Prof Jay Mitra in a recent conference that I attended said: "Governments should be interventionist than being responsive in their efforts to support and build the SME sector"
To be "interventionist or responsive" is a policy position that; the governments take to achieve or correct certain imbalances in the market. I am indifferent to either policy position. As an entrepreneur who is in the trenches for eleven years now, mine; is to reflect whether the South African Government is responding or intervening in supporting or building the SME sector?
It will be unfair and misleading to say that; the South African Government is not responding or intervening in the plight of SME’s. A number of institutions were established to respond to the needs of SME’s e.g. SEDA (Small Enterprise Development Agency), LEDA (Local Economic Development Agencies), GEP (Gauteng Enterprise Propeller), ECDC (Eastern Cape Development Corporation) and many others. The establishment of such institutions by Government can be taken as their intention to respond. However, it is important to note that; to respond, means reacting quickly and with interest. Talking from experience, the government’s reaction time to my needs was less to be desired, and it appeared that their interest was mainly in their business, not mine - I mean their tick box business interest.
I once responded to the advert by one of the SME development agencies. The advert read: “New business? Marketing assistance available to a value of XX”. I had just opened another branch, all I needed was posting an advert in a local newspaper. The cost of placing the advert was the same value of marketing assistance advertised. After submitting a million documents, and waiting, to my disappointment; I was told that I was approved, but their marketing assistance only covered -business cards, website, flyers, and signage only. Clearly one of us did not read the fine print! Suggestions were made that; I improve my website and print more business cards etc and keep stock. Instead of responding to my need at the time, I got dished what was available. Unintentionally, the monopolistic behavior of the Government was at show- I was the intervention taker, and they were the intervention giver.
There is a disjuncture between, what and when the intervention is needed by the entrepreneur, and, what and when the government willing to deliver such interventions. Usually, the interventions come at the time when the intervention is longer needed because the entrepreneur has made other plans, or the opportunity has been totally missed!! In some cases, the intervention is not what the entrepreneur is looking for but what the government is willing to give.
It is my view, that; the misalignment between the policymakers and the entrepreneurs is largely due to a lack of understanding of each other's operative environments and a lack of will to adapt especially from Government side. Though it is understandable that certain legislative imperatives and procedures have to be followed by government and its institutions, in the same vein, it should be appreciated that entrepreneurs or SMEs are always working against time and opportunities wait for no one, including government support. That is why I challenge the government to explore creative and responsive ways of supporting the SME sector. What is needed is a real-time intervention- the right intervention at the right time!
When I look at interventions made on the legislative level, I am convinced that the South African Government is committed to the sector. Surely there was an intention and desired goals in promulgating, Acts like National Business Act, BEE Act, Cooperatives Act just to mention a few. Funds have been put aside to set up Developmental Finical Institutions (FDI) so that emerging businesses do not face the same stringent requirement face by large corporates when applying for funding. Government took things further and intervened at a company level, by introducing schemes like Black Industrialist Scheme and the Gisella Programme for those small companies who displayed a positive growth, sustainable and they needed support to go to the next level.
Even though so much work has been done by the Government on the sector, but, the results are not matching the effort. Work done on the ground by entrepreneurs talk for itself, also the interventions made by the government are noted. The question though is: Do government and entrepreneurs sing from the same hymn sheet?
Eye opening and good question you have asked. Do policy makers understand the reality of people on the ground? The sad reality is that some of the challenges are brought about by researches done from the comfort of offices without involving people on the ground. A research institution run by people who have never been in a townships or have no clue about township write a report about the needs of the people they don't know anything about. They suggest business models that are not communicating to the needs of the people on the ground. A clear example is the level of preparation that is done when government official visit communities. Roads are cleared and people are prepared to behave in appropriate manner. The event becomes a show rather than an event of gathering facts. The sad reality is that even the questions asked are guided as those ask them are prepared to speak only about the things that don't matter much to the communities. Lastly is how each Councillor in the community will draft the same business plan for their community similar to those of 2004 in 2019. If one has asked speed humps, it will be the same thing with few changes. Let Government's program of action talk to the needs of the people. Don't treat people like they don't know how to run the business while they have been doing it better without your intervention as government. Interventions of government should be able to take one from where they are to a better position in business. The officials stick to what they have been told to do because that is what they know. Let those who are in business be involved in projects that are earmarked to improve small businesses. Letting people who are scared to take risk to make decisions for those willing to take the risk will destroy the moral and future of business in our country.
ReplyDeleteWow!! Thank you so much for your response. I am taken aback, I thought I was the only one and maybe my impatient nature was at play. If you do not mind. I will publish your comment on FB, its time that we have a voice as entrepreneurs. Once more thank you
DeleteMamofokeng wow i'm impressed by your provoking blog, experience as well as your views, you're hitting the nail right on the spot.
ReplyDeleteFrom my experience as an entrepreneur i learnt that if you don't get help from government, banks, do what you do be best as an entrepreneur solve the problem yourself.
Is the government proactive or reactive? Here are my views:
If you have a child he/she goes to a hot stove, will you let her experience the pain of getting burnt or will you deprive her of the experience of pain that can let her learn the hard-way plus becomes independent?
The way is see it S.A government is letting us learn the hard-way by not leveling the playing ground.
China for example works differently, they protect their own industry in all means, as your in the laundry business, if an international competitor wanted to enter your market they'll block them. They'll come to you and say Dudu there's a competitor who's coming with an advanced laundry business, here's $100 000.00 create the same or advanced business method, roll it out throughout. By the time they let the competitor into the market Dudu is way ahead (Alibaba vs Amazon), the competitor will be eating his own tail.
Moral of the story is you can't open up your market to the world yet be on a reactive mode to challenges faced by entrepreneurs. Solutions that government brings are short-term relief which is not what we looking for especially from government with the kind of resources they have, not what we really need to strive. We the last guys to get paid after scrapping on the little market that's left.
I'm in the aluminium business, BuildIt come and built their shop right next to in a township location, they selling a window at R600 while i sell it at R800. How can i compete with buildit as government couldn't protect our industry first before letting them in.
Government response time to challenges that need urgent action and attention to what we put in front of them.
Thanks for the post Dudu :)
Fellow cader. Libambe lingashoni(Hold on). There is no other truth that can amount to what you have just said. I thought the schemes like Black Industrialist Scheme was meant to do that. Propel us to the next as level at the same leveling the playing fields. We need a voice as entrepreneurs. Do you have any ideas as to how we can influence the policy makers? Thank you for your input.
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