Keynote Address by the Minister of Foreign Affairs, Dr Nkosazana Dlamini Zuma at the Nafcoc Annual Conference, Durban 4 October 2007

Programme Director
President of NAFCOC, Ms Buhle Mthethwa
Representatives of NAFCOC Structures
Ladies and Gentlemen

All protocols observed:

Thank you for the invitation to join you this evening. I would like to congratulate Buhle Mthethwa, for everything she is doing to ensure that this important business organization advances the goal of its members and our country as a whole. I would also like to congratulate NAFCOC’s members for selecting a woman of Buhle Mthethwa’s calibre as their president.

NAFCOC and its enterprises have the power to change the lives of millions of our people for the better – creating jobs, generating wealth, providing needed goods and services, acquiring new technologies, developing new skills. This is a very pivotal role that can contribute greatly to our sustained economic development.

As a result of apartheid we have inherited a vastly unequal society, an economy that over centuries was cultivated to bring wealth only to a few and to impoverish the black majority of people.

The effects of this deliberate impoverishment have been immense and far-reaching - apartheid structured the state and its apparatuses, limited the creativity and entrepreneurship of black peasants, shopkeepers, technical experts, would-be industrialists, structured our very lives and sought to control our minds.

The very structures that were in place even within the economy sought to undermine the contribution of black people and inculcate a sense of inferiority. It is only through the resilience of the human spirit that organizations like NAFCOC survived.

This has led to the present reality we are trying to change. Today we do not have a robust SMME sector because the past stifled the present. I am reminded of the words of the Nicaraguan revolutionary and writer, Gioconda Belli in her book “The Country under my Skin”.

She writes:

“The future is a construct that is shaped in the present, and that is why to be responsible in the present is the only way of taking serious responsibility for the future. What is important is not the fulfilment of all one’s dreams, but the stubborn determination to continue dreaming. We will have grandchildren, and they will have children too. The world will continue, and whether we know it or not, we are deciding its course every day.”

Indeed what we are doing today is constructing and shaping the future. Let us use this opportunity every day to unleash the Power of Enterprises through Cooperatives and Entrepreneurship, thus ensuring a future with vibrant SMMEs and co-operatives.

Internationally SMMEs and co-operatives have been recognized worldwide as very important contributors to job creation. In fact they are indispensable sources of employment according to the International Labour Organisation (ILO).

According to ILO research “an increase in the number [of SMMEs and co-operatives] can provide decent employment to the many people around the world now toiling under poor working conditions and trapped in poverty.” Co-operatives “have the potential to advance the concept of decent work” because they:

• “Promote fundamental principles and rights at work by encouraging freedom of association and work-place democracy.
• Create greater opportunities for women and men to secure decent employment and income by enabling their members to combine resources, skills and talents.
• Enhance the coverage and effectiveness of social protection by providing the socially excluded with basic social services.”

The United Nations (UN) has also recognized the importance of co-operatives. According to Kofi Annan, then UN Secretary General (in 2001),

“The United Nations recognizes the contributions cooperatives can make to achieving the Millennium (Development) Goals of full and productive employment, eradicating poverty, enhancing social integration and promoting the advancement of women. For the cooperative movement to fulfil this potential, Governments need to develop and sustain a supportive environment that allows autonomous cooperatives to grow….By extending ownership, cooperatives give their members the opportunity not only to become stakeholders in an economic enterprise, but actively to participate in its future. The values of co-operation – equity, solidarity, self-help and mutual responsibility – are cornerstones of our shared endeavour to build a fairer world.”

We need to recognize that SMMEs and co-operatives are burgeoning in the world today – the modern economy has offered many opportunities for them to blossom and in a range of sectors, productive, marketing, tourism, services, agriculture and housing to name a few. The European Union estimates that there are more that 88000 co-operatives operating in the region. They are found everywhere – eg. in USA, Russia, Nicaragua, China, Scandinavia and many more.

Of course the growing strength in numbers means that we need to recognize that here in South Africa and on the African continent as a whole there is still a lot of scope to nurture and incubate new enterprises. Furthermore the progress of humankind depends on innovation, creativity, and solidarity.

We need to recognize that we shall only succeed in these endeavours if the government makes sure that we have universal education, if we focus our efforts on skills development as indeed we are, if we build confidence in our people, if there is innovation and a creative approach and if there is access to capital. Of course the most important of these is education. In a world of new technologies, knowledge based industries, a globally competitive world, education and skills development are crucial.

Assisting business to unleash that power is an essential task of government, which should be kept in mind by all departments, including – now more than ever – those which also focus on international issues.

In this modern, highly interconnected world, the line between foreign and domestic policy is increasingly blurred. Decisions made beyond our borders can and do have as great an impact on all our lives as decisions made at home, for both good and ill. This has always been true to some extent, but never before to the extent that it is true today.

