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More Entrepreneurs, Less Tenderpreneurs

Published 5 years ago
By Forbes Africa

I wrote an article for a business news website several months ago about South Africa’s need to develop industrialists. The need is simply unavoidable: we incessantly hear about the country’s high unemployment rate in the media. Much is stated yet little is done.

A reader commented on the article, making a rather brash statement, which he is entitled to. He was of the opinion that I was naive for stating that we need to produce A-grade industrialists, instead highlighting the fact that our government should rather focus on mitigating the capital outflows South Africa has experienced in recent times. Perhaps our stringent labor laws are to blame or maybe our sluggish economy has precipitated these outflows. I agree in part; ultimately my point, and the real issue, is that not enough great ideas are being cultivated. There are various reasons such as entrepreneurs continuing to find it difficult to access funding, and our high skills deficiency relative to other industrialized economies.

The tenuous relationship between the private and public sectors cannot be over-emphasized. This issue is constantly debated in the media, illustrated by differing ideologies that the public and private sectors have pertaining to the economy: what should be done and how it should be done. Unfortunately for the greater masses, and more importantly the economic welfare of our country, their issues remain unresolved. The situation with our capitulating mining industry is a perfect illustration of the tipping point that has been reached as far as relations between the state and business are concerned. It comes as no surprise that the sector has cut thousands of jobs and this trend is likely to continue in other sectors.

According to recent data from the Department of Trade and Industry, South Africa’s gross domestic fixed investment to GDP hovers around 20%, well below the fastest growing nations. We can no longer justify our lack of saving as a nation on the fact that we have a growing fiscal budget, placing greater pressure on our budget deficit. There are several countries that face similar challenges, and are considered developing countries by the World Bank, that have significantly higher national savings as a proportion of the national income. The Asian Tigers – Hong Kong, Singapore, Taiwan and South Korea – owe some of the successes of their economic revolutions to substantially higher national savings, which enabled them in part to finance the industrialization of their economies through private investment rather than relying on foreign investment.

This brings me to my next point: South Africa needs to create world-class industrialists now and at a rapid pace. The ‘industrialist’ term has been misused by being prefixed by ‘black’ in recent government economic policy documents. The term has been used to describe what appears to be Black Economic Empowerment benefactors who will be moulded into billionaires. The ruling African National Progress (ANC) party has stated several times its need to create black billionaires. Few would disagree that the emergence of wealthy blacks, including all previously disadvantaged race groups, is necessary in the transformation struggle. The issue is not as much whether the emergence of black billionaires is wrong, but rather the manner in which the government plans to go about it.

The prioritization of creating employment opportunities remains pivotal in curbing the dependency of South Africans on state welfare and ultimately building a society in which the economic benefits of the country benefit everyone. For now, the prospect of higher employment amid the slowing economic growth is inconceivable. Great ideas need to be cultivated. Ultimately it was great ideas that birthed many of the largest corporations the world has ever seen and immortalized industrialists such as Andrew Carnegie and Cornelius Vanderbilt that transformed the concept of entrepreneurship.

The alternative of creating an elitist ‘black’ faction of billionaires through state procurement processes, better known as tenderpreneurship, will not only breed discontentment among the poor black majority, but will be a clear sign that the ANC has never, at its core, been a truly leftist party but is mutating  into a right-wing movement.

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Related Topics: #Business, #Department of Trade and Industry, #GDP, #Media, #News, #October 2015, #World Bank.