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20160513 111208 1 1 2Speech by the Deputy Minister of the Department of Telecommunications and Postal Services,

Honourable Prof. Hlengiwe Mkhize
During the Occasion of the
At Kwa-Mnyandu Shopping Centre

Friday, 13 May 2016

Topic: "Black Industrialisation in ICT Sector"

Honourable Mzwandile Masina; Deputy Minister Department of Trade and Industry

Councillor James Nxumalo; Honourable Mayor of eThekwini Metropolitan Municipality

Mr. Phakamile Madonsela; Regional Manager National Empowerment Fund KZN

Thina Maziya; Local Black Industrialist

Members of the BSTMU

Ladies and gentlemen,

Good Morning




Programme Director, let me first start by congratulating eThekwini Metropolitan Municipality for successfully hosting the Durban Business Fair, over the past 17 years with this year being the 18th. We applaud your endeavours of creating a community of local entrepreneurs from different sectors. We are even grateful that you did not isolate these entrepreneurs but have given them an opportunity to mingle with various government departments and agencies, non-governmental organisations and educational institutions. You have set up a strategic platform for these business enthusiasts to showcase and promote innovative products and services, acquire and share information and knowledge, connect with other businesses and ascertain business opportunities.


This in deed a cause for celebration after the 22 years of our hard earned democracy. Your 18th gathering coincides with the 40th anniversary of the 1976 Soweto Uprisings. The youth at the time where militant because of the harsh apartheid laws which were enforced by the imperialist government. Young person of today, your battle is in the boardroom, young person of today your battle is set up on international markets wherein your locally produced product needs to compete


Bridging the Digital Divide


The uneven diffusion of technology and the inequality in access to technologies with significant social, economic and political consequences still exist between rich and poor countries, rural and urban areas, men and women, skilled and unskilled citizens as well as large and small enterprises.
More than half of our world’s population is still living without access to the internet. The digital divide between the 3 billion people currently online and the 4.4 billion without the economic and social benefits of the Internet is a wakeup call for a sense of urgency.


The South African government has always been at the forefront of creating an enabling environment for modern ICT broadband infrastructure investment.


We believe that our SA Connect Policy and Strategy will help the country with substantial growth in access to ICTs and their use, particularly mobile phones and the Internet. The goal of increased access to ICTs and use depends largely on our Broadband Plan Programme.


Over R700 million spread over three years has been allocated for the implementation of the SA Connect Broadband Policy. The policy rests upon four strategic pillars, which are: digital readiness; digital development; digital future and digital opportunity. The implementation of this policy will ensure that all government facilities such as health care centres, schools, libraries, all municipalities, post offices are connected with high speed internet.

Our government’s investment - coupled with private sector investment which we encourage - in network and IT infrastructure signals that South Africa is ready to leapfrog into the 21st century and to promote the digital opportunity that arises from broadband rollout. Partnering with the private sector in the implementation of SA Connect will provide us access to +/- 180000 km of Fibre infrastructure. During the Phase 2 of SA Connect we intend to roll out a further 64000 Km of fibre infrastructure to provide the much needed backbone capacity for the planned Wireless expansion to our rural communities. In the big metro centres, we have invested R40 million in increasing Wi-Fi coverage.

ICT Industrialisation and ICT SMME Development


Industrial policy has experienced a revival and has resurfaced as a central component of development strategies in Africa and beyond.


The push for industrialisation is also inspired by the Agenda of the last World Economic Forum (WEF), which put the impeding 4th Industrial Revolution on the spot.

The 4th Industrial Revolution is said to be characterised by a range of new technologies that are combining the physical, digital and biological worlds, impacting all disciplines, economies and industries, and even challenging ideas about what it means to be human (WEF, 2016). Linking the virtual to the physical world. Underpinned by connectedness and mobility

Generally, industrialization is seen as a key catalyst for diversifying the manufacturing structure of not just the South African economy, but African economies and creating employment opportunities for the unemployed.

At a continental level, there is an acknowledgement that regional integration seems to show the most conclusive outcomes to supporting robust industrialization of African economies. It is for this reason that the continent is making strides towards ensuring that Africa becomes an industrialised continent.


Regional Economic Communities such as EAC, ECOWAS and SADC have introduced industrial policies as important pillars of their economic integration strategies.


Within the SADC region, the Southern Africa Development Community (SADC) Industrial Development Policy Framework (2013–2018) provides a blueprint for the industrial development of the 15 member states. The policy framework’s goal is to:

“Promote development of an integrated industrial base within SADC through the exploitation of regional synergies in value-added production and enhancement of export competitiveness”, including via “collaboration in the development of regional value chains with targeted interventions”.

South Africa's path to economic prosperity continues to be anchored on industrialisation, amongst other imperatives. Industrialisation is essential to enable diversification beyond South Africa’s current reliance on traditional commodities and non-tradeable services.


It is also critical to safeguarding South Africa’s ability to move into the knowledge economy, which is one of the key priorities of the National Development Plan (NDP).

The Industrial Policy Action Plan (IPAP) has over the years developed a very strong emphasis on the deployment and strengthening of public procurement to support local manufacturing sector and industrialisation of the South African economy.


Various tools have been designed to accommodate different procurement processes. These include Designation, the Competitive Supplier Development Programme (CSDP), and the localisation requirements of the Preferential Procurement Policy Framework Act (PPPFA). Included in the list of designated products is ICT related products, e.g., Set-Top Boxes. The ultimate goal is to ensure that the economy becomes highly industrialised.


