Speaking notes for Minister Lindiwe Zulu Pre-Gec pitching competition “National Finale”, Midrand,

13 March 2017

Programme Director, Mr Octavius Phukubye
CEO of Vodacom, Mr Shameel Joosub
GEC Partners
Our judges who have a difficult task of selecting the best disruptive innovations;
SMME–Tech Start-Ups pitching today,
Entrepreneurs ,

Distinguished guests, ladies and gentlemen,

Today is a very exciting day for South Africa and the African continent. It marks the first day of the Global Entrepreneurship Congress (GEC), the world’s largest conference and exhibition for entrepreneurs, investors and policymakers, bringing together 160 countries.

We are proud to host this exciting event. This is the first time an African country is hosting this global congress. The GEC is a once-in-a-lifetime opportunity for South Africa to showcase the passion and potential of small business in the country and the continent, whet the appetite of delegates to come back, see more, learn more, and get more of the international deal flow coming from Africa.

This year, entrepreneurs will be given an opportunity to present their business ideas to a delegate audience of 6 000 people which renowned researchers and more than  800 international investors. This morning’s pitching finale is an important highlight of the GEC. We hope that it will ignite an entrepreneurial energy like never seen before.

Ladies and gentlemen, as South Africa it is important that we embrace fully these technological shifts that will alter business success going forward. It also becomes important that SMMEs and Cooperatives embrace this radical reshaping of the relationship between technology capabilities and business opportunities.

The Fourth Industrial Revolution’s new technologies empower business model disruptions on many levels, creating a new type of opportunity where it is possible to reinvent entire industry ecosystems. I am happy that the Technology innovations we are seeing pitched today show a focus on creating a new generation of South African Start-ups that will drive the creation of disruptive technologies.

Ladies and gentlemen, in South Africa, the National Development Plan (NDP) affirms that Small, Medium and Micro Enterprises (SMMEs) and Cooperatives are important drivers of economic growth and job creation. It views SMMEs and Cooperatives as vehicles for the economic empowerment of the historically disadvantaged, but also recognizes that the Small Business sector has previously been neglected during the period following the discovery of mineral resources and the establishment of a modern, capital-intensive economy which became almost exclusively white dominated.

According to the World Bank 2015 country indicators, Small Businesses in South Africa represent 98% of total registered businesses but only contribute 49.4% to GDP and employ 63.76% of the total workforce. In contrasting the South African situation with more developed economies you will find that SMMEs in the more stable economies are performing well, representing 70% to 99% of the total business sector and employing 60% to 85% of the total workforce.

Ladies and gentlemen, in recognising the growth potential and contributions of the Small Business sector to the economy, the NDP further sets specific goals such as:

  • Creating 90% of South Africa’s 11 Million jobs through SMMEs by 2030
  • Emphasising the reduction of regulatory compliance and promoting the ease of doing business for SMMEs
  • Ensuring policy coherence through partnerships amongst key role players in the ecosystem.

In the 2016 State of the Nation address the President highlighted the need for the country to empower SMMEs and Cooperatives in order to improve the success rate of start-ups. He mentioned that SMMEs need to have access to high quality and innovative business support in order to improve their sustainability. Interventions like these innovation pitching competitions are an example of initiatives geared to unlock the enterprising and innovative potential of South African entrepreneurs; and not only positioning them locally but aiming for Africa and global markets and competitiveness.

South Africa’s net ICT imports are around R20 billion per annum and this signals greater opportunity for the emergence of innovative start-ups. Not only is every business now a digital business, but every part of every business is digital.

Ladies and gentlemen, today’s pitching competition is our final build-up event and was specially created to ensure the best use of the limited number of pitching slots available, and to attract high-profile investors to the potential that Africa has to offer. I know that every entrepreneur that is part of this pitching round has been prepared and pre-screened through prior competitive processes by the GEC Partners, e.g. the regional competitions run by DSBD/Seda through their nation-wide network of incubators.

Ladies and Gentlemen, the GEC has pitching stages on the exhibition floor, where entrepreneurs are afforded the opportunity to present their business cases to the delegate audience, particularly the international investors.

