Date: 27/01/05
Source: Department of Trade and Industry
Title: Hendricks: Launch of SmartXchange
Speech for the launch of SmartXchange
Deputy Minister of Trade and Industry, Mrs
Lindiwe Hendricks
27 January 2005
Durban
Mayor Mlaba City Manager CEO's of Companies Tenants of SmartXchange Other dignitaries Ladies and Gentlemen Programme director
Introduction
Thank you for giving me the opportunity to address you this evening on the launch of SmartXchange. The work that will be done by SmartXchange fits in well with the discussions we have been having in the Cabinet Legkotla, where we spent a great deal of time discussing the future direction of the South African economy, and amongst other things the important contribution that small business, infrastructure, and technology will play in driving our economic growth.
The issue of economic development has plagued economists and policy makers for some time. As government we don't have all the answers but in looking at how we as can South Africa move forward and plan our development we have found there are no quick fixes, and our long-term economic success is dependent on the building blocks that we put in place. The lessons we can learn from international experiences, and our own experiences over the past 10 years is that these building blocks include the development of skills, promotion of entrepreneurial and business activity, infrastructure development, the importance of technology, and the role of government. I would like to briefly discuss each of these areas and how they fit into our broader economic development vision for South Africa.
Skills Development
Ladies and gentlemen, it is well known that we have inadequate levels of skills in our country due to the legacy of Apartheid education, the 'brain-drain' of skilled people to developed countries, and the international isolation during Apartheid, amongst other factors. The realities of globalisation are that if we are to be successful as a country then we need to have high levels of skills so that we can compete with other industrialising and developed countries. The days of competing on the basis of having natural resources and inexpensive labour are over. While natural resources continue to remain a significant part of our economy such resources are finite and rapidly fluctuating commodity prices make reliance on this sector unsustainable in the long term.
Our high unemployment rate has led some to argue that we need to relax our minimum wage legislation, as this will create jobs on the basis of cheap labour. The reality is that while we do need to solve our unemployment problems, cheap labour is not the solution, as we will find it extremely difficult to compete with low wage countries such as China and India, and it is not desirable from a social perspective.
The critical issue is to ensure that we have more comprehensive skills development so that our lowest paid workers have basic education and training, and also have the opportunity to advance themselves. The work that is being done by the SETAs, by the education system as a whole, and by a host of other training institutions are playing a significant role in improving the capabilities of our people. However, this work needs to be strengthened if we are to produce enough scientists, engineers and information technology workers for the needs of our country.
The challenge that has become increasingly important for the government is to ensure that those people who are located in the second economy are able to access the opportunities for acquiring skills and knowledge, so that they and their children are over time able to move into the first economy.
Entrepreneurial and Business Activity Programme director, in order to fully understand the entrepreneurial challenges that face our country one needs to go as far back as the first few decades of the 20th century. It was during this period that we not only saw the deliberate actions that were taken to stamp out the emerging black entrepreneurial class, but also the formations of large industrial organisations that hampered the development and growth of white small businesses. These policies and forms of industrial organisations were consolidated under Apartheid.
Since 1994 the government has put an emphasis on entrepreneurial activity and small business development as one of the key drivers of our economic growth. Given the structural changes that are taking place in big businesses at a global level, small businesses have proven that they are increasingly an important part of any economy be it in a first world or developing country. Part of the success of small business driven economies is that they are able to create an economic environment that is more robust and dynamic as well as create more employment opportunities.
Despite the problems that we have been through in supporting small business development over the past 10 years, a significant amount of progress has been made and many lessons have been learnt. Today we are in a much stronger position to grow the small business sector and we have a stronger institutional framework in which to drive our programmes. Our understanding of this sector and what needs to take place in order to increase the contribution of small businesses to the economy is significantly greater than in 1994 when we first embarked on our national small business strategy. The recent establishment of the Small Enterprise Development Agency (SEDA) and the formation of the Micro Finance Apex fund are key institutions in our small business support framework.
Through SEDA we are strongly promoting more co-operation between the many players and service providers that form part of the SMME sector. We are also exploring how small business development can contribute more towards uplifting the second economy.
I hope that in the near future I am invited back to Durban so that I can address you in greater detail on the plans that we have for small business development and SEDA.
