Development during the provincial Afrikaanse Handelsinstituut (AHI), Ithala
Game Reserve
25 August 2007
Programme Director
President of AHI KwaZulu-Natal
Louis CM Fourie, Vice President
AHI members
Distinguished guests
Ladies and gentlemen
Good morning, I am honoured to have the opportunity to open this congress.
The theme for this congress: "Business in KwaZulu-Natal in 2010 and Beyond" is
an indication of a continuing co-operation between business and government
co-operation that has developed through the shared vision of growing the
provincial economy.
This government is fully aware that AHI could play an important and
strategic role in bringing respective members into direct contact with
government and to encourage them to explore together opportunities for new
businesses throughout the province.
To take this initiative further, I would like to see AHI develop concrete
proposals where the provincial government and AHI can co-operate to capture
emerging opportunities in the Far East and Latin American markets.
AHI congress comes at an exciting time for all of us in the province. The
provincial government is celebrating the issuing of a positive Record of
Decision by the national Department of Environmental Affairs and Tourism for
the King Shaka Airport and the Dube Trade Port. This allows for the
construction process to proceed without further delay and enables us to meet
our 2010 deadline to have a new airport and Trade Port ready.
We have no doubt now that indeed, this province will have the global
infrastructure enabling it to have direct connectivity to international tourism
and cargo markets.
The process of achieving a positive record of decision was inclusive. It
involved ongoing consultation with the public, national and provincial
departments of environmental affairs and tourism, transport and eThekwini
Municipality. As government we are fully aware that the balance between the
imperatives of economic development, the fundamentals of environmental
conservation and concerns of communities and stakeholders is always an
intricate and a sensitive matter.
The Airports Company of South Africa will spend R6,8 billion towards the
construction of King Shaka Airport and the Dube Trade Port.
The overall government infrastructure expenditure is R410 billion between
2007 and 2010. Of this, about 40% will be spent by public enterprises mainly
Eskom. About R84 billion will go towards energy generation, transmission and
distribution.
Transnet has a budget of about R47 billion, of which R40 billion will go
towards upgrading of harbours, ports, railway and petroleum pipelines. More
than 19,7 billion will go towards water infrastructure. Already, this
government is working very closely with the private sector on a wider onward
and outward investment issues. Local Economic Development is where our mutual
commitment is and this makes us natural partners.
Against this backdrop, we are embarking on the provision of infrastructure
in various municipalities with solely to support emerging entrepreneurs. We
have decided to open One Stop Shops across the province. The provision of these
centres throughout the province forms part of government's efforts aimed at
providing adequate infrastructure thus bringing new economic opportunities and
job creation initiatives to the people, especially those that are residing in
rural parts of the province.
These centres provide information and business support to emerging
entrepreneurs. This, amongst other things, includes information on how to start
new businesses, expand existing operations, accessing various financial schemes
and opportunities locally and internationally.
The valuable experience that we have gained over the past 13 years has made
all of us realise that government's target of halving unemployment by 2014; and
the province's ambitious aim of achieving an economic growth rate of eight
precent by 2010 is dependent on a partnership with the private sector. This
partnership is for the upliftment and development of the community. But
government alone can only do so much. There is a big scope for the private
sector large firms. They have a big role to play in the areas of training,
mentoring, Small, Medium and Micro Enterprises (SMMEs) and Co-operatives
through appropriate linkages and partnering. They can also procure
preferentially from youth-owned small enterprises and SMMEs.
We have always requested the banking institutions to also come on board and
extend financial support to SMMEs. This sector is fast becoming very
competitive and generates returns for all stakeholders.
We have cemented partnerships with ABSA and Standard Bank. I have no doubt
that the partnership with these institutions will permanently heighten
entrepreneurship activity. It is an opportunity that all communities must seize
with both hands. The majority of our people were born in an era when the
political and social environment stifled black people's entrepreneurship. The
sad result has been a stunted entrepreneurial development, with all the
obstacles such as lack of skills, lack of finance, and insufficient access to
markets.
The provincial government is implementing a number of policy measures and
programs to promote and support entrepreneurship in this province:
* We have embarked on a campaign to change the current mind-set of our young
people to one that would embrace entrepreneurship through District Information
Sessions.
* We are exploring the possibility of including entrepreneurship training in
our school curriculum.
* We are building into our new provincial BEE strategy a robust skills
development component, with the youth in mind as the main beneficiaries.
* We are reviewing the provincial government's procurement policy, as part of
its BEE strategy, with a view to significantly increasing the levels of
government procurement from emerging black enterprises, including
co-operatives.
* We are considering creating a provincial empowerment fund to fast-track
broad-based BEE in the province.
All these and many other initiatives of government point to one thing: the
government is committed to the development of entrepreneurship and of a vibrant
small enterprise and co-operative sector, and will leave no stones unturned to
achieve it. Failure in this respect cannot be an option.
The rapid growth of Small and Medium Enterprises (SMEs) is an indication that
government is succeeding in its attempts to bridge the gap between the first
and second economy. This sector now generates 35% of the country's GDP. The
integration of disadvantaged communities into business will not be spontaneous.
Government has to design programmes to deliberately lift these communities.
These are:
* broad-based black economic empowerment
* supply chain management.
Provincial government has a direct influence over 63 percent or R7,5 billion
procurement budget. We have ensured that our procurement prescripts and
strategies are designed in such a way that we are able to spend more
aggressively to Black Economic Empowerment (BEE).
In this year's provincial budget we allocated R665 million to the
medium-term expenditure framework (MTEF) over the 2007/08 period and R1,709
billion to the Provincial Growth Fund. By March this year, Ithala had approved
SMME loans totalling R478 million for 465 enterprises in agricultural,
manufacturing, services, construction, energy, tourism and other sectors.
Through the finance provided to SMME's Ithala facilitated the creation of 3 552
job opportunities.
We are continuing to find ways to facilitate technical assistance to help
SMMEs secure finances expand their operations and identify new domestic and
international markets. For instance, Ithala has appointed the Ukwakha
Consortium to help with receiving and preparing of business plans, provision of
mentorship, technical support and professional due diligence services for
specific referrals on business loan applications. We have also decided to shift
accountability for the managing of the Provincial Growth Fund and SMME funds
from Provincial Treasury to the Department of Economic Development. Significant
progress has been made towards the strengthening of co-operatives and
SMMEs.
The challenge is to get financial institutions to come on board. Our
experience seems to suggest that it is the official policy of financial
institutions is to do everything to destroy disadvantaged the small business
sector. There are barriers to finances, low tolerance for struggling
businesses.
The limited number of products aimed at embracing emerging small businesses
is disappointing, in KwaZulu-Natal is worse. Many banks seem to create the
impression that there is something wrong with businessmen if they are black. If
this trend continues, BEE will remain an elusive dream in KwaZulu-Natal. So far
what banks have done to promote BEE and black-owned SMMEs suggests that this is
a phenomenon only to be tolerated. They do not seem to see a role of banks in
contributing to addressing apartheid imbalances they themselves benefited from
their contribution would help create.
Conclusion
Each of you brings to AHI enormous talent, experience and commitment. I wish
you all well for the success of your congress. And I look forward to hearing
and acting upon your recommendations.
Thank you.
Issued by: Department of Finance and Economic Development,
KwaZulu-Provincial Government
25 August 2007
