Address by the Deputy Minister of Small Business Development, Mrs Nomathemba November (MP) on the occasion of the Budget Vote 31 on Small Business Development, 18 May 2017 (Old Assembly Chamber)
Honourable Chairperson; Minister Zulu,
Ministers and Deputy Ministers;
Honourable Chairperson of the Portfolio Committee on Small Business Development, Ms Ruth Bhengu and members of the committee
Director General of the Department, Professor Vries
SEFA and SEDA Chairpersons, Board Members and CEO’s; Social Partners,
Organised business formations Organised Labour; Government and Community’
The private sector Ladies and gentlemen
The establishment of the Ministry and the department of Small Business Development remains one of the most pragmatic interventions since the dawn of democracy to radically transform our economy and obliterate despair whilst propelling our township, rural and peri-urban areas to the main stream economy.
Radical economic transformation is here and is alive!
Honourable Chair,
Believe you me when I say, I am convinced that if we are radical enough, the triple challenges of poverty, unemployment and inequality that have given us sleepless nights for ages would be reduced to significant low proportions even before 2030.
I know so, because I have just joined a very progressive ministry fighting for the inclusion of our people in the economy.
Many had lost hope, many had no aspiration to even start, and today I can assure South Africans that under the astounding leadership of Minister Zulu, the ministry is fast turning the corner to develop and promote small enterprise and cooperatives with resultant employment and economic development.
I am privileged to be part of this paradigm shift that seeks to empower our people by providing realistic opportunities for small businesses and Cooperatives. We have already done so much in providing financial and non-financial support to both SMME’s and Cooperatives.
Although I have been part of this ministry for merely a month, I am taking the baton from a committed and very competent cadre, cde Elizabeth Thabethe, my predecessor who has indeed laid the foundation for me and my task would have been much more difficult without the support experienced in our encounter from my days as the Portfolio Committee member on Small Business Development.
I know that I used to hold them accountable and now the tables have turned. They are holding me accountable.
Financial support for cooperatives
House Chairperson,
The minister has alluded to the financial support towards supporting cooperatives and small businesses but I must mention, that through our stakeholder engagements it has become abundantly clear that the support towards cooperatives lags behind that which is provided to SMME’s and it is for this reason that we have begun to relook at the existing Cooperatives model with a particular focus on the manner in which we provide support to Cooperatives both financial and non-financial.
It is therefore a response to the needs of the people but we urgently have to provide a comprehensive support that will ensure that our cooperatives are sustainable and profitable in pursuit of radical economic transformation agenda.
Statistics have been quoted demonstrating the capacity of Cooperatives across the globe but very few have successfully shown improvement here at home. The question is why? Why is that the only cooperatives that are successful today are the ones that were funded pre democracy? Why?
What did the previous government do differently? These are the questions that we should be bold and answer in order to streamline our support with a sole purpose to demonstrate the potential that cooperatives have.
Daar is talle navorsing en statistieke beskikbaar wat die sukses van kooperatiewe wereldwyd bevestig, maar die teenoorgestelde is die plaaslike werklikheid. Die vraag is hoekom?
Hoekom is dit dat slegs die kooperatiewe wat bevonds was voor demokrasie, die enigstes is wat vandag nog suksesvol is? Wat is dit wat die apartheid staat verskillend gedoen het?
Hierdie is die vrae wat ons prontuit moet vra en beantwoord. Dit is eers wanneer ons hierdie antwoorde het en verstaan dat ons die oplosings kan skep vir vooruitstrewendheid.
Having said that, Chairperson, we continue to do everything in our collective power to ensure that cooperatives grow and thrive.
During the last financial year, 342 cooperatives were trained in cooperative governance and management, Bookkeeping and Quality Management Systems, and Product Improvement covering all nine provinces.
We will, during this current financial year, review the Cooperative Incentive Scheme. The objective of the review process is to enhance the programme’s effectiveness and enable the support of sustainable and growing cooperatives in the economy.
The instrument is part of the strategy of the department to position its policy instruments to respond to the need to bring about radical economic transformation in the area of cooperative development in the whole economy.
Last year, we made an undertaking to establish the Cooperatives Development Agency which would provide financial and non-financial support services to cooperative enterprises in the whole economy. We were unable to achieve this goal due to budgetary constraints.
I wish to assure Honourable Members that the process remains firmly on track. The process of establishing the agency will be accelerated as soon as the Cooperatives Development Amendment Act (2014) is proclaimed.
We are also embarking on a process to review the cooperative strategy with the view to formulate an integrated cooperative strategy development model geared to promote the growth and development of cooperatives on a sustainable basis and drastically reduce the mortality rate of cooperatives.
