Address by His Excellency President Jacob Zuma, at the Soweto International Conference on Entrepreneurship and Small Business Development Conference, University of Johannesburg, Soweto Campus, May 15 2012

The Vice-Chancellor and Principal of the University of Johannesburg, 
Professor Ihron Rensburg; 
The Executive Dean of the Faculty of Management, 
Professor Daneel van Lill; 
The Director of the Centre for Small Business Development, Dr. Thami Mazwai; 
Esteemed guests and delegates; 
Ladies and gentlemen; 
Good morning to you all. 

It is wonderful to visit Soweto to discuss economic development and progress.

We are meeting in a Soweto that has defied its architects. The colonial and apartheid regimes had designed this township as a reservoir of cheap labour. 

However, in this era of freedom and democracy, Soweto is becoming a thriving new city within the city of Joburg. 

Indeed, we have come a long way in 18 years of freedom. 

We are happy today to join academics, policy makers, as well as the business community who have come together to share knowledge, ideas, experiences and best practice models on how to build and sustain the small business sector in predominantly black residential areas.

Building on the theme of the first conference: "Transforming Black Townships into Economic Powerhouses", the conference comes at the most appropriate moment. It fits in perfectly with our mission as government.

At the heart of our agenda is the total transformation of our country, into a truly non-racial, non-sexist and prosperous society, now that we have achieved our freedom and consolidated our democracy. 

It is crucial to understand the magnitude of what took place in our past in order to understand why we need to act together as a nation to bring about economic transformation in the interest of all. 

Colonial and apartheid regimes systematically and purposefully restricted the majority of South Africans from meaningful participation in the economy. The assets of millions of people such as land were directly and indirectly destroyed, and access to skills and to self-employment was racially restricted. 

The accumulation process under apartheid confined the creation of wealth to a racial minority and imposed underdevelopment on black communities. 

The result is an economic structure that today, in essence, still excludes the vast majority of South Africans. 

In this second transition, we have to ensure true economic emancipation. 

That is why we continue the implementation of our affirmative action as well as the Broad Based Black Economic Empowerment (BBBEE) policies. 

The material conditions that necessitated the implementation of these programmes in the first place have not been adequately addressed.

The overwhelming majority of the black population still lags behind in terms of the ownership of productive assets, access to capital and financial resources, access to quality education and  overall levels of income and wealth.  

The affirmative action and BBBEE programmes have succeeded in increasing the black middle class substantially since 1994. By 2007 the figure stood at 2,6 million.

However, we still have some way to go in addressing the structural economic and social inequalities.  

We have said that in its current form and implementation, BBBEE has benefited only a few and has not been broad based enough. 

We are undertaking a review of the law, working with the Broad Based Black Economic Advisory Council whose members are experts in various fields in society. 

But our economic emancipation agenda definitely goes beyond the black middle class in urban areas.

If we are to adequately address the triple challenge of poverty, unemployment and inequality, we have to generate meaningful economic activity in townships, rural villages and rural towns.

Boosting small business in these areas is a most logical way of achieving this goal.

All successful economies have, as amongst the ingredients of success, invested strongly in the development of small business as well as cooperatives. 

We have decided to focus on growth-orientated enterprises as well as enterprises in priority sectors such as tourism, construction, agriculture, cultural industries as well as information and communications technology.

Our target is to support primarily the enterprises that are owned by black people, disabled persons, women as well as the youth.

As we embark on this process, we are mindful that this important task cannot be successfully undertaken by government alone. 

We have been encouraged by the increasing involvement of the corporate sector, organised business, labour, private financing institutions, non-governmental organisations, universities as well as our international partners. 

They all spread the same message of the need to grow small business, which is the engine of growth and development.

Having engaged the small business sector and other social partners, we know what we are supposed to do.

There are three key pillars of our small business strategy. These are financial and business development support services, procurement support and thirdly an improved regulatory environment.

As early as 1995, government introduced the Integrated Small Enterprise Development Strategy and the Small Business Act in 1996. This was done to tackle the high unemployment rate and to stimulate economic growth. 

