Programme director, Ms Bronwyn Nielsen
The Premier of the Province of KwaZulu-Natal, Dr ZL Mkhize
The Mayor-Elect of Ethekwini Municipality, Cllr. James Nxumalo
The Minister of Tourism in Swaziland, Mr Ntsibandze
The CEO of Goldman Sachs and our Guest Speaker, Mr Colin Coleman
The Head of UKZN’s Graduate School of Business’, Professor Anesh Singh
Captains of industry and Company CEOs
Entrepreneurs
Policy makers
Academics
Members of the media
Esteemed delegates
Ladies and gentlemen
Programme director, allow me first of all to express my warmest gratitude to all the delegates here today, who have responded to our clarion call to put our heads together, to reflect and share views on how as a province and as nation we can work together to promote innovative entrepreneurship and promote investment into our economy.
We view your participation in this conference as a crucial step to come up with decisive suggestions and robust solutions to the entrepreneurship and production challenges bedevilling our economy. Your invaluable contributions will help us to develop a roadmap to the promotion of entrepreneurship and investment in the province. The roadmap is envisaged to give us economic leverage to reclaim our rightful status as the linchpin of the Southern African economy.
To this effect, ladies and gentlemen, we consider events such as the one we have today and tomorrow as platforms for all of us to learn more through the progressive cross-pollination of ideas as opposed to one individual or group of individuals claiming to know it all.
Pointedly, this conference aims at providing a platform to discuss how a regional economy such as KwaZulu-Natal, in a developing country context, can effectively promote innovative entrepreneurship. The gathering further aims at fostering sound investment climate and profiling investment opportunities within the province, South Africa and the entire Southern African Development Community (SADC) region in a manner that engenders entrepreneurial development.
The conference further underscores the inculcation of entrepreneurship culture characterised by ingenuity and innovation whilst removing the middle man mindset of entrepreneurs in most post-colonial economies. The conference also aims at finding lasting solutions to the myriad of challenges facing South African investors and entrepreneurs.
We believe that for us to obtain a perspective about the present and prepare to redeem the future, it is important to step back and take stock of where we are coming from, our present challenges and thereafter plot the roadmap ahead.
In the pursuit of our developmental aspirations we recognise strong partnerships among provinces and the entire countries within the Southern African Development Community (SADC) region as key to building the economies of both the country and the region.
The SADC region presents vast investment opportunities for all of us in key sectors of infrastructural development and services, tourism as well as trade and industry. The natural endowments in minerals, oil, abundant raw materials for manufacturing and value addition, coupled with a combined population of about 257 million with a gross domestic products (GDP) of about US465 billion in 2009, makes the region an important investment destination not only for multi-national companies but for companies within the region.
The SADC has already decided, in pursuit of regional economic integration, that we should have a single market by 2015 and that, by 2018 we should have a single currency. In the context of the regional economy, this means free trade within the countries of the region and, critically, ability for the region to engage with a more authoritative voice in multilateral fora as opposed to the authority carried by individual countries in these platforms. The net effect of this is that the region and the economy of the region are poised for a decisive shift regarding their outlook and that, necessarily, demands that countries within the region need to adapt or perish.
One of the questions that this conference needs to respond to and respond to urgently is: “Are we as a region, and as individual countries within the region, ready for the challenges and the possibilities that will come with economic integration?”
Programme director, this meeting could not have arisen at any better time - when the economy is slowly recovering from the global recession which had resulted in KwaZulu-Natal losing considerable jobs and productive investments into our economy dwindled as investors became risk-averse.
Program director, this conference comes at a critical time when the provincial economy is emerging from the global economic recession which affected every economic sphere of our country. Economic growth in KwaZulu-Natal averaged 2.6% in 2010 compared to a decline of 1.8% in 2009. Although economic growth in KwaZulu-Natal has gathered momentum during the past year, economic growth is constrained by a number challenges which include:
- High dependence on imported goods especially finished goods, apparels, luxuries
- High dependence on commodity exports
- Failure to attract new investments (expansionary and start-up capital)
- High rate of company liquidations
- External competition
- External Shocks (Oil prices, recession, Japanese Crisis, EU debt crisis) and.
- Structural rigidities (shortage of raw materials e.g. cotton, infrastructural bottlenecks, primary commodity dependence, skills shortages).
