Mineworkers Investment Company and Entreprenuership
Posted by Daniel Makhura on 25 October 2017 3:40 PM SAST
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Small businesses have become the lifeblood of our economy for the simple reason that they create jobs. It is a widely accepted fact that large corporates are focused on streamlining operations and this often includes retrenchments and hiring freezes. But entrepreneurs consistently employ people and this is why governments and financial organisations around the world are supporting the development of the small to medium enterprise (SME) sector. Some researchers estimate that the SME sector in South Africa makes up 91% of formalised businesses and that they provide employment to about 60% of the labour force with a total economic output of about 34% of GDP. It is predicted that by 2030, 90% of new jobs in the country will be created by the SME sector. SMEs foster diversification while being productive drivers of inclusive economic growth as well as development in South Africa and around the world. Small businesses also serve the requirements of larger businesses by making innovative contributions in terms of maintenance, catering and other back office services. The SME sector is now being supported by a number of government initiatives that provide financial assistance directly and indirectly to entrepreneurs. Recently, 50 companies, including about 70% of the JSE’s (Johannesburg Stock Exchange) Top 40 companies, put R1,5-billion into a new small business fund, known as the South African Small to Medium Enterprise Fund. Deputy President Cyril Ramaphosa said government will match the private sector’s contribution to the fund, which is a joint effort by business and government to avoid a credit rating downgrade for the country by stimulating job growth through SMEs. The idea of the fund is to generate market related returns for shareholders who invest in the public company being set up to oversee the fund and to support the venture capital sector. The new fund will also focus on mentorship with executives from JSE Top 40 companies assisting entrepreneurs. Ever since the global financial crisis in 2008, the world economy has struggled to regain significant growth momentum, but growth in developing economies has been stronger than in advanced economies. South Africa’s economic growth has however disappointed in recent years. In 2014 and 2015, real GDP growth registered 1.5%, and fell short of the estimated population growth of 1.6%. Of course, in an environment of slow growth, employment creation has also been weak. On a more positive note, the sharp reduction in pricing for information technology as well as services associated with this sector has provided opportunities for entrepreneurs. The relative price of producing goods and services in South Africa serves to enable the participation of more entrepreneurs in expanding exports. Starting and maintaining a small business isn’t always as easy as it sounds. According to statistics, 70% to 80% of small businesses fail in their first year and about half of those businesses remain operational for the next five years. Another stark statistic is that these small businesses only have a 37% chance of surviving four years and a 9% chance of surviving 10 years. For this reason, the Ministry of Small Business Development, which was formed in 2014, is focused on supporting the SME sector by providing training, advice, counselling and mentoring. The aim of the ministry is to achieve the National Development Plan’s growth target of 5.4% for the next 16 years by placing SMEs and co-operatives at the centre of the war against unemployment and inequality. The most overlooked reason for the development of SMEs is the ripple effect it has, not just for individuals, but for families and communities too and this is what is meant when people talk about inclusive growth – it’s about bringing people into the economy and the job market, and ensuring that previously disadvantaged groups have real and tangible opportunities for generations to come. However, SMEs are hampered in their goals by poor infrastructure and the high costs of doing business in some sectors. Thankfully, the National Treasury has committed R847-billion over the next three years for infrastructure development and it is predicted that this will have a positive impact on small business development. For all these reasons, the Mineworkers Investment Company has teamed up with the South African Professional Network Association, a networking and empowerment organisation to support the development of professionals and entrepreneurs. The MIC also has an Entrepreneurship Bootcamp which aims to introduce learners from disadvantaged communities to the concepts and skills necessary to run a successful business. The company has partnered with Driven, an Awethu Project entrepreneurship incubator, to develop the programme at the Kliptown and Kenilworth Secondary Schools in Gauteng and at their two feeder primary schools. Every year, learners are invited to develop and pitch ideas for a small business and, if these are judged to be viable, they are selected to participate in the “boot camp”. After the camp, they receive a small loan to get the business off the ground and they are mentored through the start-up and growth phases. Given how vitally important entrepreneurs are to the economy, South Africa needs to make significant and sustainable improvements to our education system as this will serve to enhance the small business sector and foster long-term economic growth. Entrepreneurship should be seen as a viable career path and more should be done to help build a nation of entrepreneurs.