Z Mkhize: Entrepreneurship Seminar

8 August 2006

Honourable Deputy Minister of Trade and Industry, Ms Elizabeth
Thabethe
Mayor of uMgungundlovu District Municipality
Senior Officials from various government departments
Municipalities
Seda
Representatives from Business
Ladies and gentlemen

The small business sector has an important role to play in the development
and growth of the economy. In KwaZulu–Natal, we are striving to create a
competitive small business sector, and the Provincial Legislature has, in the
2006/07 financial year, allocated additional resources in support of Small
Medium and Micro Enterprise (SMME) development, cooperatives and project
development. One of our objectives is to support the poor and give them an
opportunity to step up the economic ladder.

The government is expecting a return on investment in this regard, and we
believe that support programmes targeting SMMEs coupled with effective
interventions and turnaround strategies will assist small businesses to
prosper, thus maintaining existing jobs and creating new ones.

My department is taking the lead in transforming KwaZulu–Natal into a
thriving, empowered and globally competitive economy. For us to achieve this,
the department continuously formulates and implement strategies that create an
environment conducive to sustainable economic development in the province. We
are working towards the harmonisation of the two spheres of our economy by
creating equitable opportunities for both, to help ensure a balanced economy
where emerging businesses would complement big industries in terms of providing
sustainable jobs, and quality products and services for diversified
markets.

The Integrated Small Enterprise Development Strategy forms the basis for the
government’s new approach towards the support of small businesses in South
Africa. The Strategy is based on three pillars of support strategies that are
aimed at unlocking the potential of entrepreneurs in South Africa. These
include promoting entrepreneurship, creating enabling environments and
enhancing the competitiveness and capabilities of existing enterprises.

The strategy seeks to create more effective integration between:
* the first and the second economies of South Africa
* the private and public sectors and their respective involvement in small
enterprise support
* different levels and institutions of the public sector
* different programmes already existing and those being added
* different financing sources to cover the cost of the enterprise support.

Furthermore, the strategy highlights seven development support thrusts,
which will need strong commitment, substantial and sustained funding, clear
planning, coordination and leadership as well as regular monitoring and
evaluation by the national, provincial and local government.

The development support thrusts include the following:

* addressing business growth and transformation within the second
economy
* initiating a broad entrepreneurship drive and expand education and training
for small business
* substantially strengthen support for SMME’s access to finance
* the further expansion of market opportunities for targeted small
enterprises
* facilitating the systematic expansion of sector support for SMMEs
* creating a national information network for SMMEs underpinned by
comprehensive research
* co-funding the establishment of minimum business infrastructure
facilities.

The ten year vision, which is Vision 2014, states that:

“South Africa becomes an entrepreneurial nation that rewards and recognises
those who see a business opportunity and pursue it, a South Africa with a
vibrant and competitive small enterprise sector with enterprise that grows in
both turnover and employment. Those who were once excluded from full
participation in the economy will have access to support and development
services, and be fully integrated into the different sectors of the South
African economy, with access to local, national, African and other
international markets. That process should significantly help South Africa to
sustainably meet the material needs of its entire people.”

The focus on the first pillar of the Integrated Small Enterprise Development
strategy, which is ‘Promoting Entrepreneurship’, has brought to bear the stark
realities of apartheid in the business sphere (as in other spheres) of South
Africa, including the small enterprise sector. This situation has over the past
decade shaped many of the priorities in the small business support scene. As
long as black would be entrepreneurs were deliberately and systematically
excluded from opportunities to start a business, obtain credit, get access to
markets or strengthen their business skills, questions around the strength of
entrepreneurial abilities among black business people were almost an irrelevant
issue.

Now that a decade of transformation and de-racialisation has opened business
opportunities to previously exclude black South Africans on a large scale, it
is the opportune time to look closer at the spread, level and strengthening of
entrepreneurship in South Africa as one area to boost small enterprise growth
and competitiveness in the country. In doing this, South Africa follows the
very strong emphasis placed on bottom up entrepreneurship development in many
other countries, both developed and developing countries.

Furthermore, South Africa is already heeding the lessons from comparative
and sector focussed research undertaken at South African institutions over the
past decade.

The objective of the Business Support Services programme is to create a
framework to facilitate the provision of business support services to existing
and new SMMEs to enhance their sustainability and entrepreneurial profile. A
number of steps and developments are already happening in this field. The
department is currently facilitating the provision of a better integrated
business and SMME support service in KwaZulu–Natal. To this end, the offices of
KwaZulu-Natal ZNMAC in Durban, Pietermaritzburg, Richards Bay, Port Shepstone,
Kokstad and Ladysmith have been transformed into Small Enterprise Development
Agency (Seda) branches, thus increasing the Seda networks in the province.

By May 2006, 20 Ithala Business Centres, including Information Centres, were
operational, covering all 11 district municipalities. An additional 27 Ithala
Information Centres were established and operational within the Ithala Ltd
branches by the end of May 2006. These centres form the basis for increasing
the service delivery network to support small enterprises in the province.
Sedas will become one-stop shops for small businesses, providing a broad range
of services, which will include:

* business planning
* tender information and advice, as well as information other business
opportunities
* company audits and assessments
* market access and business linkages
* business finance
* co-operative enterprise development
* export training
* franchising
* manufacturing business advice.

