Speech Delivered by Deputy Minister Elizabeth Thabethe at the SEDA Incubation Day at the Inkosi Albert Luthuli International Convention Centre, Ethekwini

Programme Director,
Political Leadership in our midst
Senior officials from government departments,
CEO of SEDA, Ms Hlonela Lupuwana
Ladies and gentlemen,

The primary agenda of any country that is geared towards developmentalism such South Africa, is the creation of a vibrant private sector, the development of entrepreneurship and creation of small and medium-sized enterprises. These (SMEs) are considered to be the principal driving forces in economic development.

Ladies and gentlemen, SMEs stimulate private ownership and entrepreneurial skills, they are flexible and can adapt quickly to changing market demand and supply situations. They are critical in generating employment, and they also help diversify economic activity and make a significant contribution to exports and trade.

These private enterprise creations (SMEs) also play an important role in innovation and high-tech business, due to their flexibility and creativity. Their adaptability has resulted in many of them becoming large businesses.

As we continue being resolute in our advocacy of SME development, emphasis should be put on the creation of a business friendly environment in which the transformation of the small enterprises towards a market economy should be pursued. Promoting entrepreneurship has a vital role to play in improving competitiveness of small businesses and improving South Africa’s employment situation.

According to international business experts, it is shown that among the many business solutions proposed, business incubation seems to be one of the most effective means for assisting entrepreneurs in starting a new business, nurturing young enterprises, and helping them survive during the vulnerable start-up period.

Ladies and gentlemen, the number of business incubators is growing rapidly over the world, from 200 at the beginning of the 1990s to more than 8,000 worldwide today. Business incubation programs are uniquely positioned to help entrepreneurs’ access resources through the incubator, business community, local colleges and universities, and other business assistance programs to help them develop the skills they need to grow successful companies.

By focusing on developing a new generation of entrepreneurs – incubators are helping to build companies that will create jobs and spark economic growth for years to come. These programs provide targeted business assistance to small enterprises at their earliest stages of development and as a result, new ventures have a greater-than-average chance of success.

Programme Director, as local, provincial and national government agents examine ways to create jobs and turn around struggling economies; business incubation programs are featuring prominently all over the world. Incubators like Smartxchange have been helping entrepreneurs turn their ideas into viable businesses, promoting innovation and creating jobs by providing emerging companies with business support services and resources tailored to emerging enterprises to increase their chances of success.

Although business incubation is still a relatively new industry, programs around the world have racked up impressive results that demonstrate the important role incubators play in stimulating economic growth and creating jobs. The world’s existing network of business incubation programs – and the many new incubators under development – can assist entrepreneurs in growing new businesses that can help put many people back to work.

Ladies and gentlemen, business Incubation is fast becoming the one of the world’s foremost job creators. The South African government has recognized this and has announced business incubation programs as effective tools for creating jobs. As government agencies at all levels continue to debate how to revive the economy, it’s important that incubators – a critical component of the entrepreneurial support infrastructure that have proven themselves to be significant generators of new jobs – be at the forefront of these discussions. Clearly, we need to target our investments to those projects that will have the greatest return and create the greatest number of jobs.

Small business owners in South Africa face rather strict governance and statutory circumstances thus starting and growing a business in South Africa becomes a challenge. However, the incubation system has turned the situation around by ensuring that 80% of businesses supported via incubation survive the first year of operation.

In the South African context, business Incubation means a business supported process that accelerates the successful development of start-up and fledging companies by providing entrepreneurs with an array of targeted resources and services.

Ladies and gentlemen, incubators vary in the way they deliver their services, in their organisational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a Startup Company will stay in business for the long term; studies found that 87% of incubator graduates stayed in business, in contrast to 44% of all firms.

Incubators differ from research and technology parks in their dedication to startup and early-stage companies. Research and technology parks, on the other hand, tend to be large-scale projects that house everything from corporate, government or university labs to very small companies. However, many research and technology parks house incubation programs.

Ladies and gentlemen, small- and medium-sized firms continue to play an important role in employment creation. According to a FinScope survey (FinMark Trust (2006), 90% of jobs created between 1998 and 2005 were in micro, small and medium firms. Despite this, total early-stage entrepreneurial activity rates in SA are about half of what they are in other developing countries. That should be an area of concern, in South Africa we need to foster sustainable businesses with potential for job creation and competition.

Aside from SMEs creating jobs, there are other advantages to broadening the base of new and expanding firms : SMEs reduce levels of economic concentration, ensure higher levels of competition, and increases opportunities for broad-based black economic empowerment.

In future, the South African government will also be promoting information technology-enabled service exports with a view in ensuring that SA becomes a leading provider of these services, both regionally and globally.” (National Development Plan, 11 2011)

I thank you!!!!

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