In 2003, government set up the Small Development Enterprise Agency, to promote a positive entrepreneurship culture and boost small business.

Currently we have been seized with refining our policies to help small businesses, self-employment schemes and enterprises and cooperatives. 

We know that the small business sector wants to be freed from the red tape and administrative burdens. They also want it to be made easier to obtain finance. 

They want government to pay suppliers on time, within the 30-day period. These are some of the critical interventions that we have been asked to prioritise.

A key factor is no doubt, access to finance.

You will recall that we had announced in the 2011 State of the Nation Address that we would merge the small business finance institutions.

To this end, government under the leadership of the Department of Economic Development has launched the new Small Enterprise Finance Agency (SEFA). 

The new agency consolidates Khula Finance, the SA Microfinance Apex Fund (SAMAF), and the Industrial Development Corporation (IDC) small business lending book. 

SEFA will offer loans initially up to R3 million.

By reducing the number of agencies, we estimate annual savings in excess of R20 million, through cutting the duplication of costs and services.

That money can be redirected to support more small businesses enterprises rather than the bureaucracy. 

SEFA will have two billion rand available over the next three years for lending.

But it is not simply cost-cutting that motivated the amalgamation. We wanted an improved service to small businesses, a one-stop shop for funding.

In addition, we are also using our relationships with key partners in the world to take forward our support to small business to achieve economic growth. 

For example the China Development Bank and the IDC have signed an agreement to access 100 million US dollars for small business lending at favourable terms.

The availability and cost of funding to small businesses is vital but not sufficient. More needs to be done to strengthen technical skills and promote market access. 

In this regard, we appreciate support from various stakeholders. 

For example, a cooperation agreement has been signed by the Department of Economic Development and the South African Institute of Chartered Accountants to train 100 Accountants.

They will support small businesses and establish a Business Hub to provide technical assistance to small and medium enterprises. Support extends to export promotion. Through Trade and Investment South Africa, a department of trade and industry agency, government provides financial assistance and training to small and emerging exporting companies operating in all nine provinces. 

We also want to invite small business to explore opportunities in our recently adopted infrastructure plan. Opportunities will arise from the new dams, railway lines, road, ports, and smelters and other infrastructure that will be built or the ongoing maintenance of the infrastructure.

There are also opportunities for small businesses in the green economy. Government has installed 250 000 solar geysers, with a target of installing a million. 

Ladies and gentlemen

A key contribution to the development of small business by government would be in improving government's ability to pay suppliers on time, within the prescribed 30-day period.  

We know that this has been a serious challenge to business over a long period of time.  

Given that non-compliance with the 30-day payment period had reached alarming levels, we decided to have this addressed at the highest levels of government. 

The National Treasury issued an Instruction Note on 30 November 2011, directing departments to report their non-compliance and reasons thereof to Treasury by the 7th day of each month for national departments and by the 15th for provincial departments.

The outcome demonstrates that we had reason to be concerned.

For March 2012, twenty-seven national departments and six provincial treasuries (covering 72 provincial departments), submitted their reports.

The report states that the current number of invoices older than 30 days that remain unpaid in the twenty seven national departments is remarkably high at more than two thousand four hundred and thirty eight (2438). 

The amounts are in excess of eighty-eight million rand (R88 Million). 

Within the seventy two (72) provincial departments, the number of invoices older than thirty (30) days that remain outstanding is also unacceptably high at  eleven thousand three hundred and seventy (11 370), and amounts to more than five hundred and forty eight million rand (R548 Million).

When all the departments submit exception reports the figures are likely to grow substantially. 

Most of the reasons provided relate to internal management problems in departments. Some of the reasons are shocking, such as that the officials responsible for processing the accounts went on leave! 

We have directed the Forum of South African Directors-General, (FOSAD) to work with their members, the DGs, who are accounting officers in these departments to ensure a reduction in both the number and value of unpaid invoices. 

It is unacceptable that departments can be so relaxed about something that can destroy some small businesses if not attended to urgently.

The FOSAD management committee is already working on this project, assisted by the Department of Performance Monitoring and Evaluation in my office. 