The Youth Economic Empowerment programme of my department is focussing on
encouraging and promoting youth businesses. Our activities in this regard
include the development of a database of Youth owned businesses to assist the
department and other stakeholders in decision-making in terms of designing
programmes that will provide Youth with economic opportunities.

Currently, the department is developing a Youth Business brochure that will
profile some of the Youth business, thus creating and attracting possible
market and business opportunities for young entrepreneurs. The department is
also facilitating the development of the Youth Economic Empowerment Strategy
for the province. Youth entrepreneurs have received productivity improvement
training through the Department’s partnership with National Productivity
Institute. Furthermore, the department has been able to expose Youth
entrepreneurs to economic opportunities through various exhibitions that have
been held around Durban and Pietermaritzburg.

The Umsobomvu Youth Fund supports youth entrepreneurship through a range of
support services; and similarly, the National Youth Commission and the South
African Youth Council are actively propagating more attention on youth
unemployment and youth self employment efforts. My department is actively
involved in coordinating various entrepreneurship support programmes targeting
youth, women and the disabled people.

General awareness about the importance of dynamic entrepreneurs as catalysts
and drivers of the small business process has increased over the years, thanks
to inputs by the media, through publications, through messages from organised
business and from research programmes at small business research centres linked
to a number of universities and Further Education and Training (FET) colleges.
Schools and FET/higher education institutions include courses in
entrepreneurship in their programmes, either in the life skills segment or as
formal (optional) subjects.

In many of the sector, focussed support programmes attention is given to the
creation or strengthening of business skills and entrepreneurial attitudes as
critical elements determining the success of operations. Government supports
some of these, while others are industry driven. To this end, the department
has developed the KwaZulu-Natal Industrial Development Strategy, which sets out
the ways in which the lead industrial sectors can be supported to grow and
create jobs. The objective of this strategy is to stimulate global
competitiveness, extend the value chain of activities of targeted economic
sectors, and improve the labour absorption of lead sectors of the economy.

Sectors targeted for specific support include the clothing and textile; wood
and wood products; information and communication technology and electronics;
crafts; logistics and transport; creative industries including film, music and
media; and agro and food processing. The department is implementing a
clustering approach to intervene within these sectors. The furniture cluster
and the craft cluster have been established, and these have already developed
strategies to improve their performance, for example, specialised training
programmes and improving the overall marketing strategies and access to new
markets.

The co-operatives development programme is one of the high level strategies
of the department to develop and promote SMMEs in the province. The programme
was conceptualised out of the realisation and acknowledgement of the existence
of the first and the second economy in the province. The second economy is
survivalist and informal in nature, and that is where sixty percent of the
population of the province is trapped in a cycle of poverty and unemployment.
The objective of this programme is to lead people towards the realisation of
their potential by creating a scope for them to engage in income generating
projects in various economic sectors such as agriculture, agri–business,
tourism, crafts and many more.

To ensure the success of co-operatives and SMMEs, the government is
improving its procurement systems to offer market opportunities to the small
businesses and co-operatives. In its first year of implementation, the
co-operatives development programme has assisted a number of co-operatives to
engage in income generating activities thus improving their livelihoods and
that of their families.

The SMMEs are benefiting from a dedicated SMME Fund of R200 million in
2005/06 that has been established by the provincial government. The SMME Fund
is managed and augmented by Ithala on at least a rand for rand basis. The
Cabinet approved the framework for the establishment of the SMME Fund, with
less stringent rules regarding own contributions and other credit related
criteria, including funding for risk cover in BEE related project
applications.

The Provincial Growth Fund is an intervention to enhance growth and
development in KwaZulu–Natal, thereby contributing to Accelerated and Shared
Growth Initiative for South Africa (AsgiSA).

Among its strategic objectives are to:

1. target productive infrastructure to crowd in private sector investment
into KwaZulu-Natal
2. enhance the existing comparative advantages of the province by focusing
on:
* tourism based development projects.
* provision of bulk water supply
* transportation and logistics for well defined economic and industrial
zones
* sector specific infrastructure projects.

The institutional structure of the Growth Fund has been finalised
accommodating the legal requirement of the financial institution. Also a Board
to manage the KwaZulu-Natal Growth Fund Managers (Pty) Ltd has been appointed.
The KwaZulu-Natal Local Economic Development Programme, known as Gijima
KwaZulu-Natal, which is funded by the European Union, is now fully operational
and a number of projects have benefited through the Business Enabling Fund and
the Local Competitiveness Fund.

Good progress is being recorded in all aspects of the various programmes of
my department.

Thank you.

Issued by: Department of Health, KwaZulu-Natal Provincial Government
8 August 2006
Source: KwaZulu-Natal Provincial Government (http://www.kwazulunatal.gov.za)