Presentation by Dr Thami Mazwai to the NWPG session on VTSD on Nov 30 2016 The tragedy of economic integration A tragedy of our times is that the activities of ordinary people have not been factored into the economy as the economy of the white man is still taken as the real economy instead o ID: 560711
Download Presentation The PPT/PDF document "Giving the black SMME and Coops sectors..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Giving the black SMME and Coops sectors more hitting power
Presentation by Dr Thami Mazwai,
to the NWPG session on VTSD on Nov 30, 2016Slide2
The tragedy of economic integration
A tragedy of our times is that the activities of ordinary people have not been factored into the economy as the economy of the white man is still taken as the real economy instead of vice versa. Fortunately, South Africa is correcting this in the current discussions on the township and rural economiesSlide3
The problem of inclusive economy
The black and white economy are not mutually exclusive, but a problem is created when inclusivity means being accommodated in the present economy. Given our past, it means being co-opted into it.
Creating new ventures, with indigenous entrepreneurship in the mix, should be the norm Instead while co-option in terms of share schemes should be just another alternativeSlide4
NPC and PBEEAC
After all, the majority lives in the townships and rural areas and it means that new activities must be stimulated and thus more must be done to stimulate entrepreneurship in these areas. Hence:
The PBEEAC is hosting a township and rural economies summit to get communities devise their own strategies to stimulate local economies; and
The NPC is having seven dialogues with communities in rural and townships to interrogate reasons why local economies are not taking off. Slide5
The conventional approach
The basis has always been funding and training, and then with mentoring and/or business opportunities thrown in. Yet, the approach in other countries has been more holistic, with Germany even having weekend bosberaads as they assist their small businesses into the business landscape. We need another approach more so that the RoI has been so low in our country.Slide6
New initiatives old architecture
The New Order came with new initiatives but these were simply plonked into communities. For instance, there was no strategy on the shopping malls. Hence the missing middle. Worse still, immigrant entrepreneurs control more than 50% of trade in townships and rural areasSlide7
Current state of small business
Turnover level formal business
Percentage in range
R1 to R
1
million
83%
R1 million
to
R5 million
9.46%
R5 million
to R10 million
4.1%
R10 million to R50 million
3.9%
R50 million +
1.4%Slide8
Five underlying realities in the environment
Highly concentrated economy
South Africa’s macro culture
Bureaucracy and its conception of small business
Meat in the sandwich between big business and big labour
Local politicians and LED or CDSlide9
The challenge
The NDP exhorts 11 million jobs to have been created by 2030, and 90% from small business sector. Creating these jobs means driving self employment as you develop the small businesses or coops. The two are not mutually exclusive. It also means commodifying the ordinary lives of people so that they make a living. Slide10
The foundations of entrepreneurshipSlide11
Empiricism as a guide
Technological progress, from the industrial revolution, started with the inventors improving local production or activities through inventions, it did not come out of the sky
The western world had long spells of protectionism which gave them the opportunity to close out outside competition and develop local capabilities. Africa did not go through this
Instead, entrepreneurship and thus innovation was, as in South Africa, not actively encouraged. It was a do as we say and not as we do dynamicSlide12
Forms of approaches
The US has many of its small business centres at varsities to emphasize research and innovation. This eliminates the “me too” approach.
Many countries now try and identify high growth entities, what the Gazelles programme means to South Africa
Other nations select specific sectors and create specializations
Other nations create value chains in the high density areas of human activity and or programmes
E.g. laundry, taxi, school feeding etc.Slide13
What is needed
A more thorough analysis needs to be done on the businesses and
coopd
in the community and a careful selection done on what support to give to each entity or groups. Specific value chains must be identified, selected and resources thrown in this direction.Slide14
What is needed
This is where DSBD comes in with:
Support for start-ups, post
startups
and mature entities
Entities in specific target groups such as people with disability , gender and youth entities
Incubation for various sectors through SedaSlide15
The realities must determine the strategy
The identification of production units, assessing their potential and relating them to spending by the Government;
The creation of value chains within communities fuelled by the identification of these production units;
Strategies to graduate informal and micro enterprises into the mainstream – e.g. Jozi at work;
The cultivation of linkages between SMMEs, infrastructure rollout and industry; and
ED programmes for these entities to deal with their self esteem
(“
The above is not exhaustive but address the immediate
”)Slide16
The seven dialogues
The purpose of the seven dialogues is to unleash the entrepreneurial potential in these communities. Some of the issues to be discussed are:
Strategies stimulate indigenous entrepreneurship through local spend
The domination of local markets by traditional big business and immigrant entrepreneurs;
The low levels of entrepreneurship activity in the Black African community
Strategies to trap and grow local spend in the localities and reduce the leakage of money to developed areas; Slide17
The seven dialogues
Issues for discussion continued:
Mutually beneficial relations between local and big business;
The effectiveness of IDPs and other government initiatives, including officials and town council members;
The effectiveness of local chambers of commerce and/or associations; and
Strategies to measure successful entrepreneurship and relationsSlide18
Discussion, discussion
and discussion
Dates and venues for the dialogues