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Remarks by President Cyril Ramaphosa at the virtual engagement with SMMEs and cooperatives

Programme Director and Chairperson of SEFA, Mr Martin Mahosi,
Minister of Small Business Development, Ms Khumbudzo Ntshavheni,
Deputy Minister, Ms Zoleka Rosemary Capa,
Premier of Eastern Cape , Mr Oscar Mabuyane 
MECs for Economic Development,
Executive Mayors and Mayors,
Chairperson of SEDA, Dr Joy Ndlovu,
Directors of SEDA and SEFA,
Senior Officials,
Businesspeople,
Entrepreneurs 
Guests,
Ladies and Gentlemen,

Thank you for the opportunity to address this long-awaited engagement with small, medium and micro enterprises and cooperatives, a sector that has a leading role in driving our economy.

In October last year I presented the Economic Reconstruction and Recovery Plan to the nation , which outlines the actions we must now take to rebuild our economy in the wake of the coronavirus pandemic.

The Plan aims to build an economy that benefits all our people. 

To achieve an inclusive economy we need to more effectively support the growth of vibrant and sustainable small, medium and micro enterprises and cooperatives.

In many developed and developing economies, SMMEs generally account for over 90 per cent of all formal businesses.

They contribute significantly to GDP and create and sustain lots of jobs in those countries . 

In South Africa, while 98% of formal businesses are SMMEs, they make a far smaller contribution to employment and GDP. 

If we are to achieve the goal of the National Development Plan for SMMEs to create at least 90% of the targeted 11 million new jobs by 2030, we need to pay far closer attention to developing small businesses. 

The measures put in place to contain the spread of the coronavirus pandemic are measures that we sought to assist those businesses that have been so damaged by the virus. 

The Department of Small Business Development, together with the Small Enterprise Finance Agency, reprioritised over R500 million to establish the SMME Debt Relief Scheme.

This was to help small businesses stay afloat during this difficult time.

It has been reported that, as a result of the funds paid out under this scheme, over 23,000 jobs were saved.

Of the SMMEs approved for support, 67% were black owned, 33% were female owned and 21% were owned by young people . 

It is a concern, however, that only 0.3% were owned by persons with disabilities.

The Small Enterprise Finance Agency extended payment holidays on capital and interest payments of up to six months to 220 direct lending clients and six wholesale lending clients. 

The total value of interest and capital repayments foregone by SEFA was approximately R106 million, resulting in over 37,000 jobs being saved.

Given the limitation of resources it is commendable that so many businesses received support within such a short space of time. To some of these enterprises this has been life support. 

As we make the transition from relief to recovery, it is critical that we continue to provide support to enable companies to recover. We therefore set up major schemes like the credit guarantee scheme  of R200bn 

At the same time, we need to introduce new business processes, technologies and equipment to assist them to adjust to the new reality.

The Department has developed a Business Viability Scheme that will help to position SMMEs to drive economic recovery. 

I am impressed with the targeted interventions the Department has extended to help enterprises in townships and rural areas. I say this advisedly because these areas have been neglected for a long time . 

We need to accelerate the implementation of the Township and Rural Entrepreneurship Programme, which will bring a lot more people into the mainstream economy.

Recognising the particular needs of different types of businesses, the Department has customised interventions for different sub-sectors.

These include sectors such as automotive, personal care, clothing and textiles, bakeries and confectioneries, tshisanyamas and cooked food, fruit and vegetable vendors, butcheries and spaza shops. 

Through the Township and Rural Entrepreneurship Programme we are providing both financial support and business development assistance.

The other critical mandate of this department is driving entrepreneurship, particularly youth entrepreneurship. 

During the State of the Nation Address two weeks ago, I reported on the mandate given to this department and the National Youth Development Agency at last year’s SONA to support 1,000 youth-owned businesses within 100 days. 

Even under the difficult conditions of lockdown, they managed to reach this number within 130 days.

There is even a bigger target that this department is expected to deliver by 2024, which is to give support to up to 15,000 start-ups. 

I hope most of these start-ups will be owned and run by young people. 

With the support of other stakeholders, including corporates, academia and civil society, I am certain that this goal will be achieved. 

One of the key elements of the Economic Reconstruction and Recovery Plan is localisation, and we expect SMMEs and co-operatives to play a central role in driving localisation. They are nimble and have great insights . 

Some work has already been done by this department to introduce SMMEs and co-operatives to wholesalers and retailers. 

We really need our corporates to come on board for us to build strong local capabilities. 

We are not asking corporates to buy goods for the sake of buying locally.

We are saying that they should buy local quality goods that can compete with the ones that they are importing and that create much needed jobs in the country. 

In this regard, the state, including our state-owned enterprises, must take the lead. 

The Department of Small Business Development is already supporting those that need assistance with certification, quality improvements, compliance and the like.

There is really no excuse for not buying locally. 

To enable SMMEs and cooperatives to meet the potential demand, our Manufacturing Scheme is supporting these enterprises to build capacity to supply products in the right quality and quantity. 

As this administration, we have specifically set aside targets for designated groups. We do this unashamedly to help those who in the past were locked out of playing a role in our economy and to contribute to growth . 

At least 40 per cent must go to women-owned enterprises, 30 percent to youth-owned enterprises and 7 per cent to companies owned by persons with disabilities.

These targets apply across government and all departments are expected to deliver on them. 

Clearly then, much has been done. But much more still needs to be done.

As government we cannot do everything on our own. 

To succeed, we need the support of our partners, especially in the private sector. 

I look forward to engaging with those businesses that have benefited from various interventions provided by government. 

It is important to have these discussions so that we can measure the impact of this work. 

Through your feedback, we can only improve our efforts and ensure that we do what needs to be done to build this vital part of our economy. I see entrepreneurs in the SMME sector as the real heroes of our economy. This is a sector that has shown that they can be innovative and adaptable and shift quickly as you face opportunities and challenges.  

I listened to an interview of a person that acknowledged that the Budget is demonstrating that government has paid heed to the proposals of small and medium businesses and co-operatives . 

We do listen and we encourage you to continue with engagements. 

The era of big corporates creating thousands of jobs has passed. We have recognised that this I the era to open opportunities to entrepreneurs and we have set procurement targets to empower this sector. 

Lastly, the AFCFTA that we signed opens up enormous scope and this sector should take up these opportunities.  This is the sector that can penetrate the markets that are now open. Let us be the first to market and let us trade in a profitable way. 

I thank you.