Address by Acting Premier of the province of KwaZulu-Natal Sihle Zikalala on the occasion of the launch of the KZN Youth Fund
Mayor of eThekwini Municipality, Cllr Zandile Gumede
Chairperson: KZN Provincial House of Traditional leaders; Inkosi Chiliza;
President of the Durban Chamber of Commerce and Industry Mr Musa Makhunga;
Director General of the Province, Dr Nonhlanhla Mkhize
Heads of Departments present
CEO of Entities
Senior Government officials from all spheres of government;
Youth formations and all NGOs;
Students and learners present;
Ladies and gentlemen
Today marks a great milestone in the advancement of the course of youth economic emancipation. The launch of the KZN Youth Business Development Fund is a seed which we hope will geminate resulting into meaningful youth participation in the mainstream economy of the country.
When the Premier, Honourable Willies Mchunu announced the creation of the establishment of this, some characterise it as sheer statement which was impossible to achieve. This occasion is not necessarily to respond to such prophet of doom but is the affirmation of this ANC Led KZN Government to the attainment of youth economic freedom.
We are conscious of the role and space of the youth in the society, investment in the youth is the direct investment to the future. Former ANC President Oliver Tambo once said a country, a society that does not value its youth deserve no future. This is the conscious understanding that propel the Premier, Honourable T.W Mchunu to advance this decisive intervention.
Ladies and gentlemen, this Fund is an instrument that we believe will help prepare young people to take charge of the future.
In August 2014, the provincial government convened a Youth Summit to distil challenges facing the youth and develop a comprehensive response. The Summit resulted in the adoption of a comprehensive KZN Integrated Youth Development Strategy.
We convened this summit because our vision as the provincial government is for all young people to grow up safe, healthy, happy and resilient.
We must work together to implement youth empowerment initiatives that will help build a robust and enduring productive capacity of young people throughout the corners of this province. This Youth Fund is a step in the right direction and forms the basis of further partnership.
Programme Director, young people are one of the hardest affected groups by our almost stagnant economy. Even though constituting the majority of our population, the youth remain one of the most marginalized groups in South Africa, economically.
A sizeable number of our youth is trapped in unemployment and poverty. It is therefore important that as government we intervene in order to assist young people to navigate through these challenges.
Honoured Guests, few years ago, the provincial government unveiled the KZN Youth Economic Empowerment Strategy. The main focus of the Strategy is to ensure that many young people shift from being “job seekers” to “job creators”.
We proclaimed that we want them to move from social dependence to self-sufficiency. The strategy directs government to explore more interventions such as a dedicated fund for the promotion of youth enterprise development.
The strategy proposes that the youth economic empowerment fund should have the following four broad functions.
Firstly, seed Capital;
Secondly, collateral support;
Thirdly, business development services such as constant coaching, business plan, regulatory compliance and business etiquette among others;
Fourthly, fund Innovation and exchange programmes;
Ladies and gentlemen, we are pleased that months of hard work have resulted in the launch of the KZN Youth Fund today.
We acknowledge the potential and critical role played by the youth in the development and transformation of this country.
- It was the youth that brought agitation and militancy to that struggle against the tyranny system of apartheid;
- It was the youth that embarked on the uprising against the apartheid oriented education in 1976, and rose against the use of Afrikaans as the medium of instruction;
- It was the youth that led rolling mass action that rendered the apartheid system unworkable and the country ungovernable during the late 1980s which finally brought the apartheid regime to its knees resulting into a transition that came with the April 27th, 1994 elections and brought the democratic breakthrough.
The current youth generation has proclaimed their course as the realisation of the economic freedom in their lifetime. Being conscious of this call and the reality that majority of the youth linger in streets with no jobs, to access to business opportunities, the progressive government could not ignore its inherent role of addressing this plight.
Former President Madiba viewed young people as valuable assets and successors upon whom a country depends for the continuity of development.
We are therefore pleased to announce that this government of Mandela has made available R50 million towards the KZN Youth Fund.
This is a long-lasting solution for youth entrepreneurs who do not qualify for bank loans as they do not have credit history and collateral.
This fund will ensure continuous support of start-up firms to minimize the liability of newness.
The fund will finance assets as required by a viable existing enterprise to conduct its operations successfully.
We must hasten to point out that the finance assets will remain the property of the KZN Government and only transferable to another youth entity if the initially financed entity fails to continue operating within the first three (3) years.
Programme Director, as government we are fully aware that the availability of funding is not the only binding constraint for youth.
What also hampers youth business development is largely lack of entrepreneurial skills.