Chairperson, I am pleased to inform the House that the department has entered into a Memorandum of Understanding (MOU) with the Government of the Netherlands to promote cooperation in the area of co-operatives development. One of the focus areas is to provide technical assistance with regard to the structuring of co-operative models that will improve production efficiencies and economic viability within co- operatives.
The first co-operative to be based on this concept, is the New Generation Co-operative (NGC) that was launched during the visit of Prime Minister Mark Rutte to South Africa. The department, in partnership, with The Netherlands Embassy, ZZ2, the RSA Group, and North West University is continuously supporting the NGC pilot in Nwanedi Area, Limpopo province.
Special thanks to our Director-General, Prof Edith Vries who, together with the Netherlands Ambassador in South Africa, Her Excellency Marisa Gerards, visited some of the NGC members on 16 July 2016. The Co-operative is currently registered and has made an application to the Enterprise Incubation programme (EIP) Programme of the Department of Small Business Development.
House Chair,
Last year, we successfully hosted the International Cooperatives Day Celebration in collaboration with Mpumalanga provincial government. The event took place in Mbombela Nelspruit and it was attended by the 3 SADC Ministers (Zimbabwe,
Lesotho, and Botswana) who came to share best practice on cooperatives development with their South African counterparts as well as deliberate on SADC Economic Policy and SADC Industrial Strategy. 1 200 members of cooperatives and general public participated in this programme.
I wish to extend an invitation to all Honourable Members to this year’s International Cooperatives Day which will be held in Sasolburg, Free State from the 30th of June to the 1st of July.
On Coordination and Intergovernmental Relations
Chairperson, we are of the firm view that the spirit of cooperative governance and intergovernmental relations is one of the most effective instruments in the hands of government to promote the growth and development of small businesses and cooperatives.
As a department, we have developed a culture of involving and engaging local and provincial governments in all our programmes and initiatives.
Indeed, all the enterprises we are funding and supporting can only be effectively monitored by local and provincial spheres of government.
The success of these small enterprises is also the success of local economic development.
We therefore make a call to all municipalities to support and capacitate their Local Economic Development units as part of our collective agenda to grow local economies through small business development.
As the President asserted during the Presidential Local Government Summit which took place during the 6th and the 7th of April this year, the key component of phase 2 of Back to Basics is Local Economic Development and as a department, we are ready to partner with municipalities.
At national level, the department has signed nine transversal agreements with various public sector organizations.
This gives concrete expression to our position that small business and cooperatives development is everyone’s business. Indeed, all departments and state-owned entities have something to offer to small businesses.
Currently, we are working with our partners to deliver support to informal and micro enterprises. Some of the key partners in this regard are MerSeta, Services SETA,
International Labour Organization (ILO), UN Women and the Department of Public Works. Through the Department of Public Works, we reached more than 100 entrepreneurs with disabilities. Our gender and youth interventions are also in line with the mainstreaming targets.
We will, in due course, be rolling out the implementation of Public Sector Transversal Agreements involving eight national departments, namely, Public Enterprises, Tourism, Defence, Social Development, Rural development and Land Reform, Labour, Public Works, and Telecommunication and Postal Services targeting key sectors of the economy that can contribute towards growing employment and ensure the sustainability of cooperatives.
House Chairperson, Co-location is one of the key priority areas that responds to the need of small businesses to access enterprise support services under one roof � from registration to funding. Through partnerships with our agencies as well as local and provincial governments, we have already established a number of co-location points.
We will this year launch more co-location points as this is a very important intervention.
As part of our commitment to support the establishment of new business incubators and to help grow and support existing incubators, we implemented the Enterprise Incubation Programme in the last financial year.
The programme will assist with the identification and guaranteeing of specific markets and provide focus and direction to the incubator’s work of preparing entities.
To date, seven incubators are being supported to offer incubation for small businesses and Cooperatives with potential but limited technical and business resources and expertise. The target for this year has been increased to 12 incubators.
I would like to take this opportunity to invite Honourable Members to the launch of Matsila Development Trust Incubation which has been funded by the department’s Enterprise Incubation Programme to a total amount of R8 million.
The fund will assist the Trust to uplift the Matsila Community by enhancing their entrepreneurial skills throughout the Vhembe District Municipality and beyond the Limpopo Province. The launch will take place on the 2nd of June this year.
Through Seda, we are rolling out the Rapid Incubation Programme in TVET colleges that host the centres for entrepreneurship programme.
These programmes are meant to unearth innovative and entrepreneurship talent for youth in these colleges and their surroundings. Early this year, we launched two such centres in Welkom, Free State and Mogwase, North West.
The creative industry
House Chairperson,
The Department of Small Business Development has long identified the creative industry as a sector with the greatest potential to create temporary jobs in the immediate and sustainable projects in the long run.
