Minister Lindiwe Zulu: Consumer Goods Council of South Africa Summit 2014

Remarks by Minister Lindiwe Zulu at the Consumer Goods Council of South Africa Summit 2014, Midrand

We remain concerned that small businesses have an exceedingly high failure rate, and the majority of the casualties are women-owned businesses. Researchers tell us that the failure rate for new businesses is almost 80% in the first year, and only about half of those who survive remain in business for the next five years. We are confident that together, we will be able to help reverse this trend.

To enable SMMEs to play this role as articulated in the NDP some of the interventions that have been proposed are as follows:

• Creating an enabling environment that promotes business entry and expansion
• Private and public-sector procurement will improve access to opportunities for small and medium enterprises
• Human settlements and services will need to be conducive to small- and medium enterprise expansion.
• Reviewing regulations and standards for small and medium sized enterprises
• Improving access to debt and equity finance
• Provision of business support measures that are segmented, based on whether small firms are start-ups; survivalist businesses; lifestyle businesses; high-growth businesses; franchises; very high potential or high impact businesses; and/or new industries or new technology businesses

For the SMMEs and Cooperatives to play their envisaged role in the development of the economy, we must take into account that the issues of standards and quality go hand in hand with the development and growth sustainable enterprises. Consumers will not buy goods that are not of good quality simply because they come from co- operatives or SMMEs. Even for the local market, products and services need to comply with certain compulsory technical regulations either set by government or private specifications set by those who procure these products and services.

Issues of standards and compliance are at the heart of trade as well as health and safety of the environment and the people in general. People are correctly demanding products that are reliable, sustainable and are of high standards in terms of safety. Our responsibility as government is to assist SMMEs and co-operatives to comply, rather than lament their lack of compliance.

As government we would like to see our SMMEs and Cooperatives taking their rightful places in the international markets. We want to see our small enterprises complying with both local and international standards. The issue of access to markets is crucial. Our key task must be to promote market access and competitiveness of our products internationally whilst at the same time protecting our local enterprises from low quality cheap imports.

Our SMMEs and Cooperatives must not be exempted from complying with these standards.

The department will lead an integrated approach to the promotion and development of small businesses and cooperatives through a focus on the economic and legislative drivers that stimulate entrepreneurship to contribute to radical economic transformation. We are determined to create a conducive environment for the development and growth of small businesses and cooperatives through the provision of enhanced financial and non-financial support services, competitiveness, market access, promotion of entrepreneurship, advancing localisation and leveraging on public and private procurement.

Together with our partners in government, we will create a conducive environment for the success of small enterprises and cooperatives and to provide a market for these enterprises through public procurement. We have already started discussing transversal agreements with other government departments which will inform our interactions with them. At the end of the day, we all have a collective desire to contribute towards a thriving SMME and Cooperative sector. It is our hope that the model will deliver the desired outcomes aimed at unlocking the potential of the small business sector.

The department has developed the following programmes that I believe can go a long way in assisting our small enterprises and co-operatives to start contributing significantly to the mainstream economy:

Centres for entrepreneurship

This programme is aimed at fostering entrepreneurial culture by creating a sustainable entrepreneurial eco-system in the country. We have established Centres for Entrepreneurship in Ekurhuleni and in King Hintsa (Butterworth) and our ultimate objective is to have a minimum of twenty Centres for Entrepreneurship by the end of government term.

Incubation Support Programme

It encourages private sector partnerships with government in order to develop SMMEs and Cooperatives and nurture them into sustainable enterprises.

Micro Franchising Scheme

This incentive is aimed at supporting the identification of profitable small businesses in the townships and rural areas and packaging them as micro franchisors to attract micro franchisees. This will assist in ensuring that township and rural economies are developed.

Cooperatives Supplier Development Programme

This programme assists cooperatives to improve quality of products, assists local suppliers to expand production capacity (existing and potential); assist suppliers to reduce input costs; provides a route to market to deserving products (locally and internationally) and to establish and build long-term, effective supplier partnerships.

Shared Economic Infrastructure Facility

It covers the funding of a common Infrastructure, upgrading or maintenance and shared by a certain number of businesses.

Youth Black Business Supplier Development Programme

This is a cost-sharing grant which will be offered to youth black-owned small enterprises to assist them to improve their competitiveness and sustainability. Even though it is difficult in general to access finance but it becomes even more difficult for young people who have no collateral or security. This will give us an opportunity to partner with you so that we can have young entrepreneurs who have competitive enterprises as not all of our young people want to be employees.
 

Public Sector Procurement

This is a government proposed programme for the public sector to implement a procurement system giving preference to the procurement of specified ten products from small enterprises by all government departments and state agencies. We are ready to finalise some few details and the whole of government will know the products that must be purchased from SMMEs.