How to hurdle the entrepreneurs’barriers
Pamela Mondliwa, a researcher at the University of Johannesburg’s Centre for Competition, Regulation and Economic Development, says studies have highlighted several barriers that block greater participation by entrepreneurs and producers in the economy. These are often mutually reinforcing microeconomic factors.
The studies also show that, when big decisions are made, they have often reinforced the interests of the large players.
“This has sometimes been linked to a BEE [black economic empowerment] quid pro quo, where the state continues to protect the incumbent in exchange for more black suppliers or shareholding,” she says.
“These ‘deals’ in fact reinforce the dominant firm’s power, as it is entrenched as the gateway to opportunities.”
Mutually reinforcing interventions are needed on a number of fronts, she says, including funding for new entrants. It requires “patient” capital, given the time it takes to build up the scale and reach required to be competitive in many areas, and an appetite for risk, which comes with financing rivals to take on powerful incumbents.
Competition law could also have been given greater reach, Mondliwa says, as it is relatively weak on abuse of dominance.
She says we should also be asking broader questions about how to redistribute wealth and assets, such as alternative models of taxation and inheritance; re-examining liberalisation and low taxation regimes that have contributed to practices such as tax evasion and profit shifting; and the monetisation of social services such as healthcare. —
Bank shows that South Africa has one of the lowest self-employment levels — only 20% of employed people are employers or self-employed. The figure is about 40% in peer countries.
Makgetla says small black producers were systematically closed down or undermined so that fewer people than in peer economies inherited assets, business networks and relationships, as well as the skills to run their own enterprises.
Makgetla is also “not convinced that just changing the ethnicity or gender of the people at the top will make a huge difference”.