The small will lead the coun­try to growth

In an en­vi­ron­ment where big busi­ness is ret­i­cent to in­vest in the econ­omy, small busi­ness must be the mean­ing­ful job cre­ator, writes

CityPress - - Busi­ness -

In­ter­na­tion­ally, sta­tis­tics are in­di­cat­ing that big com­pa­nies de­stroy jobs, while en­trepreneurs and small com­pa­nies are net job cre­ators as they pur­sue growth.

The per­cep­tion that South African cor­po­rates are sit­ting on cash and are ret­i­cent to in­vest in this econ­omy, and that there is leak­age in the fi­nan­cial sys­tem lead­ing to bil­lions be­ing sent off­shore, is of grave con­cern. If lo­cal cap­i­tal does not have con­fi­dence in this coun­try, we can­not ex­pect much for­eign di­rect in­vest­ment.

Both gov­ern­ment and busi­ness need to se­ri­ously en­gage on how they can play their re­spec­tive roles in en­hanc­ing the en­abling con­di­tions for do­mes­tic cap­i­tal to be scaled up to drive South Africa’s eco­nomic growth.

There is a per­cep­tion in some quar­ters that South Africa is a “For­mula 1” of cre­at­ing reg­u­la­tion that bor­ders, in some in­stances, on over­reg­u­la­tion.

The chal­lenge is to be ag­ile enough to cor­rect the un­in­tended con­se­quences that are sti­fling trans­for­ma­tion and growth when they are re­vealed.

South African eco­nomic poli­cies tend to be skewed on di­vid­ing the lit­tle there is with­out ad­e­quately cre­at­ing the con­di­tions and skil­fully iden­ti­fy­ing the right mul­ti­pli­ers that can ex­pand and grow the econ­omy in the long term.

The en­ergy is spent on en­sur­ing that the 7% or so part of the pop­u­la­tion that is white cap­i­tal does not “get away with things”, whether it is free ed­u­ca­tion, tax breaks or sav­ings ben­e­fits and, in the process, pe­nal­is­ing most South Africans.

On var­i­ous plat­forms, busi­ness­peo­ple are be­gin­ning to ad­mit there is a need to con­front their own prej­u­dices and lack of risk-tak­ing, which is stunt­ing progress when one as­sesses the trans­for­ma­tion gains – or lack thereof.

The broad-based BEE leg­is­la­tion has been bas­tardised and ma­nip­u­lated at ev­ery turn, mak­ing the BEE Score­card a num­bers game with no sus­tain­able changes made in the com­pa­nies or to the econ­omy.

The own­er­ship pil­lar is treated op­por­tunis­ti­cally to in­gra­ti­ate into the rul­ing party by tar­get­ing spe­cific per­son­al­i­ties, or those that busi­ness thinks would make in­flu­en­tial as­so­ci­a­tions.

Com­pa­nies also in­cor­po­rate broad-based eq­uity part­ners into their ranks, know­ing full well that they will be pas­sive and their value not felt. Th­ese ac­tions fur­ther stunt the growth of these en­ti­ties.

At man­age­ment lev­els, 21 years on, re­spectable progress has not been made. In fact, in some in­stances, there have been re­ver­sals in terms of black and fe­male gains made in the late 1990s to the early 2000s.

Most black peo­ple and women in man­age­ment oc­cupy sup­port­ing roles that are not re­ally taken as se­ri­ously as the profit and loss roles. This means busi­nesses are not tap­ping ad­e­quately into the di­verse skills and knowl­edge that in­spire cre­ativ­ity and in­no­va­tion, and that ac­cel­er­ate growth.

The en­ter­prise de­vel­op­ment pil­lar of the code has been so ne­glected that the leg­is­la­tion had to be re­worked. Where so-called ar­range­ments do ex­ist be­tween es­tab­lished big busi­ness and emerg­ing com­pa­nies, the en­ter­prise is kept on a leash and cre­ativ­ity is reined in, lest it be­come a for­mi­da­ble com­peti­tor.

Big busi­ness has more ac­cess to gov­ern­ment and the re­sources to get a hear­ing to in­flu­ence and shape pol­icy. But we know the growth we need will not come out of big busi­ness.

The gov­ern­ment also needs to re­solve con­tra­dic­tions be­tween leg­is­la­tion and im­ple­men­ta­tion, such as in the case of the Pref­er­en­tial Pro­cure­ment Pol­icy Frame­work Act, which is ev­i­dent in the skewed gov­ern­ment pro­cure­ment spend in multi­na­tion­als at the ex­pense of the very lo­cal busi­nesses they say they want to en­able to grow.

The gov­ern­ment’s role is to cre­ate the en­abling en­vi­ron­ment and it should fo­cus on pro­vid­ing sup­port to busi­ness own­ers who are then able to grow their en­ter­prises and thus cre­ate jobs.

Maybe it is time for the rad­i­cal re­struc­tur­ing of the Pres­i­den­tial Busi­ness Work­ing Group to be in­fused with en­trepreneurs and small busi­ness lead­ers who are hun­gry, cre­ative and in­no­va­tive to un­earth job-cre­at­ing so­lu­tions for our coun­try.

Our chal­lenges are vast and di­verse, and re­quire peo­ple with the right mind-set to solve them.

Ap­pre­ci­at­ing that for-profit com­pa­nies are not es­tab­lished for char­ity, but to truly trans­form and grow the South African econ­omy, we need busi­ness­peo­ple who walk the healthy bal­ance of seek­ing and cre­at­ing wealth while also try­ing to leave this world a lit­tle bet­ter off than they found it. If we don’t, we are not go­ing to turn the tide.

Msomi is CEO of Busara Lead­er­ship Part­ners

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