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1 September 2005

Ms Sowazi the Executive Vice-President Marketing and Corporate Affair (Programme Director)
Madam Premier: Ms B Marshoff
Colleagues in the Executive Council
Colleagues in the Free State Legislature
CEOs of the IDC, FDC, Khula Enterprise and NEF
Distinguished Guests
Ladies and Gentlemen

The socio-economic challenges such as unemployment and poverty that poised the Free State Province will from time to time bring government, labour, government related organisation and business together to strategise ways of dealing with these challenges. Today’s event is one of many initiatives put in place to address these economic challenges.

As a result, Free State Government launched the Free State Provincial Growth and Development Strategy (FSPGDS) on 20 May 2005 as one of its initiatives to address these economic challenges faced by all of us.

This strategy aims to achieve the objectives of Vision 2014 as adopted by national government. It is also worth noting that we could have not achieved this milestone if it was not for active participation of the Free State economic role players such as: organised business, organised labour, organised youth and organised community structures.

Whose contribution created basis for common strategic vision and provides a blueprint in which we will realise a prospective Free State development. However, this strategy should be seen as the guiding policy in which the province will draw its plans and in dealing with issues relating to:

* Economic Growth, Development and Employment
* Social and Human Development
* Justice, Crime Prevention and Security
* Efficient Governance and Administration

Programme director, for the purpose of this conference I would like to confine myself only on Economic Growth, Development and Employment, a task which I am delegated to chair in the Provincial Government in the form of Economic, Employment and Investment Cluster.

Objectives of the Conference

Programme Director, the overarching objective of the FSGDS is to align the provincial policies, strategies and spending towards the achievement of growth and development. However, we cannot achieve this without putting in place clear key performance indicators that will an enable us to monitor and evaluate our political mandate as government.

The outcomes of today’s conference will be one of the referral points of the Executive Council when monitoring and evaluating progress made specifically by the EEI cluster for economic development and job creation.

In the same vain, this conference can be viewed as one of the interventions brought by our partnership to bring about rapid acceleration of funding to ensure investment, job creation, improve efficiency, productivity and social equity.

Programme Director

I think we need to constantly remind ourselves that there are two economies that persist in our country. The first is an advanced and sophisticated economy based on skilled labour which is becoming more globally competitive, while the second is mainly informal, marginalised and unskilled economy populated by the unemployed and those who are unemployable.

This conference could bear testimony that these two economies poses challenge to the Free State Province’s intergraded economy especial to the FDC and other financial institution because they are unable to introspectively evaluate their contribution in bridging the gap that exists between the first and second economy.

Mr Qhena the CEO of Industrial Development Corporation (IDC) your collaboration with Mr Makhubalo the CEO of the FDC, Mr Sithole the CEO of Khula Enterprise Finance and Ms Buthelezi the CEO of the National Empowerment Fund, we hope that your presentation today will assist these entrepreneurs and aspirant entrepreneurs to become active participants in the economic development of our province.

The main challenge is that your presentation should help these aspirant entrepreneurs to be skilled and be capacitated at all levels so as to address challenges facing the second economy.

Programme Director, we, however, all know that the first economy is dialectically linked to the second economy, therefore, there is a need to develop both the first and second economy.

Role of Financial Institution

In the country where the two economies exist and especially where the second economy is not supported there will generally be low contribution to the gross domestic production like in the case of our province.

Therefore in our Province it is critical that financing strategies and products need to be in place to ensure a clear economic support to these entrepreneurs.

As developmental institutions you need to diversify access to funding so as to accommodate all forms, sizes and types of businesses to stimulate economic growth and sustainable development.

Therefore acute consideration in this regard should be for small, medium and micro enterprise (SMME) development, joint ventures and other forms of entrepreneurial activities such as co-operatives and many more.

Programme Director I have no doubt in my mind that from this conference the goals of the PGDS will be achieved as they fall within the mandate and practices of the developmental institutions like IDC, whose mandate is to avail funding for previously marginalised community as stipulated in the Black Economic Empowerment (BEE) policy.

