Essays

The Little Guy and the National Planning Commission

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Cover of the diagnostic report by the NPC. Will the “little guy” find the links?
A problem well-defined is a problem half solved. The expectations from the diagnostic report of the National Planning Commission (NPC) are that it would  define the problems facing our society in a way that stimulates discussion, and through a process unites us in defining the problem and the plan to resolve them. In that spirit,I am arguing that the section on enterprise development in the Diagnostic Report will require a recognition of realities of uneven market power in South Africa as a foundation to define the problem and develop solutions. At the core is that the NPC must take a stance to back the “little guy” in the economy, and all people excluded from the economy. It should do this initially through defining the problem, however it has not yet embedded in the way the NPC approaches the definition of the problems we face.
The NPC provides a useful way of describing the surface manifestations of low levels of entrepreneurial activity in South Africa. It notes in this regard that:

  • Small business contributes 40% of GDP and employs 60% of workers in South Africa
  • Notes that only 2% of adult population are involved in start-up activity
  • Highlights that South Africa has relatively low levels of entrepreneurial activity

It then summarises the policy response as follows:
Factors that hinder the development of  Small, medium and micro enterprises (SMMEs) include inappropriate regulation, lack of access to finance and external factors such as crime. Furthermore, because they have supply chains across the country, large firms are able to sell their products at prices smaller companies cannot match. A strategy to promote SMMEs cannot take hold without addressing the challenge of accessing established supply chains.
 

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Youth unemployment as a poverty trap

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This presentation provides a conceptual argument that high levels of youth unemployment are a manifestation of a deeper poverty trap in South Africa. Argues that the expansion of social security, community works and building assets are potentially viable responses that must be included in a discussion on youth unemployment. Importantly, there are young unemployed people who simply lack information, or are holding out for a better paying job. However, the majority of young unemployed South Africans have little or no prospect of finding work. Providing regular income and work to these unemployed young people requires that as a society we create mechanisms for economic inclusion.
 

 
 

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National Planning Commission Goes Facebook, excludes most South Africans

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South Africans given first opportunity to input on the development of the National Plan, but only for internet users.
On Zapreneur, I have argued that the national planning process must be made more open for the National Planning Commission to meet its goals. While it is presumptuous to indicate that the article had an influence, The Presidency announced that it will be having NPC Jam Session running for five days starting on the 28 March 2011.

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Enter the entrepreneur? Budget 2011 Proposals for Many Small Businesses not Just White Tigers

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Zapreneur declares it has an interest in this subject. Photo - Moe and Milsey's Construction Company

We like them. The small business that succeeds against the odds. Minister Gordhan even saluted a couple of success stories on the budget. In the build up to the budget, I choose to read The White Tiger by Indian author Aravind Adiga . The White Tiger provides a devastating description of the poverty traps, and that rare success stories translate to private gain without a wider social impact. The central premise of the book is that successful entrepreneurs are as rare as white tigers. In fact, in South Africa the data provided by the Global Entrepreneurship Monitor indicates that job creating, opportunity based businesses are a rarity in South Africa. The book though not set in South Africa provides a useful refrain from the rah-rah usually associated with entrepreneurship. What then does the budget propose for the small business entrepreneur?

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Youth Subsidy and building consensus

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KwaZulu-Natal Midlands: Ceramic painters Zama Nqubuku (foreground) and Wiseman Ndlovu at work in the Ardmore Ceramics studio. Photo: Hannelie Coetzee

Minister Pravin Gordhan reintroduction of the proposals around the youth subsidy is a brave political decision, given the overwhelming and justifiable criticism of the proposal. In tabling the new proposal Minister Gordhan has listened to the criticism and opted to tweak the proposal. The first proposal provided a wage subsidy or hiring voucher to lower cost of labour and compensate employers for the perceived risk of hiring inexperienced workers. In tweaking the proposal, government has shifted from this position, so that it is now to be administered as a tax credit. This is significant step as it potentially means that entry-level wages will remain the same.

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What will happen to the R 9 billion job creation fund?

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2011 Budget Options

This article previews the budget looking at three options for spending the R 9 billion for job creation activities announced in the State of the Nation Address.
President Jacob Zuma left the details of the R 9 billion for job creation activities vague in his State of the Nation Address, simply saying:

We are pleased to announce the establishment of a jobs fund of 9 billion rand over the next three years to finance new job-creation initiatives.

The announcement on the details of this are eagerly anticipated when Minister Pravin  Gordhan delivers the 2011/12 Budget Speech. There are three major readings about what the details of the proposal will mean. The major options are:

  1. Application based fund
  2. Subsidy to support youth employment
  3. Support small business

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Taxes to support entrepreneurship

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Proposals on a major reform for small business taxes have been around for years. In this preview, we explore some of the options that potentially features in Budget 2011.

Proposal to utilise taxes to support small business and entrepreneurship are a strong possibility to feature in Budget 2011.Minister Pravin Gordhan, in his 2010 Budget Speech indicated that small business taxation would be an area of focus in government. Work in this area has been undertaken, and government might be ready to offer significant tax incentives to small business and start-ups.The logic is important to understand – more employers = more jobs.  The result is that economic participation and inclusion is supported.

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