Date: 10/11/2003
Source: Department of Trade and Industry
Title: Hendricks: Northern Cape International Trade and Investment Expo
SPEECH BY DEPUTY MINISTER OF TRADE AND INDUSTRY, LINDIWE HENDRICKS, ON THE ROLE OF SMMES IN A DEVELOPING ECONOMY AT THE NORTHERN CAPE INTERNATIONAL TRADE AND INVESTMENT EXPO, 10 November 2003
MEC Akharwaray
Distinguished guests
Ladies and Gentlemen
The contribution that small businesses can make to our economy and the role that small businesses play in exports has for a long time been recognised by the Department of Trade and Industry (dti) and the South African government. It is for this reason that we have embarked on extensive programmes to support the small business sector and to promote exports by small businesses, and is the reason for this conference organised by the Provincial Department of Economic Affairs and Tourism.
Most people here today would be aware of the benefits of supporting small businesses and why government has gone this route - it would therefore be unnecessary for me to address you on this subject. However, what is often not clear to people is the role that small businesses can play in exporting, how small business can start engaging in the export market and what government is doing to assist small businesses to export.
Before I address these issues it is important that I outline why the government is promoting exports. The government has recognised that after the many years of isolation during apartheid, South Africa must integrate itself into the global economy if we are to become a successful and developed country. In developing our trade strategy we looked at other countries and saw from the successes in Asia and Ireland, amongst other places, that one of the key factors behind economic growth is through companies exporting and by the government promoting exports. The government also recognised that there are many benefits to opening up our economy and trading internationally, for example, imports are cheaper, our businesses are forced to become more competitive and provide better quality goods and services at better prices, and input costs are often reduced.
We have also recognised that at a company level there has been an interest in and a desire for exporting, as only supplying people in the domestic market might be insufficient. For example, for many products the local market is over saturated and businesses need to explore new avenues in order to grow their business and become more profitable. In addition there are many companies that have recognised that their products are more suitable for the international market with few people wanting such goods in the domestic market.
The government therefore sees exporting as a means to grow our economy in order to create jobs and improve our overall standard of living. The alternative of trying to shut off our market from global competition was not seen as a viable or sustainable approach to trade developed and we see from the failures of countries that pursued such an approach that with a small domestic market it is not a recipe for success.
The impact of our approach has seen a dramatic shift in South African industry. Our levels of trade (imports and exports combined) have almost tripled over the past nine years, our industry has become significantly more competitive and our exports have increased by 70% over the past decade to more than 29% of GDP. Even for businesses that in the past would not have seen themselves as an exporter or even felt that there was a possibility that their firm would be connected in any way with the export market, we are seeing a huge shift with these businesses participating in international trade fairs and international trade exhibitions.
We are finding that small businesses are increasingly playing a role in exporting, for example, they are become suppliers to large companies who are exporting and are supplying things from labels and packaging materials, to becoming core suppliers of components and parts.
Small businesses have also seen the opportunities that have arisen because of the growth in exporting and have become part of the export service sector. Such services include the provision of information, training, market research, marketing and freight forwarding services. There are also businesses that are providing transport services and taking products for export from inland companies to the ports and returning with goods that have been imported.
There are also spin-off industries that are linked to our increasing international exposure and we are seeing small businesses taking advantage of the greater number of businesspeople who are coming into the country and domestic businesspeople who are travelling internationally. Entrepreneurs have seen opportunities in travel agencies, tour companies, bed and breakfasts, Internet cafes, and in the selling of crafts.
It should also be recognised that it is not only big businesses that are exporting but also the medium and small businesses that are starting to export and trade internationally. It is often these companies who do not have an established supply and logistics chain and are looking for new suppliers. Consequently, there are increasingly more opportunities for small businesses to become suppliers of products and services to other SME that are exporting.
Ladies and gentlemen, there are a lot of opportunities for businesses in the export market and international trade. The small business however faces a number of challenges in this area, which is why they need to take advantage of the opportunities created by the government and the support that we offer. The first step is that small businesses need to know what the government is doing to assist them with exporting and how they can access our incentives. One of the biggest gaps that we are finding is that businesses, particularly small businesses, are not aware of the opportunities that have been created by government in international markets through the Trade Agreements and Free Trade Area agreements that were signed with other countries. These agreements will open doors for South African businesses that were previously closed. Increasingly there are more and more opportunities in other countries in Africa and through the American Growth and Opportunities Act there are trade opportunities with the United States.
