Address by Deputy President Cyril Ramaphosa at the launch of Global Entrepreneurship Week, IDC Auditorium, Johannesburg
11 November 2016
Minister of Small Business Development, Ms Lindiwe Zulu,
Premier of Gauteng, Mr David Makhura,
President of the Global Entrepreneurship Network, Mr Jonathan Ortmans,
Leaders of business, labour and community,
Ladies and Gentlemen,
It is a great pleasure to address you this afternoon on the occasion of the launch of Global Entrepreneurship Week. This event is informed by an understanding that sustainable development is people-driven.
It is informed by an understanding that countries that do not invest in entrepreneurial development hinder their own growth potential and limit the prosperity of their people. It is informed by an understanding that it is Africa’s innovative and resilient entrepreneurs that will solve the continent’s socio economic challenges and determine its destiny.
From this, the City of Gold to Dar Es Salaam, from Musina to Marrakesh, from Lephalale to Lagos, our continent salutes the women and men, the young and the elderly, who are reasserting Africa’s status as a centre for entrepreneurship.
During Global Entrepreneurship Week and beyond, we must recognise and celebrate you because you are the engines of economic growth and agents for development.
You are Africa’s merchants of hope.
We look up to you to collaborate beyond borders to pursue opportunities that will create employment for our people.
We are grateful to Africa’s global partners who are enthusiastic and committed to cultivating and supporting Africa’s entrepreneurial ecosystem.
We applaud the members and leadership of the Global Entrepreneurship Network for travelling far to be with us today and for joining us on our journey towards an entrepreneurial generation.
We are also pleased, humbled and honoured that you have chosen South Africa to host the Global Entrepreneurship Congress in March 2017.
The events planned for Global Entrepreneurship Week allow us not only to share encouraging stories – and cautionary tales – from small business owners.
It is also a marketplace for new ideas.
It is a place to see opportunities, and to act on them.
It is a unique business fair bringing together policy makers, experts, investors and entrepreneurs.
This week is about the realisation of human potential.
It is as much about the individual entrepreneur as it is about the society that produces them.
It is also about the society that they – through their endeavours – will ultimately produce.
The participants in these events are motivated by a desire to succeed.
They are equally driven by a passion to defeat the scourge of poverty, unemployment and underdevelopment.
Ladies and Gentlemen,
We all know that small businesses contribute considerably to job creation and economic growth in several developing economies.
Our National Development Plan enjoins all social partners in our country to work together to create fertile conditions to grow small enterprises.
The Department of Small Business Development, working with other stakeholders in our developmental state, is championing SMME development.
It is active on the frontline, promoting localisation, preferential procurement, mentoring and incubation of entrepreneurs.
It is an advocate for better financing, training and support of entrepreneurs.
It is the sworn enemy of the regulatory obstacles and bureaucratic ineffeciency that stand in the way of promising new enterprises.
It is leading the government-wide effort to create an environment that fully supports small businesses.
The latest Global Entrepreneurship Monitor report on South Africa highlights several of the challenges we face.
The report attributes South Africa’s weak job-creating capacity in part to our failure to adequately support enterprise development.
It highlights our country’s stubbornly low levels of entrepreneurial activity and entrepreneurial intentions when compared to many other countries in Sub-Saharan Africa.
The report notes that entrepreneurs in South Africa are almost four times more likely to anticipate making no contribution to job creation besides self-employment for the entrepreneurs themselves.
Black Africans still make up the majority of South Africa’s early-stage entrepreneurs.
But their participation has sharply declined.
The GEM Report notes that:
“In 2013 and 2014, approximately 85% of South Africa’s early-stage entrepreneurs were Black Africans. In 2015 this figure has declined by a fifth, to 68%.”
Constraints to entrepreneurship in South Africa are said to derive from inept government bureaucracy, inadequate entrepreneurship education and training at schools and social norms.
The GEM Report also says that South Africa’s national culture seems to discourage entrepreneurial risk-taking.
This observation masks a deeper reality: under apartheid, over many decades, the entrepreneurial instincts of South Africa’s majority were deliberately and cynically suppressed.
Unless we acknowledge and confront this reality, we will continue to undermine the effort to foster an entrepreneurial culture.
Blacks were stripped of land and assets, denied rights to establish businesses and deprived of opportunities to develop skills.
Like wealth and privilege, entrepreneurial capacity is often passed down through the family from generation to generation.
I was myself once a business person, and I couldn’t help noticing how many of my white counterparts had been exposed from an early age to the language and logic of business.
Many of them came from families where dinner table conversation often turned to sales, profit and financing, about new enterprises and failed ventures.
Not only did these people have the advantage of a better education, access to resources and ready-made networks; they also left home with many of the ingredients of an entrepreneurial mindset.
That is the deficiency we have only just begun to address.
We have significantly improved access to both school and higher education.
We have instituted employment equity and black empowerment programmes that have created a significant middle class that is starting to accumulate assets and savings.
We have reduced asset poverty through the provision of subsidised housing and the redistribution of land.
But there is a great deal we still need to do, specifically within the foundational phase of schooling.
Just as we confront the legacy of our past, we need to address one of the economic challenges of the present.
The structure of our economy has established high barriers to entry.
The Deputy Managing Director of the IMF, Mr David Lipton, recently spoke about a huge part of South Africa’s labour force that ‘is left on the outside looking in’.
“The formal economy is not absorbing them, nor are they able to strike out on their own.
“There is a crucial structural issue at play here: those included and successful in the advanced economy – large businesses, banks and unionised workers – maintain entry barriers against their potential competitors – small and medium-sized enterprises and the unemployed.
“In situations like this, the government should represent the interests of the excluded. However, some policies, regulations or actions only raise higher barriers.’
Indeed, a number of sectors of our economy are dominated by a few big players, costs of entry are high, and anti-competitive behaviour is widespread.
As government, we have recognised that we may unwittingly reinforce this market dominance through bureaucratic inefficiency and costly regulatory requirements.
However, we have made important progress in strengthening the competition authorities, using government’s purchasing power to promote emerging businesses, and refining the BEE codes of good practice to emphasise enterprise development.
While there is much in the South African entrepreneurial ecosystem from which we can draw inspiration – and from which we derive great hope – I have intentionally dwelled slightly more on the key constraints and obstacles.
I have done so to challenge all of us to work together to change the status quo and to allow small business to flourish.
I have done so to appeal to big business to partner with small business to grow an inclusive economy and give our youth work experience.
Leaders of established business must mentor more and invest more in young talent.
We must work together to urgently introduce those reforms that will foster a more enabling environment for SMME development.
We must find innovative ways to work and provide the necessary support to young women in particular to get involved in sustainable opportunity-driven enterprises.
Together, we must make sure, that by 2030, we have created a South Africa where, in the word of the National Development Plan:
We are traders.
We are inventors.
We are workers.
We create companies.
We set up stalls.
We are studious.
We are gardeners.
We feel a call to serve.
We make things.
Out of our homes we create objects of value.
We invest and reap good returns for our efforts.
We travel to trade beyond our borders,
carrying our values with us.
We respect ability, competence and talent.
Now our economy is growing.
Our prosperity is increasing.
We are energised by our resourcefulness.
I wish you all a successful Global Entrepreneurship Week.
From here, we must agree that entrepreneurship will occupy the centre of our national discourse.
To defeat poverty, unemployment and inequality, entrepreneurship must be part of the daily conversations in our homes, around the dinner table, in community halls and classrooms, and on radio stations.
This is a country and a continent alive with possibility.
We are looking to the entrepreneurs of Africa to unleash the potential of our people and realise that potential.
I thank you.