Programme Director, EDTEA HOD, Mr Nhlakanipho Nkontwana;
Members of the Provincial Executive Council Present;
Mayor of Msunduzi Municipality, Cllr Mzimkhulu Thebolla;
Mayor of the uMgungundlovu District Municipality, Cllr Thobekile Maphumulo;
Chairperson of the Provincial House of Traditional Leaders; Inkosi Chiliza;
Director-General of KwaZulu-Natal, Dr N Mkhize;
CEOs of Public Entities;
Recipients of Operation Vula Fund;
Esteemed Members of the Media;
Distinguished Ladies and Gentlemen;
We have converged here in an extraordinary occasion as we commence with the massive rollout of the disbursements of business instruments and equipment through the Operation Vula Fund.
The Operation Vula Fund rollout takes place during an important month. We are in Youth Month as well as on the eve of the eve of the 66th anniversary of the Freedom Charter which was adopted on 26 June 1955 in Kliptown by the multiracial Congress Alliance. In the Freedom Charter, about 3000 Freedom Delegates declared that South Africa belongs to all who live in it, black and white. They also boldly stated that in a future, democratic South Africa, the people of South Africa shall share in the country’s wealth.
Since 1994, the ANC-led government has been working hard with all sections of society to deepen the National Democratic Revolution in favour of blacks in general and Africans in particular. Side by side with the people, we have been implementing programmes and policies to achieve the ideal of a South Africa which is united, non-racial, equal, democratic and prosperous.
Despite many achievements of our democratic state which include expanding access to education, water, electricity, health, housing, social security through social grants, many of our people still live in poverty without jobs and economic empowerment opportunities. As we commemorate the 45th anniversary of June 16, we know that we are faced with high levels of unemployment which negatively and disproportionately affects the youth of our country and our province. Covid-19 and our subdued economic performance has made South African youth even more vulnerable to unemployment.
The COVID-19 containment measures including the hard lockdown triggered economic hardship in South Africa and globally. The hospitality and tourism sector was hard hit in KwaZulu-Natal and the sector is far from full recovery. SMMEs in various sectors were hard hit, resulting in business closures and retrenchments. Stats SA reports for instance that in 2020, about 83 000 young people in KwaZulu-Natal joined the unemployed.
Stats SA Labour Survery for quarter one in 2021 revealed that the official unemployment rate was 32,6%. This rate was 46,3% among young people aged 15 – 34 years. The youth aged 15–24 years are more vulnerable, with an unemployment rate of over 63%. Stats SA reveals that 59,5% of the total number of unemployed persons in South Africa are young people. The research also indicates that unemployment rate among the youth is high regardless of education level.
South Africa’s relative success in managing Covid-19 and averting a national catastrophe has been ably led from the front by our developmental state, and this proves that a capable developmental state can do more to drive a pro-poor, developmental agenda in order to create a better life for all and bring the historically excluded in the mainstream of the economy.
South Africa has chosen the model of a developmental state to ensure that the state plays an active role in tackling the root causes of race-based and gender-based poverty, unemployment, and inequality.
For us in KwaZulu-Natal, Radical Economic Transformation is not something theoretical or a buzz word. It entails a robust shift to an economy that will benefit all including the marginalised groups of the society such as youth, women, people with disabilities and the poor. We reject market fundamentalism and an orthodox view that argues that economic benefits will eventually trickle down to the poor if we grow the economy substantially. We firmly believe that government should, in addition to enabling the efficient operation of the markets, be the catalyst for transformation through strategic interventions in the economy. As a developmental state, we should not be apologetic to intervene in the economy in a responsible manner for the benefit of all including the marginalized.
In this regards, Operation Vula is the KwaZulu-Natal’s overarching programme to fundamentally transform the patterns of economic ownership by bringing in the previously marginalised groups in the mainstream economy. It is a fund to realise the policy imperatives of the ANC-led government which is Radical Economic Transformation.
