Date: 21/06/2004
Source: Department of Trade and Industry
Title: M Mpahlwa: World Conference of International Council for Small Business
SPEECH BY THE HONOURABLE MINISTER MANDISI MPAHLWA AT THE 49TH ANNUAL WORLD CONFERENCE OF INTERNATIONAL COUNCIL FOR SMALL BUSINESS, 21 June 2004
INTRODUCTION AND WELCOME
Outgoing President Jose Romaguera, ICSB President elect Dr Sandra King Kauanui, ICSB Board members, Southern African Entrepreneurship and Small Business Association (SAESBA) Board members, Conference Chair: Dr Danisa Baloyi, Conference Host & President of SAESBA: Mr David Moshapalo, MECs of Finance & Economic Development, His Excellency: EU Ambassador Michael Lake and Captains of Industry, Our international and local delegates, Distinguished Guests, Ladies and Gentlemen.
As we celebrate 10 years of democracy this conference provides us with an opportunity to reflect on our achievements and lessons learnt in the implementation of our governments small business program.
The conference theme: 'Globalisation and the impact on entrepreneurship and small business in the developing world' is very appropriate for us to share experiences with other countries and therefore provides us with a firm basis to change or revise our approach to support small businesses.
Achievements and lessons learnt in small business development
The economy we have today is fundamentally and irreversibly different to that which we inherited in 1994. The economy is stable growing, albeit slowly and our manufacturing base has proved to be robust and capable of competing in a global economy. Our restructured economy means that higher rates of growth can be attained. This is very important for small business development, as growth is essential for a vibrant small business sector. The active role adopted by the state through a set of macroeconomic and microeconomic reforms was instrumental in bringing about the economic restructuring. The microeconomic reform strategy was adopted in 2001 and it seeks to make a difference in six key performance areas:
1. Increase in economic growth
2. Increase levels of competitiveness at all levels that is country industry and enterprise levels
3. Increase in employment
4. Small business development
5. Black Economic Empowerment
6. Geographic equity
During the past decade, awareness about the importance of small medium and micro enterprises for employment, economic growth and the transformation of the economy has increased dramatically. This has resulted in a number of new programmes to support small businesses both in the public and private sector. Another important development is the unification of business chambers after years of fragmentation along racial lines. Our country needs more new enterprises and longer survival of existing ones. These enterprises should reflect different sizes and a better geographic spread of enterprises and this has to be done as we expand our influence and economic competitiveness in the global economy. As small businesses are more vulnerable, this cannot be achieved by government alone. This needs active and effective business associations in all our towns and districts to provide the much needed peer support.
As I have already indicated the past decade has provided us with important lessons and the key themes of this conference, which are entrepreneurship promotion, innovation and technology and access to finance will further enrich our learning.
New direction for small enterprise support
The dti is coordinating the efforts of government to upscale small business support in an effective and efficient manner with special emphasis on the following areas:
1. Promotion of Entrepreneurship
Fostering entrepreneurial spirit in a systematic and comprehensive manner can play a significant role in the mobilisation and expansion of start-up businesses. By providing the right conditions our country can maximise the benefits it can draw from the efforts of its entrepreneurs. Entrepreneurs are diverse, they can be young or old, they can be setting up businesses at home or in modern environments, they can be male or female and they can come from rural or urban areas. Within this diversity they share a common desire and attitude. They display a willingness to work on their own or with others to create new economic opportunities and introduce their ideas, products and services to the market in the face of uncertainty and other obstacles.