Infrastructure Development The third building block in growing our economy is that of infrastructure development. In 1994 the government was faced with choices on the levels of expenditure we should have on infrastructure development. The dilemma we faced was that on the one hand significant infrastructure development had the potential of creating much needed jobs, stimulating an ailing economy, and redressing the stark inequalities in infrastructure resulting from the legacy of Apartheid. On the other hand large scale spending on infrastructure would have burdened an already overloaded fiscus, which was faced with a significant amount of debt, a high budget deficit, double-digit inflation and comparatively high interest rates.
In the interests of maintaining fiscal discipline, and stabilising the macro economy we chose the latter option, and government spending on infrastructure remained low for many years. Given the relative stability of our economy and the growth that we have been able to achieve; we now have a significant amount of resources and greater scope to start addressing some of the infrastructure challenges that are facing our country.
Indeed, greater levels of infrastructure development are critical at this point in time, as we need to ensure that our country has sufficient infrastructure to cater for the growth in our economy and growth in new business sectors. It is also imperative that infrastructure provision is able to support our objective of improving the competitiveness of our economy by bringing down the costs and availability of transport.
Infrastructure provision will also support our objective in improving the conditions in the second economy, as it is often labour intensive and will create a number of short-term jobs. People employed in these areas will also have the opportunity of acquiring new skills.
A number of announcements have been made about infrastructure projects over the past few months, and include the recent announcement to upgrade the Ports at Durban and Cape Town, the building of the Port of Ngqura at Coega, improvements to railway lines, upgrades to airports, etc.
What is important to note is that we are not only looking at the traditional transport infrastructure but also at telecommunication and other ICT infrastructure. Such improvements will play an important role in improving the ability of South African ICT companies to compete globally.
Technology
The fourth building block is that of technology. Technology on its own will not create a dynamic and growing economy, and this area is closely linked to skills development, entrepreneurial and business activity, as well as infrastructure provision. However, without advancements in technology an economy, or even an individual business, will lag behind its competitors.
It is therefore of critical importance that we continue to build our technological capabilities and generate new investments in this area. The government is a major backer of innovative technological projects such as the Pebble Bed Modular Reactor, as well as innovation through our science institutions. The Department of Trade and Industry also has incentives to promote technology development in industry (the SPII and the Thrip programmes).
Role of Government
Ladies and gentlemen, programme director; few economists or policy makers would dispute the important role that governments play in promoting economic development. For South Africa, as in most other countries, this role extends beyond the protection of property rights, and provision of a stable regulatory environment for businesses and individuals. These issues are necessary for economic development, however, government also plays a key role in providing public goods such as infrastructure and information, as well as providing support for business, and as a buyer of goods and services.
The support measures that we are looking at in South Africa include several investment incentives, rebates and tax allowances; incentives to promote competitiveness; and support programmes for small businesses. Government as a significant buyer of goods and services also has the potential to use this buying power to further contribute towards economic growth. We have tried to encourage domestic procurement and where this is not possible we have promoted reinvestment in our economy through the National Industrial Participation programme.
Our procurement, our legislation, and our support programmes have also become important tools in the efforts to promote black economic empowerment (BEE), small business development, and women empowerment. This is in line with our view that broad based BEE and women empowerment will further contribute towards economic growth.
Implementation Developing a vision of what needs to take place in our economy and the factors that will contribute towards economic growth is very important, but what is critical but substantially more difficult is to put this vision into practice. Unfortunately, one of the findings of the ten-year review of progress in our country since democracy was that our delivery has been inadequate. Consequently, a key focus of government is now on dramatically improving delivery. Our success is dependent on: o Strong co-operation between the three spheres of government; o Having partners, particularly from the private sector and labour who share our vision and are prepared to come on board to contribute towards achieving that vision; o Having skilled personnel who are able to understand our vision and are able implement the different aspects of the vision; and o Having the resources from both the public and private sector to finance our vision.
SmartXchange
Ladies and gentlemen, from what we have heard this evening about SmartXchange, we can see how this programme fits into the broader vision of our country by providing skills development in ICT, supporting entrepreneurial activity, offering world class ICT infrastructure to its tenants, and linking up to the provision of an ICT solution for the Ethekwini municipality. This computer software that SmartXchange tenants are working on, will not only create opportunities in our local economy but also create the scope for technological innovation and exports.
I am pleased that the dti through our competitiveness fund has provided support towards this project and done so in partnership with local government, academic institutions, and the private sector.
Conclusion To conclude, I congratulate those that have been involved in the establishment of SmartXchange and the effort that has gone into making this evening a success. To the CEO of SmartXchange, I wish you the best of luck.
