Speech by the Deputy Minister of Higher Education and Training, Mr Buti Manamela, MP to the Entrepreneurship and Cooperative Development Institute (ECDI) Conference, Riversands Incubation Hub, Gauteng
Programme Director,
Chairperson of Services SETA Board,
The Board of Services SETA,
Director General of the Department of Higher Education and Training,
Senior Officials from Government Departments,
SETA CEOs and Officials,
Technical and Vocational Education and Training College Representatives,
Community Education and Training College Representatives,
Organised Labour Representatives,
Business and Industry Representatives,
Skills Development Providers,
Ladies and Gentlemen
Good morning to all. It is my privilege to participate in this Entrepreneurship and Cooperative Development Institute Conference today. We are constantly reminded of the school drop outs that have become successful entrepreneurs who have gone on to starting and leading major global businesses. What comes to mind is, Apple, Virgin, Facebook and closer to home, Web Africa are some of those companies. Some commentators have even questioned the value of education in developing entrepreneurs.
However we must remember that global companies like Adobe, Google, Intel and Cisco were founded by people who finished school and completed their first degree. Education and entrepreneurship can be two sides of the same coin. People need the mind-set, skills and knowledge to generate creative ideas and the entrepreneurial initiative to turn those ideas into action.
There are strong interconnections between education, skills development and entrepreneurship. It is because of this interconnectedness that the Department of Higher Education and Training takes entrepreneurship and the development of entrepreneurs and cooperatives seriously.
South Africa’s development blue-print, the National Development Plan (NDP), targets GDP growth of 5% and unemployment reduction to 6% by 2030. This is expected to be achieved through the creation of 11 million jobs, the majority of which is expected to be contributed by small and expanding businesses. However our current reality is different. The World Bank forecasts growth of 1.1% in 2018, higher than the country's average year-on-year growth of 0.8% in 2017.
Consequentially, the unemployment rate stands at of 26.7% as of the last quarter of 2017. SMMEs are a crucial part of South Africa’s economic growth. It is estimated that SMMEs contribute more than 30% to South Africa’s GDP. With regard to employment, SMMEs in South Africa absorb about 70% to 80% of the employed population and contribute less than 4% to export earnings, leaving a large margin for growth.
According to the Global Entrepreneurship Monitor South Africa Report of 2016/17, South African societal entrepreneurship attitudes substantially improved over the past decade and are above the average for efficiency driven economies. In contrast, entrepreneurial perception and competencies in the adult population fall below the average for efficiency driven economies. This shows a disjuncture between attitudes and skills.
The inability of the youth to engage in economic activity and find employment suggests that young people may not be receiving the necessary skills and work experience to drive the economy forward. This situation cannot be allowed to persist. The challenge of inculcating a culture and spirit of entrepreneurship and self-employment, lies not only in making funding available but in developing skills and competencies of the youth and potential entrepreneurs in general.
South Africa’s policy on SMME development and support is anchored on the National Development Plan’s aim of eliminating poverty and reducing inequality. According to the NDP, South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.
The Government’s Nine-Point Plan recognises the SMME sector as one of the critical sectors that can foster economic growth and create job opportunities to eradicate poverty. Point 7. Of the 9point plan is: Unlocking the potential of SMMEs, cooperatives, townships and rural enterprises is regarded as a major job driver.
The vision of the National Skills Development Strategy III is a skilled and capable workforce that contributes to economic expansion and inclusive growth. Goal 4.6 speaks to encouraging and supporting cooperatives, small enterprises, worker-initiated, NGO and community training initiatives.
The strategy recognises that “skills development is not just about training people for employment; it must also empower people to create opportunities to make a living for themselves”.
Similarly, the White Paper on Post-School Education and Training recognises the need for the education and training system to cater for people who will not, in the foreseeable future, be able to find formal employment in existing enterprises, who will have to create employment opportunities either by starting small businesses in the informal or formal sector, or by establishing cooperatives, community organisations or non-profit initiatives of various types.