The stage that NAFCOC and its members play on is now a global one. The small and medium enterprises you organization represents are not exempt from the rigour, rules and possibilities of the global economy. Empowerment companies, if they are to be truly empowering, need to be able to stand the heat in the global kitchen and to avail themselves of the bounty the global kitchen has to offer.

Our job in government is to create and strengthen conditions under which you can do what you do best, and in so doing, advance the common cause of a prosperous and successful country, free of want and fear.

I will not go into detail about what government is doing, since government agencies have already spoken to you at this conference.

What we need is a truly South African culture of enterprises. We are born of a generation who have fought a liberation struggle and won - what this generation does, what commitments it makes is what will count for the future. Previous generations have shown their heroism in the line of fire. We need to show the heroism of our generation.

Belli in the same book “Country of my Skin” says the following:

“Life has shown me that not every commitment requires payment in blood, or the heroism of doing it in the line of fire. There is a heroism inherent to peace and stability, an accessible, everyday heroism that may not challenge us with the threat of death, but which challenges us to squeeze every last possibility out of life, and to live not one but several lives all at the same time. To accept oneself as a multiple being in time and space is part of modern life, and one of the possibilities enjoyed by those of us who live in an era in which technology can be embraced as a liberating rather than alienating force.”

All of us should show our heroism in “Unleashing the Power of Enterprises through Cooperatives and Entrepreneurship” and working systematically to produce a robust SMME and co-operative sector. We need to show our heroism in innovation, creativity and new ways of thinking.

• Creativity and innovation ought to be coupled with community responsibility. We are only as rich as the poor among us. As business, you will only have consumers and purchasers of your services and goods as long as people can afford these and as long as they too develop in complexity as society itself becomes more sophisticated.

• A woman in a rural community will only have the luxury of making a choice between products competing for attention on the shelves if she herself has free time to think and make a conscious choice - as a result of the freedom that comes from modernization of infrastructure, the provision of water and electrification as well as health and education. So business must also be a partner with government in development.

• As South African business you must also seek to create a market niche for yourself. This requires a learned understanding of our identity, our strengths, our national character and what skills, knowledge and resources we can best harness and pool to compete effectively in the wider world.

Of course, all this requires that you seek and have the necessary information in order to enter this international arena of possibilities based on your own self-determination and self-knowledge.
Business should be aware of the many and complex roles it has to fulfil and what it needs to do in order to fulfil them. To organize not only yourself, but also society in general and services, to create more favourable conditions for your own success in the context of a rapidly modernizing and globalizing economy is an immense responsibility but it is the only way to nurture sustainability – to strive for permanence even as we live in an ever-changing world!
This is where all organizations that bring business together can offer the most benefit, because together you are not only a network but a pool of resources, intellect, practical and technical expertise, from which each can benefit. NAFCOC ought to continue to play an active role in fostering a culture of searching for new and better ways of doing business; in pooling and collectively sharing ideas and labour on service provision for instance, and in promoting progressive and patriotic business values that seek to define and identify what we can do best as South Africans in the world of business.
Operating on the foundations that the developmental state has created and based on this knowledge capacity and infrastructure capabilities, SMMEs have it within their grasp to produce something wholly different and new - having learnt from the past - to create something autonomous and independent and in this way forging a new road ahead that can thus benefit society as a whole. You are already doing this. We welcome the thinking on the co-operative bank.
Government has created an environment conducive for private investments from which the investors can make returns, and through which employment and technological progress can be derived. Some of the benefits accrued return through direct investments into areas which will help national development, to play a central role in providing public goods and to ensure social responsibility.

Our job in government is to create and strengthen conditions under which you can do what you do best, and in so doing, advance the common cause of a prosperous and successful country, free of want and fear.

NAFCOC has within it the possibilities to forge the new road also in the international arena and in so doing help to achieve the strategic imperatives of the country.

I would like to make mention of some of the opportunities that do exist that representatives of NAFCOC, SMMEs, can take up in the international arena.

The Department of Foreign Affairs can give information and assist where it can – I can give you some of these opportunities to be put up on your website.

Business opportunities in the international arena

Africa

South Africa is now the biggest investor in Africa. Africa is a laboratory of possibilities. In 2050 Africa will have the fastest growing population. The majority of the world’s mineral resources are to be found on our continent, but unfortunately we sell these as raw materials. The NEPAD project encourages us to add value.

In West Africa they have good soil. They have fruit but not agro-processing which they need.

