DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM

1. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Developing Enterprises In the Western Cape Some Preliminary Ideas Brendon Roberts 20 May 2003

2. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM A Simple Statement of the Problem • Broadly speaking, if we are to address poverty and increase employment, there has to be economic growth • In essence growth means more economic activity on the ground. • In simple terms, to achieve this means that we need to have: • more business activity by existing businesses and • more businesses

3. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Enterprise Development Given that all business activity takes place in some form of enterprise, from the one-person micro-enterprises to giant multi-national corporations, it would appear logical that “somebody” needs to act swiftly and decisively to do two things in relation to enterprises if we want to promote growth: • To assist existing enterprises to grow stronger and bigger (enterprise enhancement) and • To assist new enterprises (including co-ops) to come into existence (enterprise creation) and then grow stronger and bigger

4. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM The History to date (Slide 1) • Central Government has created an enhancing environment: policy, institutions, financing. Central Government and NGO have provided potential entrepreneurs with information. Yet, on the micro-enterprise and small business end of the spectrum, this has not translated into the level and quality of business creation which we had hoped for and need: • The strong informal support and encouragement mechanisms which are in place in the communities which have been encouraged and advantaged in business in the past are not there in the disadvantaged community

5. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM The History to date (Slide 2) • Most of the intended beneficiaries of these Central Government initiatives have been raised to perceive themselves as employees and not as entrepreneurs in most sectors of the economy and so have not easily embarked on the journey to creating and developing enterprises. • This does not mean that the courage to be a risk taker or the skills or potential to manage an enterprise does not exist. Some have, in fact, set out on that journey. • However, many of them have encountered extraordinary hurdles, barriers and, in some cases, even failure.

6. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Who Should Act? Many Role Players: • Government (Local, Provincial, National) • Business • Non-Governmental Organizations • The Community

7. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM What the Province has decided to do • In ordinary times, in the broad sphere of “economic affairs” in government, it falls to Provincial Governments to be implementers, to make things happen on the ground • But these are not ordinary times. In the tenth year of our democracy, there is consensus that something extraordinary needs to be done to address employment, ownership and poverty • Therefore, we have decided to take a strongly interventionist position in relation to enterprise enhancement and creation • We will act aggressively to mobilize every resource we can in both the private and public sectors, domestically and abroad to support this intervention

8. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM An integrated intervention: The six-pack We will intervene in a manner which achieves as many of the following simultaneously: • Creates employment, • Defends employment, • Shifts ownership patterns, • Stimulates the establishment and/or growth of SMMEs, • Creates and reinforces a tradition of entrepreneurship and • Provides a basis for Local Economic Development to take off

9. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 1 • We will engage significant numbers of existing enterprises of all sizes and in all sectors intensively. In this engagement we will: • Identify problems which enterprises experience in the business environment and attempt to address these • Encourage them to move in the direction of supporting the six-pack or any sector-specific charter scorecard

10. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 2 • Enterprise creation: We will engage in a process called New Business Actualization [NBA] which, in turn, will consist of: • Major and Medium-sized Business Actualization [MBA] • We will develop project proposals to a level of detail which potential participants can engage seriously and will recruit the full team of required partners, not just investors • Small and Micro-enterprise Actualization [SBA] • We will drive the processes of creating “ready-to-occupy” enterprises and overseeing a recruitment of qualified entrepreneurs to own them

11. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 3.1 • Enterprise development: There are many facets to an enterprise. Some existing enterprises will need some specialized advice and services in some of these facets to improve their performance and/or to grow. Most new enterprises will require a great deal of specialized advice and services in most facets in order to become effective and to grow. • We will mobilize as many partners as possible to make advice and services (some on a commercial basis) available in as many facets as possible to as many enterprises as we can through an enterprise development pipeline called Real Enterprise Development or RED

12. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 3.2 Enterprises will be able to access advice and service providers through offices across the Province called The RED Door The essential elements of a RED Door office will be: • A single entry point to seek assistance • Non-specialist advice and information will be offered • Those needing specialized advice or services will be referred • Providing a consistent “guide/anchor person” in the process • Monitoring and evaluation of the quality of advice and services • Acting to fill advice and service gaps where possible • Internet access

13. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 3.3 Advice and services will be provided in the following areas: (a) business idea development, (b) business plan development, (c) financing [loans, incentives, (d) grants and investment recruitment], (e) technology, (f) sourcing and procuring inputs, (g) operating skills, (h) management skills and HRD, (i) quality management, (j) packaging, logistics, (k) export and import processes, (l)tender application skills, (m) legal advice, (n) IT advice, (o) accounting advice, (p) marketing [domestic and global (export), (q) client care.

14. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 4 • In a globalized business environment, enterprise development must include mechanisms to ensure the global competitiveness and relevance of enterprises • It is almost impossible for SMMEs and BEE startups to develop and maintain the capacity to scan, analyse and digest developments and, hence, opportunities in the global business environment without some form of assistance • Secondly, there are very powerful forces at play which attempt to relegate countries and sub-national regions like ours to limited roles in the global division of labour. It is almost impossible for business to overcome this on its own • In this light, a major part of our broader approach will be to build a Global Business Intelligence Unit for the Western Cape Business Community

15. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 5 • One of the ways to promote growth is to export our labour in the form of products and services. However, the knowledge and expertise required to export successfully is considerable for established businesses. For start-ups it is a major hurdle. When you add in different languages, scripts and cultures, it becomes an almost insurmountable barrier. • We are looking for partners to join us in a PPP to form a Trading House. • In essence, we want to take over the products at the factory gate, help find a client abroad, and deliver the goods to the client’s warehouse. Once this relationship between the exporter and the importer is established, the Trading House will withdraw from the relationship.

16. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Specific actions: 6 • The promised R10-million. It is intended to serve two purposes: • To show our seriousness and, in so doing, to “crowd in” other public and private resources for enterprise creation and development • To finance those initiatives which this consultative process indicates will be most effective to remove obstacles and/or to stimulate small and micro-enterprise creation and development

17. DEPARTMENT OF ECONOMIC DEVELOPMENT AND TOURISM Parting shot For the critics who are likely to tell us that we are shooting for the Moon and are likely to fail, I’d like to quote JFK who was told that the attempt to send a person to the Moon was a waste of money and was likely to fail. He said: “We go to the Moon, not because it easy, but because it is hard.”