ADDRESS BY THE DEPUTY MINISTER IN THE PRESIDENCY, MR BUTI MANAMELA, TO THE 1ST EASTERN CAPE PROVINCIAL YOUTH ECONOMIC SUMMIT
ROYAL ST ANDREWS HOTEL, PORT ALFRED, EASTERN CAPE
20 JUNE 2017
MEC for Economic Development, Environmental Affairs and Tourism – Mr Sakhumzi Somyo
Executive Chairperson of the NYDA – Mr Sifiso Mtshweni
Executive Mayor of the Sarah Baartman District Municipality – Councillor Kunjuzwa Kekana
LED Portfolio Head of the Sarah Baartman District Municipality – Councillor Solwethu Lucas
Representative of the South African Youth Council – Mr Scelo Mleve
Representative of the Youth Chamber of Commerce and Industry – Ms Zinzi Rabe
Representative of the Provincial Youth in Business – Ms Buhle Tonise
It is a privilege for me to address this 1st Eastern Cape Provincial Youth Economic Summit today. We are gathered under the theme of “Mainstreaming youth initiatives for inclusive economic growth”. This conference appropriately takes place in Youth Month.
We recently commemorated the 41st anniversary of the June 16th Youth Uprising and celebrated Youth Day in Ventersdorp in the North West Province. I want to commend the Department of Economic Development, Environmental Affairs and Tourism, under the leadership of MEC Somyo, for arranging and hosting this Youth Economic Summit.
The Medium Term Strategic Framework (MTSF) defines radical economic transformation as “placing the economy on a qualitatively different path that ensures more rapid, sustainable growth, higher investment, increased employment, reduced inequality and the de-racialisation of the economy”. Where do we locate young people within this definition? This summit must unpack what sustainable economic growth means for young people. As young people you must imagine what impact an increased employment will have on you. This summit must unequivocally outline what a de-racialised economy means for black young people.
The context that young people find themselves in is a challenging one. South Africa recorded the highest unemployment rate of 27,7% since September 2003. The country’s youth unemployment rate stands at 38,6%. According to the Quarterly Labour Force Survey: Q1 of 2017, of the 433 000 people who join the ranks of the unemployed in this quarter, approximately 58% were young people aged 15-34.
The University of Cape Town estimates that between 2008 and 2012, 50.71 percent of youth dropped out of secondary education. They further note that out of the 100 young people who enter the secondary schooling system, 51 will drop out. In turn, 26 continue onto completing their matric and then enter the labour market. Finally, of the 100 secondary school starters 4 will enrol into the TVET system (without completing high school), whilst 20 of these starters will complete high school and move onto a tertiary institution.
The Quarterly Labour Force Survey reminds us that the unemployment rate of those with less than matric stood at 33,1% while the unemployment rate among graduates was 7,3%.
Education, skills development and entrepreneurship are key to economic development and transforming our economy and society. Poor education leads to youth choosing biblical studies and human resource management instead of science, technology, engineering and mathematics – the STEM areas. Our economic development is predicated on acquiring scarce skills needed to drive growth.
Young people have something to offer to our economy. It may vary from one young person to another. It may be skills, technology, innovation, passion, creativity, the appetite to use technology or the ability to think outside the box. Whatever it is, our starting point must be that young people have something to offer to our economy. If they are included they will contribute to economic growth.
Young people have told us that they do not want a hand out but rather a hand up. As we look at mainstreaming youth in the economy, we must not lose sight of young people needing a hand up so that they can offer something positive to our economy. The National Youth Policy 2020 places employment creation at the centre of all youth development interventions.
Government is investing significant resources in education and training. Higher education enrolment numbers have been maintained at over 900 000 over the last 3 years. The number of university students graduating from higher education has increased by 6% since 2013. The number of young people registering at TVET colleges has increased by 6% since 2013, reaching a total of 710 535. Education remains a key driver for youth inclusion in the mainstream economy.
Work experience remains a revolving door syndrome for many young people. You cannot get work because of little or no experience.
