Members of the Shanduka Black Umbrellas Board;
Shanduka Group CEO, Ms Phuti Mahanyele;
Minister of Small Business Development, Ms Lindiwe Zulu;
Ladies and Gentlemen:
It is a great pleasure to be here tonight to celebrate significant achievements by 100% black owned small businesses. I am also delighted that our new Minister of Small Business Development is here with us and we wish her well as she sets about developing this critical portfolio.
I would contend that the calibre of small business here tonight is reassuring and gives one cause to believe in the future of this pivotal sector of our economy.
History has proven repeatedly that small businesses have a vital role to play in any healthy and vibrant economy. South Africa is currently facing some serious challenges, which government has described as the triple challenges of poverty, inequality and unemployment.
Compounding the problem are the tough global economic conditions in which our country is trying to undo the accumulated disabilities of our apartheid history.
Small businesses play a vital role in job creation, contributing to a skilled workforce, facilitating broader ownership, responding rapidly to market demands and increasing overall production. Because of this, Small Medium and Micro Enterprises (SMMEs) tend to be more effective in driving economic development than bigger businesses.
What gives small businesses the edge in this regard is the fact that they are often vulnerable and fragile, which in turn keeps them on their toes all the time, enabling them to be highly driven knowing that failure is not an option. Thus they are prompt in decision making, become sharply focused, innovative and responsive to change.
In South Africa, government has identified small to medium-sized enterprises as key in tackling the country’s unemployment crisis. The National Development Plan, the blueprint for the country’s development, envisages that about 90% of jobs will be created in small and expanding companies by 2030.
As a matter of fact, SMMEs are key drivers of economic growth in many other countries around the world.
After 20 years of democracy, significant challenges remain in creating an enabling environment for entrepreneurship and the creation of successful and sustainable black-owned small businesses. Levels of entrepreneurship have consistently been around only 50% of where they should be given South Africa’s per capita GDP, and around 75% of emerging businesses continue to fail in the first two and a half years of their existence.
When Shanduka Foundation was launched in 2004, the Shanduka Group made a commitment to spend R100 million on corporate social investments over ten years. I am happy to say that they have in fact spent over R150 million in just less than 10 years.
Much of that money has gone into enterprise development and more specifically Shanduka Black Umbrellas (SBU).
When Shanduka adopted the Black Umbrellas programme in 2009, the objectives for the next 10 years were to:
· Open 10 small business incubators. Eight have been opened in 5 years making SBU the largest NGO incubation organisation in South Africa;
· Support an average of 50 SMME clients per incubator, and there are currently over 250 clients in incubators around the country;
· Ensure that 50% of these businesses become sustainable, thereby raising the national average significantly. SBU has an incredible 70% success rate;
· Lastly, included in the definition of sustainability is that each client needs to create at least 4 jobs by the time they leave the incubator. To date clients have created and preserved over 2,000 jobs.
What this illustrates is that business incubators can and do play a pivotal role in building the economy. Business incubation provides a nurturing, instructive and supportive environment for entrepreneurs during the critical stages of starting up a new business. The goal of incubators is to increase the chance that a start-up will succeed, and shorten the time and reduce the cost of establishing and growing its business.
Shanduka Black Umbrellas operates a volunteer mentor programme where each small business is paired with a mentor once they are fully incubated. This has often been described by clients as the most meaningful part of the programme. This would not be possible without the commitment of many individuals who give willingly of their time and experience.
Shanduka Black Umbrellas employees give so much of themselves in ensuring that the clients within the incubator achieve their dreams and create successful and sustainable businesses. A great deal of hard work goes into ensuring that the Shanduka Black Umbrellas programme is implemented effectively and its strategic objectives are achieved. The success of its clients is of fundamental importance to all staff.
In this regard, I would like to pay tribute to the Shanduka employees for the excellent service they have provided to the SMMEs in the past year.
Shanduka Black Umbrellas’ fundamental purpose is to collaborate with partners in the private sector, government and civil society to ensure its objectives are achieved. It is critical that government, business and civil society work together if we wish to see the creation of sustainable small businesses and a significant growth in the number of jobs required to grow the economy and alleviate poverty.
I am happy to report that Shanduka Black Umbrellas has benefited from successful collaboration in a number of areas:
· It has secured funding from the Jobs Fund for the Durban incubator and is currently finalising an agreement for Pretoria;
· It has partnered with Anglo Zimelele for the Lephalale incubator;
· Over 300 companies, many of them SMMEs themselves, support Shanduka Black Umbrellas as part of their enterprise and supplier development initiatives;
· Shanduka Black Umbrellas has a supplier development relationships with Transnet, Lonmin, Sanlam and Exxaro Coal;
· It works closely with the Small Enterprise Finance Agency, Small Enterprise Development Agency, National Empowerment Fund and National Youth Development Agency;
· It has recently signed an MOU with the Chartered Institute of Purchasing and Supply to develop a South Africa specific supplier development programme;
· It has signed an MOU with Business Arts South Africa to develop businesses in the arts sector;
· It has professional firms such as Norton Rose Fulbright and Grant Thornton providing pro bono training within Shanduka Black Umbrellas and participating in the mentorship programme; and
· It has a successful volunteer mentorship programme.
All credit should deservedly go to government for the recent changes to the Broad-Based Black Economic Empowerment Codes of Good Practice with respect to enterprise and supplier development, which will have a significant impact on the development of small businesses.
This demonstrates government’s commitment to the development of small business. It is also clear proof that government is not only concerned about supporting small businesses but also job creation.
While supplier development itself is not a new concept, the new enterprise and supplier development element means that companies that want to qualify for the maximum of 40 points allocated in this category will now be tasked with actively helping to develop the businesses they procure from.
This will require significant change management, co-ordination and commitment to ensure it is carried out meaningfully and the desired outcomes are achieved. This shift means that there needs to be a more concerted effort to ensure the long-term sustainability of these businesses – by investing in and up-skilling them to be better able to provide services.
Shanduka Black Umbrellas is currently working with a number of partners who recognise the importance of making a meaningful contribution in this area. These partners include the likes of Transnet, Sanlam, Exxaro, Anglo Zimele, Lonmin and Sun International, to name a few.
The Shanduka Blackpages enterprise and supplier development portal is another initiative that is benefiting 100% black-owned small businesses by bringing them into contact with corporate buyers.
Its value lies in showcasing small black-owned businesses offerings to the broader corporate world, making it possible for them to gain traction.
This innovative portal provides online training, mentoring and finance opportunities for 100% black owned businesses and allows companies to procure from and help develop these small businesses. There are currently over 4,800 SMMEs listed on the portal.
The creation of a new ministry of small business development in South Africa is a significant step forward in tackling the country’s unemployment figures. This newly created ministry also serves as evidence of government’s responsiveness to the concerns of the small business community, coming as it does after such suggestions from these stakeholders.
Creating an enabling environment for entrepreneurs to create new businesses, developing these businesses and integrating them within the broader economy comes with many challenges. It is clear that nothing will be achieved without firm commitment from all parties concerned – including government, civil society and the private sector.
Shanduka Black Umbrellas is fortunate to have a firm commitment from its employees, SMME clients, donors, mentors and stakeholders towards the success of small businesses.
In conclusion, I would like to congratulate all of tonight’s winners, the regional winners and all the clients in the incubators for the hard work and excellent results.
We as a country depend on you to create jobs, contribute to economic growth and development, and build a brighter future for generations to come. To all the incubators, continue the good work and well done.
I thank you.