at the India-Brazil-South Africa Tri-lateral Summit on Small Business
Development
24 August 2006
Programme Director
Distinguished guests
Participants
Ladies and gentlemen
It is a very great privilege and pleasure to be able to make a few remarks
on the occasion of this very important event in the evolving India, Brazil, and
South Africa programme of co-operation.
May I extend a very warm welcome to our guests from India and Brazil and
hope that you find your visit to our country both productive and enjoyable.
We are meeting in one of the most beautiful and also culturally rich parts
of our country, the province of KwaZulu-Natal and I do hope that you are find
time to enjoy some of the many attractions that this province and our country
in general has to offer.
The India-Brazil-South Africa (IBSA) tri-lateral relationship was initiated
at a meeting of our foreign Ministers in Brazil 2003. The initial purpose of
IBSA was to create a loose alliance that could build on the close co-operation
which we have developed together with other countries in the World Trade
Organisation (WTO) Doha Round Negotiating process, and to extend this, inter
alia, into co-ordination of positions in United Nations (UN) forums.
We have now institutionalised an annual dialogue at the level of Foreign
Ministers to discuss development issues and the possibility of joint approaches
in dealing with the eight millennium development goals. In the course of these
discussions, we have realised that there are many areas of fruitful tri-lateral
co-operation from which we can all benefit in areas including social
development, disarmament, infrastructure development, health care,
sustainability, economic development and poverty alleviation.
As we all know, the WTO, Doha Round Negotiations have now been suspended.
Minister Celso Amorin has called a special meeting of the Group of 20 (G-20) on
the ninth of next month to analyse the situation and to explore the
possibilities of reviving the momentum towards a developmental outcome of these
protracted negotiations.
What we know, is that the main reason for the current impasse is the
inability of developed countries to make even modest pro-development reforms of
their agricultural trade regimes. There are many voices around which are
telling us that if the WTO process goes into long-term hibernation, we will be
confronted by a scenario of rampant bi-lateralism. Of course, our three
countries are all strongly committed to multi-lateralism in the World Trade
system. We believe that a rules based system that is sensitive to the
developmental needs of developing countries offers the best prospects for
developing countries to improve their position in the global trading system.
However, if through no fault of ours, the Doha process goes into long-term
hibernation, we need to be able to make it clear and to underscore that our
countries do in fact have options other than accepting on the bi-lateral
terrain, the demands which the developed world was unable to force through on
the multi-lateral system. We need to be able to underscore that strengthened
south-south co-operation is in fact a reality and does offer potential to
participating countries to advance the struggle for economic growth and
development.
The agenda that we have begun to map through our annual dialogue forums, is
one that includes trade issues and also sectoral co-operation in a number of
important areas.
The present conference is focusing on strengthening co-operation in the very
critical and very strategic areas of small business development. The origin of
today's conference was a decision taken at the third tri-lateral commission
meeting held in Brazil in March this year where the working group on trade and
industry decided to convene a meeting of this kind. Today's meeting will seek
to build further on the co-operation which already exists between our own Small
Enterprise Development Agency (SEDA), the National Small Industry Corporation
(NSIC) of India and Servicos Brasileiros as Micro e Pequenas Empresas (Sebrae)
of Brazil. Small business development is a strategic priority for all three of
our governments and our economies, but we have to admit that we in South Africa
are probably furthest behind in this important endeavour.
Apartheid did not just neglect small business development among the majority
of black people in this country, it actively intervened to prevent and inhibit
such development. Enterprises owned by black people were not allowed to operate
in the main business centres of the country. At certain stages, shops owned by
black people even outside these areas, were only permitted to sell a certain
range of commodities. Banks and financial institutions completely excluded
black small businesses from any access to financial services. An inclusive
national small business development strategy only emerged in the years after
our democratic elections in 1994. Even then, we encountered huge problems
arising from limited capacity and experience, and unwillingness of established
financial institutions to extend credit and other services to emerging
entrepreneurs, and a general culture which saw entrepreneurship not as a first
choice for career development, but very much as a last choice.
