8 April 2008
Mobilise local economic power for local economic development
Address at the launch of the Business Linkage of the Etwatwa, Daveyton, Kingsway and Watville Chamber of Commerce and Industry, by Dr Blade Nzimade, SACP General Secretary.
Introduction
I feel particularly honoured for the invitation you have extended to us to be part of this historic launch of the Business Linkage Centre of the Etwata, Daveyton, Kingsway and Watville Chamber of Commerce and Industry.
We are of the view that this is a very important initiative in the overall context of the challenges development in our country. We are strongly of the view that small, medium and co-operative enterprises are central and should be the pillar upon which broad based black economic empowerment (BBBEE) should be based.
We are of the view that the first decade of our freedom benefitted in the main those in the mainstream economy, overwhelmingly white, with a tiny black elite joining this white group. The workers, SMEs and co-operative did not gain much out of this, and in many instances took a heavy knock, including massive retrenchments and collapse of many small and co-operative enterprises. Even the current high levels of economic growth in our economy, welcome as they are, has not translated into benefits for the overwhelming majority of our people, including small and medium enterprises.
Therefore this initiative is very important in promoting local economic development and truly broad based black economic empowerment.
Local economic development, access to finance and co-operative banks
Our economy will truly benefit the majority of our people if there are thriving local economies, providing opportunities for jobs and sustainable livelihoods for local economies. Small, medium and co-operative enterprises have a very important role to play in this regard.
You have indeed identified a very serious gap in local economic development, that of enterprise development and small business skills and knowledge. This is an area in which government at all levels should be playing an important role, but unfortunately not enough government resources and attentions are dedicated to this.
It is therefore going to be very important that your Chamber through this initiative also seeks to engage government in this regard, for more resources to be devoted to skills development for local economic development.
However what we have identified as a key weakness in small enterprise development is finance. The big banks merely pay lip service to the financing of small and medium enterprises, and are more concerned about funding the headline making big deals.
It is for the above reason that the SACP launched its campaign for the transformation of the financial sector in 2002 to, amongst other things, demanding adequate finance for small and medium enterprises. We invite you to engage local SACP structures in its campaign to build local chapters of the Financial Sector Campaign Coalition, a coalition on of whose aim is to mobilise financing for small, medium and co-operative enterprises.
One of the most important victories of our campaign has been to pilot legislation on co-operatives, and the piece of legislation now before parliament for the establishment of co-operative banks. It is imperative that you make full use of these opportunities in order to mobilise local finance to build a strong small, medium and co-operative sector in our economy.
We have to reverse this trend whereby we take our monies out of our areas, to bank in the big four banks, through our wages, stokvels and burial societies, and these monies never come back to benefit ourselves and our communities.
It is therefore going to be important that one of the important goals of your centre should also include expanding your services to include co-operative and matters related to co-operative banks. While skills are important, but skills without financing are not going to give the kind of outcomes that you have in mind.
One of the important struggles we have taken up over the last few years has been that of calling for a once-off credit amnesty for all those listed on the credit bureaux. We are for instance aware that in a place like Ekurhuleni many small businesses collapsed as a result of the violence that wrecked this place in the 1980s, and especially in the early 1990s. Most of these are blacklisted in the credit bureaux for not fault of their own. It is therefore important that you join this campaign for a once of amnesty from the faceless credit bureaux.
We have indeed notched some successes in this regard in that the new National Credit Act has granted some amnesty to certain categories of our people who are blacklisted. Whilst this is welcome but we are saying it is not enough. Let us together intensify this struggle in order to rehabilitate many of our people who cannot borrow money in order to start or grow small and medium enterprises.
Our perspective on BEE
We strongly believe in BEE, but it must be truly broad based. BEE in South Africa today is not broad based but is narrow and continues to benefit a small elite.
Also of serious concern to us is the fact that BEE is largely based on shareholding and not adequately promoting skills to run those enterprises in which there are black shareholders. This creates black shareholders who have very little idea on how to run those companies in which they have shares.
Even those black shareholders are highly dependent and beholden to white financial interests,
That is why for us SMEs and co-operatives are very important in that they do provide opportunities for black people to run enterprises.
Engaging Integrated Development Plans
One of the key challenges for your Centre will be to continue to engage local IDPs in order to ensure that they effectively respond to the challenge of developing viable small, medium and co-operative enterprises.
As part of this task it is important that SMEs work together in the mobilisation of local resources by forging closer links with our stokvels and burial societies
One matter that I am also passionate about is that of developing local community trusts that can play an important role in mobilising resources for development, such that communities are the primary beneficiaries of local economic and social development.
The SACP remains committed to working with your organisation in order to realise local economic development for the benefit of local communities.
I take this opportunity to congratulate you on this initiative, and hope that it will grow from strength to strength.
Thank you