Make Entrepreneurship Central to National Policy

This article first appeared in Finweek, 14 November 2013.

 

South Africans often criticise their Government for formulating great policies but failing to adequately implement them. While there have been pockets of brilliance in policy formulation that have served the country well, allowing us to navigate the stormy seas of the global economy, there are also a fair number of policies that have had the unintended consequence of restricting progress. Twenty years into democracy, it is time we wake up from denial and shrug off our protectionist outlook and change what doesn’t work while improve what works.

For starters, we must make entrepreneurship central to national economic policy formulation. I am talking about entrepreneurship, and not SMME development. I am talking about a deliberate national economic policy that seeks to back entrepreneurs and innovators on a serious scale, to create new products and services, access new markets, spawn new industries and, over time, create meaningful employment and grow the tax base.

I am not referring to a drive to support small businesses that remain small and only employ the founder and a handful of unskilled labour. I am talking about the state having a mechanism to identify, develop and fund entrepreneurs and innovators who show great potential for the ultimate benefit of South Africa. I am talking about a mechanism that could have identified an Elon Musk. I am talking about a mechanism that should be developing, supporting and funding a Siyabulela Xuza – the former praise singer turned science and technology entrepreneur.

The good news is that we’ve done this before. It wasn’t as structured as I propose, but it yielded unprecedented results – the benefits of which we still enjoy today. I have told the story of this gentleman before. It is very relevant in the context of how a different outlook can lead to great benefits for the state.

Meet Hendrik van der Bijl. Born in 1887, he graduated from what is today known as Stellenbosch University with distinctions in mathematics and chemistry. After university young Van der Bijl decided to further his studies in Germany. After completing his studies, he met Robert Millikan, the eminent American physicist. Millikan was impressed with the young man and recommended the young scientist to executives from the Western Electric Company. Van der Bijl accepted their job offer and moved to New York.

The first successful transmission of speech by radio was made in 1915. Later that year speech was transmitted by radio over a distance of more than 8 000km. Van der Bijl was the young scientist who managed to get the amplifiers to work to the precise tolerances required over this very long distance. By 1917, Van der Bijl had made significant contributions to the development of the photoelectric cell and by these means, also made a significant contribution to the development of the television.

Back in SA, General Jan Smuts had assumed the reins of power in Government. Smuts believed that a scientific adviser would be an asset to his Cabinet. Van der Bijl was persuaded to return to SA and in 1920 he left the US. He soon started making plans for a public utility to provide the South African industry with cheap electricity. The capital would be provided by the State and the company would be run on commercial lines.

In 1923, the Electricity Supply Commission (Escom, now Eskom) was founded. Van der Bijl borrowed R16m from the State and began putting his plans into action. From the outset the undertaking was a success and within 10 years van der Bijl was able to pay the State loan back.

What we know as Vanderbijlpark today is named after this great South African.

We have an opportunity to learn from our history. We have an opportunity to redefine the ideology and bigger purpose of entrepreneurship in re-positioning our nation as the game-changing economic leader of our continent. Let’s make entrepreneurship central to our economic policy.

What Does Mangaung Mean to Entrepreneurs

In the short time I have been working on the launch of StartUpSA (Twitter: @MyStartUpSA), I have been really encouraged by the many tweets, emails and chance meetings of many people who keep telling us how much we need StartUpSA. Thanks for all the well-wishes and rest assured we are working very hard to deliver a really powerful tool.

The truth is we are a country of very enterprising people. The problem is and has always been that we do not have an adequately enabling environment to harness that entrepreneurial spirit. We have also not promoted entrepreneurship as a real opportunity to address the many social ills created by inequality, unemployment and poverty.

So I decided to take some time out to go though the ruling party’s discussion documents on their policies, as published on its website. I wanted to see whether entrepreneurship would feature at all in the party’s discussions, as just under 5,000 delegates go into conference to decide on the policy direction of South Africa’s nearly 52 million people.

Whether you like it or not, decisions to be taken in the country’s legal capital between 16-20 December 2012 are going to impact you, as an entrepreneur.

So I picked up the “Economic Transformation – Policy Discussion Document March 2012” to try and gauge if Mangaung may deliver any progressive thinking about entrepreneurship and perhaps promoting it out of the obscurity it finds itself into the centre of policy formation and strategic direction of South Africa.

The document opens by stating: “We have an opportunity and an obligation to deliberate on actions which could best enable the economic emancipation of our people”

The Oxford dictionary defines emancipation as ‘the fact or process of being set free from legal, social, or political restrictions; liberation’.

The word “entrepreneur” appears twice and the acronym “SMME” appears 8 times, in a document where the basic thrust and master plan is: In order to get South Africa economically transformed we need a more labour intensive economy. The simplistic argument is that to get South Africans out of poverty, they need to be employed, and for them to be employed the economy needs businesses which rely on employing people. Okay?!

The first time the word “entrepreneur” is mentioned is in the context of the many complex decisions the state would need to make around new ideas and keeping what works. In a way, entrepreneurs are made out to be the alternative to that which has worked over the years. It presupposes that the two cannot co-exist.

“Should we look for new investors in mining in order to open new opportunities for black entrepreneurs, or should we go with more experienced existing companies?” the document questions.

We need to educate our government that there is a big difference between an entrepreneur and a business owner. We need to educate our government that there is a big difference between Entrepreneurship and SMME Development.

The one is a Plumbing business that has hired 15 people in the past 10 years and will continue to hire 15 people for the next 10 years. The other is a malaria testing kit made by two Coloured gentlemen in Cape Town, which currently hires 10 people and because it has signed up an international pharmaceutical is about to build a factory in Goodwood.

One of these is an SMME. The other is an Entrepreneur.

The first time the document mentions “SMMEs”, one can clearly see the confusion:

“The SMME sector plays an increasingly important role as an engine for economic growth SMMEs are a critical source of innovation. They have a higher degree of labour intensity, and tend to adapt more rapidly to changing conditions than larger organisations. They also provide opportunities for aspiring entrepreneurs, especially those who are unemployed. However, SMME’s continue to face challenges of access to finance, markets, support and information. We should target the creation of new firms, especially black owned SMME’s if we are to achieve our employment creation goals”

Here the document is talking about entrepreneurs, not SMME’s. An education is required to enable our government to support Entrepreneurship accordingly.

Whilst I don’t have the privilege of being a voting delegate in Mangaung, I hope to tell anyone who cares to listen that if we really care about the future of this country, we should bring entrepreneurship into the mainstream debate as it provides us a real chance of changing the game and making progress in creating ‘a better life for all’.

Here's to a Ministry of Entrepreneurship. I dream.

AK