Z Mkhize: Umyezane Black Economic Empowerment Awards Gala Dinner

7 December 2007

Master of ceremonies
eThekwini Municipality Deputy Mayor Councillor Logie Naidoo
Ugu Municipality Mayor, His Worship, Councillor S Cele
Councillors present
Municipal managers and representatives from government departments
Representatives from chambers and the entire business community
Members of the media
Ladies and gentlemen

As we wrap up what has been a great day of discussions and deliberations, I
think it will be appropriate to officially express our heartfelt thanks to
eThekwini Municipality Mayor Councillor Obed Mlaba, the Deputy Mayor Councillor
Logie Naidoo, Municipal Manager, Mr Mike Sutcliffe and the rest of the
organising team for their gracious hospitality during the preliminary draw for
the 2010 Fifa World Cup last weekend.

The draw gave us an idea of how best can we showcase services and products
produced by small, medium and macro enterprises (SMMEs) and co-operatives
during the World Cup in 2010. There was a great deal of excitement in various
Fan Parks that were erected across the province.

Most importantly, the international media and international delegates who
attended the draw at the International Cricket Council (ICC) left KwaZulu-Natal
with a memorable impression. Coming back in 2010, I have no doubt that they
will once again experience the warmth and friendliness of the people of this
province.

According to Tourism KwaZulu-Natal the draw, together with the international
cricket match between the Proteas and New Zealand, and soccer derby between
Orlando Pirates and Kaizer Chiefs, earned the local economy up to R100
million.

BEE seminar

This is one of the several engagements this year in which I am witnessing
yet another maturing of the Broad-Based Black Economic Empowerment
initiative.

You have disappointed many pessimists who have long forecasted the failure
of BEE. A profound question for them: for how long are they going to be
spectators and armchair critics? I have a simple message for them: "Where there
is hope, there is life, where there is life, there is possibility, and where
there is possibility, change can occur."

I am delighted to be part of the generation that is witnessing this change.
I thank all role-players who participated in today's discussions. I am pleased
to learn that today's negotiations were characterised by the desire to convert
the province's resources into sustainable growth. I appreciate that all
role-players are here. Because we believe that it is important for different
companies to accept that discussion on BEE involves everybody in the private
sector.

I have no doubt that in the next few years we will see an increasing number
of companies complying with BEE Act. By doing this, they stand to benefit from
the Codes of Practice for BEE as it was clearly pointed out today.

We are pleased to see the presence of many women emerging entrepreneurs. For
the provincial government our primary responsibility is to work and ensure an
ongoing mentorship of women as well as encouraging banking institutions to make
finances available to women. I am saying this because a research commissioned
by the Black Business Executive Circle last year found that there were 96 women
directors in the top 200 list of the Johannesburg Stock Exchange, a mere four
percent of the total. Now, this should not be allowed.

One of the major driving forces behind BEE, the preferential procurement
section in the scorecard, is the rewarding of companies who buy from small,
medium and micro enterprises sector. SMMEs are responsible for an estimated 50%
to 60% of all new jobs created.

There are several challenges associated with the implementation of BEE
strategy. One of them is the practice that I have discouraged in public whereby
some consortiums dump their BEE partners once the contract has been signed and
paying them off. I am happy that this matter received attention during
deliberations today. In the near future, such companies will incur the wrath of
the Ombudsman, a structure we will form as part of the Implementation of the
BEE strategy.

In support of the SMMEs and co-operatives, we have encouraged that there be
percentage set asides reserved for these sectors. However we have found that
there are limitations in the implementation of the Preferential Procurement
Facilitation Act where the awards are challenged in court. This is an area that
requires government to tighten up. The limitation to awarding contracts to BEE
companies because of the weighting of the 80 to 20 formula means that many
large companies will always undercut emerging companies on price because of
their capacity to cut prices and survive on relatively lower margins.

We have found it still a serious challenge that it is still difficult to
reverse the challenge whereby 80% of government procurement spent goes to about
five percent of suppliers and they happen to be established companies that have
traditionally done business with government. We still reiterate the warning
that we are tightening our operations to ensure that in future government does
not continue to do business with those companies that refuse to comply with
such fundamental transformation policies.

We have set up a section that monitors and receives complaints from small
businesses that have experienced undue delays in payment from government after
they have rendered the services. Many small companies have been compromised by
this practice yet had very little capacity to survive the lack of revenues for
much longer.

