Small business and co-operatives are expected to be central to South Africa’s job creation efforts, in line with international trends. The National Development Plan states that about 90% of jobs will be created through small and expanding companies by 2030. We are convinced that if we are to make an impact on the job creation front, we have to invest in small and medium businesses because they are the key drivers of economic growth and job creation. The best investment we can make is in the area of skills development.
The sad reality is that South Africa has one of the lowest rates of entrepreneurship activities in the world. The Enterprise Development Academy we are launching today must assist us to build a nation of entrepreneurs.
The National Development Plan sets an ambitious aim to treble the size of the economy by 2030, a daunting challenge that will require our collective contribution. Meeting the NDP’s growth target of 5.4 % for the next 16 years would not only guarantee South Africa’s material prosperity, but would be an elevating and inspiring narrative for the country – ‘an optimistic new story’, as the NDP phrases it.
As the NDP makes clear, getting South Africa onto a high-growth trajectory demands that we fundamentally change our game plan and place small businesses and co-operatives at the centre of our war against poverty, inequality and unemployment. Developing a strong and growing SME community is a cornerstone of the NDP’s vision.
South Africa is a youthful country. The long-term solution to the nation’s unemployment crisis is to create a nation of entrepreneurs and not a nation of job-seekers. Empowering young people is not an option, but a national imperative. Given the current state of youth unemployment in our country, the question is not whether we should encourage our young people to look in the direction of entrepreneurship, but rather, can we afford not to? Similarly, we must challenge young people of today to seize the opportunities created by our democracy in order to create a better life for themselves and their fellow compatriots.
Acquiring the much-needed skills will enable young people to occupy the front trenches in the reconstruction and development of our country. They will become a force for progressive change and radical economic transformation. Young people must be empowered to occupy their rightful place as change agents, rather than being mere spectators in the unfolding story of economic emancipation in our country.
We remain concerned that small businesses have an exceedingly high failure rate, and the majority of the casualties are women-owned businesses. Researchers tell us that the failure rate for new businesses is almost 80% in the first year, and only about half of those who survive remain in business for the next five years. We are confident that the Academy will help to reverse this trend through appropriate research, quality teaching and a relevant curriculum that responds to the needs of the small business sector.
Part of the challenge as noted by the academic and research fraternity is the lack of empirical information about South Africa’s SMEs. This empirical information will be critical if we are to effectively discharge our mandate to assist the establishment, growth and sustainability of SMEs and cooperatives. I am confident that the Gordon’s Institute of Business Science has been grappling with these issues for some time.
Understanding small and medium enterprises, cooperatives and the policy decisions aimed at growing this sector requires credible evidence and robust monitoring and evaluation. We want policy responses that are informed by evidence rather than interventions that are based on assumptions. We need your expert advice particularly in the area of regulation, policies, programs and support mechanisms to advance entrepreneurship. We need you to help us monitor the impact of our policies and programs particularly on black people, women, people with disabilities and youth.
I invite the Gordon’s Institute of Business Science to work with my new department as we seek to find lasting solutions to the many challenges that confront us. You must help us answer some of the complex questions facing us. You must place your expertise at the nation’s disposal and assist us to develop appropriate interventions that respond effectively and adequately to the needs of the small business and co-operative sectors.
We are painfully aware that fostering a culture of entrepreneurship is not something that blossoms over a short period of time. It takes a long time to develop and flourish. In other words, if we create awareness today about entrepreneurship as well as train others to start a business venture, it does not mean tomorrow all these people would start and run successful enterprises. We must also be mindful that not every person is destined to become an entrepreneur.
I remain convinced that, as a nation, we need to teach entrepreneurship education from primary school level right through higher education institutions. This will enable our citizens to consider starting a business as an option instead of a mindset of looking for a job after finishing high school or graduating at a higher education institution.
Government has been rolling out the incubation programme which seeks to develop, grow and sustain small businesses through the procurement and skills transfer support from big businesses. We would like to encourage this institution to participate in this programme. Our experience tells us that the incubation programme succeeds if linked to knowledge-based institutions that provide technical and empirical knowledge housed in these institutions.
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