Township economy and SMMEs need a boost

Financing and supporting smaller players is essential

There is no shortage of township entrepreneurs. But venture capital remains a contentious issue, as banks are reluctant to support growth in this sector. This was one of the burning issues discussed at the Mail & Guardian’s Critical Thinking Forum at the Johannesburg Securities Exchange (JSE) recently.

Panellist Dr Terence Sibiya, cli- ent executive at Nedbank, said the state has a huge role to play in helping banks to empower township entrepreneurs as financial institutions always have to consider risks when giving out loans, particularly to high-risk clients such as start-up businesses.

Gauteng Growth and Development Agency [GGDA] group chief executive Saki Zamxaka said that township economies need to be viable for banks to extend venture capital.

In September Business Unity South Africa (Busa) president Jabu Mabuza announced that 70% of the top 40 South African companies had contributed to the R1.5-billion SME Fund. The fund is aimed at helping small enterprises with growth potential and has also pledged to contribute to an initiative in which a million youth will be absorbed into internships. This will cost about R15-billion and will take place in the next year in partnership with government.

But George Sebulela, secretarygeneral of the Black Business Council, criticised business for contributing paltry amounts to the SME Fund. Sebulela argued that growth and transformation must happen at the same time, citing the example of Shoprite paying its chief executive Whitey Basson a salary of R100-million and pledging only R5-million to the fund as an example. “Where is the logic there?” asked Sebulela.

But Zamxaka argued that companies could not be reckless with their money as they have a responsibility to shareholders.

Lulu Krugel, chief economist at auditing firm KPMG, cited a company survey which said that the country is facing a danger of shedding jobs if it doesn’t prepare for the “fourth industrial revolution”. “The majority of youth are not trained correctly,” said Krugel.

According to Statistics South Africa, the country’s unemployment rate decreased slightly to 26.6% in the June quarter. This was down from 26.7% in the three months prior to March.

Sebulela said Further Education and Training (FET) Colleges have a huge role to play in preparing youths for the demands of the economic sector. “It is absolute nonsense to think that you can still go to university and [have to] come back and look for a job. FET colleges need to produce entrepreneurs. They must come back [from college] and run their own businesses,” said Sebulela.

Professor Ronald Wall of the University of the Witwatersrand told the forum that it is important that education matches the demands of the labour market and the economy, so that we are training according to our needs.