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DPME: Buti Manamela: Address by Deputy Minister in the Presidency for Planning, Monitoring and Evaluation, at the Industrial Development Cooperation youth conference, Gallagher Estate, Midrand, Gauteng (19/10/2016)

Deputy Minister in the Presidency for PME Buti Manamela
Photo by GovtZA
Deputy Minister in the Presidency for PME Buti Manamela

19th October 2016

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Programme Director – Ms Zama Luthuli

CEO of the National Empowerment Fund – Ms Philisiwe Mthethwa

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Distinguished guests

Young entrepreneurs

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It gives me great pleasure to address this IDC Youth Conference held under the theme:  Driving SA’s Competitiveness through Youth Entrepreneurship.  With a commitment of R4.5 billion towards youth entrepreneurship, the IDC’s investment in this critical cohort of our society is unprecedented even on a global level.  The IDC’s investment is supportive of our government’s drive to stimulate and cultivate youth entrepreneurship as a key mechanism to lift youth out of poverty; to assist youth to participate in the formal economy; to stimulate the creation of jobs and to grow our economy.

Government has developed the National Youth Policy 2020 as its seminal platform to drive its youth development response with youth employment being a priority.  We have grounded our programme of enhancing economic participation and transformation through the National Youth Policy (NYP) 2020.

Through the NYP 2020 we are driving a mass youth entrepreneurship programme encouraging youth to become entrepreneurs.  We are creating a value chain of entrepreneurship across the spectrum from start up to black industrialist.  We need radical economic empowerment for young women and men.  Radical economic empowerment does not mean the quickest way to becoming a tenderpreneur.

Radical economic empowerment means developing the capabilities of our young people, providing the opportunities and supports that they need, and assisting their entrance into the labour market and formal economy in the quickest possible way.

The National Development Plan 2030 directs that eleven millions jobs must be created mainly through the creation of small businesses.  Hence the role of young entrepreneurs are critical for small business growth and job creation.  Government must create an enabling environment and provide the right incentives and support to enable the young entrepreneur to get on with the job.

In my official duties as Deputy Minister, I all too often hearing the same issues repeated by young entrepreneurs, time and time again:
“We are unclear about how to access funding. The funding goalposts keeps changing.”
“The process is too bureaucratic.  Too many forms.  Not enough automation.”
“The turnaround time is too long.  Little or no feedback.  The process is not developmental.”
“Government agencies don’t talk to each other to streamline and align their processes to provide better support to entrepreneurs.”

In addition to these challenges, young entrepreneurs who do business with the state have sometimes found this to be a poisoned chalice.  Payments are delayed.  Cash flows are compromised.  Business operations suffer.  Cabinet is addressing this problem by setting up a unit within the Department of Planning, Monitoring and Evaluation.  Together with the National Treasury, this unit is identifying and removing the blockages so that legitimate payments can be paid within a 30 day period.  Regular reports are provided to cabinet highlighting departments that are not meeting the 30 day period and the actions to rectify this.

We are not taking advantage of the opportunities that foreign markets present to young people.
The recent gathering of BRICS leaders highlighted the need for trade volumes to be increased amongst BRICS nations.  The DTI regularly conducts foreign trade missions to our key trading partners and new markets.  Young entrepreneurs must be better represented in these missions.  At our next Committee of Deputy Ministers meeting of the Presidential Working Group on Youth, we are going to instruct the DTI to target youth participation in foreign trade missions and to provide us with a regular report on this matter.

The issues that young entrepreneurs have raised with me and Deputy Minister Masuku is essentially around the adequacy and efficiency of the youth entrepreneurship ecosystem.  We must think about youth entrepreneurship through a continuum approach.  At one end of the continuum we have unskilled, under educated and unemployed youth.  They want to engage in some meaningful economic activity.  They may or may not advance along the entrepreneurship continuum.  At the other end of this continuum we have successful young entrepreneurs who are making a profit, employing others, paying taxes and growing their businesses and the economy.

If we are to stimulate youth entrepreneurship along the continuum, we have to think, plan and align our support to these aspirant, semi-established and established young entrepreneurs.  The entrepreneurship continuum may not be a smooth process.  It will kick some out, provide boosts to others as they leapfrog stages, and will be a difficult journey for most as they progress along.

In considering this continuum and the support that these young entrepreneurs will need, we must ask ourselves some key questions:

What are the inherent characteristics of these young entrepreneurs at this particular point in the continuum?
What supports do they need at this particular point in the continuum?
What is the best way to package these supports?
How do we transition them into the next point along the continuum?
How do we align government resources to best support this transition?

These questions are not easy to answer.  But they do point us towards the critical issues if we are to develop this youth entrepreneurship pipeline.  If we are true to our analysis, we will find that the one size fits all approach negates against our best intentions.

Through the Youth Employment Accord, the NYDA, SEFA and the IDC signed a cooperation agreement towards a coordinated approach to providing funding and support services to youth owned businesses.  The collective capacity of the three institutions working together was to broaden the youth beneficiary base.  The pieces of this continuum approach was put in place.  NYDA’s grant programme would stimulate entrepreneurship with first time entrepreneurs.  NYDA would screen and recommend young entrepreneurs for funding with SEFA and IDC.  The funding thresholds with SEFA and IDC were set to ensure a seamless journey along the continuum.  A youth entrepreneurship pipeline at work.

After almost three years of cooperation, we must determine if the youth entrepreneurship pipeline exists or is it merely on paper.  What are the blockages?  What are the challenges?  How do we align and allocate other non-financial supports from government institutions to strengthen the pipeline.

The President has appointed a Committee of 17 Deputy Ministers as part of the Presidential Working Group on Youth to provide leadership and address the youth development challenges as outlined in the National Youth Policy 2020.  As a committee of Deputy Ministers we are troubled by the slow increase in youth employment and the poor uptake of youth entrepreneurship in particularly.  We are concerned about the quality and quantity of financial and non-financial support services given to young entrepreneurs.

Through Minister Patel and Deputy Minister Masuku, we will request the IDC, SEFA and the NYDA to develop a draft framework for an optimal and efficient youth entrepreneurship ecosystem.  The ecosystem must take into account the challenges raised and the disparate, fragmented government services to support young entrepreneurs.  We must define the ecosystem, align the players and get the ecosystem to work.  The IDC must lead this effort in developing a draft framework.

Once again, let me reiterate government’s commitment to supporting and growing youth entrepreneurship in South Africa.  We believe that entrepreneurship provides a viable entry point for economic participation for our youth.  Using the lessons learnt, both good and bad, we are committed to aligning government support programmes and incentives towards developing the youth entrepreneurship pipeline.  We do this because we want to drive South Africa’s competitiveness through youth entrepreneurship.  Our economy desperately needs the talent and innovation that young entrepreneurs bring to the table.

Get in the game, young entrepreneurs, get in the game.

I thank you.

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