E Thebethe: Trade and Industry Budget Vote debate, NCOP

18 May 2006

Madam Chairperson, the Department of Trade and Industry (dti) intends to
strengthen its contribution to the success of Local Economic Development. The
dti 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 dti will finalise in August 2006, is
important.

The core thrust of that strategy aligns to the Local Economic Development
(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 and Medium Micro Enterprises
(SMMEs). This framework will support the dti’s Small Enterprise Development
Agency (SEDA) achieving integrated implementation.

Given its focus on active mobilisation of economic actors, LED is best
performed through nurturing economic networks and activities within poor
communities. 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 SMME-implementation
of the Broad-Based Black Economic Empowerment (BBBEE) Codes of Good Practice,
with particular reference here to the enterprise development aspects of the
Code. In this respect, the BBBEE 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 SME suppliers, and in so using the State as a direct source
of demand for SMMEs.

Chairperson, as a package, these initiatives will make the economic
environment friendlier to the growth and sustainability of SMMEs 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, 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 dti 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 dti 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
SMMEs. 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 Unit of 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 Accelerated and Shared Growth Initiative
of South Africa (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 dti 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.

5. Conclusion

Madam Chairperson, the Department of Trade and Industry have been hard at
work refining proposal and action plans. We see 2006/07 as a year of effective
implementation at local level. The 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
18 May 2006
Source: Department of Trade and Industry (http://www.thedti.gov.za)