Hon Chairperson, hon Ministers of Small Business Development and Trade and Industry, Deputy Minister the Department of Trade and Industry, hon members, special delegates, the director- generals of the three departments and senior management, distinguished guests, fellow South Africans, we have inherited a country whose philosophy was premised on separate development. This
narrow world outlook privileged the few and impoverished the majority of our people who are in the main Africans in particular and blacks in general.
The consequences of this ideology of rapture, was a society of the rich minority and the poor majority. The majority of the South African population was excluded from participating in the economic life of our country. Today, because of this ugly past, we face a reality of high unemployment, high inequality and poverty.
Since the dawn of democracy, the ANC-led government has played a critical role in the promotion of Small, Micro and Medium Enterprises, SMMEs. In 1995, the government formulated the White Paper on National Strategy for the Development and Promotion of Small Business. The main objective of the White Paper was to create an enabling environment for small businesses to thrive. It was the first step at establishing an integrated approach towards the development of small businesses.
As the ANC, our struggle has been, is and will always be an antithesis of any aspiration to separate the people of South Africa on the basis of how they look. Our commitment to create a nonracist,
nonsexist, united, democratic and prosperous South Africa is a commitment to which we will never betray.
The 54th National Conference of the African National Congress, resolved that the ANC government must provide support for women and youth owned small businesses and co-operatives. Also, to scale-up support to SMMEs and co-operatives to ensure that their impact is felt across the economy.
In 2014, the Department of Small Business Development, DSBD, conducted a review of small business in South Africa. The review made interesting observations. These relates to the fact that small and expanding firms will become more prominent, and generate the majority of new jobs created. They will also contribute to changing apartheid legacy patterns of business ownership. They will be stimulated through public and private procurement, improved access to debt and equity finance, and a simplified regulatory environment. Small and medium sized enterprises will play an important role in employment creation.
In many developing countries, it is these activities that provide shock absorbers for extreme poverty and platforms for self-
employment, with the potential to serve as rungs on the ladder of economic advancement.
According to Trade and Industrial Policy Strategies in 2015, about 50% of the owners of small formal business were white, and most entrepreneurs in the informal sector were black. Black people owned 49% of small formal businesses in 2015, but 94% of informal enterprises.
Globally, men are more likely than women to be involved in early- stage entrepreneurial activity, according to Global Entrepreneurship Monitor. The report also highlights that youth entrepreneurship; figures were not as impressive in our country.
It is also highlighted that only 25% of adult population was aware of Small Enterprise Development Agency, SEDA, and that SEDA is known mostly in urban areas than rural areas. We therefore urge the department to prioritise public awareness of their products and services, especially among young people and in rural areas.
However, the review also identified the challenge posed by large firms to small businesses in that - because they have supply chains
across the country - large firms are able to sell their products at prices smaller companies cannot match.
There are a number of challenges identified by the Department of Planning, Monitoring and Evaluation, DPME, in conducting performance assessment of the Department Of Small Business Development. These challenges include, the formal small business is growing more slowly than large-scale companies, which contributes to slower job creation and likely limits diversification and innovation. Informal business has grown more rapidly, but remains low income, precarious and mainly survivalist.
As an emerging economy, South Africa has not increased overall participation of SMMEs in mainstream economic activity. Multi- faceted challenges, emerging entrepreneurs need skills, supportive market institutions, serviced sites and finance. Scale of intervention remains small and disjointed - not addressing systemic factors or ensuring holistic support on a large scale.
Therefore, a strategy to promote small business needs to address access to established supply chains and the facilitation of buyer- supplier relations and the challenges identified in the DPME performance assessment of the DSBD.
The commitment by the Minister that she will ensure that SEDA and Small Enterprise Finance Agency, SEFA, function in a co-ordinated and collaborative manner, is very encouraging for us as the select committee.
We welcome the undertaking by the department that it will expand incubation centres to 44 districts and eight metropoles to support village and township enterprises and the extension of incubation period to a maximum of five years. We believe this will go a long way in supporting and encourage entrepreneurship in our rural areas, and supporting SMMEs, both formal and informal.
As of 2017, according to the World Co-operatives Monitor report, at least 12% of people on earth are a co-operator of any of the 3 million co-operatives on earth. Co-operatives provides jobs or work opportunities to 10%, which is 280 million of the world's employed population, and that 300 top co-operatives or co-operative group generate 2,1 trillion US dollars in turnover.
One of the challenges facing the co-operatives is the issue of high mortality rate of co-operatives. This is a concerning matter. We are pleased that as part of intervention, the department intends to walk the journey with both SMMEs and co-operatives. The sustainability of
our SMMEs and co-operatives require aftercare measures to ensure that there is a continuous support.
We welcome and commend the signing of the Competition Amendment Act 2018 into law by the President earlier this year. As the ANC, we have been consistent in saying that the enemy of the National Democratic Revolution is monopoly capital. This law will ensure that dominance in the markets is curbed. The Competition Commission has done a tremendous work for the past many years. It has been aggressive in dealing with cartels, abuse of dominance and other uncompetitive behaviour in the market. We believe that the implementation of the Competition Amendment Act will further advance our agenda of building an inclusive economic growth.
In the past ten years of Industrial Policy Action Plan, IPAP, the Department of Trade and Industry has recorded achievements in the automotive sector, clothing, textile leather and footwear, business processing services, film production and boat building, and many other sectors.
Our industrialisation strategy is enhanced by incentive instruments that encourage investment and industrialisation in our economy. According to the Incentives Report of 2017-18 financial year, the
Automotive Incentive Scheme has attracted R8,4 billion from foreign investors, entrenching the South African automotive industry's place as a resilient global competitor, while the 12I has supported investments linked to key sectors in the IPAP. More than R60 billion of significant investments are expected from Special Economic Zones, SEZs, and Critical Infrastructure Programme which include industrial parks, approvals and these will ensure that the required infrastructure will be in place to attract more foreign and local investment.
Building on the success of the automotive industry and the lessons learned, we undertook in our Lekgotla to implement a reimagined industrial strategy which will be a central pillar of economic strategy, to diversify economy, develop and invest in targeted sectors, create jobs, export orientation, also target labour intensive sectors and small business and co-operative development, stakeholder involvement at the centre.
This will be implemented through identified sectors such as the industrial sector, which covers automotives, clothing textile leather and footwear, gas, chemicals and plastics, renewable, steel and metal fabrication, pharmaceuticals.
Tourism through the visa reforms, high tech sectors, information and communications technology, ICT, and software production, digital economy, health economy, defence economy, mining through mineral beneficiation, agriculture and agro-processing, creative industry, oceans economy as well as the generic support to sectors outside of priorities.
We conclude by saying that to create a better life for all in South Africans, we must address the triple challenges of unemployment, inequality and poverty. And to do that, we must acknowledge the disparities of the past. Therefore, our interventions must move from the premise that we have inherited an unequal society.
It therefore stands to reason that we must provide support to our SMMEs and co-operatives, to provide incentives for industrialisation, attract investment, and provide an environment for ease of doing business. These we shall do, in line with our transformative legislations such as the Broad-Based Black Economic Empowerment, BBBEE, Preferential Procurement Policy Framework Act, PPPFA, and ensure that localisation become everyone's business. We therefore support all the three budget votes. I thank you.