We know that most people see our artists by the side of the road and only view them as artist as opposed to entrepreneurs that we know have a potential to help us achieve the much needed jobs in this country.
As the department we have been tirelessly working with various partners in both the public and private sector to foster relations that will help empower the sector but also provide comprehensive support to these entrepreneurs.
Through the SA lifestyle hub in Atlanta that we re-established two and half years ago, we continue to receive orders for our local manufactures throughout the country and what remains inspirational to all of us is the fact that many of them are rural based.
Ms Agelina Masuku that the former DM reported to this house that she got an incredible order to supply Disney World with handmade baskets has reported that she is still supplying them and interestingly, they are now also ordering place mats on monthly basis. This is true economic empowerment for rural women because she now has over 15 employees with a potential to employ more.
The statistics about the creative industry point to an urgent need for interventions that seek to promote and underscore the growth and development of the domestic and local creative economy as a key driver for job creation.
A range of policy and strategic tools ranging from local production incentives, tariffs, government procurement, as well as local content quotas across all creative industries would need to be instituted to stimulate accelerated domestic growth.
As the department, our focus should be on stimulating domestic demand because consumption is central for the development of the Creative Industries and their contribution to economic growth and job creation.
The focus on domestic demand, local production and consumption is not at the exclusion of export development and growth, but emphasises a strong local market as a springboard for export
House Chair,
The Department supported 100 craft enterprises to participate in the national Decorex exhibition at Gallagher Estate, Johannesburg, which took place in August 2016.
These enterprises collected revenue in excess of R1, 8 million which is a direct cash injection into their respective businesses.
This is money that they otherwise would not generate for their businesses if the department did not provide financial support for their participation in the ever growing Decorex.
It is also vital that I share with you our National Tour of the USA with our local creatives.
The Department of Small Business Development firmly believes that the main sustainability factor for SMMEs and Cooperatives is access to markets and sustainable business opportunities.
In the interest of realising the goal of supporting their market access aspirations, the department also supported 20 visual arts enterprises on a national tour of the United States which were presented at the Santa Fe Contemporary Art Fair, the San Diego, Miami and New York Art Fairs which took place from July 2016 to April 2017.
This is again a practical demonstration of our commitment as a Department to unlocking and creating market opportunities for SMME’s and Cooperatives especially in the creative industry.
Our participation in various market platforms here at home and abroad demonstrates a continued demand for South African creative goods in the world. This is further evidence that the Creative Industry is an important growth area and a job creator for women and young people in rural and peri-urban areas.
House Chairperson,
In February this year, we launched the e-commerce platform, Peek. One of the key challenges for small South African businesses remains access to markets. With technology, however, we have the opportunity to bridge the divide and create new ways for beautiful local products to reach local and international buyers and consumers. Peek – www.peek.org.za � was developed with this in mind to assist the many businesses in an important economic sector to access new markets for free and find new buyers.
Peek provides a platform for SA’s creative businesses anywhere in the country to showcase their work to a local and global audiences, highlighting the very best of what South Africa has to offer. Any craft and design business can sign up for the Peek site by registering as a business on the national database at www.ccdi.org.za � it is free and once registered, businesses can directly access Peek to upload products.
The Peek team at the Cape Craft and Design Institute assists with any queries people may have and helps anyone who needs assistance to upload these products. Peek has 242 individual businesses listed so far from across the country and over 1400 products. Plans are afoot to increase on a daily basis the number of businesses signing up, and with regards to marketing and awareness to increase this (with both producers and buyers).
The ultimate goal is to develop Peek into SA’s biggest website dedicated to showcasing craft and design products made in the country � making it the number one place to find local beautiful products.
Platforms like Peek will enable many businesses that have constrained local market opportunities in their towns and cities to access a much larger audience and consumer-base for free. It links entrepreneurs into ever expanding national and international networks of market opportunities, putting them on a growth and profitability path.
This platform can assist in promoting a greater appreciation of South African craft and design here at home and across the world. As it is free to use, consumers and buyers in South Africa and anywhere in the world can find small businesses and hidden local emerging talent who may not yet have the means and finance to market their products widely.
Enterprise incubation programme
The envisaged socio-economic benefits, specifically employment, youth and/ or women participation that will be achieved by 2 of the incubators namely: include the following
The construction incubator by Nunnovation Africa Foundation in partnership with Sibanye Gold will support 30 SMMEs, of which 19 are youth and 16 are women. 58 jobs will be created. This number will improve significantly after months of training as they will then start producing work for the Sibanye Housing Unit.
Africa Excel Advisory Services has established an agriculture incubator. 14 Co- operatives will be supported. The component of youth and women participation is 3 and 7 respectively. Jobs to be created are 27.
Source: Government of South Africa