Remarks by the Minister of Small Business Development, Ms Lindiwe Zulu, on the occasion of the 2nd Annual Regional Smart Procurement World, International Convention Centre, Cape Town
Let me express my profound gratitude for having been invited to this important event.
The 2nd Annual Regional Smart Procurement World Western Cape provides all of us with a precious platform to exchange and share ideas. One key reality about our country is that our country has the necessary expertise and commitment to address the economic and social challenges of the day. Our main drawback is that our efforts are often fragmented and disjointed. In order to make success stories the norm rather than the exception, we need to pull together to share ideas and exchange ideas.
Working together we can achieve a lot. Charles Dillon Casey Stengel made a noteworthy point when he said "Getting good players is easy. Getting them to play together is the hard part." In order to successfully navigate through the challenges that are currently facing the small business sector, it will require that we join and enhance coherence between the national, provincial and local government and more collaboration between the public and the private sector. For this reason the Department of Small Business Development welcomes opportunities such as these and has chosen to pay focused attention on collaborating and forming strategic partnerships with those that share the same vision of getting the South African SMME sector to the highest level.
One of our department’s key strategic objectives is to facilitate partnerships with all spheres of government as well as the private sector to ensure mutual cooperation that will benefit small businesses and co-operatives. The National Development Plan sets out a vision for an economy that is inclusive, equitable and fast growing and this vision directly speaks to the work of our department.
South Africa currently faces challenges of high unemployment rates, poverty and inequality and the SMMEs sector has been widely recognised as having a pivotal role in contributing towards the alleviation of our socio-economic challenges. According to the Annual Review of 2007 commissioned by the dti, SMMEs and cooperatives were said to be contributing between 27-34% to the country’s GDP. There are other international examples of economic development and growth that has been driven mainly by the SMME sector. The role of SMMEs in developing the economy cannot be over-emphasised. There is wide-spread consensus that SMMEs play a crucial role in economic growth, employment creation, advancing innovation and fostering equity.
South Africa’s problem of high unemployment rate calls for bold and decisive actions. The National Development Plan articulates that 90% of the jobs to be created will be within the small business sector. Acknowledging that in order to accomplish job creation within the SMME sector and grow and develop the sector, a decision was made to establish the Department of Small Business in order to intensify efforts that are directed towards the sector. The vision of the department is to see a radically transformed economy through effective development and increased participation of SMMEs and cooperatives in the mainstream economy.
The Integrated Strategy on promotion of Entrepreneurship and Small Enterprises identified three strategic pillars for the SMME sector, namely increasing the supply of financial and non-financial support, increasing demand for small business goods and services and reducing regulatory constraints. These pillars are obviously not exhaustive, however in-keeping with the focus of the conference, I will be talking more on procurement. Creating and increasing demand for small business services and goods is a vital step for assisting small business growth and development.
Public sector procurement has been identified as one of the key priority areas in which government can intensify its efforts, hence government’s commitment to procure 30% of appropriate categories of goods and services from small businesses, co-operatives, township and rural enterprises as articulated in the President’s State of the Nations Address. It is envisaged that this will increase the participation of small businesses in public sector procurement.
Efforts to open and provide procurement opportunities for small businesses by some companies in the private sector must be applauded. We would further encourage the private sector to set specific targets for procuring from small businesses. It has been indicated that the private sector spends three times more on procurement than the public sector. There is clearly greater potential for procuring opportunities for small businesses in the private sector.
The department is mindful of the fact that there are set standards for goods and services that must be adhered to. Increased participation of small businesses and cooperatives in procurement processes would be better enhanced by ensuring that small businesses are compliant with the required standards so that they are able to position themselves for preferred procurement. Our agency (SEDA) has already started with this work and has already entered into Memorandum of Agreement with the South African Bureau of Standards with the purpose of assisting our small businesses to produce goods that are of acceptable standards and quality.
We believe that part of supplier development needs to entail training of businesses in order to ensure that they are firstly aware of the required standards and that they are compliant with those standards. Improving small business capacity and competitiveness is a crucial step. A conference such as this one provides a wonderful platform for big business to engage with small business and other stakeholders on their precise requirements within the context of procurement and on the identified inhibiting factors of procuring from small businesses.
Such feedback would greatly enhance efforts directed towards bringing in small businesses to the procurement space. Prioritisation of skills development, mentoring and coaching to small businesses is an important factor. In some instances, we would have to incentivise big companies to transfer skills to small businesses, given that barriers to entry in certain sectors might be too high for SMMEs, co-operatives, township and rural enterprises.
With the implementation of the revised codes of good practice taking effect this year, we are delighted to note that various big companies are making commitments to transfer skills, develop new enterprises and also provide opportunities to both new and existing small enterprises. We will watch the space very closely and work with the Department of Trade and Industry in monitoring the development of new enterprises and the implementation of the supplier development programmes.
As a department, we are aware that in order to see more impact, co-ordination with the provincial government would be necessary. A significant part of implementation takes place at provincial and local government level.
The reality is that, working alone, the department will not be able to achieve its objectives nor effectively discharge its mandate. We need the collective wisdom of all stakeholders. All of us need to bring our expertise, ideas and experiences to bear on the socio-economic changes that confront our society.
Thank you.