Therefore through this fund, we will ensure that youth entrepreneur, who will be getting funding, are mentored by a qualified business mentor for a minimum period of 2 years. This will ensure sustainability of new businesses during their critical start-up phase.
We have undertaken to ensure this support for youth entrepreneurs from the captains of industry attached to the KZN Growth Coalition, KZN Economic Council and chambers of commerce across the province.
We have planned a series of engagements with many other big businesses with a view of establishing a mentorship programme which will formally facilitate this level of constructive interaction.
The mentorship programme will look into to pairing young entrepreneurs with more experienced business people in the same industry, and create a platform on which accumulated knowledge can be shared.
Our message as government is that the economic freedom that we want will come if we deal decisively with the segregation of the youth from experienced business people.
Lets work together to create a brighter future that we so desire!!
Programme Director, we are also saying, one of the best ways to promote youth entrepreneurship and business ownership is for youth to obtain franchise licenses.
It is for this reason that we want funding to be set aside to fund franchises owned by the youth.
In many developed countries, franchising has been singled-out as a strategy to develop entrepreneurship among youth. This allows for the youth to learn and grow within a tried and tested environment.
The franchise system provides young entrepreneurs with a successful blueprint to follow as well as support in the form of guidance from other franchisors.
Unfortunately the franchise system currently is unfavourable to black youth in this country. It is only white youth who own franchises because they have access to capital. We want this to come to an end through this KZN Youth Fund.
In addition, to create conditions for young entrepreneurs to thrive, it has become clear that the participation of academia and funding agencies cannot be overemphasized.
As the provincial government we extend an open invitation to these stakeholders to partner with us as we build a new generation of entrepreneurs.
We have an enduring partnership with the Graduate School of Business and Leadership at the University of KwaZulu-Natal.
Through the Department of Economic Development, Tourism and Environmental Affairs we run a programmes that are focusing on ensuring that we create agents of change who must drive an entrepreneurship revolution.
We will ensure that the Graduate School of Business and assists in equipping our emerging entrepreneurs who will be successful in getting funding.
Programme Director, perhaps the big question is around who qualifies and what is the criteria for the selection?
First and foremost we wish to announce that the Provincial Treasury will make a transfer of the full Fund pilot amount of R50 million to the KZN Growth Fund to handle disbursements and report to the province accordingly.
The KZN Growth Fund is an entity under the Department of Economic Development, Tourism and Environmental Affairs.
We have established a clear framework to guide the disbursement of this Fund, including Fund Committees.
The first is a Grant Approval Committee which is responsible for policies and guidelines that govern the KZN Youth Fund.
This approval committee consists of the Director General, Deputy Director Generals and the HOD’s of relevant Departments such as Edtea, Treasury - including the CEO of KZN Growth Fund.
The approval committee is responsible for making final determination on applications presented by the Grant Evaluation Committee.
The second Fund Committee is a Grant Evaluation Committee and Investment Team which will deliberate on applications presented by the Investment Team and make recommendations to be presented to the Grant Approval Committee.
This Grant evaluation committee consists of the Chief Director of Youth Development in the Office of the Premier, and Directors for Youth Economic Empowerment in various government departments.
We will also ensure the participation of Youth development professional from the private sector. We will liaise Corporate Investment Managers to identify young people who will be involved.
The grant evaluation committee will prepare monthly, quarterly and annual report for the Grant Approval Committee on the fund performance. This will ensure that as government we make decisive interventions if there are problems.
Ladies and Gentlemen, we have said the KZN Youth Fund must reach businesses that are 80% owned by young people between the ages of 18 (eighteen) and 35 (thirty-five). This is line with our programme on Radical Economic Transformation we announced in 2017.
The KZN Youth Fund shall – as a guideline – finance SMME’s which fall within the definition as per the National Small Business Act of 1996 as amended.
We will be directing 100% of the fund to businesses across all corners of the province. We will work with youth managers in district municipalities to ensure proper co-ordination and access for young people.
We must hasten to point out that the KZN Youth Fund is not aimed at competing with other youth funding agencies. It is rather aimed at complementing their work on youth empowerment.
We therefore appreciate all the existing organizations with programs focusing on ensuring funding for youth enterprises. Whilst these efforts are appreciated, we acknowledge that there is a need for integration in order to make an impact.
We do not want few enterprises owned by one and the same youth entities to double dip in all funding agencies. This will cause unfair advantage.
In this regard, the Youth Directorate in the Office of the Premier will ensure proper co-ordination and partnerships with youth funding agencies, especially the National Youth Development Agency.