I thank you
End.
Source: Department of Trade and Industry
Title: Hendricks: Launch of SmartXchange
Speech for the launch of SmartXchange
Deputy Minister of Trade and Industry, Mrs
Lindiwe Hendricks
27 January 2005
Durban
Mayor Mlaba City Manager CEO's of Companies Tenants of SmartXchange Other dignitaries Ladies and Gentlemen Programme director
Introduction
Thank you for giving me the opportunity to address you this evening on the launch of SmartXchange. The work that will be done by SmartXchange fits in well with the discussions we have been having in the Cabinet Legkotla, where we spent a great deal of time discussing the future direction of the South African economy, and amongst other things the important contribution that small business, infrastructure, and technology will play in driving our economic growth.
The issue of economic development has plagued economists and policy makers for some time. As government we don't have all the answers but in looking at how we as can South Africa move forward and plan our development we have found there are no quick fixes, and our long-term economic success is dependent on the building blocks that we put in place. The lessons we can learn from international experiences, and our own experiences over the past 10 years is that these building blocks include the development of skills, promotion of entrepreneurial and business activity, infrastructure development, the importance of technology, and the role of government. I would like to briefly discuss each of these areas and how they fit into our broader economic development vision for South Africa.
Skills Development
Ladies and gentlemen, it is well known that we have inadequate levels of skills in our country due to the legacy of Apartheid education, the 'brain-drain' of skilled people to developed countries, and the international isolation during Apartheid, amongst other factors. The realities of globalisation are that if we are to be successful as a country then we need to have high levels of skills so that we can compete with other industrialising and developed countries. The days of competing on the basis of having natural resources and inexpensive labour are over. While natural resources continue to remain a significant part of our economy such resources are finite and rapidly fluctuating commodity prices make reliance on this sector unsustainable in the long term.
Our high unemployment rate has led some to argue that we need to relax our minimum wage legislation, as this will create jobs on the basis of cheap labour. The reality is that while we do need to solve our unemployment problems, cheap labour is not the solution, as we will find it extremely difficult to compete with low wage countries such as China and India, and it is not desirable from a social perspective.
The critical issue is to ensure that we have more comprehensive skills development so that our lowest paid workers have basic education and training, and also have the opportunity to advance themselves. The work that is being done by the SETAs, by the education system as a whole, and by a host of other training institutions are playing a significant role in improving the capabilities of our people. However, this work needs to be strengthened if we are to produce enough scientists, engineers and information technology workers for the needs of our country.
The challenge that has become increasingly important for the government is to ensure that those people who are located in the second economy are able to access the opportunities for acquiring skills and knowledge, so that they and their children are over time able to move into the first economy.
Entrepreneurial and Business Activity Programme director, in order to fully understand the entrepreneurial challenges that face our country one needs to go as far back as the first few decades of the 20th century. It was during this period that we not only saw the deliberate actions that were taken to stamp out the emerging black entrepreneurial class, but also the formations of large industrial organisations that hampered the development and growth of white small businesses. These policies and forms of industrial organisations were consolidated under Apartheid.
Since 1994 the government has put an emphasis on entrepreneurial activity and small business development as one of the key drivers of our economic growth. Given the structural changes that are taking place in big businesses at a global level, small businesses have proven that they are increasingly an important part of any economy be it in a first world or developing country. Part of the success of small business driven economies is that they are able to create an economic environment that is more robust and dynamic as well as create more employment opportunities.
Despite the problems that we have been through in supporting small business development over the past 10 years, a significant amount of progress has been made and many lessons have been learnt. Today we are in a much stronger position to grow the small business sector and we have a stronger institutional framework in which to drive our programmes. Our understanding of this sector and what needs to take place in order to increase the contribution of small businesses to the economy is significantly greater than in 1994 when we first embarked on our national small business strategy. The recent establishment of the Small Enterprise Development Agency (SEDA) and the formation of the Micro Finance Apex fund are key institutions in our small business support framework.
Through SEDA we are strongly promoting more co-operation between the many players and service providers that form part of the SMME sector. We are also exploring how small business development can contribute more towards uplifting the second economy.
I hope that in the near future I am invited back to Durban so that I can address you in greater detail on the plans that we have for small business development and SEDA.
