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Speeches by Lindiwe Zulu at the National General Council

I've been asked to speak on the National Development Plan and its vision, a partnership between government and business. I will use this occasion to reflect on our role as a department of small business development in meeting the NDP's 2030 targets.

As we all are aware, the president appointed the National Planning Commission in 2010. The commission comprised of 26 people primarily from outside government. There begins the partnership between government, civil society, the private sector, progressive NGOs and so forth. The Plan was a result of wide consultation over a period of two years involving community formations, business through chambers and sector bodies, unions and the non-profit sector, parliament, and development finance institutions, who we regard as very important in terms of our development of a developmental state.

But the NDP is not just a widely-consulted plan. It is also a plan that balances development and redress by acknowledging the interlinkages between the triple challenges of poverty, inequality and unemployment. It identifies the single challenge of rolling back poverty and inequality. So the partnership that we are talking about is something that is very important and we hold dearly as a department of small business development. We are proud of our country and our collective commitment can make it happen. We don't have any other country to go to, so we must focus on what we can do best together and remove the negative narrative - we actually don't need it. On the economy and employment, the NDP identified these as critical for South Africa to achieve a Gross Domestic Product of 5% or over a doubling the GDP capital by 2030. It also anticipates that unemployment will be reduced from the current 24% to 6% by 2030. 2030 seems to be very far but in reality it is not. The Plan anticipates that this will be achieved through the creation of some 11 million jobs, 90% of which would come from SMMEs. This target will require that the economy treble in size by 2030.

According to the NDP, South Africa is in a low-growth middle-income trap, characterised by a low level of competition and unemployment, poor skills and generally low savings profile. It proposes three specific interventions to remedy this: SMMEs development, boosting productivity and a progressive labour market. SMMEs are at the centre of this as well as cooperatives, which we should leave behind at all times. There is acknowledgement in the NDP that skewed Apartheid development has resulted in a high cost structure for doing business in South Africa. Government has not done enough in the past 21 years to bring down the overall cost of business in order that SMMEs can grow and flourish - our department is focused on that.

The creation of the Department of Small Business Development is government's bold response to situational analysis advance in the NDP. In July 2014, President Jacob Zuma signed the new department into existence. The department provides financial and non-financial support to SMMEs through its programmes and entities, the Small Enterprise Finance Agency and the Small Enterprise Development Agency. I would like to also indicate here that the department inherited the programmes of the Department of Trade and Industry and because we do not want to collapse the systems and the support small businesses had at the time, we decided to continue those programmes. However, we need to review those programmes so we can respond to the real challenges that are faced by small and medium enterprises. To that effect we have just started the review processes. We have outside assistance and we are looking at the academic institutions to step in and assist us in ensuring we develop programmes that really speak to the challenges of the small and medium enterprises.

Our vision is that of an SMME development and support ecosystem that provide financial and non-financial support and is customised to the life stage of SMMEs. We would like to see targeted procurement opportunities in the public and private sector being earmarked and set aside for deserving and qualifying SMMEs. We would like to see more SMMEs entering the supply chain of big corporations, the service and manufacturing sector and would like to call on big corporates to open up those opportunities for small and medium enterprises.

We are unapologetic in our support for the informal sector - we would like to see the informal and micro-enterprise sector receiving support that is equal to their contribution to the GDP. According to Statistics SA 2014 survey of employers and self-employed, the informal sector contributed 5% of the GDP between 2001 and 2013. Our vision is to see enterprises graduate from the lowest level to the commanding heights of the black industrialist. We are focusing on this sector because working together with the provincial department, with the provincial structures - who now have very big infrastructure programmes for township development - the SMME sector must not be left out. Hence we need to hold discussions with the provincial and local structures, where some of the resources lie. The local level are the closest to the sector that we are talking about.

In order to accomplish this vision, our department is undertaking a review of all inherited programmes and functions, including those programmes and functions that reside in our agencies, in order to establish these services. We intend to redesign programmes and services where necessary in order to increase the impact of our interventions.

