- Introduction

- Current economic situation

- Contributing factors to the current situation

- Motivation process model (Government and Banks attitude towards small-scale enterprise development support)

- Design evaluation and improvement


South Africa follows a mixed economy perspective yet the deepening inequality and growing unemployment, casualisation and worsening quality of employment in the country, shows that there is a need for:

  • some economic intervention to alleviate the current imbalance in economic strategies that support job-creating opportunities particularly to small-scale enterprises in the country.
  • somebody should give confidence that small scale enterprises have a role to play in S. African economy.
  • Yearly retrenchments demand alternatives that will grow productive capacity to moderate rising rates of unemployment and poverty.
  • A clear policy or strategy that will transform the financial sector to develop productive capacity.
  • A coherent beneficiation strategy or anti-monopolisation measures.
  • Clear toolsby the government for serious consideration to give effect to changes in current and unconstitutional methods of economic development strategies.
  • The economic differences available within the economic productive capacities stem from the remaining traces of racial divide the country owes up to so far when fellow white entrepreneurs do not experience this malpractice which is largely supported by available bankers. Small-scale enterprises (particularly black-led) have not been made part of the local economy contributing sector.

    Maputaland region for instance, has no industries of any sort except living on small-scale enterprises or purely informal business sector ever since. Of late tourism industry is the only hope. Despite the alarming 69% unemployment and poverty statistics, there is no government intervention program that seeks to alleviate the plight.

    Learning from available psychographics in the country, it is found that the situation calls for a participative economic development strategy that truly changes everyone’s life. It is however, a contradiction by the current government to make blacks believe that one form of economy can prosper by canceling others available in society. Whites individually own large farms and firms but they still add to the growth of the country’s gross domestic product, which results in motivating every white business individual to join in for a better life. Most of those firms started as small scale enterprises and the help of bankers.

    When cartels are a system of co-operatives with their members working independently of one another, small scale entrepreneurs therefore, can also be given a slice in the market to help grow these cooperatives. Cooperatives manage to gather a lot of people at a time when (administratively) they cannot afford to pay them a minimum wage which results in defrauding them by their own members. To avoid this, support of small-scale enterprises guarantees success of the cooperatives idea.

    The more small-scale enterprises increase in their numbers the more we see products and/or produce multiply, resulting in economies of scale.

    For example, the country has vast land on the hands of the State where the disadvantaged could make use of that land productively. Makhathini flats at Jozini in Maputaland is a fitting example of this where over a hundred of small scale farmers took to forming up their own community bank simply because local banks were lethargic to support these small-scale farmers.

    Current economic situation

    Glary in the current economic programs is blatant neglect and discrimination of small-scale enterprises in South Africa even by the government.

    Without trying to discourage or over emphasize the concept of cooperatives, one should warn that to concentrate on the current economic policy of community co-operatives without embracing small-scale enterprises, we may cripple the efforts of those (particularly blacks) who have already shown or are showing interest in engaging seriously in small-scale enterprises to feel as part of the country’s individuals who want to be counted as greater contributors in economic development.

    1) The high rate of black strivers we have in the country,

    2) High statistics of registered Close Corporation Companies

    3) Ever increasing numbers of child grant recipients against the limited numbers of registered taxpayers in the country, enable one to learn that it is not a lack of job opportunities or skills as others have suggested (which they presume, is a primary cause for slow economic growth and overspending in South Africa). Instead, these are messages that translated correctly that there is something lacking within the economic policy of the country.

    Concentration of the government on lobbying for foreign investors than growing its own investors as well for increased export seems detrimental to the future of S. Africa. Eastern countries like Japan did not depend on foreign investments for their growth that today they are counted among economic powerhouses.

    The above points seek to reflect what the small-scale enterprises can correctly address without much of foreign aid to assist the country if there is clear economic policy or strategy that supports enthusiastic black entrepreneurs to be counted on as serious contributors to the country’s gross domestic product. This emphasizes an-all-inclusive economic strategy that also accommodates all the sections of trade in business circles if community participation in everything being done in the country is the road map.

    Strivers anywhere in the world do not only need motivation but also, the most needed support and approval from the world around them. This should also be applicable in business where economic strategies should not be canceling one another.