Too many of our small businesses in South Africa are what my colleague
Deputy Minister Elizabeth Thabethe has called "entrepreneurs of necessity",
survivalist enterprises run by people who would far prefer to be in paid wage
employment. There are however a number of encouraging signs and indeed a much
greater "confluence of opportunities", to quote a term used by a President, in
the small business arena than at any time in the past
South Africa is in the midst of a period of economic growth that is both
higher and longer lasting than at any time in the past three decades. Our
current growth rates of between 4 and 4,5% are the product, first, of the
global mineral products boom and, second, of buoyant demand deriving from
un-presentably high levels of consumer and business confidence. But while we
can undoubtedly say without fear of contradiction that today is much better
economically than was yesterday, we realise that much more needs to be done to
create conditions that will allow us to meet our Millennium Development goal
targets of halving poverty and unemployment by 2015. Specifically we have
identified a need to raise growth rates to around six percent between 2010 and
2014. We also need to broaden the base of that growth, and ensure that its
benefits are shared among all the people of our country. Government has,
accordingly, adopted the Accelerated and Shared Growth Initiative for South
Africa (AsgiSA) which seeks to prioritise a number of initiatives aimed at
removing binding constraints to growth and development. They include a sizeable
infrastructure development programme that will see over R300 billion invested
between April 2005 and March 2008, a Priority Skills Acquisition Programme
(JIPSA) and more focused and resourced sectoral strategies.
AsgiSA seeks also to prioritise programmes that are both labour absorbing
and create new opportunities for small business. This, however, needs to
dovetail with more effective small business support programmes.
Over the past few years, we have significantly restructured our small
business support programme. The small business development agency SEDA, which
was established through an act of Parliament in 2004, is being rolled out in
all provinces, and eventually aims to have an outlet at the level of at least
one, in each municipality. SEDA will offer a uniform platform of services to
small businesses, including micro businesses operating in the second economy
including training, advice, and information about access to other services, and
so on. With regard to the thorny issues of small business financing, here too
we see possibilities for making breakthroughs in areas that have thus far
eluded us.
The financial sector charter which was agreed as part of the Broad-Based
Black Economic Empowerment (BBBEE) processes, commits financial institutions to
providing some R2 billion to support small businesses over the next five years.
Agreement on targets in financial terms, we believe, may begin to affect that
important attitude change in financial institutions that has thus far not been
forthcoming in providing resources to support small-medium micro enterprise
(SMME) development. At the same time, our Khula small business finance
institution is in the process of considering whether it should not change its
modus operandi from being exclusively a wholesale provider of financial
products, and move into defined market segments as a provider of direct retail
finance for small business enterprises.
The Apex fund and the Micro-Agricultural Finance Schemes of South Africa
(Mafisa) fund have now been launched and are beginning to provide micro credit
for very small and micro businesses, a sector which was previously un-serviced
with any financial products whatsoever.
Changes in procurement policies by both public and private entities will
also, we believe, be an important new boost to small business in South Africa.
The BBBEE codes of good practice will make points available for businesses that
procure products from black owned businesses and are also involved in
developmental programmes of various sorts. This we believe will be a big
incentive for established larger companies to begin to try to develop the
symbiotic relationship with small businesses which exist in many of the more
successful developing countries. At the level of government procurement in
terms of the AsgiSA being co-ordinated by the Deputy President, two main
initiatives are being contemplated; the first of these is the so-called set
asides programme. Work is being done by a task team to identify a range of
products which government at national, provincial and local level, can
realistically acquire exclusively from small businesses. The second programme
is an investigation of additional measures to ensure that small businesses are
in receipt of government contracts and tenders and are paid promptly within the
30 day period specified by the Public Finance Management Act.
Programme Director, through these and other initiatives, we believe that the
small business sector in South Africa will become a more significant player
within the South African economy. Other than that, the one hurdle that we
really have to cross is to create the conditions under which our small business
sector can become a much more active force in international trade and
international economic relations.
This conference we believe can be an important step in that direction. Its
aim is to strengthen the already existing relationship between, SEDA, SEBRAE
and NISC, through the development of tangible programmes of deliverables. We
hope also that this conference can facilitate concrete business linkages
between South African small businesses and our counterparts in Brazil and India
and in addition to that, the conference will share international business
practice, policy development and institutional support in small business, as
well as exchanging views on issues such as regulatory issues, such as the
regulatory environment, access to finance, technology support and e-trade
linkages.
We are looking forward to a productive few days and I wish you every success
in this important conference. Thank you.
Issued by: Department of Trade and Industry
24 August 2006
Source: Department of Trade and Industry (http://www.thedti.gov.za)
