Entrepreneurs worlds apart

This opinion piece appeared in the Cape Argus on Thursday 23rd October.

Earlier this month I attended two events which at their core aimed to achieve the same thing – entrepreneur development and job creation, but which illustrate the huge gulf that exists in South Africa between the worlds of the informal township entrepreneur and the connected tech entrepreneur. They also gave me an insight into the political and economic terrains in these two worlds, where the language used seems to have been drawn from completely different dictionaries, written with contrasting ideologies and politcial imperatives in mind.

The first event was the Township Revitalisation Summit in Orlando Stadium, Soweto, convened by Gauteng Premier David Makhura. The second was the SiMODiSA Start Up SA conference at the Cape Town International Convention Centre. The two venues immediately set the scene for a dichotomous relationship.

The newly installed Gauteng government has worken up to the need to direct investment towards the province’s townships, and bring them into the formal economy. Township businesses have been woefully ignored for decades. The industrial parks built by the apartheid government in the 1980s are delapidated and over-crowded, with chronic under-investment by owners the Small Enterprise Finance Agency (Sefa). Sefa has outsourced management of these parks to property manager JH Isaacs and my interactions with many of the parks’ tenants in recent weeks suggest a history of disinterest and neglect.

Most township businesses eek out a living not in these parks but by the side of the road, in home-based or rented premises which are mostly unsuited to running a professional business. Informal traders are regularly harrassed by metro police, their goods confiscated and their licences revoked for no good reason.

By contrast, townships have seen massive investment in shopping malls, an indication of South Africa’s consumer rather than producer focus. These malls are occupied by big retail chains which suck money out of the townships and do nothing to stimulate the local economies or local manufacturers. It is estimated Soweto’s consumer spend is as much as R13 billion of which only 24% is spent in the township.

1 500 people squeezed into the Orlando Stadium conference room to listen to Premier Makhura, Deputy President Cyril Ramaphosa, MEC Lebogang Maile and Dr Thami Mazwai extol the virtues of the revitalisation programme, which kicks off with a R160 million investment in basic infrastructure and facilities for township businesses. Lindiwe Zulu, Minister of Small Business Development, was due to jointhem at the afternoon session which I could not stay for.

They made much of the partnership they said government wished to establish with big business, but could not help take a dig at “white monopoly capital” which they said is robbing small businesses of opportunities to enter the formal economy.

Why did they not invite some representatives from big business to attend the Summit, I thought? Wouldn’t this demonstrate they were serious about the partnership? Perhaps the white monopolists would be fearful for their safety among such a gathering, whipped into a frenzy by political rhetoric. The government big wigs were quite blunt in pointing out to their audience that they were “their people”, in other words ANC supports. But in conversations I had with many off them afterwards I’m not so sure.

There were multiple complaints about corruption, poor service delivery, rude treatment by government bureaucrats, late payments, crime and a host of other things hampering their businesses. The things contributing to the ANC slipping to just 53% of the vote in the May elections. There is clearly a political motive behind the Gauteng ANC’s sudden cosying up to the townships. It’s where they risk losing Johannnesburg and Tshwane in 2016.

Three days later and 1 400 kilometers away, I participated in the panel discussing ‘Government as an Enabler of Entrepreneurship’ at the SiMODiSA conference in Cape Town. SiMODiSA is a not-for-profit association set up after an initial meeting convened last year by then Finance Minister Pravin Gordhan and a group of SA entrepreneurs based in the USA. Its aim is the acceleration of high-growth businesses which will create many of the jobs the country needs to reach the NDP’s target of 11 million jobs by 2014.

Sadly, the panellist from government did not turn up so we could not hear any views on what government was doing in this vital arena. Moreover my counterpart, Lindiwe Zulu, initially accepted an invitation to participate but cancelled at the last minute. So we had the bizarre situation where I was asked for my views, uncontested by a government representative, so I readily obliged.

Government can be an enabler of entrepreneurship first by providing leadership for South Africa’s ‘entrepreurial ecosystem’. This means standing up for business as the only real job creators we have. It means reducing regulations and red tape which hamper start-ups, paying small businesses on time, easing labour laws which deter job creation, and cutting talk of ‘white monopoly capital’ which frightens big business away, doing nothing to open up their supply chains.

Government, and Lindiwe Zulu in particular, needs to take a long hard look at why the total early-stage entrepreneurship (TEA) rate is so low in South Africa and why the failure rate of small businesses is so high. She needs to examine ways of creating the conditions to support both survivalist businesses and high-growth tech start-ups. She should recognise her constituency is not just the sweet seller in Soweto but also the software engineer in Woodstock.

So here we had two events, each aiming to stimulate entrepreneurship and job creation – one was all government and no business, the other all business and no government. If we carry on like this we will get nowhere. Somehow these two worlds need to get together and agree on a common language and set of political and economic priorities.

As probably the only person to be both in Orlando Stadium and the CTICC I feel like something of a lone voice on this issue, calling for these two worlds to come together. For the country’s sake they must, sooner or later. I will be doing my best to make sure they do.