    There are claims of economic imbalances in South Africa. To address this economic imbalance, what makes white South Africans sensitive when the rand is ailing, while this has no meaning to blacks should be instilled by engaging small-scale enterprise financing tools that will bridge the economic divide. The same economic feeling should also be instilled by giving small-scale entrepreneurs the financial support they deserve from all sectors of the country including the local banks and the government itself. Without a formalized and simplified economic policy that clearly states its requirements as appreciated support to small-scale enterprises as well, the country will continue to experience strikes, retrenchments and indebtedness. Politics has nothing to do with economy if alleviation of poverty is the focal point.

    Contributing factors to the current situation

    1. Everyone wants to be important. As a result, we have seen a high rate of unemployment particularly of youth; why because permanent employment has been replaced with casual labor.

    2. Whilst the population statistics have increased after the country’s first democratic elections in 1994, a limited number of conglomerates available in the country has not increased as expected to absorb the growing job-seekers in the country.

    3. The educated number of people is also growing at a faster pace than was the case before 1994.

    4. The prevailing spirit of equality dictates that everyone can be boss of him/herself.

    5. Co-operatives are underperforming or have just collapsed to prove they are not a viable alternative for a speedy economic recovery. Another person would ask why? The answer is: because their members have not been given sufficient support they really needed.

    6. The South African culture remains a challenge that co-operatives can prosper as contemplated without support of something else.

    7. Lack of government insight to supporting small-scale enterprises go as far as discouraging banking institutions to support this sector in fear of risks behind support move to small-scale enterprises.

    8. Over-emphasis on foreign investor lobby looks an effort to dis-empower the citizens particularly blacks who have not been given an equal opportunity whites enjoyed ever since. The idea in tourism ventures is a living example where most parts of the country particularly in rural areas will be sold to foreign investors when locals could equally conduct the same businesses and expect to see tourists coming in with ‘dollars’ to purchase only their services but only if the government is behind these small-scale enterprises’ efforts.

    Mbazwana Tribal Authorities are a living example after they were compensated with their land claims but were thereafter told not to use the funds and the land itself until further notice by the State controlled Authorities. Blacks cannot erect tourist structures inside that peninsula of their own instead foreign investors are being scouted to invest along the Coastal forest reserve as well as Sodwana Bay.

    9. The current tender system open to everyone does not benefit local small-scale entrepreneurs and is no wonder to the ever burgeoning squatter camps that surround any town by people coming from rural areas in search of a better life. As it is, whites continue individualistically unchallenged to trade as small-scale entrepreneurs whilst black entrepreneurs are being edged out as if they are people without a role to play in building the economy of the country.

    10. Rural areas are dominated by black entrepreneurs who are in fact the mainstay of local municipal levies. The culprit is the government who has no clear and all-inclusive economic policy that is against monopolization of the economy by some groups over others.

    A. Motivation process model

    Government and Banks attitude towards small-scale enterprise development support

    Government support to this sector is vital to grow small-scale enterprises to feel participating to the country’s economic growth. This can only be done through a clear government policy and or economic strategy to involve the banking sector to support small-scale enterprises. The returns gained from this act reduce high unemployment rate by absorbing a lot more of the unemployed, to self-employment so as to absorb some to their small businesses small as they appear to be. Eventually, this grows SARS net in favour of the State to manage to devolve a bigger chunk to public service

    a) Note that private concerns emanate from strivers. Nonetheless, there is more commitment of its members because of the self-esteem the founders of the companies inherit and they can do better only if the banks loan business support funds to these companies and cluster these clients to bank consultants employed to assistance in growing entrepreneurs through direct monitoring and use of CAD system. This results in a variety of job spin-offs in terms of permanent job opportunities; namely, permanent jobs on bookkeeping, accounting service, marketing, more managers under distribution channels, more opportunities for research and development projects, etc. Economic growth in terms of local and export can be a reality.

    This does not only create job opportunities; it also boosts small-scale entrepreneurs to feel as direct contributors to their country’s economic growth. The sector can also be a fertile ground for student interns even before they graduated. Most of the country’s undergraduates have a challenge of being unemployable for lack of experience simply because available companies are unable to provide student interns opportunities to serve as apprentices for experience.