These challenges, we believe, mirror the challenges that are, in varying degrees, faced by economies in our sister countries. It is the duty of this conference to respond not only to these challenges but critically address the root cause of these challenges. In a nutshell, this means that we have to alter the way in which we approach our economies and move to a higher level consummate with our aspirations as a region.
Ladies and gentlemen, the global economic recession taught us new economics lessons especially about the indispensable role of government in stimulating economic activity in times of economic downturns. The role of government in the economy is evident in South Africa where the government plays a pivotal role in the development of economic infrastructure and ensuring an environment conducive for private sector investment.
Not withstanding this major role played by government, Programme Director, we recognise that the private sector remains a crucial driver of economic activity in the country through its investment in the real economy to generate economic value and create jobs. Programme Director, the private Sector in South Africa contributes more than 78% to GDP. This shows that our economy is driven to a large extent by the private sector.
As such government recognises the importance of the private sector in our productive economy. The private sector, in context of the developing world wherein we as a region belong, is duty bound to play more than its orthodox role of pushing for maximum returns but also to assist in developing the region so that it becomes more competitive and can hold its own in the world economic arena.
Just as the success of any society is determined by the nurturing and opportunities that the individual has access to, so is the success of any economy determined by the level of assistance and drive that individual players have access to. In this regard, the entrepreneur is the pivot upon which the fortune of a country’s economy turns.
Unfortunately because of our history of colonialism, our economies are still largely intertwined with and, at times, dependant on those of our former colonial masters. We must therefore accept the sad fact that the rate of our production of entrepreneurs is out of kilter with our potential as a region.
Decrying the dearth of entrepreneurial activity in post-colonial Africa, one of Africa’s foremost scholars, Frantz Fanon described post-colonial economic activity as follows:
“The university and merchant classes which make up the most enlightened section of the new state are in fact characterised by the smallness of their number and their being concentrated in the capital, and the type of activities in which they are engaged: business, agriculture and the liberal professions. Neither financiers nor industrial magnates are to be found within this national middle class.
The national bourgeoisie of under-developed countries is not engaged in production, nor in invention, nor building, nor labour; is it completely canalised into activities of the intermediary type. Its innermost vocation seems to be to keep in the running and to be part of the racket. The psychology of the national bourgeoisie is that of the businessman, not that of a captain of industry; and it is only too true that the greed of the settlers and the system of embargoes set up by colonialism has hardly left them any other choice.”
Entrepreneurship is defined as: … the act of being an entrepreneur, which is a French word meaning "one who undertakes an endeavor". Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods. This may result in new organisations or may be part of revitalising mature organisations in response to a perceived opportunity.
At least in our interpretation, entrepreneurial activity demands innovation and creativity. Being an intermediary, as Fanon argues, is not being an entrepreneur. While deal-making is a legitimate pursuit for any business person, it is a fact that not all of us can be dealmakers. Indeed, the majority of us should create businesses and products that dealmakers will have to sell. If all of us are intermediaries, who then creates new goods and services that will ensure regional competitiveness and relevance? This is a question that we must respond to.
Programme Director, as the experts at this conference will attest, the most competitive nations are those that have the highest level of entrepreneurial activity. Small and medium size businesses tend to be the greatest creators of jobs and collectively, the greatest creators of wealth in emerging economies.
Ladies and gentlemen, we are mindful of the huge challenges and frustrations faced by aspirant and existing entrepreneurs in South Africa. We must admit that, at times, even where the state has made interventions to promote entrepreneurship, these do not benefit budding entrepreneurs because of, among other things, red-tape, lack of appreciation and funding for innovative ideas, lack of support to entrepreneurs, corruption, dependence syndrome on the part of entrepreneurs and, unfortunately, abuse of interventions to support prospective entrepreneurs. In this regard, no one among all of us as stakeholders can claim to have clean hands. Government, private financial institutions, development funding institutions and entrepreneurs all have, at one time or another, been guilty of undermining, wittingly and or unwittingly, the inculcation of entrepreneurship.
This state of affairs calls on all of us to move beyond the identification of challenges to a thriving entrepreneurship culture and stop pointing fingers at one another, but to come up with lasting solutions to unlock our country’s economic potential. This is the primary task of this conference.
Ladies and gentlemen as all of us know, emerging market economies are receiving an enormous flow of foreign capital at a time when their output gaps are closing and their inflation rates are rising. Portfolio investment represents a greater share of inflows relative to historical experience, reflecting the slower recovery in advanced economies. Many market participants and policymakers have attributed the recent strong portfolio inflows in emerging markets to low interest rates and high levels of liquidity created by central banks in large advanced economies.
