Ramaphosa stands behind entrepreneurs and SMMEs
Amongst the many names, such as go-getters, innovators, job creators, small, medium and micro-sized enterprises (SMMEs) and start-ups, that President Cyril Ramaphosa called the entrepreneurs gathered at the 2nd National Presidential SMME Awards, the one that resonated with me was ‘hustlers’.
These awards were very special for many entrepreneurs, not only because many of them walked away with prizes ranging from R100 000 to R1 million, but because they coincided with the president’s 71st birthday.
Many were aghast that he took the time to attend and deliver an empowering keynote speech. T
his pays testament to the dedication he has given to start-up and SMME contributions to the economy.
The awards also culminated with the close of the Global Entrepreneurship Week (GEW) 2023, where 40000 activities took place in 200 countries with more than 10 million participants.
The president began with, “Hello hustlers, it’s wonderful to have you here and it’s my pleasure to be in your midst”, which incited quite a few hearty giggles and cheers. Now the reason the word ‘hustle’ caught my attention, is that I once debated with a friend on whether we should use the word hustling or not - given the varying definitions of the word. Some perceive it to mean making money through unscrupulous means, others to mean ‘tenderpreneurs’, as well as a jack-of-all-trades - doing any business to make money.
In the 2019 movie titled, Hustlers, by Roger Ebert, it was a group of strippers who lured, drugged and fleeced their wealthy Wall Street clients out of millions.
To sum up, the one definition that stayed with me was the president’s, which was, “a group of enterprising individuals determined to succeed; go-getters that never say never and are resilient enough to achieve their passion and see their business get to greater heights”.
I quote parts of the president’s speech:
“As a country, we need to get behind our entrepreneurs and SMMEs and strengthen the ecosystem that supports them...
“Almost exactly one year ago to this day we launched the third iteration of the country’s SMME strategy, what we call the National Small Enterprise Development Strategic Framework. The Framework aims to use resources within the broader eco-system to build practical partnerships that enable entrepreneurship and SMME growth.
“As part of this effort, we are establishing a new one-stop small enterprise agency that will bring together the Small Enterprise Development Agency (Seda), the Small Enterprise Finance Agency (Sefa) and the Co-operatives Banks Development Agency.
“The Strategic Framework calls for concrete partnerships and actions in four areas.
“First, we need to tackle the red-tape and regulatory burdens that frustrate SMMEs.
“The Department of Small Business Development has identified 29 pieces of legislation, which create regulatory impediments for small businesses. We are developing an implementation plan to address these obstacles. The National Small Enterprise Amendment Bill is currently before Parliament. Once adopted, it will, among other tasks, establish a Small Enterprise Ombuds Office that can tackle unfair practices and non-payment of SMMEs.
“The Department of Small Business Development is also streamlining business licensing processes, with the Businesses Licensing Amendment Bill soon to be gazetted.
“But there is much more to be done. We know some of the frustrations which tech start-ups in particular have with foreign exchange controls that impede inward flows of venture capital, and affect the local registration of intellectual property. I have tasked our Red Tape Reduction Unit, which has been established in the Presidency, to work with the Ministers of Small Business Development, Science and Innovation, and Finance, to solve these regulatory burdens.
“The second area of focus for the National Small Enterprise Development Strategic Framework is to address market concentration and enable market access, especially for SMMEs owned by women, youth and other underserved communities. Here the Competition Commission has done excellent work...”
I applaud the work that the Department of Small Business Development is doing through its Localisation Policy, linking SMME products and services to markets. We must be alive to how markets are shifting and the new opportunities that present themselves, for example in the green and digital economies. There are also the BRICS, Agoa and AfCFTA markets, which we are supporting through trade shows and business-to business linkages.
According to Statistics South Africa, the contribution of SMMEs to total business turnover in South Africa is growing. Ten years ago, SMMEs contributed 25% of total business turnover, with large enterprises contributing the rest. By 2021, the contribution of SMMEs had increased to 33% of business turnover.
We can see the positive impact of state procurement policy in sectors like construction, where the contribution of SMMEs increased from 39% of business turnover in 2013, to 63% in 2021. This is significant progress.. We just need to increase the scale and pace.
The third area of focus for the Strategic Framework is access to finance. This is perhaps the greatest challenge that SMMEs and co-operatives face, especially start-ups. The World Bank estimates the SMME credit gap in our country to be as high as R500 billion.
“Our approach as the government is to provide loans and blended finance to higher risk SMMEs and start-ups that banks ordinarily will not touch. We also de-risk lending from banks and non-bank financial institutions through credit guarantees and first loss facilities. We are seeing some success in these instruments and as such we are looking at various ways to get more funding for the development finance institutions that will be directed solely towards SMMES and co-operatives...”
The fourth and final area of focus in the Strategic Framework is entrepreneurship support. If we get this right, we can change the country’s fortunes. For this 6th Administration, we set a target of establishing new 100 small enterprise incubators.
We have to date established 110 with another 11 under development. We do this in partnership with the private sector, universities and TVET colleges. It is encouraging that the number of people engaged in entrepreneurial activity has significantly increased.
“According to the Global Entrepreneurship Monitor, the percentage of the working-age population involved in business start-ups in South Africa increased from 6.5% in 2001 to 17.5% in 2021. This clearly reaffirms what our National Development Plan envisioned, the creation of 11 million jobs by 2030 with 9 million of these coming from small enterprises. We just need to scale up our interventions to create a conducive environment for SMMEs, and on board other eco-system partners, especially the private sector, to play their part,” Ramaphosa said.
In closing, as Open AI founder Sam Altman famously said, “Plenty of people can tell you how to be successful, but not everyone knows from personal experience. How do you decide whose advice to take and whose to ignore? A simple rule is this: heed the talk of those who walk the walk. If someone has achieved the exact outcome you’re aiming for, listen to what they have to say. If they haven’t, proceed with caution”.
And I can confidently say that entrepreneurs are the ones that walk the walk and walk the talk. They are the future of any progressive country and they are the ones that can help solve our economic and unemployment issues.
Kizito Okechukwu is the Executive head of 22 On Sloane, Africa’s largest start-up campus; and co-chair of the Global Entrepreneurship Network (GEN) Africa
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