Sunday 11 October 2015, Business Breakfast hosted by Velani Unlimited

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1 Sunday 11 October 2015, Business Breakfast hosted by Velani Unlimited The third breakfast of the series was hosted by Velani Unlimited, represented by Eddie Majozi, Chairman of Velani Unlimited and Freedom Hadebe, CEO. A presentation by the ANC Treasurer General, Dr Zweli Mkhize was followed by the keynote speaker, the Minister of Small Business Development, the Hon. Dr Lindiwe Zulu, MP. Also attending the breakfast were; the former Treasurer General, Dr Mathews Phosa; the Ambassador of the European Union; the Ambassador of Mauritius, other members of the diplomatic community; members of the ANC National Executive Committee; Ministers and Deputy Ministers; Members of Parliament; Prof Edith Vries, Director General in the Department of Small Business Development; members of the PBF, and representatives of the South African and African business community, including Standard Bank and AgriSA. 1. Introductory address: Freedom Hadebe Velani Unlimited has grown from an idea to changing people s lives, with community engagement and transformation central to their approach. The company is involved in construction of schools, low cost housing, clinics, and hospitals; in water, sanitation, waste management and contract cleaning, with a focus on restoring people s dignity; and in the medical sector, aiming to save people s lives. Through a flagship recruitment and employment process, communities remain empowered once Velani projects have been completed there. It is through companies with passion for business and community partnering with government that solutions can be found to the challenges of South Africa s economy and opportunities for transformation grasped. 2. Summary of the Treasurer General s input South Africans need to unite to face the current difficult economic challenges. The answers to these challenges lie within government, the political sphere, the business sphere, and civil society. Unfortunately, there is a spirit of pessimism and negativity in South Africa, a dismissal of the opportunities before us. This can be overcome through communication based on trust and good faith, as well as good governance, the fight against corruption, and a desire to build the country together. A recent analysis of the National Development Plan (NDP) and concomitant research by Mackenzie International revealed that there is a global interest and excitement about South Africa. The research question was whether 5% economic growth by 2030 is possible. Their study highlighted the Big Five areas which are major opportunities, some of which are highlighted below. 16

2 The first of the Big Five was the industrial and manufacturing sector, which already includes some of the leading manufacturing companies that supply global clients. This is a good foundation on which it will be possible to create a further jobs, growing to 1.5 million jobs by Government and business together need to identify growth areas in companies and products to achieve this opportunity for job creation. One existing programme already created for this purpose is Operation Phakisa. Another focus is infrastructure, which is essential for economic growth particularly through an increase in intra-african trade. Trade is currently at 11-12%, but with infrastructure development, it will reach 27%. The building of infrastructure will also create jobs. With the opening of trade in Africa, services including financial and tourism services, can expand across the continent, creating a further jobs. A third Big Five is natural gas. Not only have gas reserves been discovered in the Karoo, but also in the Romvuma Basin in Mozambique. This speaks into a possible solution to the power challenges facing South Africa and opportunities for electricity generation, and a potential jobs. For each of these initiatives, and the whole NDP, to be successful, the public and private sectors need to work together to build an enabling environment. 3. Summary of ministerial input The creation of the Department of Small Business Development in 2014 is a response to the need to grow SMMEs which are basic to the NDP s vision of economic growth. The Department focuses on providing financial and non-financial support to the SMMEs through its programmes and entities, including those inherited from the Department of Trade and Industry, in order to fulfil the vision of a customised SMME development and support ecosystem. The support of the private sector, including big business, business chambers and sector bodies, is vital to the success of these interventions. The Department is unapologetic in its support of the informal sector, including microenterprises, which deserves to receive support equal to its contribution to the GDP, which is in the region of 5%. For this sector to succeed, infrastructure and resources are essential, with work being done on a provincial and local level. The Department has developed the National Informal Business Upliftment Strategy (NIBUS), which is being rolled out nationally, with Gauteng and KwaZulu-Natal at the forefront. NIBUS calls for a progressive legal and regulatory regime for informal traders; intergovernmental coordination; enterprise development and promotion for informal business; stakeholder management between communities and informal business; knowledge management, and capacity building. This consolidation of state resources will avoid duplication of inefficient functions and allow resources to reach local and 17

3 provincial structures, particularly those in townships and rural economies, which are the coalface of access to SMMEs. Apart from reviewing and redesigning programmes to increase their impact, and creating a unit to oversee special projects, the Department is also working with National Treasury to review the Preferential Procurement Policy Act, with a view to creating dispensation for 30% of state procurement to be set aside for SMMEs. This procurement is essential for the growth of this sector, which is going to produce young black industrialists who can participate in the entire value chain. One area of growth would be the Renewable Energy Programme, as well as in agriculture, where SMMEs and local businesses have an important role to play. The NDP targets will continually be reviewed to ensure that growth in the SMME sector continues. In the meantime, success stories must be told to serve as examples of what South Africans can achieve by working together. 4. Discussion 4.1 The regulatory environment Enquiries How is the Department aiming to bring down the cost of creating business and creating a conducive space for the informal and SMME sectors? What work is being done by the Department to smooth the regulatory environment for SMMEs to enable them to contribute to NDP targets? The Department is currently engaging with informal and small businesses to understand their experience first-hand. Workshops are planned on a municipal level to discuss by-laws and regulations that need to be changed, as well as administrative and enforcement issues that hinder SSMEs and informal businesses in particular. The Department is also currently looking at the relevant national regulations, particularly the Small Business Act, and proposing necessary changes. However, improvements and changes to regulations require a parliamentary process which takes time. The intention is also to provide incentives to SMMEs to work within growing economic sectors. This is the purview of the DTI, and both departments are cooperating in this regard. 18

4 4.2 Education, training and youth development Enquiries How much of a priority is skills development in the informal sector, and what interventions are being developed? What plans does government have to offer training in the smaller towns and rural areas so that youth are not lost to cities, but can rather create jobs where they are? What is the relationship between the National Youth Development Agency (NYDA) and the development of young black industrialists? Small business opportunities are often taken up without waiting for skills or training to be provided. However, it is also important that training in entrepreneurship needs to be introduced at schools and other higher education institutions. This is not to ignore the need for accredited training programmes and platforms to be developed to meet specific SMME needs in different sectors, such as artisan trades, including carpentry or welding. 4.3 The role of big business Enquiry What means are being used to prevent big companies proving barriers to small business growth? The process of revising regulations is important here as the regulatory environment is more conducive to big business so small businesses are squeezed out at the cost of complying with regulations. However, the building of trust between government and business is also essential for cooperation in growing the SMME sector. The private sector is active in enterprise development programmes, but needs further commitment to sharing skills, resources and opportunities with small business to allow them to grow. In fact, big business needs to champion local SMMEs to enable them to develop into formal, respected businesses of their own. South Africa s economic challenges are the responsibility of all, just as job creation and economic growth will improve the lives of all South Africans. 19

5 5. Conclusion The NDP aims to double the GDP capital of South Africa by This massive economic growth can only be achieved through the creation of some 11 million jobs, most of which are anticipated to emerge from SMMEs. The Department of Small Business Development was created specifically to achieve the emergence of an informal and small business powerhouse. A conducive environment, however, will require adaptation of regulatory legislation; increased education and training; financial incentives; resourcing and support for SMMEs; and the buy-in of the private sector. 20