In the field of trade and investment, a number of sectors exist throughout the continent that need to be further explored as business opportunities:

They are: construction, small scale mining and beneficiation. Some of the solid minerals are uranium, bauxite, gold etc as well as oil and gas. Opportunities also exist in agriculture and agro-processing (with the need to enhance existing infrastructure), Textiles, hospitality and tourism offer possibilities as well as handicraft and interior decoration. Marine resources are also an important area as well as the very important provision of infrastructure such as telecommunications, road networks, apartments etc.

Within North Africa in particular, there are niche market opportunities in ICT, paper and pulp in Tunisia as well as public works programmes in Libya and Algeria. Within the SADC region the service sector is blooming and there are also opportunities in fishing, food industry technologies and agriculture. West and Central Africa with their large markets provide enormous opportunities for South African SMMEs – these are in small-scale mining, construction, oil and gas services and agriculture among others.

Asia

We are also looking east. There is a new Asia-Africa strategic partnership. This is also meant for business to forge links. You must take advantage of these opportunities.

Japan

South Africa has strengthened its relations with the East. We have seen an opening of business opportunities with Japan. The government of Japan is assisting the province of KZN in SMME development, having deployed an SMME expert in the province and implementing an SMME Promotion Project. Japan has been assisting developing countries through its One Village, One Product Project and South Africa has been invited to attend a training course of this project in the 1st quarter of 2008.

China

Bilateral trade between South Africa and China is rapidly growing and there is a huge potential for further growth due to the strong complementarities between our two economies. Sustainable trade growth will be beneficial, not only in developing our economy, but also in improving the living standards of people in South Africa. Whilst there is a trade deficit in favour of the PRC, President Hu Jintao has committed the PRC to working together with South Africa to create a win-win economic situation and improving the structure of bilateral trade by promoting South Africa’s exports to China in terms of higher value added products.

We have in place the necessary legal framework in terms of Agreements on Promotion Bilateral Trade and Economic Cooperation to help promote trade and economic interaction as well as Phyto-Sanitary Protocols for the export of citrus fruit, table grapes, tobacco leaf, pork and poultry as well as a Joint Agricultural Cooperation Working Group to assist with agriculturally related trade.

The second leg of the project will afford the opportunity to showcase our products in a series of commodity and trade fairs which will form part of the year-long series of events in 2008 celebrating the 10th anniversary of the establishment of diplomatic relations with the PRC.

The 3rd and final leg of the project aimed at marketing Brand SA in China will see South Africa participate in the 2010 Shanghai Expo which will afford companies and South African businesses the opportunity to showcase their products and establish links with Chinese business over a period of six months.

There are numerous opportunities for trading and doing business with China. The following South African products will get preferential access to the Chinese market: oranges, mandarins, clementines and other citrus, jams, fruit jellies, marmalade, fruit purees, cooked fruit, temporarily preserved fruit, fruit and vegetable juices including unfermented grape juice, fresh and dried grapes, vegetables, Also alkaloids, natural or reproduced by synthesis, paper and paperboard, impregnate, coat, surfaced –coloured, paper and paperboard in notes or sheets. As well as material of animal origin, excluding bones, horns, hooves, claws, coral, shell.

Vietnam

After the war in Vietnam they had to import rice. Now they are second biggest exporter of rice in the world. They want to work with us.

Vietnam’s exports to South Africa are mainly footwear and vegetable products, mineral products, textiles, machinery etc. Our exports include base metals, wood and articles of wood, as well as machinery and mechanical appliances, prepared foodstuffs, products of chemical and allied industries, animals and animal products etc.

There is good potential for export of mining equipment and mineral products, automotives, medical equipment, agricultural products, machinery and general trading commodities and services. South African companies can also benefit from bidding on construction projects, the building of roads, telecommunications, electricity and water management.

During our recent visit, we agreed that co-operation in fishery, transportation, post and telecommunications, tourism, cultural exchange, arts, banking, sports, environment, meteorology, disaster management and rural education should be improved and there should be co-operation on capacity building and forest management as well as timber processing and the making of furniture.

India

India is also becoming a valuable partner for South African enterprises. The JMC has been an important framework for bilateral engagement. Export opportunities for South Africa include mining technology, specialised equipment in security and the medical sector, fresh produce, beverages, processed food as well as prepayment metering and revenue management technology and automotive parts. An important area of growth is also tourism, with India providing the largest tourist grouping from Asia.

IBSA opportunities

In about two weeks time the 2nd Summit of the India Brazil South Africa Dialogue Forum (IBSA) is taking place. Meetings will take place from 15-16 October 2007 for business, academia, parliamentarians, women representatives and cultural performers. I hope that NAFCOC is part of this engagement.

The 2nd Summit, as well as the variety of trilateral initiatives that are actively being pursued in over 14 identified cooperation areas under the umbrella of IBSA, offers unique opportunities and an ideal South-South cooperation framework within which South African business could get involved to widen its commercial horizons.

