Anglo American South Africa Enterprise Development Conference 2016 Final version

Transcription

1 Anglo American South Africa Enterprise Development Conference 2016 Final version FOR Andile Sangqu: Executive Head of Anglo American South Africa DATE TO BE DELIVERED 10 November 2016 TIME VENUE ENGAGEMENT THEMES 08h30 till 08h45 Riversands Incubation Hub Company Address: 2016 Enterprise Development Conference Enterprise development; NDP; entrepreneurship; township economies; partnerships; economic inclusion 1

2 A big role for small business: How the revitalization of township economies can help spur economic inclusion Thank you for that kind introduction. Good morning everyone. It is great to be with you here today. I m particularly excited to be in the presence of the many entrepreneurs in the room who are doing the much-needed work to build our economy. Over the past year, there has been a collaborative effort by business, labour and government to stave off a credit ratings downgrade and create job opportunities while stimulating the growth of SMEs concurrently. While there have been some green shoots, we are still not where we re meant to be. And while we may make some progress on stabilizing our economy in the medium term, our unending challenge as a nation has always been this: How do we widen the window of opportunity for all South Africans, particularly those who have been historically disenfranchised? I would like to make three arguments that will hopefully give a sense of where our thinking is as Anglo American all of which are drawn from our experience over the past 27 years, through our enterprise development arm, Anglo American Zimele: 2

3 Firstly, I want to argue that the revitalization of township economies will only happen if we have structured and sustainable programmes that help entrepreneurs in townships scale their businesses; Secondly, that township economies can no longer be seen as secondary as or less important than big business. For us to realise economic inclusion, greater linkages between the two are needed; And lastly, that it is only through cross-sector partnerships, as business, government and civil society, that we will be able to achieve this. The National Development Plan (NDP) argues that for us to maximise our economic potential, both the public and private sector will need to create a more enabling environment for SMMEs to grow, particularly those in neglected areas of our society, like our townships and rural communities. To fully realize the promise of township economies, we will have to jointly overcome a number of challenges, which include: Access to financial capital, and limited access to markets; Access to mentorship and business skills; Creating a conducive regulatory environment which will support the growth of township businesses; Building a strong interplay between the formal and informal economy, to open up opportunities for small and township businesses to participate in the formal sector s value chain. 3

4 As a company, we began the journey of tackling this challenge 27 years ago through our enterprise development arm, Anglo American Zimele. The Zimele model entails support for SMEs that combines financial support, in the form of subsidised loans and equity finance, with practical mentorship. The programme is primarily focused on SMEs linked to Anglo American's supply chain and local procurement efforts. More relevant to the theme of this conference today is our Community Fund, which has done a sterling job in providing funding, training and mentorship to small businesses in our host communities and labour-sending areas many of which are in close proximity to townships and rural communities across South Africa. A big part of our focus on the Community Fund is to find ways in which our enterprise development initiatives can have greater impact in semi-urban and township economies. Our belief is that the most powerful benefit that a thriving township economy can offer to its immediate community is the ability to create jobs. Let me paint a picture of how effective this fund has been in many township and semi-urban communities such as Phola and Bushbuckridge in Mpumalanga and Mthatha in the Eastern Cape: These are areas in which the economy is depressed; the economic valuechain is limited; and there are numerous barriers to entrepreneurs to fully reach their potential; 4

5 During the 2008 to 2015 period, the Community Fund concluded 213 transactions with 175 companies who were able to employ over 3600 people in these areas; Location matters. Having an active presence, in communities like Lambasi in the Eastern Cape, or Bushbuckridge in Mpumalanga, our network of nationwide business hubs provide access to business skills transfer, ICT equipment, internet services and funding to entrepreneurs who ordinarily wouldn t have had access to such; Building on 27 years of pioneering the growth and development of black-owned SMEs and responding to rapid changes in the mining sector we have recently decided to place a greater focus on SMEs that can be scaled appropriately to create meaningful jobs and economic activity in our laboursending areas and semi-urban and township communities. Through our sharpened focus on the three funds the Supply Chain Fund, Community Fund and Sebenza Fund we are not only helping to create black entrepreneurs and sustainable job opportunities, but we re making a real difference to many families and communities in South Africa. There are two fundamental lessons we can draw from Anglo American Zimele s successes: One of the key lessons is the importance of holistic, well-structured and sustainable programmes that are able to turn the entrepreneur s dreams into a reality no matter where they come from; 5

