JOHANNESBURG – Small business is among the few sectors that had some good news from Finance Minister Malusi Gigaba in his Mid-Term Budget Policy Statement speech last Wednesday.
He announced that with ministers Lindiwe Zulu and Naledi Pandor at the fore, the government would be setting up a fund for small business enterprise development that focuses specifically on start-ups and technology. Zulu is the Minister in the Department of Small Business Development (DSBD) and Pandor heads up Science and Technology.
The new fund joins the one set up by the CEOs’ Initiative, a worthy endeavour to support small business by some of the country’s big businesses. The two funds are welcome, particularly as there are also two other major activities that happen in the next month.
Firstly, the DSBD and Department of Co-operative Governance and Traditional Affairs (Cogta) host a conference on local economic development (LED) on November 9 and 10.
Two weeks later the DSBD partners with the Services Seta to host another on business advising. The Services Seta is emerging as a key player in this space and is even setting up a national entrepreneurship institute. Obviously, it will be making its own announcement but, to reinforce the idea, South Africa will be the better with such an institute.
The two conferences are important as they focus on an issue that was identified as problematic some 15 years ago when the European Union (EU) released research that showed why LED is not gaining traction. Worryingly, research completed this year by the National Planning Commission confirms that of the EU.
Lamentably, in the 15 years between these two reports very little has been done to correct the situation and LED in many of our municipalities is still in a pitiable state. We are not talking absolutes and there are municipalities that are making waves but, and in general, they are few and far between.
Yet, LED should be a national religion as it is a major necessity for transformation. Thus, and this is the crunch, while Gigaba’s announcement is welcome and the two conferences coming our way equally appropriate, three elephants in the room need attention.
Our highly concentrated economy, big business mentality; and the levels of expertise and commitment, in fact lack of these, in parts of the civil service responsible for small business development in the lower levels of government have the potential to reduce Gigaba’s fund and the coming two conferences into hot air. In my last column “We must win the war on poverty” I argued that the concentration crowds out new players into our economy.
Fortuitously, Gigaba endorsed this and lamented this concentration which, he rightly says, has a negative effect on economic growth. The private sector, National Treasury, the Competition Commission and the DSBD must address this, and urgently too. There is no point in setting up funds and having well-timed conferences when the environment militates against small business development.
The reference to the civil service specifically speaks to the research by the EU which, in a few words, said many officials responsible for small business development in municipalities know zilch about it. The research also decried the corruption in these municipalities and, to crown it all, it pointed out that the Integrated Development Plans, which must drive LED in these areas, were nothing else but cut and paste exercises in many instances.
Some are hardly based on the realities of the local economy. We also have situations in which consultants are appointed to provide services but come with fancy programmes which hardly speak to the ground.
A fundamental truth that we South Africans must assimilate into our sub- conscious is that entrepreneurship is a societal activity. It flows from the community upwards based on the knowledge systems, entrepreneurial cognitions and values abound. Thus, the stakeholders in the environment and what is called the ecosystem, must facilitate entrepreneurship and small business development.
To add another perspective to the argument above is that small business development continues to be an add-on and not the driver of economic development as is the case in other countries, developed and developing. The mindset on small business in South Africa’s elite, black and white, seems to be: “Ai, let us do something about those people”.
This attitude will not assist in absorbing at least 5million of our employable compatriots, and mostly youths, into the economy. To emphasise, if the bulk in our intelligentsia, black and white, has this thinking, the small business revolution envisaged in the National Development Plan will not happen. We will not create the projected 11 million jobs by 2030.
In Soweto people simply say Bagcwalisa umthetho. The nearest interpretation of this phrase is “paying lip service” to the issue. For the record, the Soweto phrase is stronger than the interpretation and is more pertinent. Hence, one always has this sinking feeling that South Africa’s elite is like that in parts of the continent – it fantasizes on an environment of big parastatals, big corporations, big multinationals and milk and honey flowing in abundance; forgetting the reality of millions starving.
As stated, it then sees small business as something on the side. Let us get this clear; only the emergences of hundreds of successful small businesses can take us to a better life for all. Dr Mazwai is special adviser to the Minister of Small Business Development but writes in his personal capacity.