South Africa, for example, has also witnessed an increase in portfolio investment in the recent times.The increase in portfolio investment inflow in South Africa has happened against a backdrop of declining foreign direct investment into the real productive economy. Programme Director, fixed capital investment was also a victim of the global recession. In 2009, Gross Fixed Capital Formation (GFCF), a measure of investment towards the acquisition of fixed assets, declined on average by 9.9%. In 2010, a lacklustre average growth of 0.2% was recorded.
Another question for this Conference then is: “How much of the projected growth in FDIs will benefit our entrepreneurs and grow the economy?” It is critical to respond to this question precisely because our continent has a history of investment into countries with downstream beneficiation taking place somewhere.
As we intensify our pursuit for much-needed FDIs, we need to ensure that we avoid the second colonisation of Africa wherein Africa’s resources are exploited without our countries benefiting in terms of economic growth, job creating, imparting of skills and social investments.
Historically, there has been a trade imbalance between the developed world and the developing nations. Our reliance, as a region, on internationally-traded commodities leaves us vulnerable to external shocks of international price fluctuations. Even in terms of intra-trade, we were not doing so well standing at an average of 10%. This means that the economies of countries within SADC do not compliment each other. This is what this conference needs to address.
As we move towards the creation of more entrepreneurs, we must identify goods and commodities that are demanded not only by external markets but the SADC market which, estimated at more than 257 million people, is quite sizeable.
This should be a collaborative effort among all stakeholders. We must have a dedicated effort to position the region where both the public and private sectors as well as funding development institutions come together and devise a strategy to achieve this. This will identify new possibilities for SADC and her entrepreneurs to thrive because the space is there, however, we have been going about this in an uncoordinated manner. We need focus and coordination while ensuring that we allow entrepreneurs’ inherent creativity and innovation to thrive. This is turn will help attract investments into the region.
In this regard, our province has just yesterday approved the KwaZulu-Natal Investment Strategy. The vision of the KwaZulu-Natal (KZN) investment strategy is:“To provide strategic guidance to the actions and activities of the Department of Economic Development and Tourism (DEDT), Trade and Investment KwaZulu-Natal (TIKZN), and all other relevant role players in attracting, promoting and facilitating investment of R33 billion3 into the province of KwaZulu-Natal by 2016.”
The five pillars of our strategy are:
- Achieving institutional coordination
- Dynamic Investment promotion focus
- Packaging information and research
- Addressing the fundamentals
- Skills and resource requirements
Programme Director, cognisant of the many bureaucratic challenges faced by potential investors, we have developed an investment protocol to guide investors to the South African regulatory environment, processes involved, cost of doing business and the length of time it takes to complete the compliance processes. The Investment protocol is, therefore, an important investor handbook that makes it easy for potential investors to settle in the province.
The government recognises that the creation of wealth in an economy such as South Africa hinges primarily on innovation and the production of beneficiated products. Against this background, it is the aim of this conference to deliberate on strategies the government can use to promote innovative entrepreneurship in the economy. We further believe that innovative entrepreneurship is the key to the attainment of our developmental goal of growing an economy that creates sustainable jobs.
We also recognise that investment is critical to the growth of our economy and we are going to do all in our power to ensure that we create a conducive environment for investment to thrive. We believe that the product that we have to offer to the market – the SADC region and all its economic potential – should put us in a pole position to grow and grow rapidly.
This conference, therefore, is a call to arms for all of us to re-imagine the world and not to accept that ours is a fate of also rans when we have been endowed with so many comparative advantages ranging from raw materials, advantageous geographic location, regional stability as well as sound infrastructure. The task of this conference is to have a no-holds barred engagement on the two topics of investment promotion and inculcation of a culture of entrepreneurship. This platform should be viewed as a building block towards a competitive and resilient regional economy that can compete with other economies of the world.
History has given us a task to re-model our world and rebuild our region. In this regard, the hopes of millions of our people rest on our shoulders. Therefore, there is no room for posturing and polemics but ours must be an engagement that appreciates that, as individuals, we are smaller than the task at hand but are critical for its attainment.We dare not disappoint.
I thank you.
Source: KwaZulu-Natal Department of Economic Development and Tourism
