ADDRESS BY PRESIDENT RAMAPHOSA AT THE PRESIDENTIAL MICRO, SMALL AND MEDIUM ENTERPRISES AND COOPERATIVES AWARDS

“Ladies and Gentlemen, it is a great pleasure to be here. The Presidential MSME and Cooperatives Awards recognise excellence in one of the most important areas of our economy. Micro, small and medium enterprises and cooperatives together form a vital part of our economy with immense growth potential. Whether they are small businesses in townships or cooperatives in rural areas, whether they are well established or just starting out, these businesses are integral to the future of our economy.

The broad range of the industries represented in these awards showcases the dynamism and versatility of this sector. As in years gone by, our finalists include innovators, designers, tech-pioneers, consultancies, farmers, financial services providers and so much more. This should dispel misconceptions about small businesses fitting a particular mould, being confined to particular localities or industries, or about their abilities to operate at scale.

These awards recognise best practice. They show that small businesses can and are operating as efficiently and soundly as any large corporation. We know that small businesses have been in the news of late. The recent spate of food-borne illnesses that have been linked to spaza shops and informal traders in townships has thrown into sharp relief issues of regulation, health and safety. At the same time, the issue has highlighted the critical role small businesses play in communities, providing much-needed services and supporting local economies. That is why it is so important to bring small businesses into the mainstream of the economy, and that we provide the necessary support for them to do this.

International experience shows that MSMEs are drivers of sustainable growth. Countries with more MSMEs tend to have lower levels of inequality. Entrepreneurs are the drivers of innovation. However, rates of entrepreneurship in South Africa are low by continental standards.

According to the 2022 Africa Youth Survey, more than one in five working-age persons in Africa has started a new business. More than three-quarters of young people in Africa plan to start one in the next five years. By contrast, the most recent Global Entrepreneurship Monitor report on South Africa found that the percentage of adults intending to start a new business in the next three years declined to 10 percent in 2023. This is the lowest proportion in twenty years.

This is a worrying trend at a time when economic growth remains constrained and when there is limited capacity in the economy to absorb the high number of unemployed people. It is therefore essential that we encourage entrepreneurship. It is vital that we enable the emergence and growth of MSMEs and cooperatives. We must focus on targeted interventions to address financial exclusion and onerous regulatory requirements. We must provide access to funding, capacity building and other support.

The success of the finalists here this evening show that with the right support, small businesses can succeed, expand and be sustainable. The Government of National unity has made inclusive growth and job creation our apex priority. Supporting small enterprises is an integral part of these efforts.

The National Planning Commission estimates that we need 5.8 million MSMEs to meet our job creation targets. This means we need to double the number of MSMEs in our country. We are encouraged by the efforts underway to capacitate the sector. One of these is the merging of SEFA, SEDA and the Cooperatives Bank Development Agency into the newly-formed Small Enterprise Development Finance Agency.

Of the R730 million disbursed by the new Agency to date, R101 million has gone to township enterprises and R261 million to rural enterprises. The Small Enterprise Development Finance Agency has also provided non-financial business support to more than 15,000 township and rural enterprises.

Legislation is in the pipeline to streamline business licensing. An e-registration system that integrates the work of the South African Revenue Service and the CIPC is under development. If we are to fully unlock entrepreneurial potential, there must be a razor-sharp focus on start-up growth, especially in the burgeoning tech sector. We must ensure that we are not left behind in the global transition to knowledge and innovation-based economies. As part of this, we must scale up the adoption of advances like mobile payments and digitised record-keeping by small businesses.

We are encouraged by the work of the Department of Small Business Development and the Department of Science and Innovation around a national start-up policy. Among other things, this policy will deal with issues such as intellectual property registration and foreign exchange controls.

Even as this is all work in progress, we recognise the urgency with which we must scale up support for small businesses in South Africa. They are the driving force of our economy. The finalists and recipients of this year’s awards are a shining example of what can be achieved. Allow me to congratulate all the winners and runners-up. You have done well. You are a fine example to other South Africans who want to follow their entrepreneurial dreams. I would like to thank the organisers of tonight’s awards and our generous sponsors. Lastly, I would like to thank the millions of entrepreneurs who make our country work and our economy grow.

These are the micro, small and medium enterprises and cooperatives that create livelihoods and jobs. They provide communities with vital services. They create value that goes far beyond turnover or profit. They contribute in a million different ways to building a more equal, more prosperous and more productive society.

These awards are a celebration of all the entrepreneurs in a country. It is a token of our gratitude and admiration. I thank you.”