Entrepreneurs: essential, but no panacea
There is no single solution that will, like magic, resolve all of SA’s complex and numerous socioeconomic challenges. A problem statement for SA’s malaise might begin by pointing to a vicious cycle of low investment in people’s capabilities and wellbeing, against the backdrop of one of the most unequal societies on earth, reproducing economic and social exclusion in each successive generation.
Breaking out of this trap will require multiple strategies. Entrepreneurship, in all its many manifestations, is not a silver bullet.
Some institutions and people advocate entrepreneurship as a cure-all. They are wrong. But entrepreneurship is an important piece of the puzzle.
SA desperately needs new ideas and new sources of economic activity. Where will the next million jobs come from? They will come from a combination of new significant companies, each employing 10,000 people or more, and the majority from small and medium-sized enterprises that each employ one to 50 people.
Recent research by Trade & Industrial Policy Strategies (Tips), which fellow columnist Neva Makgetla has highlighted, shows that the small business growth engine has stalled. Since 2008, employment in formal small businesses has grown slower than large-scale business. Informal businesses have grown rapidly but these tend to be survivalist in nature.
This calls for a public policy response. Financial resources are constrained but the Tips report (Real Economy Bulletin, September 2017) makes proposals on legislation and other nonfinancial reforms to clear the path for successful small business development.
The dire situation also requires the private sector to deepen enterprise development frameworks that deliver proven results.
The need to open up concentrated industries, recognised by consumers and policy makers alike, is a call to entrepreneurship. It’s difficult to target a particular market structure for any industry, but attempts to level the playing fields are crucial for us to have a dynamic and fair economy.
These efforts to have open, competitive markets will only yield outcomes if there is a credible possibility that new entrants will arise where incumbents get complacent or new inventions are made.
Transformation without innovation is easily hijacked by corrupt elements, as we have learned over the past two decades. Redistribution matters, and it should be done transparently with clear goals to redress the ills of the past.
Redistribution provides only the foundation for an inclusive, transformed economy. On that foundation, we need to build an economy that taps into innovations and fresh perspectives from a diverse pool of talent, as should be the case with a country as blessed in this regard as ours.
The entrepreneurship gospel has no shortage of false prophets. The market is littered with quacks who sell platitudes by the hour.
There is also ladderkicking, the sport of choice for some entrepreneurs who harvested what the apartheid government showered on white South Africans in terms of education, healthcare, silos, subsidies, cheap electricity, cheap labour and legitimacy only to turn around to say that black entrants don’t have what it takes to build businesses.
Self-interested crooks ride the social enterprise wave, and false prophets lurk in the state, waxing lyrical about entrepreneurship but frustrating small and new businesses no end. These people give entrepreneurship a bad name. That should not obscure the efforts of business leaders and public servants trying to do the right thing.
Entrepreneurship will not solve everything, but there is no real economy without it.