India, Brazil and South Africa trilateral, share a coincidence of interests in so far as we have common hopes, aspirations and challenges. Through IBSA we have created a platform from which we can attend to these many and varied challenges. The role of business is very critical.

The IBSA initiative last year had its first Business Summit. IBSA also offers greater business opportunities from maritime and aviation perspectives; it creates opportunities for better movement of goods and people between three great continents and thus ensure increased business prospects. This includes the area of agriculture, especially with regard to research, trade and the role of agriculture in rural development.

Again, business is central to the on-going challenges of information and communication technology and the role of ICT in development in our countries and regions. There also ought to be closer cooperation between the IBSA countries in the areas of mining, beneficiation and energy. We are also exploring the prospect of a Trilateral Free Trade Agreement (TFTA) and this should bode well for business.

To give validity to the ambitions of IBSA, the Business communities in all three countries should continue to explore what it is that they can trade between and among each other. IBSA presents our business communities with an opportunity to build the types of networks and critical mass that is required to play a leading role in the global value chain and economy.

In addition, as you may be aware, negotiations are ongoing to study the modalities for the possible conclusion of a future Free Trade Agreement (FTA) between SACU, MERCOSUR and India. Should this succeed, this would increase potential positive business spin-offs for our region. As an emerging economic region in a global environment of high demands, Africa could be ideally placed within this context.

Opportunities in the north

Similarly we also need to look at AGOA to see what opportunities we can exploit through this act.

In recent months South Africa has also taken its relations with the EU to deeper and more strategic levels. SMMEs need to look into this relationship and see what opportunities exist.

Some business opportunities in Latin America

Over the years we have expanded our missions in Latin America, giving us the ability to build strategic partnerships to diversify our trade, to attract foreign direct investment (FDI) and to facilitate investment opportunities for South African business. These interventions have and will continue to have positive economic spin-offs for South African business. Particular opportunities exist worth mentioning:

Trade between South Africa and Venezuela has thus far not yet been fully explored. South African exporters have shown an interest in the Venezuelan market which includes prefabricated housing and pre-paid electricity meters. With regard to the latter, 300 South African meters have been installed in a Caracas low cost housing; more opportunities now exist for further expansion in this regard.

South Africa has traditionally registered a constant flow of economic activity with Colombia, with South Africa maintaining a favourable positive balance. Mining offers opportunities for partnerships and while big companies are taking advantage of these opportunities, there is still room for smaller players to come on board.

Bilateral trade between Peru and South Africa presents many opportunities for diversification and value-added trade and such a move will be in line with both countries industrial policy to diversify their industrial policy.

As you have noted, there are significant opportunities in South America. Business remains an important vehicle to strengthen our relations, and we have great expectations as to the success that we will achieve.

Economic Opportunities in the African Diaspora

Next year South Africa will be hosting the Africa-African Diaspora Summit. This is an important engagement. Business must be part of the meetings that lead up to this event.

As you may be aware, South Africa at the request of the African Union has also done a lot of work in strengthening the relationship between African and its Diaspora. There are also bilateral benefits that South Africa can accrue from the African Diaspora relationship. These include strengthened historical and cultural ties; expanded trade opportunities; increased tourism; skills exchanges and increased multilateral co-operation.

Some of the recommendations from the Regional Consultative Conferences on the Diaspora specifically address the issue of SMMEs and business/investment cooperation between Africa and its Diaspora.

Specifically, for NAFCOC, relationships between chambers of commerce and portals of communication must be established to include what Africans in the Diaspora can offer, in addition to investment opportunities on the African continent.

A number of African and Diaspora regions lack the capacity and economic structures to take advantage of the opportunities provided by globalization. The Diaspora represents a significant market opportunity for African e-commerce entrepreneurs. Therefore, opportunities exist in the business-to-business, business-to-consumer, and consumer-to-business domains.

African communities in the Diaspora already represent a significant source of capital for Africa via remittances and other forms of transfer. Rural tele-centres represent one significant way that ICT access can reach the grassroots.

Conclusion

A recent report of the International Finance Corporation (IFC), an agency of the World Bank, called ‘Doing Business’ says that “doing business has become easier in some parts of Africa.”

The report attributes the ease of doing business in Africa to higher percentages of women among entrepreneurs and employees.

South Africa as 35th out of 178 countries is considered one of the easiest places in which to do business. This indeed bodes well for the future.

Together as government and business we can demonstrate the heroism of our generation by showing our commitment to Unleashing the Power of Enterprises through Cooperatives and Entrepreneurship”.

Let each day present a new opportunity to strengthen your businesses and initiate new enterprises.

I wish you well in your work and a good evening.

I thank you.