Through your cooperation and support the Free State Government will be able to rip the fruits of economic development, because of the catalyst role given to your institutions by South African Government, which is, to recover the economy through transfer of ownership, management and control to black people.

It is my considered view that today’s signing of the Memorandum of Understanding (MOU) between the DTEEA and the IDC will open channel of communication and access to funding that will fast track provincial growth and development.

We are raising this issue because we all know that access to capital has been a major constraint to SMME growth in the Province, and efforts to establish sustainable sources of financing have often been less than successful.

As we said earlier new and innovative financing methods and non-traditional sources of financing need to be developed and identified.

Programme Director, I hope this conference will give a particular financial attention to flagship programmes as identified by the Premier during the launch of the PGDS, which are:

* Harrismith Logistical Hub
* Infrastructure Development
* SMME Development

Harrismith Logistical Hub

This project is focused in enhancing the country’s performance on services and manufactured goods. It will further focus on enhancing agricultural activities in the communal land areas as well as other small-scale agriculture and will provide road and rail trans-shipment functions in the country.

Infrastructure Development

Lack of infrastructure in the Province has negative impact for both socio-economic and environment where our communities resides.

For instance lack of access roads and other services like electricity, water, waste collection and sewage service poses a challenge to the economic development and especially to small construction industry.

I am certain in my mind that with the huge support that entrepreneurs will enjoy from the IDC and other developmental agencies we will for the first time in the province have black people playing an active role in the Ready Mix Concrete Company through equity shareholding and other large companies where they could not participate due to their financial standing.

We call on all financing institutions to support emerging contractors engaged in infrastructure development through funding and utilising the Preferential Procurement Policy Framework Act (Act 5 of 2000) to ensure that black contractors and women in construction benefit form these government initiatives.

Improvement of roads in the province remains a thorny issue to government as it lead to decline in economic development. Economic viability around towns cannot take place as there are no linking roads in good conditions between towns.

Conditions like these discourage tourists to drive around our towns to explore experience and enjoy the tranquillity that the Free State has to offer. Government through the Economic, Employment and Investment Cluster (EEI) has already made plans to redress this situation.

We call upon black entrepreneurs either as individuals or through joint ventures to explore possibility of tapping into this business so that government could utilise their services when it roll-out its plans.

Participation of blacks and women in large business that generates huge turn-over it’s a government’s policy and needs to be implemented with urgency that it deserves.

This is the mandate of financial institution such as IDC and FDC to ensure that it translates this policies into reality for the benefit our society.

I am however convinced that this would not happen if clear funding mechanisms are not agreed upon between the Free State Government and the IDC.

Programme Director whilst still on this point I hope it is not late to make a suggestion that has financial implications with regards to the MOU to be signed this evening.

I suggest the MOU should enable the FDC to focus on funding SMMEs or entrepreneurs who require funding that is less that R 500 000.00 whilst the IDC concentrates on the ones requiring funding beyond R 500 000.00. However, this does not suggest that there should be exclusive funding for these categories.

SMME Development

Cognisant to the fact that we cannot continue to complain about the slow pace and the last year’s decline to 0.2% of tourism in the Province, the Free State Government has moved swiftly for the enactment of the Free State Tourism Authority which has been signed by the Premier on Monday 29 August 2005 to enable the Province to vigorously market the Province and optimise tourism.

These new developments comes with financial challenges for instance refurbishing of Koppies Dam by the end of the next financial year and the refurbishment of Phillip Sanders by end of December 2005 and also the development and maintenance of the Vredeford Dome , all this requires financial support of SMMEs development

Programme Director

In conclusion, I just hope and wish that your inputs today will address the challenges that the Premier will be raising so that the entrepreneurs gathered here today depart form this conference with renewed faith and confidence so as to gear themselves to come up with projects that will address challenges outlined by the FSGDS.

This conference should not be a talk-shop but a pivotal platform where all role players’ especially aspirant entrepreneurs and business people to gather courage for conceptualising concrete projects that will carry forth the challenges of the FSGDS.

Our goal in this conference should be geared at addressing the growing cycle of poverty and unemployment.

I thank you

Issued by: Department of Tourism, Environmental and Economic Affairs, Free State Provincial Government
1 September 2005