Rural Development that seeks to create vibrant, equitable and sustainable rural communities underpinned by enterprise development to stimulate the rural economy, and jobs creation and human development through increasing and diversifying the rural skills base is a key priority.
Additionally, the promotion of Cooperatives as an effective vehicle that contributes to the development of rural and peri-urban areas of the economy, and improves, primarily, the economic and social well-being of black people, women, the youth and people with disabilities, should be targeted.
Support and growth of township enterprises operated by township entrepreneurs to meet primarily the needs within and beyond the township, requires a targeted and coordinated strategy that removes barriers and promotes thriving local economic activity.
The vision and objectives of our national policies and strategies remain relevant. What is lacking is integrated and coordinated action, and innovation to address the diverse needs of targeted beneficiaries, equity in terms of access and the scale of demand.
The Post School Education and Training system offers formal entrepreneurial education at all levels including Universities, TVET Colleges and private Skills Development Providers. The Entrepreneurial Ecosystem offers specialised support services including Business Development Services and Business Advisory Services aimed at promoting access to information, access to markets and access to finance.
Entrepreneurial education and skills development whether formal or informal, applied or observational, is imperative in building the competencies and capabilities of the SMME sector, entrepreneurs and cooperatives.
Shared National goals and objectives and corresponding mandates of the Department of Higher Education and Training and the Department for Small Business Development enables mutually beneficial and reinforcing contributions and partnerships.
The University Branch of the Department of Higher Education and Training in March 2017 developed a Framework and Action Plan for Entrepreneurship Development in Higher Education aimed at coordinating and mobilising universities to achieve three primary goals namely Entrepreneurship in Academia through the curriculum and research, Student Entrepreneurship through practical application, and Entrepreneurial Universities through commercialisation.
The Small Business Development Agency (SEDA) in 2015 established a programme partnering the TVET Colleges to establish Centres for Entrepreneurship (CfEs), and Rapid Incubation Centres. These Centres provide innovation space for creating viable business ideas and concepts, and technical workspace for product development, respectively. Key objectives included fast tracking and developing youth and graduate entrepreneurs and creating new and sustainable small businesses.
The project was initiated in one TVET College per province. The impact of this programme should be evaluated jointly to strengthen design, implementation and access. The cost of establishing, maintaining and expanding these centres necessitates consideration of a broader partnership framework and models for self-sustainability.
All 21 Sector Education and Training Authorities (SETAs) have targets to support small businesses, cooperatives and non-profit organisations aligned to the goal of the National Skills Development Strategy.
It is recognised that Small Business Development including New Venture Creation, and Business Advisory Development qualifications fall under the scope of the Services SETA but the demand for skills amongst entrepreneurs, small businesses, and cooperatives span across all sectors and SETAs. Investment in such training and development has therefore been made across SETAs.
The nature and impact of these investments on the establishment and sustainability of beneficiary enterprises requires due consideration as it may not be adequate on its own highlighting the need for collaboration and partnership.
Community Colleges located in townships and rural areas also offer opportunities to provide support services for targeted entrepreneurs, structurally and historically marginalised and economically excluded.
The complexity and variable needs of SMME, entrepreneurs and cooperatives is acknowledged. The Programme of Action should consider different types of enterprises, their size, stage of development, location, access to technology, markets and competency requirements. It is understood that entrepreneurial, managerial and technical skills are required for business success. Quality, adequacy and relevance of supply-side services are as imperative and funding.
Within the South African context growth in terms of GDP and jobs will not be achieved by a small minority of high growth, high innovation and high risk entrepreneurs. Government programmes need to support those most vulnerable and marginalised in addition to those most prosperous.
I am excited to learn more about the Programme of Action that the Services SETA has facilitated. This programme of action has the massive potential to shift reality as we know it. We are committed to collaborative action and partnerships and wish you fruitful engagements throughout today.
We hope that the engagement will have outcomes that change the lives of South Africans.
I thank you.
