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Jobs, Jobs, Jobs: We Need A National Entrepreneurship Plan

A national programme that supports demarcated disadvantaged groups is crucial.

07/12/2017 05:37 SAST | Updated 07/12/2017 05:37 SAST
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The National Development Plan (NDP) aims to eliminate poverty and reduce inequality by the year 2030. To confront unemployment, specifically in the demarcated disempowered groups of youth, women and people with disabilities, government, industry, unions and the electorate need to work together.

Currently, there is a lack of support by both government and the private sector to nurture the growth of the next generation of business minds –– specifically those in the demarcated groups.

Chief among the many problems holding back the middle class is poor leadership, both in the private and public sectors, but particularly in local and provincial spheres of government.

Many policies have been developed to support small businesses in South Africa, but none have managed to effectively increase employment as well as grow a successful small-business sector, specifically in the demarcated groups.

This article will establish the grounds for a national programme that supports the demarcated disadvantaged groups of youth, women and people with disabilities. The structure will start on a national level and comprise National Youth Enterprises (NYE); National Women's Enterprises (NEW) and National Enterprises for People with Disabilities (NEPD). The structure's DNA will be privately owned by member companies.

Each enterprise will be tiered according to revenue per annum, as per the horizontal bars in figure 1. The scale of investment value for each tier will be agreed upon by all the stakeholders, with tier 3 being the lowest and tier 1 the highest annual income per enterprise.

The national structure consists of key sectors, based on the Industrial Policy Action Plan (IPAP). The IPAP highlights the key sectors of the country: automotive products; advanced manufacturing; forestry; oil & gas; and creative industries such as music and film, etc. An enterprise will fall within a specific tier and sector, based on revenue, depending on the core function; e.g. manufacturing.

But as effectiveness should be sought at the coalface of poverty, which is where the people live –– in a ward of a local municipality, operating within a province with opportunities and resources to offer the small business sector –– the programme proposes a provincial as well as a local structure.

The provincial framework should have a structure for each of our nine provinces, comprising Provincial Youth Enterprises (PYE); Provincial Women's Enterprises (PWE) and Provincial Enterprises for People with Disabilities (PEPD). As on a national level, each enterprise in the provincial structure will also be tiered according to annual revenue. It is essential that the revenue bands for each tier are agreed upon by all stakeholders.

The economy of the province will support and supply the enterprise, and when the enterprise exceeds the agreed-upon revenue parameters of the provincial structure, it will transfer to the national structure and then exit the programme.

Whereas the IPAP determines the national key sectors, at a provincial level the key sectors are specified in each province's Provincial Growth and Development Strategy (PGDS). The sectors will be different for each province, depending on their specific focus areas and growth within the province. For example, whereas mining would be a main key sector for Limpopo, in Gauteng a key sector would be manufacturing.

It is important to note that the sectors will be different for each province. This ensures no unnecessary duplication in each structure.

The third and final level is the local structure. This includes a structure for each metro and district municipality for Local Youth Enterprises (LYE); Local Women's Enterprises (LWE) and Local Enterprises for People with Disabilities (LEPD). South Africa consists of eight metropolitan municipalities and 44 district municipalities (52 in total).

As with each of the provinces, the local key sectors will differ for each metro and district municipality, according to their specific economic profile. For example, the largest economic sectors in the Nelson Mandela metro are manufacturing, finance, community services and transport; whereas Buffalo City metro has a strong manufacturing base, with a prominent automobile industry.

The Integrated Development Plan (IDP) will be key in determining the key sectors for each metro and district municipality.

The proposed programme will be supported at all three levels –– national, provincial and local –– by government procurement (both departments and SOEs) and private sector preferential supply.

Every year government procures millions of rands of goods and services. To ensure the demarcated groups, made up of the youth, women and people with disabilities, receive a fair proportion of government spend, a percentage must be set aside specifically for the enterprises in this programme.

If an enterprise is available and able to perform work or provide the products being procured by government, those opportunities are "set-aside" exclusively for those enterprises in this programme.

In addition, government will allow for preferential procurement specifically for enterprises within this structure. Private companies making use of the services or products of any of the enterprises in the programme will benefit through the positive impact on their scorecard.

Private companies will favour using enterprises in this programme, as it will enhance their own BEE scorecard under the preferential procurement element provisions. Preferential procurement also provides a valuable opportunity to drive social and economic transformation.

Each enterprise that participates in the programme will be required to pay a percentage fee determined by their level (national, provincial or local) as well as tier. In return, they will receive office support in the form of a shared services centre, provided by the private sector.

When the enterprise exceeds the revenue bands in their current tier, they move up to the next tier. If they are on tier 1 of a specific structure (such as local) and they exceed tier 1's revenue band, they ascend to the next structure (i.e. provincial). Once a company exceeds the tier 1 in the national structure revenue bands, they must exit the programme.

Each enterprise must graduate from local, to provincial, to national, depending on their revenue tiers. The typical lifespan in this safe cocoon of a programme will be three to five years, after which the enterprise must exit to accommodate another company.

On their exit, they should adopt a local member which they will guide and mentor. The financial contribution to the programme will terminate once they exit, and the support received from the programme will then also come to an end, including the back-office support and specific markets set aside for the enterprise.

Governance will be maintained by an executive that would typically consist of the CEO, CIO and CFO, the board, sector and industry reps from various companies in the sector, and ex-officio representatives from government.

The programme requires government and industry to work together to nurture and empower the youth, women and people with disabilities in their entrepreneurial activities.

The enterprise structure will assist demarcated groups through business and artisanal skills development, maximising a participating enterprise's potential for success.

It will ensure more people are employed and help reduce poverty, thereby contributing to economic growth.

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