Africa Growth Institute SME Conference: Sept 2012 - Black Industrialisation: Quo Vadis?

1. AFRICAGROWTH INSTITUTE SME CONFERENCE: SEPT2012 BLACK INDUSTRIALISATION – QUO VADIS? Innovative Enterprise Development Thinking Enterprise Development • Research • Evaluation

2. THE ISSUE STARTS HERE “We think South Africa is faced with the imminent fate of de-industrialisation” Garth Strachan Chief Director: Industrial Development Division Department of Trade & Industry Source: www.ru.ac.za/latestnews/name,66828,en.html (released Thursday 23 August 2012, accessed 26 September 2012) Enterprise Development • Research • Evaluation

3. THEN MOVES HERE • “… the dti will facilitate the development and implementation of a medium- to long-term industrialisation programme, guided by the following goals: • Industrialisation, characterised by broader participation of historically disadvantaged people and marginalised regions” • Source: the dti, Medium-Term Strategic Framework 2010-2013, p.35 Enterprise Development • Research • Evaluation

4. AND THEN HERE … “Black industrialists needed as South Africa shifts to investment-led growth path” Attributed to Minister PravinGordhan, speaking at the launch of the Black Business Council (Engineering News 1 March 2012) “President Jacob Zuma has urged black businessmen to move away from only owning shares or fronting to becoming authentic industrialists who own factories and mines” (Mpho Masondo, Times Live, 6 September 2011) Enterprise Development • Research • Evaluation

5. AND THEN FINALLY HERE … • “… the dti will facilitate the development and implementation of a medium- to long-term industrialisation programme, guided by the following goals: • Contribution to industrial development on the African continent, with an emphasis on building productive capacities” • Source: the dti, Medium-Term Strategic Framework 2010-2013, p.35 Enterprise Development • Research • Evaluation

6. THEREFORE • Black industrialisation is about: • Black entrepreneurship • South Africa’s and • Africa’s economic progress • That’s why it’s such an important project!! Enterprise Development • Research • Evaluation

7. WE HAVE A LONG WAY TO GO Source: Based on the Annual Review of Small Business in South Africa: 2005-2007, the dti, pp62-63 Enterprise Development • Research • Evaluation

8. EVEN MORE SO IF YOU CONSIDER THIS [1] • “African manufacturing industries are squeezed by competition pressure on two fronts. On one front, Africa faces competition from knowledge-intensive economies in the industrialized countries, which occupied 70 percent of the global manufacturing market in 2005” Enterprise Development • Research • Evaluation

9. EVEN MORE SO IF YOU CONSIDER THIS [2] • “On another front, Africa must compete with other developing and transition economies, including the emerging manufacturing giants in Asia, which derive much of their competitive strength from low labor costs ” Enterprise Development • Research • Evaluation

10. EVEN MORE SO IF YOU CONSIDER THIS [3] • “Together, other developing and transition economies enjoyed a market share of over 20 percent in 2005, leaving only 1 percent for Sub-Saharan African firms, of which South Africa alone accounts for more than half ” • Source: The World Bank, “Fostering technology absorption in Southern African enterprises”, 2011 Enterprise Development • Research • Evaluation

11. WE HAVE A REALLY LONG WAY TO GO Enterprise Development • Research • Evaluation

12. SO WHAT SHOULD WE DO? • I was asked this question in February 2010 in Taiwan. My answer was: • “Something extraordinary” • I still maintain that position. Enterprise Development • Research • Evaluation

13. WHICH IS WHAT? • I believe the answer lies in a single-minded focus on • Entrepreneurship driven by innovation, technology transfer and technology commercialisation Enterprise Development • Research • Evaluation

14. “Technological transfer and absorption play a critical role in development. Technology absorption is particularly a driver for ‘catch-up growth’. Knowledge acquired from the global economy is thus the fundamental basis of economic catch-up and sustained growth” Enterprise Development • Research • Evaluation

15. SO WHAT SHOULD WE FOCUS ON? • Put in place the right incentives for firms (market structure and competition, open trade, sound investment climate) • Foster access to technology (inter-country, intra-country, intra-industry, intra-firm) • Build absorptive capacity (education and learning) Enterprise Development • Research • Evaluation

16. WE HAVE THE INSTRUMENTS • Technology Innovation Agency’s Funds and Technology Stations Programme • SEDA’s Technology Programme / Incubation • Various dti offerings, e.g. Support Programme for Industrial Innovation, BBSDP, Technology for Women in Business • Research Institutes and universities • Multilateral agencies such as UNIDO, Technonet Enterprise Development • Research • Evaluation

17. WHO WILL DRIVE IT? • We need to harness all these instruments – and more – to do something extra-ordinary to drive the country’s industrialisation through small (Black) entrepreneurs. • The key question is: Who’ll be the driver? • The dti? • BBC’s National Industrial Development Forum? • Or who? Enterprise Development • Research • Evaluation

18. CONTACT DETAILS • Septi M. Bukula • Ground Floor, Block F • The Palms Office Park • 391 Main Avenue, Ferndale • Randburg, South Africa • T: 011 326 4082 • C: 081 561 7610 • E: septi@osiba.co.za • W: www.osiba.co.za Enterprise Development • Research • Evaluation