E Thabethe: Local Economic Development.

19 May 2006

Madam Chairperson, the Department of Trade and Industry intends to
strengthen its contribution to the success of Local Economic Development (LED).
The Department of Trade and Industry will strengthen its delivery at the local
level through the concrete promotion of a vibrant, small enterprise sector.

We recognise that local government, within the framework of integrated
development plans, pursue economic development mainly through functions such as
land use planning, service delivery, development and regulation. The Department
of Trade and Industry, however, retains a shared responsibility for economic
growth and job creation opportunities. In this regard, the Integrated Small
Enterprise Development Strategy that the Department of Trade and Industry will
finalise in August 2006, is important.

The core thrust of that strategy aligns to the LED National Policy Framework
and has four critical elements: policy and planning, enterprise development,
women’s empowerment, and improved co-ordination with provinces.

1. Policy and Planning

This year the dti will make considerable inroads into ensuring policy
coherence and convergence. At the forefront of our activities will be the
development of an inter-governmental framework for enabling the three spheres
of government to provide support for Small, Medium and Micro Enterprise (SMME).
This framework will support the Department of Trade and Industry Small
Enterprise Development Agency (SEDA) achieving integrated implementation.

Given its focus on active mobilization of economic actors, LED is best
performed through nurturing economic networks and activities within poor
communities. Local Economic Development (LED) needs to build the capacity of
the poor to undertake economic activity and connect them with external economic
opportunities. This means connecting economic operators and work seekers in
poor communities with the wider economy. This will be the approach underpinning
the SEDA implementation strategy.

The department will also be strengthening policy and planning in three other
areas. First, the dti is working on a framework to guide the activities of the
Development Finance Institutions to enable provision to access to finance for
SMMEs. Second, the department will guide the private sector SME-implementation
of the Broad-based Black Economic Empowerment (BEE) Codes of Good Practice,
with particular reference here to the enterprise development aspects of the
Code. In this respect, the B-BBEE Codes will be an important source of demand
for emerging small enterprises and will be a driver of transformation in our
economy. Finally, the dti is championing a public sector programme to target
procurement towards Small and Medium Enterprise (SME) suppliers, and in so
using the State as a direct source of demand for SMEs.

Chairperson, as a package, these initiatives will make the economic
environment friendlier to the growth and sustainability of SMEs and hence the
success of Local Economic Development.

2. Enterprise development

Enterprise development, the second part of our integrated small enterprise
strategy, has several aspects to it. The first is an expansion of the service
delivery network. This network will expand the reach of enterprise development
services and strengthen provision of specialist services and mentoring to
SMMEs.

In consultation with municipalities, Small Enterprise Development Agency
(SEDA) has established five Provincial Offices, 24 branch offices and 87
Enterprise Information Centres. This has been done with due consideration to
geographic spread. In the remainder of the financial year, a further three
provincial offices, 20 branches, and 103 Enterprise Information Centres will be
opened.

The second aspect of enterprise development is improved access to finance.
The Department of Trade and Industry is working with banks to see how they can
support the development of competitive economic clusters within and across
provinces. The banks are examining the possibility of providing partial funding
for the clusters. In the process, banking initiatives can be introduced to
support community-based economic development plans and individual
enterprises.

Further, in establishing the Apex Fund, the dti will reduce institutional
constraints to successful SMME lending and the mobilisation of community
savings to improve credit worthiness. The facility will provide specialised
loans to SMMEs.

The third aspect of enterprise development is market development. The
Department of Trade and Industry is actively seeking to expand market
opportunities for SMMEs. State procurement is an important tool to increase
demand for the goods and services produced by SMEs. To support that approach
government will soon be announcing measures to target certain products to be
procured by the State from SMME suppliers.

The fourth aspect of enterprise development is organisational support. Weak
organisation is an important constraint to the growth of the SMME sector,
particularly micro-enterprises.

