Issued by: North West Communication Service
KEYNOTE ADDRESS BY NORTH WEST PREMIER POPO MOLEFE AT THE ANNUAL GENERAL MEETING OF THE SOUTH AFRICAN CHAMBER OF BAKING - SUN CITY - 08 OCT 1996
It is often said that the momentous changes that were brought about by the Great General Election of April 1994 mean different things to different people. How we judge them depends to a great extent on how we think they benefit us. But what I know for a fact is that they have liberated many people and brought urgent relief to their difficult life conditions.
For thousands of school going children from disadvantaged commu- nities, the inauguration of the President is associated with bread. The Primary School Nutrition Programme, immortalised in what is called "the Mandela Sandwich" has succeeded beyond our expectations. Not only has there been a sharp decline in the school drop-out rate, but there has also been a marked improvement in the overall performance of entire classes.
As school children were liberated from the pangs of hunger, absenteeism declined, concentration improved and children now looking forward to going to school. Let me use this opportunity, Chairperson to congratulate members of the South African Chamber of Baking for responding so magnificently when the President announced the feeding scheme at such short notice. Announced as one of the "First 100 days" programmes, it could have faltered, but did not, thanks to the efforts put in by the baking industry. The slogan "Bread for Life" is credible and real.
Furthermore, the feeding scheme has also brought into sharp focus the issues of economic empowerment, growth, job creation and international competitiveness. Since the elections these issues, which form the centrepiece of the macro economic strategy, have been placed high on the agenda of our national vision of reconstruction and development. With millions of South Africans unemployed and underemployed, the government has no option but to give its full attention to the fundamental task of job creation, and generating sustainable and equitable growth.
The view of the government is that part of the integrated strategy to take the economy onto a higher road would involve urgent steps to achieve diversification, to enhance productivity, to stimulate investment and to develop entrepreneurship.
We also believe that the real engine of sustainable and equitable growth in this country is the private sector, and as the government, we are committed to doing everything within the limits of state resources, to help create an environment in which the private sector can flourish.
One of the best ways we can help in creating such environment is to hold ongoing and serious consultation with all the major stake- holders to ensure that the government gets proper guidance in fulfilling its mission and meets the related challenges of reconstruction and development
The macro-economic strategy addresses a wide range of economic development issues, each of which calls for serious attention and concerted action by all major players in the economy. Of critical importance is the need to open up the economy to allow for entry the small enterprise sector. Not only is it of great importance for the rate of job creation and income generation, but it deserves particular attention if only for the fact that this sector has been greatly neglected in the past - in particular black-owned and black-controlled businesses.
It is encouraging to note that a number of big players in the baking industry have begun to apply their efforts at stimulating and developing smaller bakers and other emerging entrepreneurs, inclu- ding sub-contracting work to black shopkeepers from disadvantaged rural areas for the delivery of bread to targeted schools.
This development needs to be noted, reflected upon and improved so that the bread industry can eventually increase its capacity to absorb labour, penetrate new markets and generally contribute to the expansion of the economy. We are of the view that, with the appro- priate enabling environment, and creative and innovative strategies, small bakers can make an indelible mark on the economy.
These strategies should be developed and implemented within a broader vision which includes big business, parastatals and also the small enterprise sector. In this process, the small sector should not be treated as a junior partner, nor as a separate entity to which different rules or principles apply.
CONSTRAINTS FACING EMERGING BREAD DEALERS.
As a point of departure, small bakers and aspiring bread dealers, especially those in rural areas, are confronted by a comparatively wider range of constraints and problems and are less able to address the problems on their own.
1. I Lack of access to appropriate, relevant and understandable information is one of the most important problems of small enterprises, in particular micro-enterprises, survivalists and small start-up ventures. As a result of past discrimination and lack of opportunities this problem is most severe in traditionally black areas.
As part of the strategy to stimulate and develop entrepreneur- ship, including baking, the government believes that information and advice should be focused and supplied at grassroots level. Respon- sibility for the preparation and dissemination of relevant-material falls on all the agencies, including public, parastatal, private and non-governmental. Government wants to get business information and advice within reasonable distance to all entrepreneurs and to those interested in self-employment.
