President Cyril Ramaphosa: Launch of BLSA Connect initiative and SA SME Fund

Remarks by President Cyril Ramaphosa at the launch of BLSA Connect and the SA SME Fund held at Business Leadership SA, Johannesburg

Programme Director,
Minister of Small Business Development, Ms Lindiwe Zulu,
Chairperson of Business Leadership South Africa, Mr Jabu Mabuza,
Chairperson of the SA SME Fund, Mr Adrian Gore,
CEO of BLSA, Mr Bonang Mohale,
CEO of the SA SME Fund, Mr Ketso Gordhan,
Business leaders,
Distinguished guests,
Ladies and gentlemen,

The initiatives that have been presented here today present a clear and direct response to the economic challenges our country faces.

They demonstrate both the determination and the ability of South African business to make an effective contribution to growth and job creation.

Through the BLSA Connect initiative and the SA SME Fund, business is placing the development of small business – and the scaling up of small business into medium and large ventures – at the centre of the country’s economic and social revival.

It is for this reason that we welcome these bold measures, which will both help to unlock funding opportunities and facilitate much-needed access to markets for black suppliers and service providers.

Too often we hear stories of young people with brilliant business ideas who never succeed simply because there is no one in their immediate social circle with the necessary experience to guide them or sufficient contacts to give them opportunities.

Together, these two initiatives will be essential in bridging the gap between ideas and capital, between buyers and sellers, and between those desperate for investment and those with the resources and appetite to invest.

The inclusion of SMEs in the value-chain of big companies will be critical in developing emerging entrepreneurs and creating new jobs.

It aligns with the firm commitment of government to use its substantial procurement spend to more effectively support the emergence of small businesses.

We know that economic growth is driven by innovation and technological development – and the improvements in productivity that they bring about.

It is therefore essential that we focus on key drivers of innovation, including the provision of venture capital, especially to technology start-ups, and the commercialisation of intellectual property.

If we are to create jobs at a faster rate and absorb additional capital more quickly, we need to invest in scaling-up emerging businesses.

South Africa’s business landscape is characterised by a large number of very small and micro enterprises, a significant proportion of which are informal.

Yet, the success rate of small and micro businesses is poor.

Most of the crucial enablers – access to capital, markets, talent and capabilities – are in short supply.

Innovation is further constrained by our inability, as a country, to leverage our strong research base in higher education institutions and science councils.

We have a poor record of successfully commercialising our research outcomes.

International experience suggests that this is a key area where public private partnerships can have a substantial impact.

For its part, government is committed to create a more enabling regulatory environment.

This includes a greater focus on education – providing quality science, technology, engineering and mathematics education for all, while encouraging creativity and innovation at an early age.

It also means improving the environment for small businesses to thrive, including giving proper effect to government’s repeated commitment to pay SMEs on time.

We know that many SMEs are still failing due to working capital constraints caused by late payment both by public and private sector clients.

As we announced in the State of the Nation Address, Government is expanding its small business incubation programme to provide support in areas that have long been neglected, such as townships and rural areas.

But, as the SA SME Fund has established, one of the greatest gaps is in financing entry and expansion of new companies.

There is a distinct shortage of venture capital and growth equity investment among government and private sector players.

Seed capital – providing the funding needed to get a business started before it demonstrates feasibility – is almost non-existent.

It is therefore necessary that we work on ways to incentivise the deployment of more ‘patient capital’ and use the public sector to de-risk private sector investment in entrepreneurship.

We must acknowledge that while Government provides billions of rands to support SMMEs, not enough of this is directed towards commercialisation and growth.

Working together with our partners, we should more critically assess where our spend achieves the most impact and allocate resources accordingly.

Given these challenges, the SA SME Fund is an example of a well implemented multi-pronged approach.

I am pleased to note the work done by the Fund to date in areas of growth, venture capital and technology development, and encourage more investment in this space.

I welcome the launch of the CEO Circle to focus on scaling large small and medium sized businesses into significant businesses.

It is these companies that have the greatest potential to create new employment opportunities in South Africa.

Providing these entrepreneurs with access to capital, mentoring, and, crucially, access to corporate supply chains and procurement offices is an excellent start.

I would like to commend those CEOs who have already put up their hands to assist:

  • Calvo Mawela
  • Sim Tshabalala
  • Mike Brown
  • Fani Titi
  • Bongani Nqwababa
  • Sipho Maseko
  • Norbert Sasse
  • Alan Pullinger
  • Saks Ntombela
  • Adrian Gore
  • Brian Joffe

The fact that most, if not all, of these CEOs are men presents a great challenge both to the SA SME Fund and corporate South Africa.

If we are serious about transforming our economy, this needs to be corrected as a matter of priority.

Through BLSA Connect and the SA SME Fund, business is taking the initiative in building a vibrant and inclusive economy that creates jobs.

It is responding to the call that we made to all South Africans to be actively involved in the renewal and revitalisation of our society.

Most importantly, it is investing the substantial resources, capabilities and insights of the country’s leading businesses into programmes that will give life to the next generation of entrepreneurs.

South Africa does not lack the resources or the knowledge needed to create a thriving economy, but these resources and this knowledge need to be properly marshalled and more effectively deployed.

We have the means to fundamentally transform our future.

Working together, I am certain that we will succeed.

I thank you.

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