Small busi­ness is good busi­ness

The Mercury - - OPINION & ANALYSIS - Thami Mazwai Dr Mazwai is spe­cial ad­viser to the Min­is­ter of Small Busi­ness De­vel­op­ment but writes in his per­sonal ca­pac­ity.

SMALL busi­ness is among the few sec­tors that had some good news from Fi­nance Min­is­ter Malusi Gi­gaba in his Mid-Term Bud­get Pol­icy State­ment speech last Wed­nes­day. He an­nounced that with min­is­ters Lindiwe Zulu and Naledi Pan­dor at the fore, the gov­ern­ment would be set­ting up a fund for small busi­ness en­ter­prise de­vel­op­ment that fo­cuses specif­i­cally on start-ups and tech­nol­ogy.

Zulu is the Min­is­ter in the Depart­ment of Small Busi­ness De­vel­op­ment (DSBD) and Pan­dor heads up Science and Tech­nol­ogy.

The new fund joins the one set up by the CEOs’ Ini­tia­tive, a wor­thy en­deav­our to sup­port small busi­ness by some of the coun­try’s big busi­nesses.

The two funds are wel­come, par­tic­u­larly as there are also two other ma­jor ac­tiv­i­ties that hap­pen in the next month.

Firstly, the DSBD and Depart­ment of Co-op­er­a­tive Gov­er­nance and Tra­di­tional Af­fairs (Cogta) host a con­fer­ence on lo­cal eco­nomic de­vel­op­ment (LED) on Novem­ber 9 and 10.

Two weeks later the DSBD part­ners with the Ser­vices Seta to host another on busi­ness ad­vis­ing.

The Ser­vices Seta is emerg­ing as a key player in this space and is even set­ting up a na­tional en­trepreneur­ship in­sti­tute.

Ob­vi­ously, it will be mak­ing its own an­nounce­ment but, to re­in­force the idea, South Africa will be the bet­ter with such an in­sti­tute.

The two con­fer­ences are im­por­tant as they fo­cus on an is­sue that was iden­ti­fied as prob­lem­atic some 15 years ago when the Euro­pean Union (EU) re­leased re­search that showed why LED is not gain­ing trac­tion. Wor­ry­ingly, re­search com­pleted this year by the Na­tional Plan­ning Com­mis­sion con­firms that of the EU.

Lamentably, in the 15 years be­tween th­ese two re­ports very lit­tle has been done to cor­rect the sit­u­a­tion and LED in many of our mu­nic­i­pal­i­ties is still in a pitiable state.

We are not talk­ing ab­so­lutes and there are mu­nic­i­pal­i­ties that are mak­ing waves but, and in gen­eral, they are few and far be­tween.

Yet, LED should be a na­tional re­li­gion as it is a ma­jor ne­ces­sity for trans­for­ma­tion.

Thus, and this is the crunch, while Gi­gaba’s an­nounce­ment is wel­come and the two con­fer­ences com­ing our way equally ap­pro­pri­ate, three ele­phants in the room need at­ten­tion.

Our highly con­cen­trated econ­omy, big busi­ness men­tal­ity; and the lev­els of ex­per­tise and com­mit­ment, in fact lack of th­ese, in parts of the civil ser­vice re­spon­si­ble for small busi­ness de­vel­op­ment in the lower lev­els of gov­ern­ment have the po­ten­tial to re­duce Gi­gaba’s fund and the com­ing two con­fer­ences into hot air.

In my last col­umn “We must win the war on poverty” I ar­gued that the con­cen­tra­tion crowds out new play­ers into our econ­omy.

For­tu­itously, Gi­gaba en­dorsed this and lamented this con­cen­tra­tion which, he rightly says, has a neg­a­tive ef­fect on eco­nomic growth.

The pri­vate sec­tor, Na­tional Trea­sury, the Com­pe­ti­tion Com­mis­sion and the DSBD must ad­dress this, and ur­gently too.

There is no point in set­ting up funds and hav­ing well-timed con­fer­ences when the en­vi­ron­ment mil­i­tates against small busi­ness de­vel­op­ment.

The ref­er­ence to the civil ser­vice specif­i­cally speaks to the re­search by the EU which, in a few words, said many of­fi­cials

A highly con­cen­trated econ­omy and a big busi­ness men­tal­ity crowd out new play­ers ... and have a neg­a­tive ef­fect on eco­nomic growth.

re­spon­si­ble for small busi­ness de­vel­op­ment in mu­nic­i­pal­i­ties know zilch about it.

The re­search also de­cried the cor­rup­tion in th­ese mu­nic­i­pal­i­ties and, to crown it all, it pointed out that the In­te­grated De­vel­op­ment Plans, which must drive LED in th­ese ar­eas, were noth­ing else but cut and paste ex­er­cises in many in­stances.

Some are hardly based on the re­al­i­ties of the lo­cal econ­omy.

We also have sit­u­a­tions in which con­sul­tants are ap­pointed to pro­vide ser­vices but come with fancy pro­grammes which hardly speak to the ground.

A fun­da­men­tal truth that we South Africans must as­sim­i­late into our sub­con­scious is that en­trepreneur­ship is a so­ci­etal ac­tiv­ity.

It flows from the com­mu­nity up­wards based on the knowl­edge sys­tems, en­trepreneurial cog­ni­tions and val­ues abound.

Thus, the stake­hold­ers in the en­vi­ron­ment and what is called the ecosys­tem, must fa­cil­i­tate en­trepreneur­ship and small busi­ness de­vel­op­ment.

To add another per­spec­tive to the ar­gu­ment above is that small busi­ness de­vel­op­ment con­tin­ues to be an add-on and not the driver of eco­nomic de­vel­op­ment as is the case in other coun­tries, de­vel­oped and de­vel­op­ing.

The mind­set on small busi­ness in South Africa’s elite, black and white, seems to be: “Ai, let us do some­thing about those peo­ple”.

This at­ti­tude will not as­sist in ab­sorb­ing at least 5mil­lion of our em­ploy­able com­pa­tri­ots, and mostly youths, into the econ­omy.

To em­pha­sise, if the bulk in our in­tel­li­gentsia, black and white, has this think­ing, the small busi­ness rev­o­lu­tion en­vis­aged in the Na­tional De­vel­op­ment Plan will not hap­pen. We will not cre­ate the pro­jected 11 mil­lion jobs by 2030.

In Soweto peo­ple sim­ply say Bagcwal­isa um­thetho. The near­est in­ter­pre­ta­tion of this phrase is “pay­ing lip ser­vice” to the is­sue.

For the record, the Soweto phrase is stronger than the in­ter­pre­ta­tion and is more per­ti­nent.

Hence, one al­ways has this sink­ing feel­ing that South Africa’s elite is like that in parts of the con­ti­nent – it fan­ta­sizes on an en­vi­ron­ment of big paras­tatals, big cor­po­ra­tions, big multi­na­tion­als and milk and honey flow­ing in abun­dance; for­get­ting the re­al­ity of mil­lions starv­ing.

As stated, it then sees small busi­ness as some­thing on the side.

Let us get this clear; only the emer­gences of hun­dreds of suc­cess­ful small busi­nesses can take us to a bet­ter life for all.


A woman gets her hair done at an in­for­mal sa­lon. The African hair­care busi­ness has be­come a multi­bil­lion-dol­lar in­dus­try and has drawn global giants such as L’Oreal and Unilever. The writer says only the emer­gence of nu­mer­ous suc­cess­ful small busi­ness can take us to a bet­ter life for all in South Africa.

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