2. Small enterprises usually suffer from market constraints and the inability to sell their products and their services, and these problems are most severe in rural areas. Market access is a critical factor in business growth, but in view of spatial development patterns peculiar to South Africa, most survivalists, self-help and community based ventures cannot grow beyond the subsistence level to enter the mainstream of economic activity.
Individual entrepreneurs and groups of small business have to discuss ways in which they can broaden the scope beyond competing for the same clients.
Local government structures and business associations should reconsider regulations hindering market access to newcomers. The established business community should open up competition rather than continue to control markets in a monopolistic fashion.
The role of state department in this regard is to reorientate tender procedures to accommodate small enterprise suppliers and subcontractors, especially in the event where, due to the complex nature of the job, tender has to be awarded to big enterprises.
Furthermore, the government is committed to facilitate this complex process in a number of ways, including encouraging the Competition Board to take necessary reform steps to prevent restrictive practices and to make the Board more accessible to small enterprises and to motivate the big sector to systematically expand its links with the small enterprises.
3. The development and financing of business and industrial premises and infrastructure facilities is usually seen as the responsibility of either the private sector or local authorities, rather than the government. Yet, due to the past neglect of the needs of black areas and emergent enterprises, a serious backlog of even the most basic facilities exists in both rural and urban areas.
Given its financial limitations, the government is not in a position to directly channel funds to meet all the needs of the small sector. But the North West Government, through its finance and development corporation, has been able to provide industrial incubators and commercial premises at rentals affordable to emergent entrepreneurs. There is a lot more room for the private sector to narrow the gap between advantaged and disadvantaged areas.
4. The needs of small and medium enterprises are so complex that a simple range of support services cannot meet most of them. The most effective way to acquire experience and skills, enter new markets, access finance and meet market competition is generally the entering of joint ventures with an experienced partner. It can be a black/white partnership, a big business with a small enterprise, a franchise relationship or three-pronged foreign investor linking up with domestic big and small enterprises.
Political changes and a new economic strategy, with its emphasis on international competitiveness and co-operation, are currently generating strong interest in joint ventures, with particular attention to black enterprises.
The government regards this route as having proven capacity to achieve empowerment through the transfer of skills, expertise and technology. In addition, the active involvement of foreign donor agencies and larger investment groups in the facilitation of such ventures will ease the burden on state finance to provide venture capital.
Chairperson, as in other areas of socioeconomic development, organized business has a critical role to play in the restructuring of the economy. This applies as much to those businesses that operate in the whole country as it does to those that operate provincially or at district level. Compared to many other countries, business organizations in this country are very weak, financially and organisationally.
Especially with regard to those that represent the interests of small operators, they suffer from a debilitating fragmentation and a limited capacity to actually support themselves.
While the government respects the autonomy of organized business, nevertheless it is concerned about the fragmentation and relative weakness of existing small business associations. We accept the long tradition of voluntary membership and demand-driven services, but we are concerned that the many years of neglect and unrealistic market tendencies, many small enterprises that could be the catalysts to bring about equity, innovativeness and competitiveness cannot do so simply because they are small.
Against this background, the government would like to keep up the dialogue with major business to open up their membership to smaller operators. In this regard, business associations should be encouraged to adjust their membership base and member services, in order to become more representative and inclusive in terms of gender, race, size of business, degree of informality and controlling structure.
As far as the baking industry is concerned, the demand for bread is perhaps as great as that of the other staple food, maize. Judging by the government's primary school feeding scheme, the market is too big for those who are already established.
We appreciate the steps which have already been taken, but we would like to encourage this chamber to consider expanding its membership base to reach the far-flung corners of this province.
You will find that there are so many opportunities that are underpinned by an infectious enthusiasm from the part of rural communities, a willingness to work, easy organisation around development issues, and perhaps best of all, comparatively low crime level.
May I wish you a successful annual general meeting and thank you very much for your support.