New programs will be introduced and new forms of ownership will be promoted to support their efforts. The dti will introduce new support programs for co-operative enterprises and will also submit co-operative legislation to parliament. In addition, franchising legislation will also be tabled before parliament to provide certainty and reduce unethical behaviour in the franchising environment
2. Reducing the regulatory burden
A lot of emphasis has over the years been placed on the creation of a small business friendly regulatory environment. The issues are complex relating to regulations that emanate from different spheres of government i.e. national, regional and local government. New efforts are being made to reduce the regulatory burden on small business and to promote compliance. These efforts will result in the following interventions:
* Streamlining of regulatory processes
* Simplification of regulation by providing simple guides for entrepreneurs
* Introducing regulatory impact assessment of new regulation on employment and investment
3. Access to Finance
A major challenge of providing support to small business in South Africa centres around the difficulties entrepreneurs have in getting start-up finance or funds for the expansion of their business, this is especially the case with black entrepreneurs as a consequence of our history. Much work has been done in this area and in the unfolding of these developments special attention is being given to the following
* The establishment of a Micro- credit Apex Fund
* New products to address short term financing needs
* Risk capital facility for viable new businesses
* A new enterprise development bill will be tabled in parliament to provide a framework for the development, adjudication and payment of incentives to all sectors of our economy
4. Technology transfer and incubation
South Africa has a fairly advanced technical institutional infrastructure in the areas of technology, standards and environment including productivity training. Government recognises the importance of technology transfer and innovation as a tool for expanding businesses and as a market for new business formation. To this end government continues its support to technology transfer centres and will integrate these services in localised centres. Through a partnership between the dti and the Department of Science and technology the GODISA Trust has been formed to consolidate technology incubators covering different sectors e.g. furniture, stainless steel and biotechnology. A venture capital fund in support of the incubators tenants is being established, this is an exciting addition to our range of support instruments.
5. Increasing research capacity and statistical information on small business
While the last 10 years of government efforts have focused on design and delivery of development services to the small business sector, it is clear that more attention should be given to understanding the small business sector better. A range of government, non government, academic institutions and international organisations have conducted research into small business in South Africa but much of this has been uncoordinated, poorly funded and fragmented. To address the situation, government through the dti will improve coordination among research agencies by establishing a centralised resource, which will contain a comprehensive range of information knowledge and practices on small in South Africa. This will be supplemented by the preparation of regular profiles on small business, which will be disaggregated by province, sector, gender and class size. These initiatives will lead to a better understanding of the dynamics and growth potential of small businesses in South Africa, the participation of the academic institutions is critical to the success of these efforts.
6. Small business development service delivery
As I have indicated earlier, in the past 10 years we have seen a proliferation of small business support programs under different government institutions as part of the unfolding of the implementation of the 1995 white paper. The range of institutions and programs on offer can easily confuse entrepreneurs in need of business development services. To address this, government is finalising processes to pull together these programs under a single focal point. The concept of a single small enterprise development agency has been refined to respond to current experiences and institutional arrangements and in recognition of the role of local government in the implementation of small business support strategies. The primary role of this agency will be to ensure that business development services are accessible and visible to all South African entrepreneurs. While the government encourages the diversity of support programs and agencies, it upholds its responsibility to ensure coherence and effectiveness of small business support. The preconditions for the unfolding of such a service delivery model exist now more than ever before. It is envisaged that this institution will be operational by the end of this current financial year.
7. Development Challenges for Small business in the African Continent
The heart of globalisation is the massive extension of markets due to the reduction of transport costs and the introduction of technological changes coupled with policy measures aimed at the reducing barriers to the movement of goods and capital. Today small businesses in the African continent are experiencing a more open economy on which foreign competition is closely linked to the national economy. This exposure to world competition can lead to marginalisation of small businesses and ultimately business failure. On the other hand this could mean opportunities for more business and increased turnover for those small businesses that are well prepared to face these markets.
The new partnership for African development (NEPAD) provides an opportunity for the development of small business through joint efforts of governments and networks of entrepreneurs in the continent to wok together to mitigate the negative effects of this exposure to global competition. There are new efforts underway to promote these networks and the new program Technonet Africa, which involves entrepreneurs from 7 African countries, will be launched on Wednesday he 23 June. We hope that South African entrepreneurs will take advantage of this opportunity.
