Five Reasons Why Actual Enterprise Development Can Save South Africa

Implemented well, Enterprise Development potentially addresses more nation-wide challenges than all other solutions combined because those problems begin and end with the economy.

 

As the below list of challenges and respective solutions demonstrates, our country’s burning issues are economical and can be addressed through an incentive framework such as Broad-Based Black Economic Empowerment (B-BBEE).

 

Sound ED Implementation Could Alleviate Unemployment 

The Centre for Development and Enterprise observed that, “The most efficient, sustainable ‘projects’ for creating jobs are private sector firms.  Policy that ensures their survival and expansion, as well as the creation of many more new firms, would have the greatest impact on unemployment”.

 

At the time of the Jobs’ Summit, they further observed that “too many of the country’s policies raise the cost of doing business and reduce the economic growth rate”.  This fixed costs’ problem particularly affects Small, Medium and Micro Enterprises (SMMEs) that, while expected to create 90% of the country’s jobs by 2030, reported a number of obstacles to growth even before the pandemic.

 

If we can salvage small businesses affected by lockdown, we can restore employment opportunities: this was the logic behind government grants and similar interventions extended in response to the Covid-19 pandemic.  Unfortunately, many small-business owners lacked the financial governance compliance skills necessary to access those funds.

 

In response to this, our consultancy is leveraging B-BBEE spends to assist small businesses address those eligibility barriers so that they don’t miss out on interventions we anticipate may be announced at Minister Tito Mboweni’s Budget Speech. 

 

This raises the question: why haven’t existing Enterprise Development interventions assisted a critical mass of small businesses to position themselves for this kind of assistance?  Our experience has shown us several possibilities that link one to another like dominoes.

 

Most ED implementers don’t have the resources to attract and educate and aid a sufficient number of potential contributors and beneficiaries.  This creates a vacuum where, in the absence of public awareness about ED, opportunists arise. 

 

A sound Enterprise Development regime would have the right people screening the right business candidates by asking the right questions to pre-empt and manage the right challenges.  General public oversight on ED is what ensures that businesses capable of creating meaningful employment opportunities get ahead of businesses owned by politically-connected people with zero intention for adding business or social value to their ecosystems.  

 

A Culture of Sound ED Implementation Can Alleviate Crime and Corruption 

Is it ethical to make access to large ED opportunities conditional on non-partisan policy implementation oversight?

 

Is it ethical for the disbursement of ED funding to be, for an example, through a competition where the winning SMME is one that’s demonstrated a pattern of holding the private and public sector accountable for the fairness of ED or general policy implementation in their sector?  

 

How many businesses would it take to agitate for tax breaks towards creators of ED opportunities?  Would it be practical to panel-beat some of those incentives together at an event, and then send off a petition to Parliament, the Department of Trade, Industry and Competition as well as the South African Receiver of Revenue?

 

Does ED need to be separated from B-BBEE, or does BEE need to change?  Should specific government sectors have ED taken off their scorecards while the private sector, for example, has ED increased as a weighting?

 

These are the kinds of questions we’ll put to panelists at an event we’re hosting on ED just after Human Rights Day.

 

While it’s common knowledge that employment decreases criminality (the World Bank has replicated government interventions to test this hypothesis) what’s less known is that creating economic access increases direct line-of-sight on the variables behind economic access among beneficiaries.  In other words, the beneficiary of an ED opportunity is more likely to understand the policy framework that made that opportunity possible than if they’ve had no exposure to it.  The indirect proof for this is the number of people defending “radical economic transformation” policy advocates before the Zondo Commission.  Or consider Shallcross, Durban, where suspected drug kingpin Yaganathan “Teddy Mafia” Pillay was shot dead at his home — and the community burned and decapitated suspected shooters.  Pillay was considered the community’s go-to problem solver, and the details around his death (including the community’s willingness to defend “the gang” from police) show how gangsterism fills leadership voids.

 

It’s tempting to view B-BBEE as the source of the corruption by which some political leaders filled similar voids among networks that then perpetrated “state capture”.  But it’s more accurate to say that B-BBEE, like any policy instrument, can subvert democracy whenever it’s implemented in isolation from civil society, or politicians, or business or labour.  To quote John Steenhuisen’s response to President Cyril Ramaphosa’s State of the Nation Address (SONA), “It doesn’t matter about the name on the bill”.  It didn’t matter whose name was on B-BBEE when it was first envisaged: conceived by business, as often pointed out by political economist Moeletsi Mbeki, B-BBEE implementation was monopolised by the politically-connected.

 

Is the antidote to this is an ED and BEE regime steered and overseen by a wide array of observers?

 

A Regime of Holistic ED Implementation Can Alleviate Gender-based Violence

Economic dependency is often cited as a factor in staying in an abusive relationship; this can be mitigated by a focus on developing woman-owned enterprises.  This is why policies already exist to ensure ED protects women’s interests.  What’s missing, then?  

 

What’s missing is implementation unencumbered by corruption, cronyism and poor implementation.

 

Sound ED Can Increase and Improve our Education Options

One may say that education is the most important thing a society may focus on — a panacea.

 

This was true a decade ago.  Education is no longer static.  The relevance of a skill-set is dictated by the evolving needs of varying industries.  No matter how far down the education value chain one looks, knowledge production and dissemination industries are experiencing as much “disruption” as other economic players.

 

Therefore, it makes sense that more parents and adults are turning to business for schooling solutions.  Others are turning to business creation trainers to educate their children.  Some schooling service providers are also among the businesses experiencing barriers to accessing Covid relief funds.  Education is increasingly becoming an ED matter. 

 

Allon Raiz, founder and CEO of Raizcorp, credits exposure and conditioning in childhood for the ability to innovatively see and seize entrepreneurial opportunities; for this reason, the Raizcorp business development agency has partnered with Radley, a Randburg-based school that fosters an entrepreneurial mindset in students.

 

We anticipate and indeed see a rise in similar initiatives that prepare children to occupy other emerging niches.   

 

Sound ED Implementation Can Enhance Food Security Options

In Obstacles facing a young black farmer in South Africa, Mnqobi Ngubane argued that Constitutional amendments to allow land expropriation without compensation as a land reform tool were doomed to fail unless the country better supported small and emerging black farmers by allocating them “a prime role in any reform process”.  

 

A PhD candidate at the time, his argument appealed to other countries’ experience and best practice.  One could infer from it that using land reform as a legitimate redress and empowerment opportunity that addresses the obstacles would-be farmers encountered, could increase food production.  This could be translated to an argument that B-BBEE implementation in the agricultural value chain could enhance our food security prospects while enhancing economic growth.

 

Conclusion:

People like President Nelson Mandela planted the seeds of our democracy; if it is to survive, we have a collective duty to nurture them by exercising collective oversight on the robust implementation of B-BBEE. 

 

BEE Novation can be contacted on 060 000 2331 or info@BEEnovation.co.za for assistance implementing ED compliance initiatives. 

 

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