Furthermore, we have stated as government that the silo-mentality and competition amongst youth development agencies and organizations including government departments is the root cause of our inability to harness the potential of young people.
The ANC as a ruling party has emphasized the need for proper co-ordination and long-term planning on youth development.
It is for these reasons that the KZN Executive Council mandated the Youth Directorate in the Premier’s Office to deal with proper co-ordination.
We also want the directorate to focus on ensuring that Provincial Government departments and municipalities across the province have Youth Development Units that are managed by Youth Managers.
These units should have real presence and footprints at community level to drive youth development as guided by the Provincial Growth and Development Plan.
Ladies and Gentlemen, as I have indicated on many platforms, the PGDP provide a lasting sustainable solution to youth unemployment and ultimately deliver us closer to the National Democratic Society.
The plan will bring to an end apartheid legacy and create a more equal society. It is a perfect answer for the triple challenges of poverty, inequality and unemployment.
Accordingly, there are different sectors of the economy we have identified where we believe young people must be involved in through the fund.
Firstly, the manufacturing sector has been for some time been the backbone of our economy. We are therefore concerned about the fact that this sector, as a key labour creating sector in the KZN economy, contracted by 3.1% in the 3rd Quarter.
We are however excited about the progress that has been made with the Black Industrialist Programme. Through this programme we want to ensure that the proportional share of businesses operating in this sector are reflective of the demographics of our province.
The overall infrastructure spend in the province across the budget votes of the 14 provincial departments is over the R12 billion mark.
Apart from generating employment opportunities for the youth, we want youth owned enterprises to be involved in manufacturing and Black Industrialist Programme. This is the only way of driving radical local economic transformation for the benefit of young people.
As part of manufacturing sector another area of focus for funding is the automotive sector. This sector has served this province extremely well and it is a catalyst for economic development and job creation.
The development of an Automotive Supplier Park by the department of Economic Development, tourism and environmental affairs is designed in a manner that will meet the objectives of economic transformation. We have set aside R11, 5-bn development for the construction of this side in the South of Durban.
Ladies and Gentlemen, we are looking forward to applications from young entrepreneurs interested in mining. Despite its size, the mining sector in KwaZulu-Natal remains key to the provincial economy.
Other than the direct employment, output and foreign exchange contribution of the sector, it is clear that a number of synergies exist between the mining industries and other secondary sector players in the province, hence potential for beneficiation along the mineral value chains.
We won’t hesitate to fund viable ventures in the maritime sector in line with our objectives of unlocking opportunities in the Oceans Economy.
Being a coastal province, we have not yet maximised our marine economy. We recognise the potential of this sector to contribute to economic growth and development, not only to KZN, but to the rest of Africa and the world.
Good progress has been made with harbour infrastructure development in the Ports of Durban and Richards Bay.
Negotiations of further boat building and repair initiatives in both ports, capacity building and skills development programmes are being continuing.
We want young entrepreneurs in this province to be involved in the entire maritime sector as Fishermen, Seafarers, owners and operators of cruiseliners etc.
The Richards Bay Industrial Development Zones is earmarked as an infrastructure for energy infrastructure. We therefore want you as young entrepreneurs to be involved in the zone as there are endless opportunities.
The clothing and textiles sector is another priority sectors in the KZN economy and where we believe young people have an important role to play. Few days ago we launched a multimillion-rand Black Industrialist textile firm called Africa Bespoke Apparel (ABA) in Verulam.
ABA is a 100 percent black-owned company operating in the textile, clothing and footwear sector. As we reported during the launch, the company is the first one amongst the Black Industrialists beneficiaries to create about 450 employment opportunities within four months of its operation.
ABA was approved for grant funding of R35.5 million from the Department of Trade and Industry (the dti’s) Black Industrial Scheme (BIS) and the project is co-funded by our very own KZN Growth Fund.
We are also paying attention the Township and Rural Economies. We have a programme to revitalise and sustain the Township and Rural Economies.
We have initiated a process of identifying suitably located state land in the township and rural areas with a purpose of ensuring that we have youth owned businesses established there.
And lastly, we want young people to be prepared for the return of the land to the rightful owners.
We want young people to take an interest in agriculture and farming in general.
We will be more interested in funding young entrepreneurs who want to focus on issues of food security, land and agrarian reform.
We want to boost the capacity of a new crop of young farmers to produce food for our consumption and export to countries in the Gulf Region, Middle East and Europe.
In conclusion I want to state that “the Sky is the Limit”
I thank you.