We view Operation Vula to be the provincial practical vehicle to mobilise all sectors of the economy towards achieving meaningful economic transformation in KZN, to remove apartheid inspired socio-economic disparities where black communities were deliberately excluded from active participation in the country's economy. Operation Vula uses government procurement to encourage black entrepreneurs to seize business opportunities available in various sectors of the economy.
Ladies and Gentlemen, you will recall that when Operation Vula was conceptualised, six commodities for meaningful black participation were identified to start with. These are bakery, clothing and textile, furniture, paper & pulp (detergents), fertilizers (seeds and animal feed) and construction.
The Operation Vula Fund is the backbone of the KwaZulu-Natal’s Economic Recovery Plan. We have established various work streams to ensure that we have a targeted approach to the various economic sectors with a potential for growth and job creation. These include Agriculture, Industrial Development, Health Innovation and manufacturing, Clothing and Textiles, Creative Industries, Informal sector, Investment and Trade, Infrastructure Development, Tourism, Fourth Industrial Revolution (4IR), ICT and Innovation and Finance.
To save life and livelihoods, KZN and our country will continue to work with all stakeholders, including the private sector, to secure adequate vaccines and vaccinate enough people to achieve population immunity. We continue to encourage our people to adhere to non-pharmaceutical safety protocols as we accelerate our vaccination drive.
We are intensifying efforts to implement the economic reconstruction and recovery plan and to advance radical economic transformation. For more jobs to be created, we support government’s infrastructure-led development and the promotion of international trade while taking advantage of the export opportunities provided by the African Continental Free Tarde Area (AfCTA) which came into effect at beginning of this year.
The disbursement of these SMME support grants from the Operation Vula Fund is set to give impetus to our economic recovery and transformation efforts as the province of KwaZulu-Natal. Thus over the next couple of weeks, members of the KwaZulu-Natal Executive Council will be in all the 11 districts to hand over business instruments to successful applicants who had applied to the Fund.
In this unprecedented rollout drive, we will disburse equipment with a combined value of R300 million to more than 1000 SMMEs who have been selected as successful applicants.
Before I proceed any further, I must concede that the disbursements of the Operation Vula Fund grants have taken longer than expected. We understand the frustration that it has brought to hundreds of applicants who, for many months, were in the dark about the statuses of their applications.
The delays were mainly as a result of the due diligence process which had to be undertaken. The due diligence process was a painstaking one as we sought to ensure that the Operation Vula Fund support went to deserving beneficiaries.
The appointment of the Independent Due Diligence firms was regrettably delayed by an appeal that was lodged by an unsuccessful bidder. The judgement on the appeal was issued in June 2020 during the COVID-19 national lockdown. This resulted in a significant delay on the due diligence work for Tiers 2 and 3.
In processing the applications, we had to look at whether each business met a number of strict criteria which included a test on whether the business is sustainable, profitable and has the capacity to create jobs.
We also examined to what extent would these businesses empower the historically disadvantaged groups, namely Blacks, youth, women and the disabled. We also looked at whether the initiatives by the applicants helped to promote innovation and if they are aligned to our economic development strategies.
Each and every one of the 4229 applications received were subjected to this process. We did all this because we wanted to ensure that the process is above board, but most importantly, to also ensure that the beneficiaries are those who will be able to create jobs.
As a result of that process, to date we have approved a total 1021 applications with a value of R299 157 million. Of these successful applications, 923 were in Tier One which disbursed equipment and instruments not exceeding R200 000 .There were 11 successful applications in Tier Two where equipment disbursed ranges between R200 000 and R500 000. Finally, there were 87 successful applicants in Tier 3 which disbursed instruments whose value ranges from R500 000 up to R2 million.
An analysis of these disbursements reveals that 42% of the successful applicants are businesses owned by young people under the age or 35. Furthermore it reveals that 49.5% of the successful applications are women. This augurs well for our transformation agenda and our endeavours to empower young people and women as outlined in the State of the Province Address in February 2021 under the theme of “Quickening the Tempo to Economic Recovery and Job Creation.”
