Z Mkhize: Youth Economic Empowerment Summit 2006

16 September 2006

The honourable Mayor of eMnambithi/Ladysmith Municipality, Councillor DCP
Mazibuko,
Senior officials from various government departments,
Municipalities,
Youth from various youth structures,
Representatives from business,
Ladies and gentlemen:

I am delighted that today my department together with key stakeholders and
social partners is hosting the first KwaZulu-Natal (KZN) Provincial Youth
Economic Empowerment Summit. Having received the warm welcome from the Mayor, I
will now briefly outline the objectives of the KZN Youth Economic Empowerment
Summit 2006 as follows:

1. To create a platform for government, private sector and young people to
craft a provincial framework to guide all stakeholders on youth economic
empowerment strategies.

2. To deliberate on challenges faced by youth in the following areas and
develop strategies to address them:
* access to finance
* access to markets
* youth entrepreneurship support and promotion
* institutional mechanisms for youth economic empowerment.

3. To consolidate and adopt the second draft of the youth economic
empowerment strategy.

4. To acknowledge and award successful and emerging youth businesses in the
KwaZulu-Natal Province.

5. To launch the KZN youth business development website.

Looking at the objectives of this summit and the deliberations that will
take place over the next two days, I am convinced that the future of the youth
in KwaZulu-Natal is in good hands and they stand to benefit from the
discussions and resolutions of this summit.

The small business sector which includes young entrepreneurs has an
important role to play in the development and growth of the economy. In South
Africa, it is estimated that the contribution of the small business sector to
economic growth is about 35 � 40 percent. It is against this background that
government has prioritised youth in its various strategies and programmes. In
response to the high rate of youth unemployment and lack of or no participation
by youth in the mainstream economy of the country, the government is targeting
youth as one of the major role-players in bridging the gap between the first
and the second economy. Central to the national government agenda and other
levels of government is youth economic emancipation. To this end, the
department together with its strategic partners is facilitating the process of
developing the "KZN youth economic empowerment strategy".

We recently asked National Small Industries Corporation Ltd (NSIC) of India
to conduct a review of constraints that hinder the small business sector from
growth. It will be important to learn from countries that have a higher
contribution by small businesses to their economic growth. The small business
sector contributes significantly in job creation and the elimination of
poverty.

The following factors have been cited as hindrances in the small business
sector:

1. Regressive regulatory compliance costs, where we find that smaller firms
bear the heaviest financial burden, e.g. more that eight percent turnover and
more that R13, 000 per employee is spent on annual regulatory compliance by
small firms.

2. It has also been estimated that recurring compliance costs for the formal
sector amounted to nearly R79 billion in 2004, which is equal to about 6,5
percent of the country's Gross Domestic Product (GDP) in 2003.

3. Limited incentive and reward mechanism does not encourage new start-ups
and/or growth of existing enterprises.

4. There is an uneven geographical distribution of service providers which
tend to cluster in urban areas.

5. Linkages between small suppliers and large buyers are few.

6. The absence of state procurement as a tool to increase demand for the
goods and services produced by Small Medium and Micro Enterprises (SMMEs).

7. The non-existence of micro-finance institutions for promoting SMME
initiatives.

8. The lack of commitment and support by the banks and financial
institutions for small and emerging businesses.

There are many more factors but we don't have the time to mention them all
today. I believe that these challenges will assist you in your deliberations
and contribution to the development of the KZN youth economic empowerment
strategy. The challenge is for this strategy to be able to provide guidelines
and frameworks to address the constraints faced by the youth in the
province.

The department is making an effort to transform KwaZulu�Natal into a
thriving, empowered and globally competitive economy. For us to achieve this,
the department continuously formulates and implements 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 10-year vision of the Accelerated and Shared Growth Initiative for South
Africa (AsgiSA) is:

"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".

Furthermore, the Joint Initiative for Priority Skills Acquisition (JIPSA) is
aimed at the development of scarce and critical skills without which we cannot
deliver on our AsgiSA commitments and targets. I need not remind this audience
that skills are the backbone on which every successful economy relies. The
skills revolution has been at the core of the economic revival in countries
like Malaysia and Japan.

I therefore strongly recommend that as you deliberate on the development of
the KZN youth economic empowerment strategy, you should consider and include
the issue of education and skills development.

The objectives of the business support services programme are 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 better integrated,
business and SMME support services in KwaZulu�Natal.

The department has embarked on the creation of one-stop shops for small
businesses, all sectors were involved in this project including the Small
Enterprise Development Agency (SEDA), Ithala and other support services which
will provide a broad range of services which 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:

* developing a database of youth owned businesses
* assisting the department and other stakeholders in decision-making in terms
of designing programmes that will provide youth with economic
opportunities
* developing a youth business brochure that will profile some of the youth
business
* creating and attracting possible market and business opportunities for young
entrepreneurs
* facilitating the development of the youth economic empowerment strategy for
the province
* offering productivity improvement training through the Department's
partnership with National Productivity Institute (NPI)
* exposing youth entrepreneurs to economic opportunities through various
exhibitions that have been held around Durban and Pietermaritzburg.

The department works together with the Umsobomvu Youth Fund (UYF) to support
youth entrepreneurship through a range of support services, similarly, the
National Youth Commission (NYC) and the South African Youth Council (SAYC) are
actively propagating more attention on youth unemployment and youth
self�employment efforts. My department is actively involved in co-ordinating
various entrepreneurship support programmes targeting the youth, women and
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 (HEI) 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 (ICT) and
electronics, crafts, logistics and transport, creative industries including
film, music and media, and agro and food processing.

The co-operatives development programme is one of the high level strategies
of the department to develop and promote co-operatives and 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.

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 government has made financial support available through our development
corporation Ithala, for SMMEs and co-operatives to access finance. Limited
partnership has been entered into with financial institutions such as ABSA and
Standard Bank to improve access to finance for the small business sector.

In conclusion, I am delighted that today we are going to witness the launch
of the KZN youth business development website which will assist in promoting
youth businesses in the KwaZulu�Natal.

I invite you to join me in the historic launch of the KZN youth business
development website.

Thank you!

Issued by: Department of Finance and Economic Development, KwaZulu-Natal
Provincial Government
16 September 2006
Source: KwaZulu-Natal Provincial Government (http://www.kwazulunatal.gov.za/)