Remarks by the Deputy Minister Mr Buti Manamela at the DPME 30 Days Payment Imbizo Emperor’s Palace, Kempton Park, Gauteng
Programme Director
Minister in the Presidency for Planning, Monitoring and Evaluation – Mr Jeff Radebe
MEC, Economic Development, Gauteng – Mr Lebogang Maile
Executive Mayor of Ekurhuleni - Cllr Mzwandile Masina
CEO of Gauteng Tourism - Mr Simphiwe Ngwenya
Representatives from the Government departments and institutions
Entrepreneurs – young and old
Ladies and gentlemen
It gives me great pleasure to address you at this 30 Day Payment Imbizo convened by the Department of Planning, Monitoring and Evaluation (DPME).
Government is a key consumer of goods and services that are offered in all its forms. In fact government is one of the largest consumers of the goods and services provided by entrepreneurs – both aspiring and established entrepreneurs.
From pens to fill the litany of government forms, to vehicles that transport government services, to sophisticated computer equipment to map out geospatial data – government consumes these services on a daily basis.
Government is reliant on a supply chain of professional, ethical and compliant vendors and service providers to offer high quality goods and services at affordable prices. Government’s procurement system is reliant on this efficient and effective cycle progressing unhindered so that the work of government continues unimpeded.
Of course, when there is a cog in the cycle, the system is not as effective as it can be. When vendors and service providers are not paid on time, the effects of this action causes ripples in the system. This results in cash flow problems, inability to pay creditors, inability to pay staff, bad credit records and unnecessary legal actions.
Likewise, when the necessary paperwork is not submitted on time and compliance issues are comprised, government faces the arduous task of not spending its budget, not meeting its service delivery commitments and not deriving value for public funds.
Recognising that the system can be more efficient and effective, with particular regard to the 30 day payment period, the Cabinet requested that the DPME monitors this situation and regularly reports to Cabinet.
You have heard and will hear from presenters on what action has been taken and how some government institutions have developed good practices in these areas.
We look forward to hearing from you on what else government can do to improve in this area. We also look forward to hearing your self-reflections on how to foster strong compliancy for an effective procurement system.
As I make these remarks, I am reminded that for many aspirant, small and medium enterprises, doing business with government is the first rung of their entrepreneurship ladder. The nature of this business relationship will sometimes determine success or failure.
At the heart of dealing with youth unemployment, poverty and inequality is the drive and passion for entrepreneurship. It is our responsibility to stimulate, drive and support entrepreneurship among South Africa’s youth.
In our National Youth Policy 2020, we noted the low levels of entrepreneurship uptake by South African youth when compared to their BRIC’s counterparts or other middle income developing countries.
As a country we need to do more to stimulate youth entrepreneurship, particularly encouraging young people who have never tried entrepreneurship to do so. And in that process we will give young people a hand up.
We need more young entrepreneurs. Entrepreneurship and small businesses are a mechanism to draw new entrants into the economy, strengthen inclusive growth, build the social economy, encourage solidarity and create large numbers of jobs.
In our conversations with young people we have learnt that many young people view entrepreneurship as too risky an adventure.
They fear that if they fail they will end up with massive debt at a young age. They will end up with a negative credit record that will follow them as they transit into adulthood. This will likely affect their employability, their ability to buy a house or access credit to buy a car or to even pay lobola.
Taking these concerns into account, the National Youth Development Agency (NYDA) introduced the Grant Programme with the aim of stimulating entrepreneurship by getting young people to take a bite at it. The grant is just that, a grant. The grant ranges from R1 000 to R100 000. They do not have to pay it back.
If they don’t succeed, and of course we want them to succeed, they will not have massive debt or a negative credit record. So the programme helps to mitigate risk on behalf of the young person. They can use the grant to establish their business, develop a track record and use this track record to access further business funding to grow their businesses. The grant is coupled with other business development support services.
In the 2016/17 financial year, the NYDA will assist 629 youth enterprises with grant financing. A further 62, 916 young aspiring and established entrepreneurs will be assisted with business development support services.
The Industrial Development Corporation (IDC) has committed R4,5 billion over 5 years to support youth owned enterprises. They have already approved R970 million in 2015/16.
The evidence has shown us that building a pipeline of entrepreneurs is important at all stages, from start-up, to small business development and to growth. This pipeline must have the necessary business development supports along the way demonstrating the necessary sophistication as young people start and grow their businesses.
We will be engaging with the Premiers of Gauteng and the Free State to expand their support for youth businesses. We are also working on unblocking the set asides for procurement from youth as committed by the ruling party. All these efforts work in unison towards our pipeline for entrepreneurship.
Of course, in building and supporting this pipeline of young entrepreneurs, government must play its part in making payments within 30 days or less. Without this concomitant action, the pipeline will remain fragile.
So our dialogue is important today. Payment within 30 days may be the window of our discussions at this Imbizo. But building the pipeline of young entrepreneurs, stimulating small and medium enterprises, creating jobs, growing our economy and realising the vision of the National Development Plan 2030 is the view that we must fix our eyes upon.
I thank you.
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