In this regard, and most importantly, it is projected that these disbursements will assist in our job creation drive as we project that no less than 10 816 jobs will be created out of the funded Operation Vula Fund activities.
These jobs are distributed as follows:
- 9 083 jobs will be created in Tier One
- 175 will be created in Tier Two and
- 1 558 jobs will be created in Tier Three.
Ladies and Gentlemen, when we created this fund we had an objective of changing the architecture of our economy. We believe these disbursements give a practical expression to our commitment to transform our economy so as to include the previously marginalized.
Earlier today we visited two Operation Vula beneficiaries. One of the companies is the Duzi Timber Board and Carpentry, an SMME involved in carpentry and furniture manufacturing.
We saw how with the help of the Vula Fund equipment, the company has improved its production and is able to sustain no less than 10 jobs.
We also did a site inspection at Gijima Printers and saw for ourselves the impressive work and potential for this business. As a government that has already invested in these businesses, we need to lead by example by placing orders from such companies or making use of their services.
We are not supporting them simply because they are black owned companies and contributing to job creation – but we are also supporting them because we have been appraised that they deliver quality, on time, and offer good value for money while creating much needed jobs for South Africans.
We wish to encourage the people of Mbali, Pietermaritzburg, and KwaZulu-Natal to embrace and support such local brands – let us all get in the habit of buying local and promoting local SMMEs to support job creation in our own province and country. We also challenge big business and the private sector to act in a patriotic manner and support the SMMEs that are emerging in KwaZulu-Natal. Big business has a role to play in transforming and deracialising the economy by taking orders and creating business opportunities for black owned companies.
Programme Director, we wish to emphasise that we are not going to make these disbursements and then disappear. Instead, we have put in place proper support and monitoring and evaluation mechanisms to ensure that these businesses succeed, thrive, and become sustainable.
As part of the post-disbursement support, we will conduct regular audits to ensure equipment is properly maintained and insured. Beneficiaries will also be required to submit monthly reports on progress made in areas such as job creation. Officials will pay regular visits to entities for monitoring and evaluation purposes.
A skills and capacity gaps audit will also be conducted regularly and where these are identified, entities with common needs will be identified and grouped together for the purposes of providing them with training with appropriate institutions such as TVET Colleges.
Training will also be offered in the preparation of financial statements while ongoing support will be provided to ensure ease of access to markets and compliance with sector regulations among other things.
In conclusion, please be assured that the KZN Provincial government remains committed to radical economic transformation. We have a plan to save lives and livelihoods. We also have a plan to revitalise the economy, grow it, and ensure that all our people benefit from it. The Operation Vula Fund and this intervention of radical economic transformation requires that we must overhaul any system and program that perpetuates inequalities, unemployment and poverty.
We want an economy that will benefit all its citizens irrespective of their class, race, gender and spatial location. We are unequivocal that transformation should be characterized by meaningful participation of everyone in the economy. We are clear that those who were historically disadvantaged should be at the epicentre of development. If we succeed, and we have to succeed, we will make the Freedom Charter proclamation that South Africa belongs to all who live in it a reality.
Ladies and Gentlemen, please note that once all the disbursements have been made, a second window under the same fund shall be opened.
We invite those who were unsuccessful to try again when that window opens. In the same vein, we request applicants to bear with the process.
To all our successful entrepreneurs, please remember that we trust you and have faith in all of you. We are truly invested in your success and we want to see you all running profitable enterprises that are creating employment and hope for the people of KwaZulu-Natal. We know that you will make this investment multiply and create opportunities for others. Indeed, we must grow together.
Asisukume sivule umnotho siwubuyisele ebantwini!
Kuyashesha nge Operation Vula Kuyashesha!
Economic Freedom In Our Lifetime!
Let us grow KwaZulu-Natal together!
I thank you.