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DSBD: Lindiwe Zulu: Address by Minister of Small Business Development, during the debate of the State of the Nation Address, National Assembly, Cape Town (15/02/2017)


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DSBD: Lindiwe Zulu: Address by Minister of Small Business Development, during the debate of the State of the Nation Address, National Assembly, Cape Town (15/02/2017)

Small Business Development Minister Lindiwe Zulu
Photo by Duane
Small Business Development Minister Lindiwe Zulu

16th February 2017


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Honourable Speaker

Ngokuzithoba ngibingelela uPresident wezwelonke uPresident Jacob Zuma, nesekela lakhe uDeputy President Cyril Ramaphosa, abaholi be African National Congress. Khakulukazi ngibingelele abantu abamqoka kakhulu kulomsebenzi wami ne department yeSmall Business Development. Siwa  Sivuka, sigudla sifuna indlela yokuthuthukisa osomabusinsisi abancane namacooperatives kuyonke imkhandla kahulumeni pecelezi eNational, Provincial na se Local government.


Ngingakhohlwake nokubibgelala abangasemakhaya ababelindela ukuzwa ukuthi sibagodleni kulonyaka ka 2017/2018. Nabasekhaya enhlazatshe nasemaphethelweni ngiyabingelela. Ngicela nokubonga wonke umphakathi ohlangane ePeople’s square abalelele umungameli wabho ngomhaka 09 February 2017.

Ngokuzithoba ngime kulendlu ehloniphekileyo ngiqinisa  amazwi kaMongameli wezwelonke. Ikakhulukazi amazwi aphathelene nezomnotho wase Ningizimu Africa.


Our mission remains the quest for a united, democratic, non-racial and prosperous South Africa. We are building a South Africa that is free from poverty, inequality, and unemployment. Lawa amazwi Wombutho wabantu iAfrican National Congress.

Umongameli wombutho wabantu uqhubeke wathi, “We have decided to focus on a few key areas packaged in the nine point plan to reignite growth so that the economy can create much needed jobs. The focus areas include industrialization, mining and beneficiation, agriculture and agro-processing, energy, attracting investment, growing the oceans economy and tourism. SMMES and Cooperatives are a cross-cutting function, they are fundamental to the success of all the above projects!

Globally, especially in developing countries, the importance of SMMEs and their contribution to economic growth is acknowledged.

Honorable members,

I stand here to reiterate and reaffirm statements made by honourable members who spoke yesterday to the fact that change must happen in the economic landscape of South Africa, and must happen now!  The ownership of the means of production must change, the patterns of ownership must change, land must be returned to the people for production and dwelling.

All institutions supporting radical socio-economic transformation must step up!

Our people need to be empowered to understand the value of their rand. They must decide whether their rand will continue to grow a system that does not invest back into them or whether they must now redirect that rand and develop their own!

In his 2017 State of the Nation Address last week, President Zuma defined Radical Socio-Economic change as; “…fundamental change in the structure, systems, institutions and patterns of ownership, management and control of the economy in favour of all South Africans, especially the poor. The majority of whom are African and female.”

As the President notes, this economic situation is buttressed by a twin challenge that manifests through high levels of concentration or monopoly practice and the collusion of established businesses that squeeze out smaller players.

In order to deal with this asymmetry, the President and this government have proposed the use of “strategic levers” available to the state. The President has cited the five hundred Billion Rand a year for the government bill of goods and services, as well as the nine hundred Billion Rand infrastructure budget over the MTEF, which must be used to advance economic transformation. That is a total of close to one and half Trillion Rand of opportunities.

In his 2015 State of Nation Address, the President announced that, “government would set-aside a minimum of 30% of appropriate categories of State procurement for purchasing from SMMEs, cooperatives as well as Township and Rural enterprises.”

In January 2017, the new Preferential Procurement Regulations were signed into law. They will take effect from April 2017, replacing the Preferential Procurement regulations of 2011.

What this legislation means is that state departments and agencies will restrict certain designated tenders by stipulating minimum B-BBEE requirements or stipulating that tenderers agree to subcontract a minimum of 30% to categories of exempted micro enterprises and qualifying small businesses. Obviously our aspiration is to eventually go beyond 30% and above the R50million rand threshold.

This new legislation increases the threshold of affected contracts from R1 Million to a threshold of R50 Million. Tenders below R50 Million will now be evaluated in terms of 80/20 preference system and tenders above R50 Million will be evaluated in terms of the 90/10 preference system. This will allow smaller, less established companies better opportunities for real growth.