    Even our education system should not only concentrate on sports and barren culture without understanding economic opportunities available in the importance of those cultures namely game reserves. Learners should (after school hours) be given practical business exposure to taste the importance of being independent at work as part of their class projects.

    This directly transfers and groom individual learners to grow year after year in small-scale enterprise skills so that after their formal education, they have practical knowledge about the working world’s expectations from them.

    b) Such programs should be government-funded for proper monitoring of funds. Because of an all-inclusive government policy/strategy, the banking sector should not charge a prescribed interest percentage to such government-funded projects.

    B. Design evaluation and improvement

    We have seen a lot of young mothers in the country of late; some as young as ten years of age. They are a result of unemployed youth and unemployable graduates and poverty state in the country.

    a) The number of registered Close Corporations encouraged to register with CIPRO and every Provincial Treasury Database, affirms willingness and preparedness of small-scale enterprise sector to make the black community feeling fully participating in growing the country’s economy. This does not only refer to tourism related industries. It also includes owning and running enterprises like game reserves and the manner in which these concerns generate revenue for the country’s GDP.

    b) Already politicians and chief executive officers have set the salary level to a new lifestyle for a new South Africa and everyone wants to follow. This can only succeed by way of supporting the small-scale enterprise support programs.

    c) There are government institutions designed to assist even the size of small-scale enterprises. These institutions seem far removed or are altogether unknown to the entrepreneurs. These institutions’ requirements to be eligible for funding are discouraging. Moreover it takes these institutions too long for applicants to receive financial assistance they expect to prosper their business needs at right times until they have been pushed out of the intended businesses for other alternatives.

    d) The government intervention in a lobby for small-scale enterprise support by the country’s Financial Services sector is indispensable to upgrade the standard of life in the country with quarterly reports of financed small-scale entrepreneurs submitted to the National Treasury.

    e) The policy should be able to emphasize its might in terms of capacity building in business sector. The local banks should not just be in business than to assist by empowering their clients to grow than to expect a ready-made business community. There is no local bank that can boast to have groomed its clients after funded if it ended awarding that applicant with a required bank loan. This can moderate the negativity local bankers hold about small-scale entrepreneurs.

    This is the only effort through which even the South African Communists Party can feel everyone is now benefiting whilst the idea of cooperatives cannot at all be divorced.

    It is misleading therefore, that black-owned small-scaled enterprise owners in the country are lacking skills and are not participating in building the economy of the country. The truth is: they lack financial support from the government to feel as part of the contributors, why? because there is no clear guide line that engages exquisitely small-scale enterprises in formal business for economic growth.

    Whilst the legacy of not supporting small-scale enterprises lives, the government remains unwilling to intervene. As long as the government itself has not put a clear economic strategy in place to allay fears that blacks lack management skills the S.A. bankers hold, it will be always very difficult for the black small-scale enterprises (in particular) to succeed despite the commitment they have displayed over so many years of their overwork.

    Up to so far, it is only a white community that has benefited from the banks the support, it is felt, everyone deserves in the country.

    To make the program a success, the government needs to channel the financial aid sought for economic development programs for the blacks through the banking sector than is the current trend however not neglecting white community.

    1. The requirement from the State Treasury should set a minimum number of quarterly applications that have been approved from previously disadvantaged individuals by banks in every province;
    2. the number of created job opportunities (not to be created) by a single enterprise;
    3. the type of opportunities so created and the amount of support awarded.
    4. Every Provincial Treasury should demand a quarterly list of such data for monitoring and evaluation than is the current trend.

    A developmental State is the one that is capable of deploying its instruments that work against monopolisation of the economy by some to a productive sector. This calls for a direct intervention of the State to shape the activities of the private sector. The government intervention appears to be limited to transform the private sector which up to now is still dominated by whites; the primary cause is lack of clear economic policy to guide the situation.

    To balance the situation, black small-scale enterprises need to be considered for financial support to help the government in alleviating unemployment as well as poverty whilst other matters of greater importance are under consideration.

    As it is, South Africa is in dire straits while it seems there is still no policy or if there is one, it is still not clear how it is set to transform the financial sector for development ends.

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