More support, not new rules, will help black enterprises
SOUTH Africa was again shocked into reality when Statistician-General Pali Lehohla released the latest report on poverty trends. While people living in poverty (less than R1 000 per person per month) declined from 31.6 million in 2006 to 27.3 million in 2011, they rocketed to 30.4 million in 2015.
Those living in extreme poverty below R441, swelled from 11 million in 2011 to 13.8 million in 2015. These alarming figures correlate with the unemployment numbers, now at a staggering 27.7 percent.
On the other hand, the gini coefficient, which measures inequality, continues to drop nationally, but reflected an increase within in the black African community, which is not at all surprising.
But this is another story. It is the levels of poverty that are not at all complimentary for the richest and most modern economy in Africa. It also tells us that our socio-economic transformation has not been to expectations.
After all, the single item that ensures a minimum of income for most households, despite at poverty levels, are the social grants. Small business development is also problematic and the challenge is at the interface, and not necessarily only in the levels of support.
This comes out in dialogues conducted by the National Planning Commission (NPC) in three urban townships, three rural communities and one informal settlement.
According to the dialogues, entrepreneurial and productive activity in these areas lacks; there is a limited understanding of capabilities of township entrepreneurs and those in rural areas; there is limited demonstration of value-add of government programmes in townships and rural areas; there is recognition that the needs of entrepreneurs in these areas are peculiar; and, finally, there is a lack of coherence or organisation in townships and rural areas and a winner takes all mentality abounds.
The NPC will be releasing this report to the public but, to say the least, it is very disconcerting. A combination of the poverty trends, unemployment figures and the NPC dialogues tell a depressing story of a society that has lost all semblance of being caring, the government included.
For instance, the media reported that the Vodacom Group won an estimated R5 billion contract with the South African government as the National Treasury seeks to cut costs.
Principle The details are still sketchy but let us talk principle. Let us recall that in a previous first tranche of cost cutting, catering was targeted. Yet, it is this sector that is dominated by small black companies, mostly run by women.
Apartheid previously kept blacks out of entrepreneurship, now it is our own Treasury that is coming with policies that are decimating the very small businesses that could get into the economy post 1994.
Does the Treasury do a prior evaluation its regulations will have on small business? I think not. Are we then surprised that our unemployment keeps ballooning? At the weekend, more than 1 000 South Africans representing hundreds of co-operatives countrywide met in Bloemfontein to celebrate International Co-operatives Day.
In his speech President Jacob Zuma stressed that the government had taken a decision to give business to co-operatives.
I am in doubt that as the President said these words, some were giggling with amusement. Or, to be frank, many simply wondered if the speech writers for the President are not aware that the Treasury is not going to allow the government to buy from these co-operatives. A hard look is needed at the regulations the Treasury is churning out. Are these building our economy or keeping up to the Joneses?
Fortunately, several provinces, Gauteng and KwaZulu-Natal that I know of, have simply defied some of these regulations and done what is expected, care for human life.
In fact, a few departments are also defying regulations by the Treasury. Good show by these conscientious departments. Let us dig deeper into the logic of cutting costs at the expense of black small businesses.
It flies in the face of the government’s stated objective of small business development. There is a cost to black economic empowerment and the development of small black businesses. You cannot expect new entrants to the economy to be cost competitive from day one after the fall of apartheid, a policy which deliberately ensured white businesses thrive while black ones were on the fringes or being non-existent. It just does not make sense.
Getting back to the Bloemfontein event, the scores of co-operatives from all parts of South Africa want business opportunities. And you and I can make it happen. It is possible to help fellow South Africans have a decent meal by supporting them and helping them grow their operations.
Lingering effects Strangely, there was widespread support for the dismantling of apartheid, but all is silent when we talk of the dismantling of the lingering effects of the apartheid economy.
Unfortunately, it is now crunch time and we must turn the tide against the continued deprivation of the persons as per the report by Lehohla.
These people will not starve in silence for much longer. Inevitably, they will revolt against the haves, you and me.
Business and society must thus be more sensitive.
But, and at the very least, the Treasury must now be more responsive to the realities of economic transformation, entrepreneurship and the development of small business if we must combat the poverty above.
All of us, in any case, can make a huge difference when we support these co-operatives. It is in the national interest.