Speech by the Minister of Small Business Development, Ms Lindiwe Zulu, at the Festival of Enterpreneurship, Maboneng Precint
Programme Director,
Organisers of the Festival of Enterpreneurship Distinguished guest,
Ladies and gentlemen
I am indeed delighted to be associated with The Hookup Dinner and all partners who are committed to empowering young people to access business opportunities. As we conclude the Global Entrepreneurship Week, must make a sacred commitment that we will, at all times, ensure that aspirant entrepreneurs have all the necessary information about the growing opportunities that entrepreneurs can take advantage of.
It is particularly interesting that this event takes place in the Maboneng Precinct, a place known for its retail, restaurants and entertainment venues. This place is itself a festival of enterpreneurship.
As a department, we see the festival as an important tool in creating a nation of entrepreneurs and igniting and enterpreneurship revolution. I am confident that this festival will become a platform where we can get into the hearts and minds of entrepreneurs. This will enable us to create an enabling environment for entrepreneurship to thrive.
The Global Enterpreneurship Week is the world’s largest celebration of entrepreneurs, innovators and job creators. We are proud and privileged to be part of the 150 countries who are marking the sixth anniversary of the Global Enterpreneurship.
For us as South Africans, the week served as a platform to reflect on the state of enterpreneurship in the country and to intensify an entrepreneurship revolution in our country. On this important occasion, let me add my voice to those who assert that it will be important for South Africa to be given the opportunity to host the global entrepreneurship congress in the near future. This will help sustain the momentum of our enterpreneurship revolution and inspire millions to aspire to a life of entrepreneurship.
As we marked Global Entrepreneurship Week, we were also celebrating innovators and job creators, especially those who launch start-ups that bring ideas to life, drive economic growth and expand human welfare. Indeed, the objectives of GEW are consistent with our National Development Plan which envisages that small and expanding firms will create the majority of jobs.
In the South African context where there is a deep-seated culture of seeking employment, this campaign must send a bold and vocal message about the importance of instilling an entrepreneurial culture. As we seek to inculcate a new entrepreneurial culture in our society, we must ensure that our people understand that they are not destined to be job seekers, but that they can be job-creators.
The President established the Ministry for Small Business Development as part of government’s commitment to place the economy and job creation at the centre stage. Government is convinced that through this intervention, we will be able to unlock economic opportunities and thus achieve inclusive economic growth and sustainable employment, particularly for women, youth and people with people with disabilities.
The Department of Small Business Development is determined to ensure the integration of all initiatives that are aimed at promoting and developing small businesses and co-operatives through economic and legislative drivers. We have a responsibility to stimulate entrepreneurship in order to contribute to radical economic transformation.
The department has embraced Global Enterpreneurship Week as part of our commitment to inspire society to take risks, dismiss the stigma associated with business failure and be assured that government has a clear role to play in creating a conducive environment where small businesses can develop, grow and become sustainable. As the Ministry, we remain open and receptive to new policy ideas that will help accelerate the formation of new businesses and sustainability of existing one. The Global Enterpreneurship enables us to learn what other nations are doing to promote and sustain enterprise development.
We will strengthen our capacity to support innovation because innovation is the backbone of competitiveness and sustainable economic development. As a nation, we need to build a pool of innovators and subsequently entrepreneurs. Innovation is synonymous with risk-taking and organisations that create revolutionary products or
technologies take on the greatest risk because they create new markets. Creating more innovators in our country will place us in a better position to add value to the needs and expectations of customers, resulting in wealth creation by innovators.
Countries around the world aspire to make their economies more competitive by boosting entrepreneurship. Yet, in most countries entrepreneurs still struggle with operating and growing their businesses because the attention and resources devoted to entrepreneurship promotion tend to focus on singular interventions, not systemic change. For entrepreneurs to thrive, we need a supportive ecosystem of intertwined factors ranging from infrastructure to financial access. Policy frameworks and institutions play a particularly important role in entrepreneurship ecosystems.
Building a truly competitive entrepreneurship ecosystem requires an environment where businesses operate on a level playing field, where their rights are protected, and the same rules apply to all. However, the reality is that there is no one-size-fit-all template for building such ecosystems. Each country must find its own unique approach to reform. This requires an open and democratic dialogue where policymakers and entrepreneurs come together to discuss barriers and find solutions. This explains why we have been meeting various stakeholders since the establishment of this Ministry. These platforms give us an opportunity to understand what the facing small businesses and co-operatives and what more still needs to be done.