In this current year, government will also finalise a comprehensive strategy to increase levels of intra-African trade in support of NEPAD objectives.
8. Information and Advice
Each of the areas I have just highlighted constitutes a critical factor in the shaping of the business environment. Responsibility for action falls upon a wide range of stakeholders with action at the local level being more important than at central government level. Government will step up its efforts to work with local government to ensure that these actions are taken.
With close to 3 million small businesses in South Africa (this includes businesses of an informal nature) an urban biased network of about 200 information centres is quite insufficient. In fact, given the rapidly changing business environment in South Africa and the wide variety of support programs, limitations in the access to user friendly information is still the most critical shortcoming, government is committed to step up provision of basic information and advice using different outlets. The following will be particularly suitable:
* Business chambers and sector associations
* Community centres - churches, schools etc
* Libraries
* Municipal advise offices
* Private consultants and business service suppliers
* Parastatals
* The media, including daily newspapers, Radio and TV
* Financial Institutions issuing information material to prospective clients
This long list suggests that there are ample opportunities to bring information to the doorstep of the entrepreneurs
In line with the poverty reduction objectives of the millennium development goals and the aims of NEPAD and Tokyo international conference for African development, I would like to take advantage of this special occasion to declare the launch of the Africa-Asia SME network programme, which is supported by the governments of Japan, Malaysia, South Africa, and Thailand as well as NEPAD secretariat, the United Nations development programme and the Japan cooperation agency, this network programme will promote African Small and medium enterprise development through collaborative sister networks in Africa and Asia called Techno-net Africa and Techno- net Asia.
In conclusion ladies and gentlemen, I would like to encourage all the delegates to use this conference as a platform to thoroughly interrogate and benchmark our approaches to support small business and to take the discussion further to all provinces of South Africa.
Let me also take this opportunity to wish you a successful conference.
Thank you
Issued by: Department of Trade and Industry
21 June 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
Source: Department of Trade and Industry
Title: M Mpahlwa: World Conference of International Council for Small Business
SPEECH BY THE HONOURABLE MINISTER MANDISI MPAHLWA AT THE 49TH ANNUAL WORLD CONFERENCE OF INTERNATIONAL COUNCIL FOR SMALL BUSINESS, 21 June 2004
INTRODUCTION AND WELCOME
Outgoing President Jose Romaguera, ICSB President elect Dr Sandra King Kauanui, ICSB Board members, Southern African Entrepreneurship and Small Business Association (SAESBA) Board members, Conference Chair: Dr Danisa Baloyi, Conference Host & President of SAESBA: Mr David Moshapalo, MECs of Finance & Economic Development, His Excellency: EU Ambassador Michael Lake and Captains of Industry, Our international and local delegates, Distinguished Guests, Ladies and Gentlemen.
As we celebrate 10 years of democracy this conference provides us with an opportunity to reflect on our achievements and lessons learnt in the implementation of our governments small business program.
The conference theme: 'Globalisation and the impact on entrepreneurship and small business in the developing world' is very appropriate for us to share experiences with other countries and therefore provides us with a firm basis to change or revise our approach to support small businesses.
Achievements and lessons learnt in small business development
The economy we have today is fundamentally and irreversibly different to that which we inherited in 1994. The economy is stable growing, albeit slowly and our manufacturing base has proved to be robust and capable of competing in a global economy. Our restructured economy means that higher rates of growth can be attained. This is very important for small business development, as growth is essential for a vibrant small business sector. The active role adopted by the state through a set of macroeconomic and microeconomic reforms was instrumental in bringing about the economic restructuring. The microeconomic reform strategy was adopted in 2001 and it seeks to make a difference in six key performance areas:
1. Increase in economic growth
2. Increase levels of competitiveness at all levels that is country industry and enterprise levels
3. Increase in employment
4. Small business development
5. Black Economic Empowerment
6. Geographic equity
During the past decade, awareness about the importance of small medium and micro enterprises for employment, economic growth and the transformation of the economy has increased dramatically. This has resulted in a number of new programmes to support small businesses both in the public and private sector. Another important development is the unification of business chambers after years of fragmentation along racial lines. Our country needs more new enterprises and longer survival of existing ones. These enterprises should reflect different sizes and a better geographic spread of enterprises and this has to be done as we expand our influence and economic competitiveness in the global economy. As small businesses are more vulnerable, this cannot be achieved by government alone. This needs active and effective business associations in all our towns and districts to provide the much needed peer support.