Our department also has begun negotiations with the National Treasury to review the Preferential Procurement Policy Framework Act, with the view to creating a dispensation for 30% of state procurement to be set aside. This discussion has been going on for too long. Treasury is supposed to issue the practice note and we have a back and forth about it. As a department we are very clear about this. We see that this 30% procurement is vital for the growth of small and medium enterprises. Also, when we talk about black industrialists, we see small and medium enterprises as an opportunity particularly for young blacks. When we talk about black industrialists, we must have something straight: We need industrialist people that understand what they are producing - the entire value chain. We don't want in-betweeners, we want people who are able to understand that if you have to produce something, you must know the material that is required, where to acquire it, what the measurement of it is, how to measure it, and how to get the people that are qualified to do this. When you call yourself a black industrialist you must be able to explain everything that you are engaged in.

Our department is talking with various business chambers and sector bodies to establish enterprise and supply development programmes. I have created a special projects unit in my office to oversee some of these projects because sometimes we agree that we are going to do certain things and then the bureaucracy creeps in. I believe that there are certain projects that need not fail and one must have people that are going to ensure those projects are taken forward.

Our department has also developed the National Informal Business Upliftment Strategy, which has been adopted by Cabinet and is being rolled out in the nine provinces. So the partnership and the coordination with the provinces is going to be helpful to us because government doesn't have many resources; we need to harness the resources we have to make sure we do not waste it. The strategy 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. Gauteng and KZN are in the process of consulting their provincial strategies for this. We call it NIBUS, for the National Informal Business Upliftment Strategy.

Finally, this terrain is not without challenges. In this regard we need to ensure more active participation by the private sector in the development of the small enterprises, generally, and black SMMEs in particular. To clarify, when we talk about black SMMEs that does not mean we are not going to look at other SMMEs. We don't want the other SMMEs that have grown to the level of contributing so much to the GDP to also collapse. So in general we are looking at supporting all SMMEs but because of historical challenges of the majority of black people, we will focus on them through our black economic empowerment programmes.

We must pay more attention to the consolidating state resources geared towards SMME support and development. We cannot have a situation where there is a duplication of inefficient functions while our poor suffer. We need to ensure there are adequate resources given to municipalities and metros to undertake local economic development functions, which we have in almost all the provinces. One of the reasons why people have to keep on calling us at national level is because those local economic development structures are not functioning as much as they are supposed to. Therefore one of the key roles of the department is to ensure they are talking to the local and provincial structures, and that they take responsibility so people are able to get the service right by their door. This is the coalface of service access to SMMEs - rural and informal township economies must be prioritised, particularly because they are entry points into the economy for many black people.

The NDP targets must constantly be reviewed to ensure that the current economic performance does not distraught the targets and ultimately diminish the impact.

We have a few regulatory acts. We have agreed as a department we need to look at and make sure we change whatever needs to be changed in that act. But if you need to make any changes to any act that is in parliament, there are processes, which also include public commentary. We are going to look into the Small Business Act, making sure that it really speaks to the current challenges that are being faced by small and medium enterprises.

When we started there was an issue about trust between government and business - we want to address that first and foremost. Then, secondly, there has to be the understanding that jobs cannot only be created by the public sector and the private sector, and therefore the role of small and medium enterprises has to be understood by everybody. Where we engage with the private sector in particular - because they are doing a lot of enterprise development programmes - we want to have a discussion with them. As for those public enterprise development programmes, do they really speak to the challenges, or is big business and the private sector just ticking that box? If South Africa has to go to the next level, none of us should be ticking the box. All of us have to have the broader understanding of why we have to do what we have to do. And I know that it's quite a difficult one, because there are private sector companies that would be producing things that in my opinion should be produced by small businesses. They need to give the opportunity to smaller businesses, but of course they often complain that the production of something that needs to fit into their value chain is not the best quality. But again, who is supposed to assist small and medium enterprises to produce the kind of quality goods they want? So I think there is a long journey that we have to travel together because we have to work together as South Africans with the understanding that the challenges of the country will affect everyone, whether you are a small business or not - job creation will affect everybody. The more we have people with jobs, the better for South Africa as a whole.

Black industrialists and entrepreneurship - we are talking to the department about higher education. We are looking at how we can begin to introduce entrepreneurship even at schools, because people don't have to realise too late that the possibilities are there. They don't have to go around looking for jobs, they can create jobs for themselves by starting their small businesses. I think this is what we need to encourage to our people.

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