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Ebrahim-Khalil Hassen           http://zapreneur.com Economic Development Department Panel onGovernment’s Role in Supporti...
FREEDOM CHARTER                THE PEOPLE SHALL SHARE IN THE COUNTRY`S WEALTH!  THE NATIONAL WEALTH OF OUR COUNTRY, THE HE...
The Small Business DebateAgency                           Structural• Less Red Tape, More            • Monopoly Capital – ...
Motivations to Start Business                      40Work with the small        35.8                                  34.2...
Number of Jobs by owners motivation100%90%                                            22.480%           43.070%60%50%40%  ...
Jobs in Small Business By Activity             0   1   2   3   4   5   6 or more100%90%80%70%60%50%40%30%20%10% 0%
Registration Status By Net Profit        Less than 25K     25k to 100 K      100K to 1 Million     More than 1 Million    ...
Lesson One  WORK WITH THE SMALL BUSINESSES  WE HAVE. UNDERSTAND THEM AND  FIND WAYS TO SUPPORT OPPORTUNITY  BASED AND EMPL...
Lesson TwoALLIANCE WITH THE LITTLE GUY
We must have a different kind ofmarket economy — one basedon a decentralised alliancebetween the little guy and thegovernm...
The Number One Problem Facing       Small Business             DEMAND FOR PRODUCT                  Across all surveys that...
ECONOMIC CONCENTRATION• The picture that emerges is of a landscape inhabited by  lumbering giants – corporates, parastatal...
Concentration Reflected in the State               Budget• Less than 1% of economic budget allocated to  small business (2...
Examples• Nuclear energy• Dam building linked to large scale mining• Strong SOE support for aluminium sector and  iron ore...
Responses Needed• Economic Deconcentration Act  – Large oligopolistic nature of the economy is a    structural fault line ...
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Government Role in supporting small business in South Africa

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Initial thoughts on governments role in creating a viable small business and entrepreneurial sector in South Africa

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Government Role in supporting small business in South Africa

  1. 1. Ebrahim-Khalil Hassen http://zapreneur.com Economic Development Department Panel onGovernment’s Role in Supporting Small Business 29 May 2012 Centurion
  2. 2. FREEDOM CHARTER THE PEOPLE SHALL SHARE IN THE COUNTRY`S WEALTH! THE NATIONAL WEALTH OF OUR COUNTRY, THE HERITAGE OF SOUTH AFRICANS, SHALL BE RESTORED TO THE PEOPLE; THE MINERAL WEALTH BENEATH THE SOIL, THE BANKS AND MONOPOLY INDUSTRY SHALL BE TRANSFERRED TO THE OWNERSHIP OF THE PEOPLE AS A WHOLE; ALL OTHER INDUSTRY AND TRADE SHALL BE CONTROLLED TO ASSIST THE WELLBEING OF THE PEOPLE; ALL PEOPLE SHALL HAVE EQUAL RIGHTS TO TRADE WHERE THEY CHOOSE, TO MANUFACTURE AND TO ENTER ALL TRADES, CRAFTS AND PROFESSIONS.
  3. 3. The Small Business DebateAgency Structural• Less Red Tape, More • Monopoly Capital – squash Deregulation little guys like bugs BOTH APPROACHES FIND RESONANCE IN POLICY IMPLEMENTATION ? Issue One – Understanding SMME Sector Issue Two – Economic Deconcentration
  4. 4. Motivations to Start Business 40Work with the small 35.8 34.2 35businesses we have 30• Large numbers of 25 25.1 own account 20 16.6 workers 15 14 8.9• But, 10 7.3 5 2.9 1.9 1.8 understanding 0 differentiation very important FINSCOPE 2010, Authors Calculations
  5. 5. Number of Jobs by owners motivation100%90% 22.480% 43.070%60%50%40% 77.630% 57.020%10% 0% Opportunity Lost Job/ Unemployed Own Account Worker More than one Job FINSCOPE 2010, Authors Calculations
  6. 6. Jobs in Small Business By Activity 0 1 2 3 4 5 6 or more100%90%80%70%60%50%40%30%20%10% 0%
  7. 7. Registration Status By Net Profit Less than 25K 25k to 100 K 100K to 1 Million More than 1 Million 98.9100.0 90.0 80.0 76.5 70.0 60.0 50.0 40.0 30.0 20.0 11.9 10.2 10.0 1.5 0.7 0.4 0.0 0.0 Registered Not Registered
  8. 8. Lesson One WORK WITH THE SMALL BUSINESSES WE HAVE. UNDERSTAND THEM AND FIND WAYS TO SUPPORT OPPORTUNITY BASED AND EMPLOYMENT CREATING INITIATIVES. WHAT ABOUT NECESSITY DRIVEN BUSINESSES?
  9. 9. Lesson TwoALLIANCE WITH THE LITTLE GUY
  10. 10. We must have a different kind ofmarket economy — one basedon a decentralised alliancebetween the little guy and thegovernment.Roberto MangabeiraUnger, 2001
  11. 11. The Number One Problem Facing Small Business DEMAND FOR PRODUCT Across all surveys that were reviewed WHY IS THIS? LACK OF UNCOMPETITIVEENTREPRENEURIAL ECONOMY EDUCATION
  12. 12. ECONOMIC CONCENTRATION• The picture that emerges is of a landscape inhabited by lumbering giants – corporates, parastatals and conglomerates – that can easily squash any smaller species that do not find a way of hanging on and moving with them.• Small Business Project, 2011
  13. 13. Concentration Reflected in the State Budget• Less than 1% of economic budget allocated to small business (2009 paper available)• Strong focus on IPAP, New Growth Path and Industrial Development Zones• R 350 billion to R 700 billion on nuclear• State Budget reflects and supports economic concentration
  14. 14. Examples• Nuclear energy• Dam building linked to large scale mining• Strong SOE support for aluminium sector and iron ore sectors• Limited legislative agenda focussed on• Frontier industries (Internet) virtually ignored, yet South Africa can create 150 000 jobs in the next two decades
  15. 15. Responses Needed• Economic Deconcentration Act – Large oligopolistic nature of the economy is a structural fault line (#ows). They are too big too fail. – US and other countries actively reducing the largeness of firms. – Incentives for linking small and larger businesses – Introduction of stronger venture capital fund role for government – Stronger support for franchising

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