We are showcasing Africa’s best innovative start-ups at GEC, and we’re benchmarking against top talent from around the world, so I want to you to fight and disrupt hard for the ultimate space to go to stage 3.

Allow me to share some few technology commercialization lessons for the entrepreneurs who are getting into the innovation space:

  • For a high-technology innovation to be successful and reach the market, an enterprise commercialization team must identify, and manage needed technological knowledge. (Strength of the team behind the technology is critical to success).
  • The innovation must be developed around customer-need, into a product, which must then be manufactured, marketed, and distributed. (there is a time to stop developing and test the product against the market).
  • On-going success with subsequent commercialization attempts can be facilitated by a growth strategy that exploits economies of shared costs and scale. (don’t forget to think about how you will scale-up).
  • Furthermore, an innovation can be successful if the innovation team or company can adhere to their learning paths and create and maintain a good network. (master and exploit the art of utilizing networks or get mentors with strong networks).
  • Additionally, the team need not concentrate on a niche market but also focus on a wider (potential) market because a niche market may not be able to sustain the product in the long run with on-going disruption. (market foresight and segmentation).

Of course, the commercialization process is fraught with difficulties, such as those that relate to marketing, adequate resources, knowledge of business environment, and the planning and management of commercialization process. The marketing challenges relate to a failure to obtain sufficient and relevant market information, a failure to use it properly, insufficient knowledge about the international market and the business growth, and an inability to establish both local and international sales and distributions.

There are also challenges in commercializing innovative, disruptive ideas for entrepreneurs such as:

  • Access to early-stage financial, business, and technology support;
  • Creating models for university–industry engagement that are best suited to particular needs and capabilities of entrepreneurs;
  • Marketing and licensing invention and intellectual property disclosures;

However, these challenges can be overcome through effective pre-planning activities, better utilization of resources, and knowledge of high technology commercialization.

Strong partnerships with the science councils, relevant incubators, education and research communities and financial institutions may provide a better environment for the high tech start-ups to thrive better. The Department of Small Business Development has created the Seda Technology Programme incubators and other innovation platforms to assist in successful commercialization of technology-based enterprises.

Policy frameworks and institutions play a particularly important role in entrepreneurship ecosystems. The department will continue to create a conducive and enabling environment where potential and existing entrepreneurs would prosper.

All enterprises need access to markets in order to become sustainable. It is even more appealing for aspirant entrepreneurs to learn about market opportunities as this enables them to dream about starting and running a business, unlike a situation where individuals are forced to start a business because they cannot find employment. DSBD is in discussions with other government departments as well as the private sector to establish procurement opportunities for small businesses and co-operatives.

Moreover, real entrepreneurs create market opportunities for themselves because they identify problems within a society and provide a solution. It is these types of entrepreneurs that DSBD would like to create and provide them with an enabled environment in the form of incentives or financial support.

I have come here to urge you, our young people, to know about the economic opportunities that this democratic government has availed to you. My department is determined to promote youth entrepreneurship, youth self-employment and youth  owned and managed enterprises, so that they can contribute in the mainstream economy of the country.

My department has a plethora of programmes that seeks to promote youth-owned businesses and co-operatives. Young people can apply for the Black Business Support Development Programme which supports the growth and sustainability of small businesses. Young people in co-operatives can also apply for the Co-operative Incentive Scheme which provides grants that respond to the needs of cooperatives.

We are doing all these things in order to provide support to youth-owned enterprises in order to increase their capacity to access economic opportunities, enhance competitiveness and improve skills. In terms of its envisaged impact on economy our interventions will assist to create much needed youth jobs as young people will not only create enterprises for themselves, but jobs for others as well.

As government, we see young entrepreneurs as national assets to be cultivated,motivated and remunerated to the greatest possible extent. Entrepreneurs can change the way we live and work.

I look forward to the outcome of today, wish the audience strong engagement, the pitchers and all entrepreneurs much success, and would like to thank the GEC partners who worked tirelessly alongside DSBD in an effort to ensure that South African entrepreneurs are ready to compete in the world stage, in particular the following:

I thank you.