Business owners and aspiring entrepreneurs are often at the mercy of macroeconomic factors yet it is estimated that South African small businesses employ 50% – 60% of the workforce and contribute up to 34% of the total GDP – playing a crucial role in job creation. But rising inflation, fuel and food prices, as well as operational challenges, mean that entrepreneurs while resourceful as they are, are struggling and it is clear that a vibrant ecosystem approach is required, where multiple stakeholders and interventions work together collaboratively to help develop and support entrepreneurs in an inclusive and sustainable manner – especially if we are to meet the South African National Development Plan’s goal of seeing SMEs contributing 60-80% to the GDP and generating 90% of the 11 million new jobs required by 2030.
In a discussion with Chi Chi Gule, Setlogane Manchidi, Head of CSI at Investec unpacks more:
Unemployment is still high; how do we encourage South Africans to take the entrepreneurship route?
SM: Our country’s unemployment rate remains persistently high at 32%, and in order to address this issue, we should encourage young people to look beyond traditional employment to exploring entrepreneurial opportunities that not only enable them to become active economic participants, but also in the process solve people’s pain points. We are a country beset by many socio-economic challenges, but these very challenges as unfortunate as they may be, present opportunities for entrepreneurially minded people to add value by designing and delivering innovative solutions. Such a perspective is what should inform our entrepreneurship development programmes such as Startup School, Junior Achievement South Africa, and Finance Readiness Programme which Investec has partnered with for many years.
At the heart of these programmes is the acknowledgement that entrepreneurship is often a long hard and lonely journey which is not really enticing for many people. Therefore, partnering with these programmes is a way of not only encouraging people to explore entrepreneurship, but also aimed at assuring them of some level of support aimed at helping many to make a success of their entrepreneurial aspirations.
The Department of Small Business gazetting its intentions to introduce a new bill to establish a state-owned company to support small business in South Africa – what impact will this hopefully make?
SM: The execution of this new bill, which is primarily focused on township, rural, and informal business development, should hopefully result in the creation of more job opportunities, which should in turn foster inclusive economic growth. While such a development should be welcomed with a degree of optimism, we must however also point out that introductions of such a bill is not in itself a silver bullet and will not be enough if it is not followed through with carefully thought-out practical interventions implemented on the ground. The latter is unfortunately a challenge observed in many spaces in South Africa where the legislative framework and plans exist but the reality on the ground falls short of what was initially intended.
No doubt, if appropriately implemented such developments could fast track not only the uptake of entrepreneurship as a meaningful route to active economic inclusion but open doors to financial and strategic support that will enable the growth of emerging businesses and facilitate the employment of others.
What is the importance of coaching and mentorship in this space?
SM: Coaching and mentoring are both crucial development and support initiatives, particularly for those looking to start their own businesses and those looking at taking their business to the next level. Both contribute to the development of people, relationship building, and provide a unique opportunity to gain valuable insights and expertise from those who have walked the journey of establishing successful businesses, which will be critical in guiding upcoming entrepreneurs towards success too.
For those wanting to scale their business but are afraid of rocking the boat – what options are there?
SM: Starting a business can be intimidating and challenging, however with the correct support systems, it is possible to achieve success. Joining interdependent support systems such as business incubation centres and taking advantage of some of the programmes offered corporates such as Investec. This kind of support can go a long way to nurturing and growing small businesses through their initial development stages.
One is reminded of the saying if you want to go fast go alone but if you want to go far go together with others. Participating in entrepreneurship development initiatives gives emerging entrepreneurs the opportunity to engage with and benefit from others in very similar circumstances – building a network of like-minded people where they can draw inspiration, lessons and peer support from throughout their business journey.
From a corporate perspective, how do we unlock entrepreneurial potential in SA and beyond?
SM: Supporting start-ups goes beyond funding from corporates. While access to funding capital helps in executing a business strategy, access to robust, strategic entrepreneurship programmes could result in higher chances of success. Through these programmes, corporates must create an environment that provides startups with access to professional support for entrepreneurs, particularly around the management of finances and administrative operations of the business. This kind of support and service alleviates some pressure from entrepreneurs, allowing them to focus on their innovation while strengthening their long-term ability to build robust businesses.
