Will ‘Operation Vula’ stimulate entrepreneurs?
SMALL Business Minister Lindiwe Zulu summed up her contributions to the State of the Nation Address (Sona) debate by declaring “Operation Vula” in the implementation of her mandate to stimulate entrepreneurship, create viable small businesses and grow the economy.
“Operation Vula” was a 1986 underground operation against the apartheid government by the ANC’s military wing, Umkhonto we Sizwe.
It involved the heavyweights of the ANC and SACP such as Siphiwe Nyanda, Mac Maharaj, Pravin Gordhan and the late Billy Nair, and was a thorn in the flesh.
As “Vula” means “open”, Zulu is declaring the ANC’s determination to open the economy to blacks. The main weapon, she said, would be the R500 billion-a-year government spend – quite a formidable arsenal.
Two weeks ago, President Jacob Zuma delivered the annual Sona which, in my book, was the more precise in recent years in giving direction, commitment and detail.
Zulu’s determination following the Zuma delivery, and the R500bn arsenal could see a real “Vula”.
In the past, empowerment was clouded in niceties such inclusivity, necessity, business logic and so on. It was painfully apologetic and, evidently, the ruling party was caught in the complexity of being a big church, where the interests of one group are not necessarily those of the other.
Thus, we have had egg dances on empowerment and transformation.
Zuma has now given a clear road map in the Sona. Should the government and civil service stick to it, the ANC will be back to its winning ways come 2019.
While the Sona was clear and purposeful, I do wonder if the rest of society, particularly the civil service and state owned companies, have bought into it.
One or two nags also come to mind. The first is the national mindset. Although the government talks small business all the time, it is more of lounge discussions and intellectual discourse rather than guts and blood.
Otherwise the Preferential Procurement Policy Framework Act and Public Finance Management Act, just to look at two issues, would not have had their uninterrupted runs.
To get to the point, unfortunately most people, including many in government, see small business as literally small business. They look at the street hawker, spaza shop or tavern.
Heart of the economy
They do not see small business and entrepreneurship as the heart of the economy. Hence, they reduced the two to providing financial and non-financial services, mentoring and coaching, and market access.
The government then rightly creates institutions like the Small Enterprise Development Agency, Small Enterprise Finance Agency and the provincial enterprise development agencies.
But, in line with the mindset I’m referring to, these institutions do not get the type of attention Eskom or the IDC get, yet arguably they are the more important.
Even the budget Treasury gives for small business development is chicken feed. Township residents commonly remark “Ugcwalisa umthetho”, which means going through the motions.
Yet, when talking of entrepreneurship and small business development, we are talking of the most important but complex of disciplines in human activity – the core of the economy and people development.
Thus, more is required than the above as entrepreneurship and small business are multidimensional with issues like sociology, psychology, histology, geography and anthropology being part of the mix and, believe you me, even sheer luck.
The focus is on innovative rather than replicative entrepreneurship, which is our bane. In the usual South African way of looking at small business development, we ululated when big business created a R1.5 billion fund for small business.
Yes, it is a big gesture, but it does not mean anything unless you address environmental dynamics, one of these being the concentrations in the economy.
The same big business is the culprit, which is not new as academics such as Rogerson, Beavon, Southall, Hart and Kuper have argued over the years.
The fund will thus end up of going back to big business via their vertical and horizontal linkages in the small business landscape.
The second nag is undoubtedly the extent to which the private and public sectors do not pay small businesses on time.
A key and persistent challenge for small business sustainability is cash flow. The private sector is the main culprit yet, as it is business, one would expect it be more understanding.
Black small businesses are thus perpetually just surviving and cannot grow. Getting back to the main point: yes, we welcome Operation Vula.
To add to this, in terms of new policies 30 percent of procurement dynamics in government contracts or spending will go to small business.
The combination of the two will be dynamite. But above all, instead of the petty cash small business gets every year, give it a budget that will take us to higher levels of economic activity.