Speaker, the Incubation Support Programme, ISP, is one of several initiatives being undertaken by the Department of Trade and Industry, DTI, with the aim of encouraging private sector partnerships to support incubators in order to support, develop and nurture small, medium and micro enterprises, SMMEs.
In line with the National Industrial Policy Framework objectives, of promoting industrialisation that is characterised by equity and broadening participation in the economy by way of increased participation by small businesses, historically disadvantaged individuals and marginalised regions, the ISP will seek to promote South Africa's entrepreneurial development by encouraging greater involvement of established business in mentoring and supporting the development of entrepreneurs with capacity to engage in the productive economy.
The programme operates on a cost-sharing grant basis between government and private sector partners by providing funds to qualified infrastructure and business development services. Programme approval is capped at a maximum of R10 million per financial year, payable biannually. The programme was announced during the International Small Business Conference in September this year. We have already received 60 applications, which will be presented shortly to the adjudication committee.
As I said, it is one of several initiatives. It includes the changes that we are making in the black economic empowerment, BEE, codes of good practice, which are also intended to add support to incubation-type programmes, as well as partnerships with universities and further education and training, FET, colleges around the country, including those in peri- urban and rural areas. One example of the latter is that the department is working with the King Hintsa FET College in Butterworth in the Eastern Cape, which will host a centre of entrepreneurship focused on agroprocessing. Thank you.
Thank you, Speaker. Minister, for the interest of this House and, more importantly, the general public, would you please explain what incubators are and why they are important for the SMMEs? Thank you. [Interjections.]
Thank you very much, hon Gcwabaza. That is indeed an important question. [Interjections.] Incubators - for the benefit of those on that side who do not understand what incubators are - are programmes where you provide support services to groups of entrepreneurs who are beginning to develop their skills and capacities in a particular productive activity. It involves informal mentoring, as well as formal training, access to means of production, and things of that sort.
The problem that we have in South Africa is that we have far too few of these kinds of programmes, which are internationally recognised as providing huge opportunities for small business development across the world. At the end of 2010 we had only about 30 recognised incubation programmes. The Small Enterprise Development Agency is committed to doubling that in the next few years. As I said, the Incubation Support Programme is intended to building support from the private sector to roll out these programmes on a much larger scale. Our target is for rolling out around 250 of these over the next 5 years. Thank you. [Applause.]
I thank the Minister very much for his response. I certainly support a great deal of what he has to say in regard to using the broad- based black economic system's scorecard to incentivise.
However, Minister, entrepreneurs in rural and peri-urban areas and those in small businesses are in touch, not with your department, but with the provincial departments of economic affairs. Many of these provincial departments are fundamentally disabled and paralysed, and in many provinces there is no point of contact between the department that is supposed to support small entrepreneurs and government. This is particularly true in the case of the Eastern Cape, Limpopo, and Mpumalanga.
The question I am asking you is this: What steps will you take to make sure that the incubation programmes that you so nicely elaborated on and the government programmes that you outlined for us, with which we agree for the most part, reach the entrepreneurs in rural areas? What steps will you take?
Well, indeed, we do think it is very important that we take these programmes out to entrepreneurs in those areas. I must say that, in the first instance, we are trying to work with provincial governments, as well as with local authorities. Sometimes, as in the case of the Western Cape, where there was a Red Door programme, which was closed down by the current Western Cape government, we have had to take over the running of these particular programmes. However, where the provincial governments are active, we partner with them.
In fact, the DTI has a programme that is called Taking DTI to the People, where we engage in extensive outreach programmes in all kinds of rural and peri-urban areas among the people to make sure that our programmes are understood. We also give particular attention to following up with engagements that we have in this regard. Thank you.
Madam Deputy Speaker, at times I get the impression that when Ministers do not have the answer to a question I ask, they tell me they do not understand what I am saying. However, I know that Minister Rob Davies has all the answers. So, he will clearly understand me.
In the past 15 years we have tried all sorts of programmes to promote small, medium and micro enterprises, SMMEs. Many of them have failed. One gets the impression that one often retries the same programme in new packaging and with new emphasis. This time it is the notion of incubating businesses rather than merely supporting them.
Could the Minister possibly clearly identify what the differentiating elements are between this programme and the previous programmes? What type of assessment has he made, both in quantitative and qualitative terms, of all the programmes in the past that did not work so as to develop this programme, hopefully in a manner which will work. Thank you.
Madam Deputy Speaker, our assessment of the SMME programme does, in fact, conclude with the inescapable result that we have achieved too little with our SMME programmes in the past. However, within that, we have tried to pick out those parts of the programme where we think the results have been relatively good, and on which we should focus more attention.
One of the conclusions has been that the incubation programmes, which operated originally under manufacturing advisory centres and so on, were actually some of the best programmes that we had offered to SMMEs. That is also in line with international experience in this regard.
The problem that we have had in South Africa is that proportionally we have had far too few of those. What we are trying to do, is concentrating more effort and more resources on those parts of the SMME programmes where we think we have delivered results. That is why we are prioritising incubation programmes with different measures to try to support an expanded roll-out of incubation. The aim, of course, is that we want to create entrepreneurs with real skills and real capacities who would become involved in the productive economy of this country. Thank you.
Thank you, hon Deputy Speaker. Cope remains concerned about the effects of this global crisis, mainly on the local manufacturing sector and employment. Will the Minister inform the House whether government has looked into alternative industrial and manufacturing policies that target the development of SMMEs and improve the economic conditions of poor South Africans?
For example, South Africa has benefited from the African Growth and Opportunity Act, Agoa, of the United States, in exporting manufactured goods at tariffs favourable to South Africa. What is government doing about similar agreements with its partners in the Brazil, Russia, India, China and South Africa, Brics, bloc, and other African states? I thank you. [Applause.]
Thank you, hon member. [Interjections.]
Am I not supposed to respond?
Oh, sorry!
Deputy Speaker, I think you actually have a point. There is a question later on about manufacturing and so on, to which that follow-up question is more appropriate. The point is this. Our conclusion is that the global crisis does not mean that we need to stop trying to industrialise our country. In fact, it means that we have to accelerate our efforts to industrialise the country. We also need to accelerate our efforts to ensure that SMMEs emerge as productive players in the economy and are able to work in symbiotic relations with big manufacturing companies, and so forth. That is exactly what we are trying to focus and refocus our SMME support programme on. Thank you.
Departmental assistance to SMMEs and black-owned enterprises
316. Mr N E Gcwabaza (ANC) asked the Minister of Economic Development:
How will his department assist (a) SMMEs and (b) black-owned enterprises to benefit from the implementation of the infrastructure programme?