International best practice on set-asides has been looked at using the examples of the US, Brazil, South Korea and most recently, India. India became the latest to implement set-asides for smaller firms, implementing a policy in January 2017 that obligates State departments and State Owned Companies to source 20% of goods and services from small enterprises.

In order to implement a new and more progressive procurement regime, government will gradually move towards an integrated, government-wide supply chain management system, which will bring standardization and uniformity across government. In the long term this will also decrease the costs of doing business with government for small businesses.

I would like to thank Minister Gordhan and his team at the National Treasury for leading this work. I would also like to thank the other relevant stakeholder departments who contributed to these efforts which brought us to where we are, however much more needs to be done on this matter.


Much work still remains to ensure that implementation happens within the timelines set by the National Treasury. Departments and agencies must support and work with National Treasury and other stakeholders to ensure that this dispensation is implemented effectively and timeously. We encourage National Treasury to ensure that the process is adequately coordinated to ensure that all parties are adequately represented in this process.

Honorable Members,

We are aware that in the past some of the large State Owned Enterprises have been at the forefront of anti-competitive behavior that has limited opportunities for small business in favour of more established majors. Infractions range from the non-payment of invoices to emerging suppliers and collusion to fix prices and lock out smaller players. In the last 15 years, a large number of cases brought before the Competition Authorities have involved some of our biggest State Owned Enterprises.


The Department of Small Business Development and the Department of Public Enterprises have signed a Memorandum Of Agreement to cooperate on providing opportunities for SMMEs and increasing oversight over State Owned Enterprises’ adherence to fair business practices towards small business. We would like to see tenders that are issued from the SoEs codifying SME development into the language of the tenders. Next month, senior officials from my Department and the Department of Public Enterprises, together with Transnet will develop a cooperation strategy, which we will pilot in Saldanah in the Western Cape with a view to spreading this new strategy countrywide.


I invite other State Owned Enterprises to collaborate with the Department and other relevant state departments to ensure that we provide sustainable opportunities for SMMEs.

We will hold State agencies that continue to underperform on providing opportunities to SMMEs to account. We will seek proof that SMMEs are being enabled to access opportunities within these supply chains. In this context, we will ensure that we give practical meaning to localization through various capacitation efforts. The Department of Small Business Development will avail itself to provide financial and non-financial support to SMMEs that need capacity to deliver on contracts without bringing unnecessary risk to the balance sheets of State Owned Enterprises.

With regards to the private sector, Government and seven companies in the construction industry recently signed an agreement to promote transformation in the sector and settle outstanding and potential civil claims between the parties relating to a number of infrastructure projects. The civil claims relate to the infrastructure projects in the period to 2010 that were settled as part of the Fast-Track Settlement process with the Competition Commission.

The Agreement, also known as the Voluntary Rebuilding Programme (VRP), has three components:

  1. Commitments to promote transformation and black South African ownership and participation in the sector, through either equity transactions or by partnering with and developing smaller, black-owned construction companies that will result in black-owned companies with a market value of approximately R5 billion in 2024.
  2. Integrity commitments by the company CEOs to take all steps to avoid collusion and corruption in their dealings with the state, their competitors and their customers and to partner with Government in exposing all forms of corruption and tender irregularities.
  • Financial contributions by the companies of R1,5 billion for developmental projects (in addition to the R1,4 billion in competition penalties previously imposed by the Competition Tribunal).

We have also recorded progress on government to government relationship. With regards to the transversal agreements between the Department of Small Business development and other Departments, there remains a need to accelerate implementation of existing transversal agreements.

Transversal agreements must be accompanied by implementation strategies and plans. Amongst other things, this means that teams be assigned to implement existing agreements with clear timelines and measurable outcomes. We must reach a point where such agreements are linked to the performance contracts of senior managers and officials across government.

This cross-sectoral approach means that the private sector must also be included as a partner in this work. I can inform the house that I have met with various business chambers including BLSA, BUSA, SACCI, AHI and the Black Business Council and its affiliates, including NAFCOC. We will continue to strengthen the dialogue in order that they may culminate in strong Public Private Partnerships.

Honorable Sihle Zikalala spoke to operation VULA ... Interestingly OPERATION VULA was part of the liberation struggle plan to further entrench our position.

Operation Vula is no longer underground but is above ground. uOperation Vula wanamhlanje is about opening the economy to those who were locked out. We will not be sneaking through borders to destroy the enemy ... we are in power no, we are using the levers of power and government to advance radical socio-economic transformation.

The AK47 of operation Vula the underground will be replaced by the 500 billion government buying power and spent to empower the previously disadvantaged.

I will unpack specific interventions the department will undertake in the financial year 2017/2018 during our budget vote.

I Thank you!


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