AS SOUTH Africans turn their attention to the second decade of democracy, it is important to learn from our experiences in the first. Five vital principles can guide a new approach to supporting emerging entrepreneurs.
Entrepreneurship is a quality, not a deliverable commodity: it is a mistake to believe there is an unlimited pool of enterprise that needs only state-driven affirmative action, technical and financial support for a wave of successful small businesses to emerge.
Only a minority of people have the vision, guts, energy and capacity to cope with setbacks (even repeated failures), and stick with their idea until it succeeds.
An international expert captures the importance of attitude when he talks of two fundamental decisions, which are: “To depend entirely on one’s own abilities for economic security and to expect opportunity only by first creating value for others. To do this one has to move away from thinking that someone or something has to support you. It also requires freedom from entitlement to move away from the thinking that something is owed to you.”
Race means little, but culture is vital: in SA the temptation to see any issue from a racial perspective is ever present. In the sphere of entrepreneurship relatively low participation rates by blacks are often assumed to reflect continuing discrimination by the white establishment. This in turn, it is argued, requires affirmative support for aspirant entrepreneurs and measures to direct a stubborn white business establishment to mend its ways. These attitudes have an insidious counterpart, less likely to be expressed in public, but still destructively influential. It is that low entrepreneurship rates among black South Africans reflect inherent incapacity for business.
It is not hard to see how the two race-based attitudes feed on each other in a destructive cycle.
An international perspective can quickly give the lie to these racial perspectives. The 2002 Global Entrepreneurship Monitor reported: “Africans, or people of African descent, living in western countries are five times more likely to start their own businesses than their white counterparts. and people from the Caribbean were twice as likely as white people to be entrepreneurs.”
The same report found “97% of financing for ethnic communities came from personal or family sources”. This fits in with an emerging consensus that a supportive culture (pooled resources of finance and labour, values of self-reliance, independence) is more important than assistance from government.
The fallacy of finance: it has been part of the conventional wisdom which guides government policy to identify lack of access to finance as the top impediment to black business. Expert findings in this field however, regularly note would-be entrepreneurs often take the easy option of erroneously blaming lack of finance for the failure or stagnation of their businesses. Conversations with successful South African entrepreneurs bear out the fallacy of this mistaken focus on access to finance. SA’s successful firms started with a great idea, a champion(s) and their own risk capital. The First Rand Group started initially with R10000 of the founders’ own money. Dimension Data started with even less.
Entrepreneurship can flourish only where the values of the market are thoroughly and widely internalised. Policies to back entrepreneurship should work with the market and not try to overrule it.
Celebrate achievement, learn from successful entrepreneurs: SA has done far too little to recognise, fête and analyse the success of SA’s black entrepreneurs, who have “done it on their own”. Too much has been invested in focusing on structural obstacles black entrepreneurs have faced, instead of drawing on the lessons of those who overcame them.
In the long run education is crucial: SA must get the environment right for business now and promote successful entrepreneurs. Government must ensure its achievements with respect to access to education are now matched by achievements in the quality of education for poorer South Africans.
This will require far greater involvement of the private sector to maximise the benefits of markets and competition if poor citizens are to get the education they deserve. This will provide some with the skills to start their own businesses.
- This article by Ann Bernstein and Sandy Johnston is based on the CDE report: `Key to Growth supporting SA’s emerging entrepreneurs.’