By signing these agreements, the South African government sees itself as creating opportunities and a more enabling environment for the small exporter; and in order to assist the exporter take advantage of these opportunities the dti and its agencies offer the following support:
* The Trade and Investment Development Programme, which is run by Ntsika Enterprise Promotion Agency: This programme offers small businesses training in how to export, support to become internationally competitive and assistance with participation at international trade events.
* The Manufacturing Advisory Centres (MAC) that in association with Trade and Investment South Africa, Ntsika and other dti agencies provide support to enterprises to become more competitive whether it is in the domestic market or in the international market. This support equips small businesses to face the challenges in the international market and many of the successful businesses in the MAC programme are referred to the agencies dealing with exporters.
* Trade and Investment South Africa (TISA), which offers subsidies for businesses wanting to attend trade shows, participate in trade missions or travel to an overseas market for the purposes of primary market research. Small businesses that meet TISA's criteria receive between 70% and 80% of the costs of travel, as well as allowances and accommodation costs. TISA will also provide support to small businesses for producing marketing material for the overseas market that they wish to enter.
* Export councils have been established with the support of TISA. The mandate of these export councils are to encourage firms in their sectors to export and to identify international trade opportunities for businesses.
* Trade points have been or are being established in several provinces in South Africa with the purpose of giving advice to businesses on how to export, where to export and assists them to identify international trade opportunities. Ntsika is supporting this programme in partnership with TISA, chambers of commerce, local government and provincial trade and investment agencies. Trade points are part of a United Nations trade development programme and there are over 200 trade points around the world, all of which share trade opportunities with each other.
In addition to the work that is being done by the dti, its agencies and provincial departments of economic affairs, we are also:
* Ensuring that there are small businesses included onto our trade mission overseas so that they are also able to receive exposure to the international market.
* Supporting small businesses to attend and participate in local international trade exhibitions, for example, the recently held SAITEX exhibition.
* Working with established industries and sectors that are already exporting to ensure that companies in these sectors are using small businesses. A good example is the work done to promote SMMEs in the automotive industry as suppliers of components and products that are used in the exporting of vehicles.
Before concluding I would like to touch on a few issues as to how small business can start engaging in the export market.
Firstly, you will need to understand the strengths of your company, if you have the capacity to export and what you will export. Exporting is a difficult path to walk down and requires commitment on the part of the entrepreneur.
Secondly, you will need to be focused in your approach to exporting. You cannot hope to be successful if you try and export to the whole world; even the larger South African companies have placed limits on their potential export markets. You need to treat your export customers in the same way as your local customers and build up a relationship with them. Whatever applies to your domestic customers and how you supply or service them also applies to your international customers.
Thirdly, you need to ask advice. There are government and private sector organisations that can assist and advise you on where to export your products, how to tackle the export market, how to quote correctly, and how to insure yourself and protect yourself against currency volatility.
Fourthly, you need to be aware of what international trade and market opportunities exist and what government incentives are available; many of which I have mentioned today.
Fifthly, you need to find the opportunities, either by identifying the local opportunities in international trade or taking the plunge and exporting. Many small businesses that are exporting start out by using a marketing agency or a marketing business whose business it is to market goods overseas.
Lastly, you will need to have resources to export and there are agencies that provide finance to existing companies with export orders. Your provincial Department of Economic Affairs or local Business Service Centre should be able to advice you on this.
To conclude, I have only touched on a few areas that small businesses need to consider in exporting but hope that with this information you will start to see the potential that the international market has for your business. I hope that you continue with your work to promote yourselves and your companies. You need to continually remind yourself that engaging with the export markets is a long term strategy and one where you cannot give up easily, especially in an environment where you only get recognised after having proved yourself and what you can deliver.
The dti is here to support you in your export efforts and if you need more information on any of the dti products and services that I have mentioned today please contact our customer care line on 0861 843 384.
Finally, I would like to thank the conference organisers and the Department of Economic Affairs and Tourism for the work that has gone into this event. I commend you on your continual efforts and hard work to promote economic development in this region.
I thank you.
