South Africans are impatient. They want to see economic changes that can reduce the unemployment rate dramatically. If not adequately managed, impatience can be a source of political instability, especially when the elites eat while the unemployed get the crumbs of social grants.
But there are differences of opinions about how best to trigger economic growth and create jobs. In a democracy with highly opinionated middle classes, differences of opinions on economic direction is encouraging, but only if the state has the capacity to distill from the opinions the best policy options.
Alas, the state often gets overwhelmed and get stuck in policy paralysis.
Here is a sample of the most divisive questions that often raise emotional debates and yield rationality:
- Fiscal policies – to what extent should government borrow and increase spending?
- Tax policies – can more be squeezed from the taxpayer?
- Monetary policy – should the South African Reserve Bank’s role should go beyond its constitutionally prescribed role of taking care of the value of our currency?
- Labour relations – do our labour laws allow for employment creation?
- Black Economic Empowerment – should it be scrapped?
- State tender system – does it serve the purpose?
- State-owned companies – should be sold to private sector players who can run the competently and help add to the tax base?
- Land – should it be expropriated without compensation?
Sadly, there is hardly national consensus on any of these questions. Whatever the state implements are not always the correct policies even if they may be popular enough to keep the governing party in power.
Differences aside, there is one really where there is almost national consensus – that small and medium-size businesses have the potential to revive our ailing economy and diffuse the social bomb of unemployment.
Now, if we want to move forward as a country, we have to start by focusing on those areas where there is a reasonable level of consensus. So, given the fact that there is agreement about the potential for small businesses, what are policy makers doing to unleash it?The state has several development finance institutions aimed at supporting small businesses. They are found at national and provincial spheres of government. The government has even established a full ministry of small business – a clear indication that small business is a national priority.
Yet, we aren’t seeing small businesses taking off in a big way as they potentially could and reduce our scary unemployment rate of more than 50% among young people. Many young people are talented enough to run small businesses, but they run around looking for jobs, seemingly unaware of their potential or perhaps daunted by the prospects of taking responsibility.
This is an outcome of an education system that inculcates in the minds of young people below-par confidence levels. To solve it requires a complete culture change and the review of the curriculum. School graduates should not only be competitive; they must also feel confident that they are actually competitive enough to start a business, fail, and start again until they get it right.To immediately get the ball rolling, the Ministers of Small Business; Basic Education; Higher Education and Technology must consider regulations to restrict business opportunities within schools and higher education institutions to students whose line of studies, broadly speaking, have to do with entrepreneurship. Why must a university canteen or campus official events be outsourced to private operators?
These businesses should be run by senior students who are doing business or hospitality studies. Universities and other institutions of higher learning must become sites of entrepreneurship, innovation and confidence-building institutions.
Culture change is not the sole responsibility of higher education institutions. Leaders across society – in politics, churches, extended families and corporations – must use their influence to inculcate the culture of independence, responsibility, hard work, ethics and competitiveness. They must all say no to the culture of instant gratification, freebies and entitlement.
Our dominant political culture that encourages corruption, get-rich-quick-schemes and display of instant wealth by dodgy pastors, politicians and tenderpreneurs is sadly damaging the psyche of our young people. Transforming the culture of entitlement into that of responsibility might take time. It’s important to start now.
But there is one thing that can be done quickly to promote small business. The government must make it a criminal offence for any state organ to fail to pay a small business operator within 30 days and the person responsible for settling of the bills should face criminal charges of business sabotage.
While awaiting the outcome of a trial they must not get a salary from the state. On the other hand, a businessperson who fraudulently submits invoices for work not done or not done according to the required specification must also face jail time.
If this system can be proven effective, stimulate quick payments – and by extension economic transactions – without compromising quality of service delivery, it can be extended to include the private sector. But before the private sector is burdened with regulations, which are often the cause of economic contraction, the state must prove that it can lead by example in unleashing the potential for small businesses.
Mkhabela is chairman of an investment company and is he is also a political analyst.