And you cannot gain the experience unless someone gives you a job. It is for this reason that government has prioritized youth internships as an outcome of the Youth Employment Accord. Government, at national and provincial levels, have taken on over 44,000 youth in youth internships since the Youth Employment Accord. This figure will rise in subsequent years. The Harambee Youth Employment Accelerator programme, funded by government, has already placed over 30,000 youth in private sector jobs with ambitious targets for the next 3 years.
The Deputy President is leading the engagements with the private sector to take on an additional 1 million youth in internships over the next three years. Youth internships are important as they give young people a necessary foothold in the labour market.
Public employment programmes such as the Community Works Programme and the Expanded Public Works Programme provide an important safety net for vulnerable youth.
While these programmes are short term, they do provide valuable work experience and often simulate job market conditions. The EPWP has created 1,1 million work opportunities for youth between 2014 and 2016. Participation in these programmes can build assets and resilience for vulnerable youth and can lay the foundation for a longer term sustainable participation in the mainstream economy.
Youth entrepreneurship remains a viable option for youth participation in the economy. However, the levels of entrepreneurship uptake among South African youth are still far too low when you compare ourselves to our BRICS counterparts and other middle income developing countries. Young people have to be creators of jobs and not only seeking jobs. How do we stimulate entrepreneurship as one of the solutions to tackling youth unemployment and mainstreaming youth in the economy?
It is for this reason that the NYDA introduced the Grant Programme with the aim of stimulating entrepreneurship by getting young people to take a bite at it.
Before I speak further about this grant, let me mention that the NYDA will soon be opening a new branch in Mthatha, in addition to the Port Elizabeth and East London branches. The Chairperson of the Board and I will be visiting the NYDA branches to ensure that they are working efficiently and effectively meeting the needs of young people.
The NYDA grant ranges from R1,000 to R100,000. Young entrepreneurs do not have to pay it back. If they don’t succeed, and of course we want them to succeed, they will not have massive debt or a negative credit record. So the programme helps to mitigate risk on behalf of the young person. They can use the grant to establish their business, develop a track record and use this track record to access further business funding to grow their businesses. The grant is coupled with other business development support services.
The Industrial Development Corporation will spend R4.5 billion to support young entrepreneurs over the next 5 years.
In the last financial year, a further R18 million was spent on youth cooperatives through the Cooperative Incentive Scheme by the Department of Small Business Development. This is in addition to what we are already investing through other government agencies, both at a national and provincial level.
Government has revised the Preferential Procurement Regulations, commonly known as set asides. The purpose of the set asides is aimed at increasing access to government procurement by requiring that 30% be subcontracted to support small business, young people, women and people with disability.
Government has responded positively to the loud call by young, especially black entrepreneurs, to increase their access to government procurement. Provincial government must be serious about implementing these set asides if we want preferential procurement to be successful.
It is now up to youth owned enterprises to ensure that they take advantage of these opportunities by demonstrating their value proposition and ensuring that government gets value for money.
Governments revised Mining Charter represents a progressive step towards transformation of that particular sector. Not only does the charter address the question of increased ownership, the charter also increases the requirement on companies to procure goods and services from black companies. Mining companies must now get 70% of goods, up from 40%, and 80% of services, up from 70%, from BEE companies. In addition, two percent of the turnover will be levied to establish the Mining Transformation Development Agency. Other sectors must look at this revised Charter and distil appropriate lessons for the transformation of their respective sector.
While government has made significant investments in youth education, skills and entrepreneurship, it still remains a struggle for mainstreaming youth in the economy.
Young people and youth organisations have to be at the forefront of this struggle. You have to advocate and lobby government, the private sector and civil society to create more opportunities for youth development. If you do not do this, youth development can easily fall of the agenda as other priorities emerge. Your voice is critical and must be heard.
We have always argued that youth development and youth economic participation must be mainstreamed. That young people cannot operate in some corner on the periphery of the economy. No, they must be part and parcel of the mainstream economy, contributing to it, growing it, paying their taxes, employing others and demonstrating their good citizenship.
I wish this Summit well. I look forward to reading your three year programme of action that will emanate from this Summit. I trust that this Summit will be successful in all its deliberations and share its lessons with other provinces. Young people can and must contribute to an inclusive and growing economy.
I thank you.