existent support for innovation in the informal economy in South Africa. The imminent growth of ICT infrastructure, however could fuel a more fertile environment in which innovation in the informal economy will prosper if a more enabling environment is nurtured. The DTPS, in conjunction with USAASA and the DTI must investigate how ICT specific innovation in the informal sector could be encouraged.
Government would continue to facilitate the deployment of enabling infrastructures such as Community IT centres at community level. Such centres must facilitate access to finance and market opportunities for innovators. These centres must also be catalysts in improving cohesion between innovators in the formal and informal sectors.
Business finance is one of the greatest challenges that any small business is charged with facing. Big banks have complicated criteria and in some instances require that businesses should have collateral before they can be funded. We are working hard as a department to corporatize the Postbank as a fully-fledged bank that will be a developmental bank providing financial services to our people. Once the bank has been established, small businesses will be able to get finance that will cater for their needs.
I would like to commend the work that is being done by the eThekwini municipality on SMME’s. This platform of engagement goes a long way in growng SMME’s in the city. I have recently launched the National ICT Forum as a platform where the sector and South Africans in general can interact on the development and most importantly the implementation of our policy as a department. I would like to encourage all of you present to contact my Department through the officials present here today and engage through this forum.
I wish you all the best as you continue to participate in this Indaba and I look forward to interacting with you at the different stall in the exhibition.
Thank you!