Source: Department of Trade and Industry, (http://www.dti.gov.za), 10 November 2003
Source: Department of Trade and Industry
Title: Hendricks: Northern Cape International Trade and Investment Expo
SPEECH BY DEPUTY MINISTER OF TRADE AND INDUSTRY, LINDIWE HENDRICKS, ON THE ROLE OF SMMES IN A DEVELOPING ECONOMY AT THE NORTHERN CAPE INTERNATIONAL TRADE AND INVESTMENT EXPO, 10 November 2003
MEC Akharwaray
Distinguished guests
Ladies and Gentlemen
The contribution that small businesses can make to our economy and the role that small businesses play in exports has for a long time been recognised by the Department of Trade and Industry (dti) and the South African government. It is for this reason that we have embarked on extensive programmes to support the small business sector and to promote exports by small businesses, and is the reason for this conference organised by the Provincial Department of Economic Affairs and Tourism.
Most people here today would be aware of the benefits of supporting small businesses and why government has gone this route - it would therefore be unnecessary for me to address you on this subject. However, what is often not clear to people is the role that small businesses can play in exporting, how small business can start engaging in the export market and what government is doing to assist small businesses to export.
Before I address these issues it is important that I outline why the government is promoting exports. The government has recognised that after the many years of isolation during apartheid, South Africa must integrate itself into the global economy if we are to become a successful and developed country. In developing our trade strategy we looked at other countries and saw from the successes in Asia and Ireland, amongst other places, that one of the key factors behind economic growth is through companies exporting and by the government promoting exports. The government also recognised that there are many benefits to opening up our economy and trading internationally, for example, imports are cheaper, our businesses are forced to become more competitive and provide better quality goods and services at better prices, and input costs are often reduced.
We have also recognised that at a company level there has been an interest in and a desire for exporting, as only supplying people in the domestic market might be insufficient. For example, for many products the local market is over saturated and businesses need to explore new avenues in order to grow their business and become more profitable. In addition there are many companies that have recognised that their products are more suitable for the international market with few people wanting such goods in the domestic market.
The government therefore sees exporting as a means to grow our economy in order to create jobs and improve our overall standard of living. The alternative of trying to shut off our market from global competition was not seen as a viable or sustainable approach to trade developed and we see from the failures of countries that pursued such an approach that with a small domestic market it is not a recipe for success.
The impact of our approach has seen a dramatic shift in South African industry. Our levels of trade (imports and exports combined) have almost tripled over the past nine years, our industry has become significantly more competitive and our exports have increased by 70% over the past decade to more than 29% of GDP. Even for businesses that in the past would not have seen themselves as an exporter or even felt that there was a possibility that their firm would be connected in any way with the export market, we are seeing a huge shift with these businesses participating in international trade fairs and international trade exhibitions.
We are finding that small businesses are increasingly playing a role in exporting, for example, they are become suppliers to large companies who are exporting and are supplying things from labels and packaging materials, to becoming core suppliers of components and parts.
Small businesses have also seen the opportunities that have arisen because of the growth in exporting and have become part of the export service sector. Such services include the provision of information, training, market research, marketing and freight forwarding services. There are also businesses that are providing transport services and taking products for export from inland companies to the ports and returning with goods that have been imported.
There are also spin-off industries that are linked to our increasing international exposure and we are seeing small businesses taking advantage of the greater number of businesspeople who are coming into the country and domestic businesspeople who are travelling internationally. Entrepreneurs have seen opportunities in travel agencies, tour companies, bed and breakfasts, Internet cafes, and in the selling of crafts.
It should also be recognised that it is not only big businesses that are exporting but also the medium and small businesses that are starting to export and trade internationally. It is often these companies who do not have an established supply and logistics chain and are looking for new suppliers. Consequently, there are increasingly more opportunities for small businesses to become suppliers of products and services to other SME that are exporting.
Ladies and gentlemen, there are a lot of opportunities for businesses in the export market and international trade. The small business however faces a number of challenges in this area, which is why they need to take advantage of the opportunities created by the government and the support that we offer. The first step is that small businesses need to know what the government is doing to assist them with exporting and how they can access our incentives. One of the biggest gaps that we are finding is that businesses, particularly small businesses, are not aware of the opportunities that have been created by government in international markets through the Trade Agreements and Free Trade Area agreements that were signed with other countries. These agreements will open doors for South African businesses that were previously closed. Increasingly there are more and more opportunities in other countries in Africa and through the American Growth and Opportunities Act there are trade opportunities with the United States.