Industrial Financing and incentives


Further demonstrating its commitment to industrialisation, government launched the Black Industrialists Incentive, designed to ensure that broad-based black empowerment and inclusive growth characterise all-round efforts to secure and grow South Africa’s manufacturing base.


Government launched the Black Industrialists Development Programme in 2014 and is aimed at creating in excess of 100 black industrialists. The objective is to put black industrialists at the forefront of South Africa's industrialisation efforts.


The programme promotes the participation of black industrialists as manufacturers for the key sectors identified in the Industrial Policy Action Plan (IPAP) as well as other sectors powering economic growth and development.

Amongst the key sub-sectors prioritised, is the electro technical industries, which incorporate ICT related products such as electrical machinery, television, radio and communication equipment. Amongst the key interventions earmarked to support black-owned manufacturing companies is access to finance, access to markets, skills development, and standards, quality and productivity improvement.


Industrial decentralisation


Industrial decentralisation is particularly difficult in South Africa, given the deep-seated structural/spatial distortions inherited from apartheid. That said, the key instrument identified by government to drive the necessary industrial rebalancing or decentralisation effort is the Special Economic Zones programme.


Building partnerships with Original Equipment Manufacturers


One of the strategies identified as key to industrialising the local economy is the need to continuously build partnerships with global Original Equipment Manufacturers (OEMs), who already have global trade networks and associated infrastructure and are interested to developing production centres in South Africa. Key developments in the electro-technical sector (which encompasses ICTs) since 2005 includes:


• Designations - Set-top boxes, electrical and telephone cables and, electricity meters;
• Investment and expansions– Samsung TV- assembly plant, CZ Electronics- mobile devices, Vektronics - Electricity Meters, and HiSense- Chest Freezers.

Industrialisation and ICT Policy White paper


The growth and development of the ICT Industry has been prioritised in the National Integrated ICT Policy White Paper which will be presented for Cabinet approval in the next few months.

In keeping with the drive to stimulate industrialisation across sectors, White paper focuses on innovative approaches to position the ICT sector as a driver of industrialisation and reindustrialisation.


It locates the ICT sector at the heart of innovation to support the national goals set out in the National Development Plan, the Industrial Policy Action Plan and other legal and non-legal instruments aimed at promoting sustainable growth.

At the heart of this new drive lies the need to improve coordination within government and between government and industry, stimulating demand for ICT goods and services, promote research and development, innovation and local manufacturing, promoting the role of SMMEs and community innovations and introducing a new skills development dispensation.


The deployment of Digital Technology Hubs in disadvantaged communities as infrastructure to catalyse innovation, is seen as an effective measure of bringing innovation at the disposal of SMMEs and young innovators.

More importantly, the policy review process underlines the need to address concerns about Intellectual Property protection elements which creates barriers to entry for SMMEs in the ICT sector.

It therefore recommends that IP should not become a barrier, rather a bridge that enables an innovator to share an innovation with other companies that pass the innovation to their customers. This, it is believed, will definitely aid government’s endeavours of creating a strong and competitive and industrialised ICT sector.


The Department of Telecommunications and Postal Services (DTPS) is committed to further develop and promote ICT SMMEs and their effective participation the broader ICT industry. The White paper also proposes a new regime of Spectrum allocation, which will see broadband spectrum shared on an open access basis, to the benefit of potential ICT SMMEs operators.

Let me clarify that the Department’s mandate in the SMME space is two folds:

(i) the development of ICT SMMES and,
(ii) Facilitating uptake of ICTs as tools to develop or advance the general SMME development.


With that said, the DTPS has initiated a partnership with the Department of Small Business Department and the two departments are in a process of concluding a transversal agreement with Department of Small Business Development (DSBD) to avoid duplication of efforts and to ensure alignment in policy. In the proposed agreement, the departments have committed to undertake the following:

• Conduct Capacity Buildings to bridge the skills and enterprise gaps within the ICT SMME sector.
• to accelerate ICT SMMEs and Co-operatives development through an Incubator model;
• Ensure that there is access to funding by ICT SMMEs and Co-operatives;
• Address the crosscutting SMMEs and Co-operatives bottlenecks in the public sector;
• Promote ICT SMMEs and Co-operatives
• Promote collaboration in the development of SMMEs and Co-operatives to ensure that they take part in the ICT value-chain.


The department has also committed, in its 2016/17 Annual Performance Plan, to develop an ICT SMME Support Strategy following consultative workshop with the SMME sector in 2015.

Working with our sister departments, such as the Department of Trade and Industry, Department of Science and Industry, Economic Development Department and others, we will ensure that policy positions contained in the White paper are effectively implemented and advance the course of ICT SMMEs.


We are fully aware of the plight of ICT SMMEs and as such, we will continue to petition our State Owned Companies such as SITA, SENTECH, USAASA, Broadband Infraco and Telkom to set-asides dedicated resources to procure goods and services from ICT SMMEs. The need to support women and youth owned and managed ICT SMMEs cannot be over-emphasised.

The department has established and operationalised an ICT Broad-Based Black Economic Empowerment Council. The Council is hard at work and to date, has facilitated the alignment of the ICT B-BBEE Charter Code with the Generic B-BBEE Code of Good Practice. The objective is to ensure that the sector transform and effectively support government priorities such as ICT entrepreneurship development.


I thank you.