Infrastructure Development The third building block in growing our economy is that of infrastructure development. In 1994 the government was faced with choices on the levels of expenditure we should have on infrastructure development. The dilemma we faced was that on the one hand significant infrastructure development had the potential of creating much needed jobs, stimulating an ailing economy, and redressing the stark inequalities in infrastructure resulting from the legacy of Apartheid. On the other hand large scale spending on infrastructure would have burdened an already overloaded fiscus, which was faced with a significant amount of debt, a high budget deficit, double-digit inflation and comparatively high interest rates.
In the interests of maintaining fiscal discipline, and stabilising the macro economy we chose the latter option, and government spending on infrastructure remained low for many years. Given the relative stability of our economy and the growth that we have been able to achieve; we now have a significant amount of resources and greater scope to start addressing some of the infrastructure challenges that are facing our country.
Indeed, greater levels of infrastructure development are critical at this point in time, as we need to ensure that our country has sufficient infrastructure to cater for the growth in our economy and growth in new business sectors. It is also imperative that infrastructure provision is able to support our objective of improving the competitiveness of our economy by bringing down the costs and availability of transport.
Infrastructure provision will also support our objective in improving the conditions in the second economy, as it is often labour intensive and will create a number of short-term jobs. People employed in these areas will also have the opportunity of acquiring new skills.
A number of announcements have been made about infrastructure projects over the past few months, and include the recent announcement to upgrade the Ports at Durban and Cape Town, the building of the Port of Ngqura at Coega, improvements to railway lines, upgrades to airports, etc.
What is important to note is that we are not only looking at the traditional transport infrastructure but also at telecommunication and other ICT infrastructure. Such improvements will play an important role in improving the ability of South African ICT companies to compete globally.
Technology
The fourth building block is that of technology. Technology on its own will not create a dynamic and growing economy, and this area is closely linked to skills development, entrepreneurial and business activity, as well as infrastructure provision. However, without advancements in technology an economy, or even an individual business, will lag behind its competitors.
It is therefore of critical importance that we continue to build our technological capabilities and generate new investments in this area. The government is a major backer of innovative technological projects such as the Pebble Bed Modular Reactor, as well as innovation through our science institutions. The Department of Trade and Industry also has incentives to promote technology development in industry (the SPII and the Thrip programmes).
Role of Government
Ladies and gentlemen, programme director; few economists or policy makers would dispute the important role that governments play in promoting economic development. For South Africa, as in most other countries, this role extends beyond the protection of property rights, and provision of a stable regulatory environment for businesses and individuals. These issues are necessary for economic development, however, government also plays a key role in providing public goods such as infrastructure and information, as well as providing support for business, and as a buyer of goods and services.
The support measures that we are looking at in South Africa include several investment incentives, rebates and tax allowances; incentives to promote competitiveness; and support programmes for small businesses. Government as a significant buyer of goods and services also has the potential to use this buying power to further contribute towards economic growth. We have tried to encourage domestic procurement and where this is not possible we have promoted reinvestment in our economy through the National Industrial Participation programme.
Our procurement, our legislation, and our support programmes have also become important tools in the efforts to promote black economic empowerment (BEE), small business development, and women empowerment. This is in line with our view that broad based BEE and women empowerment will further contribute towards economic growth.
Implementation Developing a vision of what needs to take place in our economy and the factors that will contribute towards economic growth is very important, but what is critical but substantially more difficult is to put this vision into practice. Unfortunately, one of the findings of the ten-year review of progress in our country since democracy was that our delivery has been inadequate. Consequently, a key focus of government is now on dramatically improving delivery. Our success is dependent on: o Strong co-operation between the three spheres of government; o Having partners, particularly from the private sector and labour who share our vision and are prepared to come on board to contribute towards achieving that vision; o Having skilled personnel who are able to understand our vision and are able implement the different aspects of the vision; and o Having the resources from both the public and private sector to finance our vision.
SmartXchange
Ladies and gentlemen, from what we have heard this evening about SmartXchange, we can see how this programme fits into the broader vision of our country by providing skills development in ICT, supporting entrepreneurial activity, offering world class ICT infrastructure to its tenants, and linking up to the provision of an ICT solution for the Ethekwini municipality. This computer software that SmartXchange tenants are working on, will not only create opportunities in our local economy but also create the scope for technological innovation and exports.
I am pleased that the dti through our competitiveness fund has provided support towards this project and done so in partnership with local government, academic institutions, and the private sector.
Conclusion To conclude, I congratulate those that have been involved in the establishment of SmartXchange and the effort that has gone into making this evening a success. To the CEO of SmartXchange, I wish you the best of luck.
I thank you
End.
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