As I have already indicated the past decade has provided us with important lessons and the key themes of this conference, which are entrepreneurship promotion, innovation and technology and access to finance will further enrich our learning.
New direction for small enterprise support
The dti is coordinating the efforts of government to upscale small business support in an effective and efficient manner with special emphasis on the following areas:
1. Promotion of Entrepreneurship
Fostering entrepreneurial spirit in a systematic and comprehensive manner can play a significant role in the mobilisation and expansion of start-up businesses. By providing the right conditions our country can maximise the benefits it can draw from the efforts of its entrepreneurs. Entrepreneurs are diverse, they can be young or old, they can be setting up businesses at home or in modern environments, they can be male or female and they can come from rural or urban areas. Within this diversity they share a common desire and attitude. They display a willingness to work on their own or with others to create new economic opportunities and introduce their ideas, products and services to the market in the face of uncertainty and other obstacles.
New programs will be introduced and new forms of ownership will be promoted to support their efforts. The dti will introduce new support programs for co-operative enterprises and will also submit co-operative legislation to parliament. In addition, franchising legislation will also be tabled before parliament to provide certainty and reduce unethical behaviour in the franchising environment
2. Reducing the regulatory burden
A lot of emphasis has over the years been placed on the creation of a small business friendly regulatory environment. The issues are complex relating to regulations that emanate from different spheres of government i.e. national, regional and local government. New efforts are being made to reduce the regulatory burden on small business and to promote compliance. These efforts will result in the following interventions:
* Streamlining of regulatory processes
* Simplification of regulation by providing simple guides for entrepreneurs
* Introducing regulatory impact assessment of new regulation on employment and investment
3. Access to Finance
A major challenge of providing support to small business in South Africa centres around the difficulties entrepreneurs have in getting start-up finance or funds for the expansion of their business, this is especially the case with black entrepreneurs as a consequence of our history. Much work has been done in this area and in the unfolding of these developments special attention is being given to the following
* The establishment of a Micro- credit Apex Fund
* New products to address short term financing needs
* Risk capital facility for viable new businesses
* A new enterprise development bill will be tabled in parliament to provide a framework for the development, adjudication and payment of incentives to all sectors of our economy
4. Technology transfer and incubation
South Africa has a fairly advanced technical institutional infrastructure in the areas of technology, standards and environment including productivity training. Government recognises the importance of technology transfer and innovation as a tool for expanding businesses and as a market for new business formation. To this end government continues its support to technology transfer centres and will integrate these services in localised centres. Through a partnership between the dti and the Department of Science and technology the GODISA Trust has been formed to consolidate technology incubators covering different sectors e.g. furniture, stainless steel and biotechnology. A venture capital fund in support of the incubators tenants is being established, this is an exciting addition to our range of support instruments.
5. Increasing research capacity and statistical information on small business
While the last 10 years of government efforts have focused on design and delivery of development services to the small business sector, it is clear that more attention should be given to understanding the small business sector better. A range of government, non government, academic institutions and international organisations have conducted research into small business in South Africa but much of this has been uncoordinated, poorly funded and fragmented. To address the situation, government through the dti will improve coordination among research agencies by establishing a centralised resource, which will contain a comprehensive range of information knowledge and practices on small in South Africa. This will be supplemented by the preparation of regular profiles on small business, which will be disaggregated by province, sector, gender and class size. These initiatives will lead to a better understanding of the dynamics and growth potential of small businesses in South Africa, the participation of the academic institutions is critical to the success of these efforts.
