Keynote Address by the Honourable Minister of Telecommunications and Postal Services, Dr. Siyabonga Cwele at the 2015 Durban Main Business Fair Conference
Thank you Programme Director,
Deputy Mayor of the eThekwini Municipality, Cllr Nomvuzo Shabalala,
Ladies and gentlemen,
I am pleased to be addressing the 17th Main Durban Business fair this morning as the premier business gathering of entrepreneurs since 1998 in the city of Durban. I would like to applaud the eThekwini Municipality for its hard work which ensures that this conference which supports the development of SMME’s through its business connect sessions, business seminars and training programs has continued until today. I have been informed that the city has invested more than R100 million towards this project since its inception and as a result we have 8 000 sustainable jobs have been created through the Business Fair Programme.
I am privileged to having attended the regional business fair which was held in the South Region at the KwaMnyandu Shopping Centre in May earlier this year. My interaction with the exhibitions of different SMME’s was indeed a welcomed experience and an eye opener into the real benefits of SMME’s for our economic growth.
Ladies and Gentlemen,
The global economic crisis has left economies throughout the world experiencing slow growth rates and high unemployment rates, particularly amongst the youth. National Treasury has indicated that South Africa is sitting with a 2% growth rate and an unemployment rate of 25%. These indicators signal that we need to broaden the economic participation of our people in order to meet our target of a 5% growth rate by the year 2020.
In his 2015 State of the Nation Address, President Jacob Zuma spoke of a nine point plan that would assist South Africa ignite growth and create jobs for our people. The plan articulates the need to unlock the potential of SMME’s, cooperatives, township and rural enterprises as meaningful contributors to South Africa’s economic growth and development.
SMME’s are projected to be contributing 35% to our GDP and 54% to the formal private sector employment. The small business sector is a necessary catalyst that will bridge the gap between the first and the second economy and contribute positively in our fight against poverty, inequality and unemployment. With that being said, modernising our economy through the increased use and uptake of ICT’s is perhaps the greatest enabler of development that we at our disposal.
In efforts to modernize our economy, government has prioritized the rollout of fast, ubiquitous and reliable broadband services as a part of the Industrial Policy Action Plan to drive economic growth. Phase 1 of broadband rollout will deliver connectivity to government institutions in 8 districts by 2017 with Phase 2 delivering connectivity to all government institutions by 2020.
The connectivity in both phase 1 and 2 of broadband rollout will include over 32 000 schools all over South Africa. This means we will require a supply of digital hardware such as tablets and related applications for e-learning to drive this programme. There is an urgent need for our country to enhance our capacity for the manufacturing, supply and maintenance of these gadgets. Small businesses operating in the ICT sector have a central role to play and the benefits will increase our technology trade agenda and help create the much needed jobs. One of my Department’s entities SITA in the past financial spent R274 million in ICT SMME procurement and as we continue to rollout broadband these figures will increase.
Once we have the required hardware to deliver e-education in our schools, opportunities for SMME’s also come in the form of ICT applications development. We require computer programmes and software engineers that will develop local content such as e-learning platforms and apps as we modernize our education system. We will also require maintenance services as the gadgets will require fixing and in some instances upgrades. SMME’s can harness these opportunities. The benefits go beyond our implementation of e-education as we will have similar requirements in the provision of a wide range of e-government services. We will have similar requirements as we deliver e-health, e-government and other e-services.
Ladies and Gentlemen,
Despite the existence of a solid policy framework and various support measures in pursuit of small enterprise development, the SMME sector remains vulnerable as most SMME’s still use outdated technologies, there is a lack of access to markets and SMME’s sometimes have inadequate business and technical capital. The ICT SMME environment is also affected by these challenges. The multiplicity of business activities in the ICT sector which consist of hardware, software, networks and media presents an opportunity as these can be harnessed to create opportunities for our unemployed youth.
Timely information and access to the latest industry developments is crucial to the success of businesses. Research and development to innovation, and the limited resources within many SMMEs for carrying out research and development access to finance is a concern. This has an impact on the ability of SMME’s to keep abreast of the latest developments affecting their sectors and markets. Furthermore, inadequate knowledge about or access to new technologies and know-how inhibits SMME growth. The Department of Science and Technology has a policy on the National System of Innovation which aims to encourage research, development and innovation. Of particular interest to my Department will be the measures that will support e-education, e-health and e-government.
One of the best ways of promoting innovation is to ensure that innovative entrepreneurs benefit from the results of their research efforts. Therefore, effective rules and procedures for the protection of intellectual property are fundamental. Many SMMEs are particularly vulnerable to overly complicated patent procedures and property right laws.
If we, as a country are to reap the benefits of SMME innovation, it is critical for government to simplify processes relating to patent protection. SMMEs need a user-friendly patent process with lower cost and streamlined procedures. In some countries, special patent regimes for SMMEs with simplified registration processes have been introduced.
The ICT Policy Review Panel recommends that local innovation be better protected by introducing a creative commons licensing framework. A Creative Commons license is one of several public copyright licenses that enable the free distribution of an otherwise copyrighted work.
In the current environment there is very little or non-existent support for innovation in the informal economy in South Africa. The imminent growth of ICT infrastructure, however could fuel a more fertile environment in which innovation in the informal economy will prosper if a more enabling environment is nurtured. The DTPS, in conjunction with USAASA and the DTI must investigate how ICT specific innovation in the informal sector could be encouraged.
Government would continue to facilitate the deployment of enabling infrastructures such as Community IT centres at community level. Such centres must facilitate access to finance and market opportunities for innovators. These centres must also be catalysts in improving cohesion between innovators in the formal and informal sectors.
Ladies and Gentlemen,
The transformation of the ICT sector remains central to ensuring that SMME’s are able to mature and contribute to our economic growth. Cabinet has recently concurred with the appointment of the ICT BBBEE Charter Council and the council has had its first meeting and has begun work on aligning our sector codes to the revised generic codes.
The ICT Charter Code finalized in 2012 includes amongst other a black ownership target of 30%, a target of 5% net profit after tax to be spent on enterprise development initiatives aimed at growing black ICT enterprises and a 1.5% net after profit tax on socio-economic development initiatives to improve the lives of the communities through areas such as health and education. The Charter Council will monitor the implementation and conduct annual reviews of these thresholds to ensure the transformation of the ICT sector and encourage black SMME development by big corporates.
Access to funding is a critical factor in the success of any business. SMME’s are particularly challenged when they require funding as they do not have the necessary collateral that would enable them to acquire financing. The Department is working towards the corporatization of the Postbank as a fully-fledged developmental bank that will provide financial services to ordinary South Africans and SMME’s.
Ladies and Gentlemen,
I would like to encourage all of you here to participate fully in all of the activities of the Durban Business Fair. I am particularly pleased by the gains that have been achieved through this platform. I believe the impact that has been realized through this initiative will go a long way towards developing SMME’s in South Africa.
I thank you.