It was good to have participation from the banking institutions since that
issue of lack of access to financial institutions is one of the serious
limiting factors in the sustainable growth of the small business sector. Even
access to small amounts of finance for street vendors to take advantage of
bargains, is a challenge. We want to reactivate the formation of Financial
Services Co-operatives, to support these vendors instead of leaving them prey
to loan sharks.

The scope for the development of the small business sector has not been as
positive as it is now. As a developmental state, the pursuit for development
and prosperity should be characterised by partnerships and collaboration
between all spheres of government, civil society, co-operatives and SMMEs. All
of us here have a lot to learn from the recipients of uMyezane BEE Awards. They
have proved that job creation and economic prosperity is not a far-fetched
dream. Their achievement is an indication that they fully understand that
working in partnership means lots of different organisations and individuals
contributing towards improving the quality of life. As with most teamwork, the
end results are often greater than what could have been achieved in
isolation.

The winners have a wealth of experience, which will help drive the
entrepreneurship revolution. As we celebrate their achievements this evening, I
am tempted to ask them to take their efforts a step higher than at present. I
have recognised that they have the potential and the will to succeed.

Through their resilience and dedication, they have inspired many of us. Be
rest-assured: as from this evening, some of us, public representatives will
have case studies to add to our experiences as we continue with our efforts
aimed at growing the economy of this province. Many of you will get the awards
tonight simple because you are making a concerted effort towards improving the
lives of our people.

We are forever grateful to the sponsors of Umyezane BEE Awards, the South
African Breweries Millers Pty Ltd, Ithala and the Department of Economic
Development.

The sponsors recognise that knowledge and innovation are keys to the future.
The vouchers that we will be presenting to the overall winners will help the
province move towards a skilled society. It cannot be right in the 21st century
to spend very little to develop a skilled and knowledge society.

KwaZulu-Natal government's overall strategy embraces two key aims: to
contribute to overall goals on skills revolution, promotion of investment and
development of small businesses to create employment and push back the
frontiers of poverty. Undoubtedly, Umyezane Awards will contribute in doing
just that.

This evening we will be presenting awards to the Best Provincial Business
organisations in the BEE as per the following categories:

* Best Owned and Managed Co-operative of the Year
* Best Youth Owned and Business of the Year
* Best Small Micro Medium Enterprises of the Year
* Best Black Owned and Managed Business of the Year
* Best Women Owned and Managed Business of the Year

Our main goal is to ensure that KwaZulu-Natal becomes a heaven for skilled
entrepreneurs. We want to do that by creating an environment that will help
them acquire much needed skills in order to be globally competitive.

The private sector, I believe, is in a unique position to assist and produce
this new generation. This should be achieved through initiatives such Umyezane
BEE Achievement Awards, through learnerships, ongoing education for young
entrepreneurs and provision of access to many of the necessary services and
skills required to get a business up and running.

Most importantly, as we approach 2010 Soccer World Cup, I have no doubt that
if the private sector extends more support to government's skills revolution we
will help provide an excellent infrastructure. We should ensure that this
province develops a crop of skilled entrepreneurs with in-dept knowledge on a
wide range of markets of industries such as:

* asset and project management
* civil and municipal engineering
* electrical and mechanical engineering
* geotechnical and geohydrological engineering
* communications
* environmental management
* infrastructural and sectoral policy development.

By all accounts, all successfully growing economies are distinguished by an
unwavering interest in the development of their human capital. A skilled
society is crucial to the success of any business – modern economies need
skilled people if there are to remain competitive in the fast moving global
market place.

Ladies and gentlemen

In conclusion, I would like to thank judges for their participation in the
adjudication process and the sponsors, Standard Bank and the South African
Breweries Miller Pty (Ltd) for their contribution. I would also like to thank
the staff for organising a successful BEE Seminar.

The development of KwaZulu-Natal cannot be separated from the development of
the continent and the world at large. Whilst developed countries have advanced
technologies, KwaZulu-Natal is endowed with rich resources, huge markets and
potential for development.

Thank you and enjoy the festive season.

Issued by: Department of Finance and Economic Development
7 December 2007
Source: KwaZulu-Natal Provincial Government (http://www.kwazulunatal.gov.za)