Abridged Version
Global Unemployment reached 225 million
(7% of International Labour Force) in 2011 [ILO] and domestic Unemployment stubbornly
basks on its 6.6 million (40%) resistance level. It is little wonder then that most
Governments, including our own, fear to be befallen by their well earned ‘Tunisia
day’ and are seen scrambling, at dire straits, for solutions, anything really, so
long as it is quick and sellable!
Other than a few forgettable murmurings
here and there about small businesses and entrepreneurship, no one seems to
have figured out, to within a comforting degree of reason, a path towards lower
unemployment. The suggestion that small businesses are a dependable solution
for our joblessness woes seems to have caught on but failed to capture the
imaginations of many, least of all our Politico.
Between the SONA, SOPAs and 2012 Budget,
little was said about the role entrepreneurs could play in this process. Whereas
there are some pundits, CEOs and politicians that have dabbled with this
notion, none have laid down clear concrete steps or a plan of any sort that we can
begin to consider. So far we have spoken a good talk but not much has been
said.
There is good reason for this; it’s complicated!
You cannot plagiarise an economic model unless the socioeconomic variables are
exactly alike. In the US, for example, 45 million people are employed in Micro
businesses that each employ less than 10 people (there are about 7 million of
these businesses) [SBA, 2009]. However, the US economy is more than 50 times
our size in real GDP terms, 7 times in population and more than 5 times in real
per capita GDP adjusted for Purchasing Power Parity. These are critical factors
that influence the nature, scale and dynamism of entrepreneurship.
Consider this for a second; all things
being equal, were South Africa to copy the US model on Micro Entrepreneurship,
1.3 million new micro businesses would have to be established to each employ
at-least 6 people within the next 5 years. Our economy is simply not built for
this. Who would train these entrepreneurs? What would these businesses do? How
would they be funded? Where would the institutional capacity to support them
come from? These are pertinent questions not to be ignored in policy debates
and wish-lists of many a pundit.
The microeconomics are also not
supportive to this. Household savings are low, which means there are no surplus
funds to fuel the demand side of the domestic economy. This means existing
businesses are not keen to employ more people or prompt up the supply side.
With inflation already testing the patience of SARB, interest rates are not
going down to support higher disposable incomes. Fiscal policy also cannot come
to our rescue with lower taxes, otherwise how will we support our expanding
social net, national debt and a budget deficit already not palatable for many?
So where to look?
If entrepreneurship is to be appointed
the preferred solution to joblessness then we must have a meticulous strategy
to achieve this. It cannot be left to a hope and prayer or cut to a one dimensional
undertaking, it necessarily must be multifaceted. We must consider a sequential
plan with several integrated phases that affect demand, skills, capital and
enterprise support.
Entrepreneurship is not an end in itself
and we cannot, therefore, continue to speak of it as if it were some magic wand
that even when left to its own volitions, could miraculously direct itself
towards the job intensive activities for which it is required. We must
intervene, with the correct incentives, to direct entrepreneurship towards
areas through which we could derive the highest value.