The entrepreneurial climate in South Africa is not where we would like it to be, with fewer locals taking the risk of starting a business, or even thinking about doing so. We know that culture takes time to develop, and similarly an entrepreneurial culture will take time to develop in South Africa. The responsibility to develop a culture of entrepreneurship in South Africa does not lie on the shoulders of government alone. All players have a role to play.
Research tells us that less than 14% of South Africans plan to start a business in the following three years. This is 13% below the global average of efficiency-driven economies category that South Africa falls into. Other countries that fall into the category include Malaysia, Argentina, Mexico and South Africa’s BRICS partners Russia and Brazil.
Early stage entrepreneurial activity took a 20% knock in one year, dropping to 7.3% in 2012. Compared to the rest of Africa and the world, South Africa is said to have the lowest enterpreneurship activity. This means our country is yet to see the true value and benefits of SMMEs.
Together, we must work towards building a culture of enterpreneurship in the country. We must consciously strive to build a nation of enterpreneurs and not a nation of job-seekers. We are painfully aware that fostering a culture of entrepreneurship is not something that blossoms over a short period of time. It takes a long time to develop and flourish.
In other words, if we create awareness today about entrepreneurship as well as train others to start a business venture, it does not mean tomorrow all these people would start and run successful enterprises.
We must also be mindful that not every person is destined to become an entrepreneur. All of us have a responsibility to contribute to the task of building a nation of entrepreneurs.
We must promote entrepreneurship as a viable career path as we continue to build a nation of entrepreneurs. We must inculcate an understanding that starting a business is not something you do because you have run out of options and you find yourself unemployed. Enterpreneurship must be a conscious and solid decision.
I urge players in industry, academia and civil society to join hands with us as we strive to unleash an entrepreneurship revolution. Together, we can promote and advance entrepreneurship capacity development. The call to action is for all of us to work hard to inculcate a culture of entrepreneurship in the country. In the spirit of vukuzenzele, our people must seize the economic opportunities presented by our democracy and freedom to build and grow businesses.
Enabling policies are very instrumental in any economy. The department has a mammoth task to ensure that the policy framework creates an enabling environment where potential and existing entrepreneurs prosper. Similarly, if policy obligations place costly administrative burdens on small businesses, such policies need to be reviewed with the purpose of reducing regulatory constraints.
Lack of access to finance is one of the major obstacles facing potential and existing entrepreneurs. Fortunately, as government we are addressing such obstacles by ensuring that more financial products are designed for the market. Some of the new products for very small and micro enterprises should include micro equities or angel investment funds as opposed to the traditional micro loans, which place a burden of interest on SMMEs.
Human capital is one area that government is prioritising because an unskilled and illiterate citizenry cannot take any country forward, whilst efficiency driven economies have skilled and educated workforce behind them. Access to markets provides procurement opportunities for small businesses either in the public or private sector. Our five year strategic plan has prioritised market access as strategic objective number one in order to grow small businesses and co-operatives.
The department is determined to provide small business owners and entrepreneurs with business development support including training, coaching, information, access to markets and mentoring through our agency, SEDA, in the main. We also continue to provide incentives to small businesses to cover the needs of business such as machinery, equipment and tools.
Building a culture of enterpreneurship also requires fighting a culture of enterpreneurship. In South Africa, we are confronted by individuals who purport to be entrepreneurs whilst their objective is to loot state resources. These tenderpreneurs do not innovate any new idea, but wait for the state to advertise tenders and then react to what is put forth by the state. In all our platforms, we must never celebrate such individuals because they do not add much value to the economy. It is possible that some individuals in this category can create jobs but their objective is not to produce but to consume.
The government, with its regulatory and economic policies, including provision of infrastructure, notably energy, is going to be the greatest role player and facilitator for innovation and entrepreneurship in South Africa. Easing the regulatory burden and reducing red tape is going to be key if we truly want to unlock the economic and job creation potential of SMMEs. The slow business registration process, late payment of small businesses, licensing procedures and small business taxation will require serious attention. Our ultimate goal is to reduce obstacles to doing business wherever possible and to expand access to economic opportunities for historically excluded and vulnerable groups.
We are of the firm view that supporting the development of micro, small and medium-sized enterprises offers an important vehicle for sustainable social and economic inclusion as well as national cohesion.
I thank you.