6 Zimele s value proposition is built on aiding the entrepreneur to grow throughout his or her entire journey, through mentorship, funding, access to markets and business skills; Another lesson from our own experience as a company is that to achieve some degree of growth, it may be best to help entrepreneurs to access opportunities in the formal economy. And I want to emphasize that this is what has made the Zimele model as successful as it is the linkage between the formal and informal economies; As you would ve seen, Anthony Mpati s story founder of 115 Electrical Solutions demonstrates the importance of creating linkages between small black entrepreneurs and big business. And I want to venture that this is the missing puzzle in our efforts to stimulate and grow township economies. While not a township entrepreneur in the strictest sense, one learning that I draw from Anthony s story is that black business or township businesses is not small business. It is through his single-minded focus on scaling his business with the right kind of support from Anglo American Zimele that he has been able to grow his company. When thinking of township entrepreneurs or SMEs more broadly, we ought to always remember that their role despite their size in building our economy is big, and their possibilities despite market limitations and structural barriers are endless. But how do we break down the structural barriers that inhibit the growth of the township economy? 6

7 Which brings me to my last point: the importance of building cross-sector partnerships that will revive and stimulate township economies. When thinking about how we go about creating many more entrepreneurs like Anthony Mpati, or Zandi Shabangu who runs a growing black and womenowned construction firm in Mpumalanga supported by Zimele partnerships between big business and government are needed now more than ever. This is important because the solution does not lie with either the government or the private sector alone, both have a role to play. And that is the strength that we need to capitalize on: the power of collaboration. Each of us whether business, government have our weaknesses and challenges. While we have had many successes in our 27-year journey as Anglo American Zimele, we have also learnt some hard valuable lessons. Amongst others, we have learnt that: - Creating quality jobs through SMEs particularly those that are in underlying semi-urban and township areas can be challenge. Quality and sustainable jobs can only be created over a long period of time; - SMEs need to find way to harness their collective pool of resources, skills and talents to build economies of scale. This is the only way that we will bridge the gap between the formal and informal economy; - 7

8 - We need to place a stronger focus on empowering township and rural SMEs to take up opportunities in neglected sectors, like agriculture, as this can create large scale job opportunities. This can be done by focussing on initiatives, such as business fairs, expos and portals, that enhance access to information and knowledge to those entrepreneurs in semi-urban and township communities; - It is not enough to focus on capacitating SMEs at the pre-investment phase only. A structured approach to what happens after you have funded and capacitated an SME is needed. Which is why we launched our postinvestment management function in 2015, to proactively ensure remedial and corrective action. But to overcome these challenges, both government and business will need to reflect carefully on their role. What is more important, beyond just the individual roles we can play as different sectors, is how we collaborate. The interplay between business and government is the only mechanism that will ensure that we build thriving and sustainable township economy that does not play second fiddle to the mainstream economy but instead grows it. One more recent exciting initiative on our end, which demonstrates the importance of strong collaboration with government, is our diamond beneficiation project. Through our diamond business De Beers, we are empowering five selected black-owned diamond cutters to cut, polish and sell our diamonds in the competitive world market. 8

9 Another encouraging feature of this initiative especially in light of today s conference is the launch of a dedicated incubator that will assist aspiring diamond cutters, polishers and sightholders from neglected communities, grow their footing in the diamond market. What s more exciting is that this incubator will be located within the Jewellery Manufacturing Precinct at the OR Tambo Industrial Developent Zone in Ekhuruleni. While our contributions to date have been laudable, we are nowhere near where we need to be. More alignment between government, business and other sectors of society is needed on key national programmes that bring all of us together. Initiatives such as the South African SME Fund, led by the CEOs of some of our country s largest companies in collaboration with government, are an important step in forging this interplay. The Anglo American group of companies recently contributed to the R1.5 billion fund, and we re particularly excited about the prospects of this initiative in stimulating high-potential SMEs many of which will invariably come from the townships across the length and breadth of our country. 9

10 I want to end off by paying tribute to the many entrepreneurs in the room, who wake up daily to build their businesses amidst many challenges. In doing so, a well-known poem by the American novelist and poet, Sylvia Plath, titled Mushrooms is fitting. And I will read just a few lines from it: Little or nothing. So many of us! Nudgers and shovers In spite of ourselves. Our kind multiplies. We shall by morning Inherit the earth. Our foot s in the door. While there may be various interpretations of the poem, it speaks about how mushrooms, growing in a nighttime forest, quietly poke their heads from the forest floor to eventually sprout from the cracks of a sidewalk. You the founders and builders of small businesses in our townships, urban and semi-urban areas are these mushrooms that will eventually grow and sprout. Keep on nudging, and keep on shoving. I thank you. ENDS 10