Giving the black SMME and Coops sectors more hitting power - PowerPoint Presentation

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