Speaking notes for the Minister of Small Business Developm,ent, Ms Lindiwe Zulu, at the Minara Chamber of Commerce and Industry on the occassion of the graduation dinner, Durban
Programme Director,
Premier of KwaZulu-Natal, Mr Senzo Mchunu,
MEC for Economic Development and Tourism, Mr Mike Mabuyakhulu,
President of Minara and Honoured guests, Mr Solly Suleman
It gives me great pleasure to have been given the opportunity to speak on the occasion of the Minara Chamber of Commerce Graduation Dinner of 2015.
When we examine youth demographics, we can clearly see that South Africa is a young country, with a ‘youth bulge.' Youth (14-35years) constitute 41.2% (20.5 million) of the total population of South Africa. When we look at the demographics and include children between the ages of 1 – 13 years in the equation, then 77.6% of the South African population is between 1 – 34 years old.
While South Africa has an acute youth unemployment problem, it is perhaps important to acknowledge that youth unemployment is a global challenge. Importantly, even though there is global economic growth, this growth is not addressing the needs of people in terms of jobs. While economic growth has been achieved, it has not created enough jobs to cater to the number of new entrants to the job market annually.
South Africa’s jobless rate decreased to 24.3 percent in the last three months of 2014 from 25.4 percent in the previous quarter. It is the lowest rate in a year as employment rose for the third consecutive quarter and the unemployed labour force decreased. In the three months to December, the number of employed people increased by 203 000 to 15.32 million. Large quarterly gains were observed in the agriculture (56 000), construction (53 000) and trade (50 000) industries. Job losses were recorded in the utilities, mining and community and social services industries (15 000, 14 000 and 12 000 respectively).
Employment gains were recorded in seven of the nine provinces. The largest quarterly employment gains were observed in KwaZulu-Natal (101 000) and Gauteng (61 000) while job losses of 42 000 and 12 000 were respectively recorded in Eastern Cape and Western Cape. Government has recognised the problem of poor economic participation of young people in the economy and has put in place numerous policy interventions geared towards bringing young people into the mainstream of the economy.
The Small Business Development Department is mandated to implement the Youth Enterprise Development Strategy (YEDS) which is the Department’s primary contribution to the Youth Employment Accord.
The Department realises that youth between ages of 16-35 years own approximately 33% of all businesses in South Africa. It also recognizes that about two thirds (63%) of youth entrepreneurs are self-taught or acquired their skills from spouses (14%).
Furthermore, less than 2% of the youth entrepreneurs reported tertiary institutions as a source of skills and training. Finally, over 80% of youth owned enterprises are not registered. According to the classical definition, these businesses will be regarded as informal, but from a perspective of their level of sophistication they are not. Therein lies the dilemma and the DSBD through the development of its Informal Sector Business Development Strategy is attempting to modernize these businesses, and through organic growth steer them towards formalisation, and also towards other mechanisms available at the DSBD to promote their expansion.
Entrepreneurs are vital to a healthy economy. They look for unmet needs in society and then try to fill them with a new good or service. They take risks without any certainty of reward. They push forward new technology. They try things that others might consider unlikely to succeed, and occasionally these results in successes that would never have even been attempted otherwise. In difficult economic times entrepreneurs help in multiple ways by creating jobs and finding unique and creative ways to provide society with the goods and services they desire. It’s hard work, and many new endeavours fail, but the contribution of entrepreneurs to a productive economy cannot be overstated.
The performance on any business is inextricably linked to the person who runs it, in the case of most small businesses; this is the entrepreneur who started the business.
Our economy needs entrepreneurs, but what do entrepreneurs need? This is the primary question that my Ministry will try to answer as it builds an effective nurturing and enabling environment for small businesses in South Africa.In line with the Youth Enterprise Development Strategy, the DSBD has partnered with the National Youth Development Agency (NYDA) to train 120 young people on deal origination and micro-finance. These young people will graduate at the end of June 2013 and the next phase will focus on placement of these graduates within commercial and development financial institutions and DSBD COTII agencies, to gain practical work experience for a period of one year or more.
Another key project where the DSBD has partnered the NYDA is to establish 20 youth Cooperatives that own Fish and Chips Co. franchise stores in the 20 priority townships in the Gauteng province. The project is being funded through the Cooperative Incentive Scheme of the DSBD, with the NYDA providing bridging funding. Furthermore, the DSBD has provided sponsorships to two young entrepreneurs to participate in the G20 Youth Entrepreneurship Summit held in Mexico during June 2012, as well as taken a cadre of young cooperatives and entrepreneurs to the Youth Day Commemorations held in Port Elizabeth in 2012.
The DSBD’s Small and Enterprise Development Agency has provided business development support services to SMMEs including youth owned enterprises across the country through its network of outlets. The services provided through the network of outlets include the following services, which are related to basic issues such as starting or running a business, as well as, more complex and specialized business development needs such as business registrations, business planning, access to markets, and access to finance, Cooperative support, small enterprise training and mentorship and access to technology.
On the financial support area for young people focusing of cooperatives, the DSBD through the Cooperative Incentive Scheme (CIS) has provided grant funding to cooperatives with youth membership. During the 2012/13, approximately 119 youth members have benefited from the CIS scheme. The DSBD has embarked on revising all incentives application forms to improve biographic information of all applicants. It is envisaged that when the ongoing Integrated Electronic Management System is implemented a much more improved biographic information will be captured allowing for a better reporting moving forward.
The Mass Youth Enterprise Creation Programme (MYECP) is a flagship programme, designed to engage young entrepreneurs over 24 months, whilst providing a 12-month Seta accredited entrepreneurship certificate, development of a business plan, sourcing of funding, business launch and post programme support. The programme will be implemented through a supply driven approach, designed to increase the quantum of entrepreneurs in the youth market;
In the pilot phase of implementation, the programme will recruit 1000 youth beneficiaries from 3 provinces (KwaZulu-Natal, Eastern Cape and Gauteng), and will run for a period of 24 months to test its viability, efficiency and effectiveness – Pilot Launch 2015/16. It will be implemented over the next 5 years 2015/16 to 2019/20. This intervention is earmarked at creating sustainable job opportunities for the youth in line with government commitment pronounced in the various policies, strategies and programs. The programme is designed to improved Total Early Stage Entrepreneurial Activity (TEA) amongst youth, thereby increasing the culture of entrepreneurship in general, and youth entrepreneurship, in particular.
Programme Director, we are determined to create a South Africa that has a dynamic youth entrepreneurship culture and developed youth owned enterprises, operating in all sectors of the economy, which contribute to economic growth, poverty reduction and employment creation, as well as, assist in bringing about economic transformation and an equitable society.
In closing I would like to commend the graduates and future graduates for their attendance to this event and for their hard work and dedication to their studies. I hope that as the future leaders of our country, and especially as our future entrepreneurs, you will endeavor to strive towards the creation of jobs and the alleviation of poverty in our country.
It has been an honour to be among such accomplished individuals.