By signing these agreements, the South African government sees itself as creating opportunities and a more enabling environment for the small exporter; and in order to assist the exporter take advantage of these opportunities the dti and its agencies offer the following support:
* The Trade and Investment Development Programme, which is run by Ntsika Enterprise Promotion Agency: This programme offers small businesses training in how to export, support to become internationally competitive and assistance with participation at international trade events.
* The Manufacturing Advisory Centres (MAC) that in association with Trade and Investment South Africa, Ntsika and other dti agencies provide support to enterprises to become more competitive whether it is in the domestic market or in the international market. This support equips small businesses to face the challenges in the international market and many of the successful businesses in the MAC programme are referred to the agencies dealing with exporters.
* Trade and Investment South Africa (TISA), which offers subsidies for businesses wanting to attend trade shows, participate in trade missions or travel to an overseas market for the purposes of primary market research. Small businesses that meet TISA's criteria receive between 70% and 80% of the costs of travel, as well as allowances and accommodation costs. TISA will also provide support to small businesses for producing marketing material for the overseas market that they wish to enter.
* Export councils have been established with the support of TISA. The mandate of these export councils are to encourage firms in their sectors to export and to identify international trade opportunities for businesses.
* Trade points have been or are being established in several provinces in South Africa with the purpose of giving advice to businesses on how to export, where to export and assists them to identify international trade opportunities. Ntsika is supporting this programme in partnership with TISA, chambers of commerce, local government and provincial trade and investment agencies. Trade points are part of a United Nations trade development programme and there are over 200 trade points around the world, all of which share trade opportunities with each other.
In addition to the work that is being done by the dti, its agencies and provincial departments of economic affairs, we are also:
* Ensuring that there are small businesses included onto our trade mission overseas so that they are also able to receive exposure to the international market.
* Supporting small businesses to attend and participate in local international trade exhibitions, for example, the recently held SAITEX exhibition.
* Working with established industries and sectors that are already exporting to ensure that companies in these sectors are using small businesses. A good example is the work done to promote SMMEs in the automotive industry as suppliers of components and products that are used in the exporting of vehicles.
Before concluding I would like to touch on a few issues as to how small business can start engaging in the export market.
Firstly, you will need to understand the strengths of your company, if you have the capacity to export and what you will export. Exporting is a difficult path to walk down and requires commitment on the part of the entrepreneur.
Secondly, you will need to be focused in your approach to exporting. You cannot hope to be successful if you try and export to the whole world; even the larger South African companies have placed limits on their potential export markets. You need to treat your export customers in the same way as your local customers and build up a relationship with them. Whatever applies to your domestic customers and how you supply or service them also applies to your international customers.
Thirdly, you need to ask advice. There are government and private sector organisations that can assist and advise you on where to export your products, how to tackle the export market, how to quote correctly, and how to insure yourself and protect yourself against currency volatility.
Fourthly, you need to be aware of what international trade and market opportunities exist and what government incentives are available; many of which I have mentioned today.
Fifthly, you need to find the opportunities, either by identifying the local opportunities in international trade or taking the plunge and exporting. Many small businesses that are exporting start out by using a marketing agency or a marketing business whose business it is to market goods overseas.
Lastly, you will need to have resources to export and there are agencies that provide finance to existing companies with export orders. Your provincial Department of Economic Affairs or local Business Service Centre should be able to advice you on this.
To conclude, I have only touched on a few areas that small businesses need to consider in exporting but hope that with this information you will start to see the potential that the international market has for your business. I hope that you continue with your work to promote yourselves and your companies. You need to continually remind yourself that engaging with the export markets is a long term strategy and one where you cannot give up easily, especially in an environment where you only get recognised after having proved yourself and what you can deliver.
The dti is here to support you in your export efforts and if you need more information on any of the dti products and services that I have mentioned today please contact our customer care line on 0861 843 384.
Finally, I would like to thank the conference organisers and the Department of Economic Affairs and Tourism for the work that has gone into this event. I commend you on your continual efforts and hard work to promote economic development in this region.
I thank you.
Source: Department of Trade and Industry, (http://www.dti.gov.za), 10 November 2003
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