The department will continue to encourage organisation building among small
enterprises, to create and strengthen networks that can act on behalf of their
members. This clearly includes entities like Chambers of Commerce and Industry
South Africa (CHAMSA) and Business Unity South Africa (BUSA). More importantly,
however, it also includes supporting new and existing networks of co-operatives
and Second Economy enterprises to become organised to access markets and
resources for their members. For example, Second Economy enterprises organised
into associations or networks (say, fresh produce entrepreneurs) could work
with government to access formal markets (say food procurement of hotel),
increasing growth opportunities for their members and working to bridge the
gaps between the First and Second Economy. In this manner, the dti will work
within the ASGISA process to ensure that such organisation-building projects
are prioritised.

The fifth aspect of enterprise development is community enterprise. In this
regard, the proposed legislation on co-operatives was approved and is now law.
Co-operative regulations have been publicised for comment.

The dti is working very closely with provinces, districts and local
municipalities to ensure proper implementation and co-ordination, including the
equitable spread of resources. These partnerships will assist in mobilising and
facilitating the formation of co-operatives and self-help groups at a local
level. The Co-operatives Incentive Scheme was established in September 2005
with the purpose of providing financial support to co-operative enterprises.
Chairperson, between 400 and 600 co-operatives will be supported through the
incentive scheme that we believe could create almost 100,000 jobs and
sustainable livelihoods in the current financial year.

The Department of Trade and Industry is partnering with local municipalities
to capacitate Local Economic Development officials in order for them to be able
to offer effective support to co-operatives at the local level.

Finally, enterprise development requires us to develop a culture of
entrepreneurship in South Africa. Therefore, the dti views the support of
youth-owned enterprises as a priority. The department is currently giving
particular support to the formulation of the Youth-Enterprise-Development
strategy developed by Umsobomvu Youth Fund and the National Youth
Commission.

3. Women’s economic empowerment

Madam Chairperson, in all that we do, strong leadership is needed to ensure
that the needs of women are prioritised. Indeed, as we move forward from ten
years of democracy we must accept the fact that we have not yet yielded the
full benefits for women. More emphasis on women’s empowerment is needed.
Responding to this need, government is considering a strategic framework for
women’s economic empowerment to assist us closing the gaps that currently exist
in our economic policies and programmes.

It was reassuring to get positive feedback yesterday our strategic framework
from members of our Parliamentary Committee. I am excited that we will soon be
launching some of the framework’s concrete deliverables that we believe will
make a substantial difference to women’s enterprises. As South African Women’s
Entrepreneurship Network (SAWEN) has continued to be the best vehicle for
supporting women entrepreneurs in all provinces, I wish to assure you that
these will be accessible to women in all provinces.

As part of facilitating immediate access to all our women, this month we
will launch three of our provincial SAWEN offices. This has been the urgent
request from our women in terms of ensuring that they are offered one-on-one
business advice, counselling and information as part of preparing them to
successfully engage with other public and private service providers.

Again, through SAWEN we continue to succeed in exposing our women to
international markets. As part of doing business with the rest of the world, we
have alliances with other critical women’s business organisations in Africa and
Europe. Our intention is to make sure that women’s empowerment continues to
inform some, if not all, our global partnerships that we enter into.

Madam Chairperson, we believe that our women have to learn from the world
and we also know for a fact that the rest of the world can and has learnt from
our women!

4. Improved co-ordination with provinces

At the centre of all effective implementation is effective leadership and
co-ordination. Giving leadership to such a LED programme requires effective
alignment of provincial and national SMME support initiatives. In this regard,
the dti has set up the Provincial Co-ordination Committee.

Conclusion

Madam Chairperson, the Department of Trade and Industry have been hard at
work refining proposal and action plans. We see 2006/ 7 as a year of effective
implementation at local level. His implementation of all the strategies and
initiatives I have mentioned today will be supported and closely monitored,
hand-in-hand with the provinces, so that, together, we can contribute to a
better life for all our people.

Issued by: Department of Trade and Industry
19 May 2006
Source: Department of Trade and Industry (http://www.dti.gov.za)