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SA needs a national entrepreneurial revolution

Talent is more important than money.

The ‘triple challenges’ of poverty, inequality and unemployment are the biggest problems facing South Africa, we hear every day. I think we should rephrase this mantra to read: ‘Unemployment is the biggest problem facing South Africa, because it is the root cause of poverty and inequality’.

Unemployment is also the strongest contributor to rampant crime, the simmering anger among black youth, gangsterism and other social ills threatening our stability and progress.

And no, simple economic growth or massive infrastructure spending are not the tools with which to successfully combat unemployment. Governments aren’t good at creating sustainable jobs, and we have at long last established for certain that wealth doesn’t trickle down after all.

The closest we’ll ever get to a silver bullet for all our ills would be to get all able-bodied adult citizens economically active in some way or another.

Entrepreneurship is the obvious key: thousands of new business start-ups every year, with some of them growing to medium enterprises employing more than just a handful of people and a few growing really big.

We Afrikaners always believed we were not natural entrepreneurs. For five decades we had a government looking after us, employing most of us in the civil service or State-owned companies like the Railways and the old Iscor – those of us, that is, who were not still farming. The few with higher ambitions became engineers, doctors and academics. (And some would say those with less ambition became journalists and dominees…).

The transition from apartheid to democracy changed the Afrikaner reality abruptly and fundamentally. Agriculture subsidies were stopped and farmers suddenly had to compete with subsidised farmers from other countries. In 1980 there were 128 000 white commercial farmers, most of them Afrikaners. This went down to about 60 000 seventeen years later and has plummeted to just over 30 000 today.
I couldn’t find reliable figures of the number of whites employed by the State in the 1970s and 1980s, but I’m sure one out of three or four Afrikaner households had one member working for the State in some capacity. The vast majority of them left the civil service in the years after 1994.

So where have all the Afrikaners gone? Gone to business – virtually every one, to paraphrase an old song. Tens of thousands of them used their pension payout or savings to start a business. It turns out they weren’t such bad entrepreneurs after all, they just needed a kick in the butt.

I have a feeling most black South Africans also secretly believe they’re not natural entrepreneurs. But today’s reality means the State cannot employ most of them. Instead of a kick in the butt, perhaps what we need is to shift the emphasis from narrow-based black economic empowerment and infrastructure projects to unleashing the entrepreneurial potential of black South Africans.

It is an uncontested fact that small and medium businesses have a much greater capacity to create jobs than large ones.

Here’s the problem, though. The initiative to stimulate entrepreneurship from the side of the State would have to come from three departments: Economic Development, Trade and Industry and Small Business Development. The ministers in the first two portfolios, Ebrahim Patel and Rob Davies, have shown that they instinctively believe in grand State plans, intervention and control. (We shouldn’t be too surprised – they’re both long-standing members of the Communist Party.) The third, Lindiwe Zulu, is an apparatchik with an arts degree and only has experience in foreign relations.

Stimulating entrepreneurship entails a lot more than luke-warm efforts to cut red tape. It needs a vision and a lot of positive action.

I would love to donate a small book to these three ministers. It is called Entrepreneurial StrengthsFinder, written by the chairman of Gallup, Jim Clifton, and his colleague Sangeeta Bharadwaj Badal. The book is based on a massive body of research by Gallup. The book ‘disses’ the American conventional wisdom that the secret to growth and prosperity is innovation: “Entrepreneurship is the horse, and innovation is the cart.

In putting innovation ahead of entrepreneurship, our thinking has been dangerously off.” There is ample innovation in the US, says Clifton, but not nearly enough entrepreneurs – the country now ranks 12th among developed nations in terms of startup activity.

The most interesting finding in the Gallup research was that the most successful entrepreneurs have innate traits, “a unique neuron configuration for entrepreneurship” (think Richard Branson, Mark Zuckerberg, Elon Musk). Only about five in 1 000 people have a special aptitude for starting and growing a business – about 20 in 1 000 have IQs high enough to become Mensa members.

Among the talents of successful entrepreneurs are risk-taking, confidence, creative thinking, determination and relationship-building.
The authors suggest that an “early identification assessment system” be installed at schools and universities to catch youngsters with the special entrepreneurial talents. They should then become part of a special programme with specialised curricula, meaningful internships and certified coaches. (Gallup has an online test to detect youngsters with special entrepreneurial gifts)

Imagine Minister Zulu’s Small Business Development Department going into partnership with business and sending out scouts to all high schools, colleges and universities to test for special entrepreneurial skills. I have no doubt the business sector would love to pay for academies for these recruits, even to set up a fund to get the promising candidates going.

I think South Africa as a whole would benefit a lot more from this kind of exercise than it would from Minister Patel’s budgeted R23 billion for a 100 or so black industrialists.

Imagine how many thousands of entrepreneurs one can get going with that amount of money. Imagine how many jobs they could create.
Don’t hold your breath, though. There doesn’t seem to be much scope for entrepreneurship in the ruling alliance’s National Democratic Revolution.

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Spot on Max.
This morning on Cape Talk Radio I heard a guy saying that he used to be technician and a friend suggested that they start up a business. After hitting brick wall with red tape and bureaucracy they just gave up.
Considering that almost 60% of GDP is generated by SME’s they should be given laissez-faire to do whatever it takes to turn over a rand with absolutely no interference until they reach a turnover of R1 million a year.
But what do I know? An retired old white capitalist male entrepreneur ….
No doubt the proponents of the failed communist regimes know far better than me.

With respect, I get a bit tired of all these DIY, “entrepreneurial” wadawadawada.

The South African Government approves every month dozens of laws smothering entrepreneurs and businesses with loads and loads of bureaucratic crap. Everything under the name of “nation building for a just & equitable society”. Can they not see what they are doing?

Next to that, South African governement gets bigger each year, creating a parasite that sucks the life and spirit out of the economy. They have no idea as they sit in an ivory tower talking wadawadawada.

You name an opportunity and I will name 10 Acts which wil keep you busy for a month or 2.

And every year we hear that government is very worried about jobs. So very worried that they are going to organise a….Job Summit. Hahahahaha..

Sorry Max, It is just not going to happen as long as this government is in place.

Thank you Max DuPreez for recommending this strategy. I am sure to follow-up on it because I too believe Entrepreneurship is the key to solving the biggest problem, Unemployment. Once unemployment is reduce it will have a direct result in crime reduction and reducing inequality in South Africa.

I believe inequality is often used as a scapegoat, like Apartheid for not doing anything about the situation. There is always small things that can be done. However, our government welfare system has trained by learned helplessness. We must overcome the inherent learned helplessness that stops people from starting businesses and growing them.

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