We will receive regular reports in Cabinet so that we can monitor progress in this campaign and make a difference. 

Compatriots,

You have chosen the right venue for a conference of this nature. You will be inspired as Soweto oozes the spirit of entrepreneurship and creativity.

We can mention for example, the potential of the arts, culture and heritage sectors in this new city which provide small business opportunities in significant ways.

For example, the music industry was worth around R1.7 billion in sales and ranked 17th in the world in 2007. The craft sector contributes R1,1 billion annually to the gross domestic product and employs more than 38 000 people. The visual arts sector has a turnover of nearly two billion rand, with employment for an estimated 17 700 people. The film industry generates over R5.5 billion in economic activity annually and employs an estimated 30 000 people. 

These figures demonstrate why we call arts and culture the golden economy of Mzansi. The support of small business ventures in these fields would certainly yield results. 

Compatriots,

You are also meeting in a community that has produced inspiring entrepreneurs such as Dr Richard Maponya, whose name is synonymous with black entrepreneurship. He and his peers such as Dr Sam Motsuenyane taught us that anything is possible if you set your sights on achieving it.

From humble beginnings, Dr Maponya defied the oppressive apartheid policies to become one of the leading and highly respected self-made black entrepreneurs. He built his business empire from bottom-up in the early 50s and  paved the way for a new generation of emerging black business leaders, long before the advent of Black Economic Empowerment.

Dr Maponya's life also entails the fascinating story of how he was helped by the legal practice of two outstanding revolutionary lawyers, our beloved Presidents Nelson Mandela and Oliver Tambo, who made representation on his behalf that led to the issuing of a General Dealer's Licence. 

Therefore, Presidents Madiba and Tambo have a direct link with the story of success that has proven that black people can be successful entrepreneurs. 

We normally salute their political contributions, but they made an impact even in fighting colonial oppression and apartheid through their legal practice. We honour President Mandela and President Tambo today too.

Their investment in Dr Maponya has yielded results. We are happy that the Maponya family continues to invest in Soweto, proving that we can indeed turn our townships into thriving economic centres.

In his remarkable business career, Dr Maponya was also the first black person in South Africa to be awarded horse racing colours, and he went on to become a leading racehorse owner and breeder. You will remember that his entry into horseracing was colourful as his horse was dressed in ANC colours!  

The Maponya or Motsuenyane  success stories are valuable case studies for entrepreneurs and academics alike. 

I would like to congratulate Dr Maponya on his being awarded an honorary degree by the management faculty of the Mangosuthu University of Technology last week. 

This added to his honorary doctorates from the University of Johannesburg and the Tshwane University of Technology. He is also a recipient of the Order of the Baobab one of our key national orders. He is an inspiring South African, and we should salute him and his peers in business at the time for proving black excellence and achievement against all odds.

Ladies and gentlemen,

Vice-Chancellor Rensburg,

Let me take this opportunity to commend the University of Johannesburg on the progress made in becoming one of South Africa's leading universities in such a short time. 

Merging major institutions is fraught with difficulties, but UJ has managed the process well. 

I understand that the University produces about 11 000 graduates a year across a range of academic and vocational disciplines. 

This represents a meaningful contribution to the skills base of our country. 

I have also been informed that the academic staff has managed to double their research outputs in half the expected time. 

These are considerable achievements, but it is in the area of expanding access to higher education that UJ is really excelling. 

We know that the beginning of the academic year has been a challenge for UJ and this year we tragically and painfully lost a mother who had come to register her son.

They say great educators are those who can see true potential in those who have not had any opportunities and then open doors that will positively change their lives. We commend UJ for keeping the hopes and dreams of our youth alive. 

Honoured guests and delegates,

You have gathered for a very important conference. 

We are of one mind in the belief that our townships should be thriving centres of economic activity and excellence instead of the purposes for which they were established by colonial and apartheid regimes.

I wish you well with your deliberations.

It is my honour and privilege to declare the Soweto International Conference on Entrepreneurship and Small Business Development Conference officially opened.

I thank you.

Issued by The Presidency, May 15 2012

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