SPEECH BY THE DEPUTY MINISTER OF HIGHER EDUCATION AND TRAINING, MR BUTI MANAMELA, MP TO THE ENTREPRENEURSHIP AND COOPERATIVE DEVELOPMENT INSTITUTE (ECDI) CONFERENCE
1 MARCH 2018 | RIVERSANDS INCUBATION HUB, GAUTENG
Programme Director, Chairperson of Services SETA Board, The Board of Services SETA, Director General of the Department of Higher Education and Training, Senior Officials from Government Departments, SETA CEOs and Officials, Technical and Vocational Education and Training College Representatives, Community Education and Training College Representatives, Organised Labour Representatives, Business and Industry Representatives, Skills Development Providers, Ladies and Gentlemen
Good morning to all. It is my privilege to participate in this Entrepreneurship and Cooperative Development Institute Conference today. We are constantly reminded of the school dropouts that have become successful entrepreneurs who have gone on to starting and leading major global businesses. What comes to mind is, Apple, Virgin, Facebook and closer to home, Web Africa are some of those companies. Some commentators have even questioned the value of education in developing entrepreneurs.
However we must remember that global companies like Adobe, Google, Intel and Cisco were founded by people who finished school and completed their first degree. Education and entrepreneurship can be two sides of the same coin. People need the mind-set, skills and knowledge to generate creative ideas and the entrepreneurial initiative to turn those ideas into action.
There are strong interconnections between education, skills development and entrepreneurship. It is because of this interconnectedness that the Department of Higher Education and Training takes entrepreneurship and the development of entrepreneurs and cooperatives seriously.
South Africa’s development blue-print, the National Development Plan (NDP), targets GDP growth of 5% and unemployment reduction to 6% by 2030. This is expected to be achieved through the creation of 11 million jobs, the majority of which is expected to be contributed by small and expanding businesses. However our current reality is different. The World Bank forecasts growth of 1.1% in 2018, higher than the country’s average year-on-year growth of 0.8% in 2017.
Consequentially, the unemployment rate stands at of 26.7% as of the last quarter of 2017. SMMEs are a crucial part of South Africa’s economic growth. It is estimated that SMMEs contribute more than 30% to South Africa’s GDP. With regard to employment, SMMEs in South Africa absorb about 70% to 80% of the employed population and contribute less than 4% to export earnings, leaving a large margin for growth.
According to the Global Entrepreneurship Monitor South Africa Report of 2016/17, South African societal entrepreneurship attitudes substantially improved over the past decade and are above the average for efficiency driven economies. In contrast, entrepreneurial perception and competencies in the adult population fall below the average for efficiency driven economies. This shows a disjuncture between attitudes and skills.
The inability of the youth to engage in economic activity and find employment suggests that young people may not be receiving the necessary skills and work experience to drive the economy forward. This situation cannot be allowed to persist. The challenge of inculcating a culture and spirit of entrepreneurship and self-employment, lies not only in making funding available but in developing skills and competencies of the youth and potential entrepreneurs in general.
South Africa’s policy on SMME development and support is anchored on the National Development Plan’s aim of eliminating poverty and reducing inequality. According to the NDP, South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.
The Government’s Nine-Point Plan recognises the SMME sector as one of the critical sectors that can foster economic growth and create job opportunities to eradicate poverty. Point 7. Of the 9point plan is: Unlocking the potential of SMMEs, cooperatives, townships and rural enterprises is regarded as a major job driver.
The vision of the National Skills Development Strategy III is a skilled and capable workforce that contributes to economic expansion and inclusive growth. Goal 4.6 speaks to encouraging and supporting cooperatives, small enterprises, worker-initiated, NGO and community training initiatives.
The strategy recognises that “skills development is not just about training people for employment; it must also empower people to create opportunities to make a living for themselves”.
Similarly, the White Paper on Post-School Education and Training recognises the need for the education and training system to cater for people who will not, in the foreseeable future, be able to find formal employment in existing enterprises, who will have to create employment opportunities either by starting small businesses in the informal or formal sector, or by establishing cooperatives, community organisations or non-profit initiatives of various types.