6. Small business development service delivery
As I have indicated earlier, in the past 10 years we have seen a proliferation of small business support programs under different government institutions as part of the unfolding of the implementation of the 1995 white paper. The range of institutions and programs on offer can easily confuse entrepreneurs in need of business development services. To address this, government is finalising processes to pull together these programs under a single focal point. The concept of a single small enterprise development agency has been refined to respond to current experiences and institutional arrangements and in recognition of the role of local government in the implementation of small business support strategies. The primary role of this agency will be to ensure that business development services are accessible and visible to all South African entrepreneurs. While the government encourages the diversity of support programs and agencies, it upholds its responsibility to ensure coherence and effectiveness of small business support. The preconditions for the unfolding of such a service delivery model exist now more than ever before. It is envisaged that this institution will be operational by the end of this current financial year.
7. Development Challenges for Small business in the African Continent
The heart of globalisation is the massive extension of markets due to the reduction of transport costs and the introduction of technological changes coupled with policy measures aimed at the reducing barriers to the movement of goods and capital. Today small businesses in the African continent are experiencing a more open economy on which foreign competition is closely linked to the national economy. This exposure to world competition can lead to marginalisation of small businesses and ultimately business failure. On the other hand this could mean opportunities for more business and increased turnover for those small businesses that are well prepared to face these markets.
The new partnership for African development (NEPAD) provides an opportunity for the development of small business through joint efforts of governments and networks of entrepreneurs in the continent to wok together to mitigate the negative effects of this exposure to global competition. There are new efforts underway to promote these networks and the new program Technonet Africa, which involves entrepreneurs from 7 African countries, will be launched on Wednesday he 23 June. We hope that South African entrepreneurs will take advantage of this opportunity.
In this current year, government will also finalise a comprehensive strategy to increase levels of intra-African trade in support of NEPAD objectives.
8. Information and Advice
Each of the areas I have just highlighted constitutes a critical factor in the shaping of the business environment. Responsibility for action falls upon a wide range of stakeholders with action at the local level being more important than at central government level. Government will step up its efforts to work with local government to ensure that these actions are taken.
With close to 3 million small businesses in South Africa (this includes businesses of an informal nature) an urban biased network of about 200 information centres is quite insufficient. In fact, given the rapidly changing business environment in South Africa and the wide variety of support programs, limitations in the access to user friendly information is still the most critical shortcoming, government is committed to step up provision of basic information and advice using different outlets. The following will be particularly suitable:
* Business chambers and sector associations
* Community centres - churches, schools etc
* Libraries
* Municipal advise offices
* Private consultants and business service suppliers
* Parastatals
* The media, including daily newspapers, Radio and TV
* Financial Institutions issuing information material to prospective clients
This long list suggests that there are ample opportunities to bring information to the doorstep of the entrepreneurs
In line with the poverty reduction objectives of the millennium development goals and the aims of NEPAD and Tokyo international conference for African development, I would like to take advantage of this special occasion to declare the launch of the Africa-Asia SME network programme, which is supported by the governments of Japan, Malaysia, South Africa, and Thailand as well as NEPAD secretariat, the United Nations development programme and the Japan cooperation agency, this network programme will promote African Small and medium enterprise development through collaborative sister networks in Africa and Asia called Techno-net Africa and Techno- net Asia.
In conclusion ladies and gentlemen, I would like to encourage all the delegates to use this conference as a platform to thoroughly interrogate and benchmark our approaches to support small business and to take the discussion further to all provinces of South Africa.
Let me also take this opportunity to wish you a successful conference.
Thank you
Issued by: Department of Trade and Industry
21 June 2004
Source: Department of Trade and Industry (http://www.dti.gov.za)
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