“South Africa should be tackling the rising unemployment rate by facilitating and driving entrepreneurship.” This is according to Christo Botes, spokesperson for the 2016 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, who was speaking in light of the recently released unemployment figures.
Statistics SA yesterday revealed that unemployment increased to 26.7 percent in the first quarter of 2016, up from 24.5 percent in the previous quarter, making it the highest rate since the labour force survey began in 2008.
“With rising interest and inflation rates as well as low growth expectations for South Africa – expected at 0.6% this year and 1.2% in 2017 – local businesses are increasingly facing the pressure and this impacts employment levels.”
It is during such challenging times where entrepreneurs can play a significant role in driving economic growth, says Botes. “Despite slow economic growth, South Africans have proved to be resilient and standing together in times like this. Entrepreneurs are ready to capitalize on opportunities and society at large needs to dedicate more resources to identify, facilitate and promote entrepreneurship as the answer to creating jobs and wealth for all. Entrepreneurs and small business are typically more nimble and flexible to capitalise on the gaps created in the market from economic difficulty.”
Botes adds that he welcomes President Jacob Zuma’s recent announcement of a plan for government and business to set up a joint fund to support small businesses as part of Government’s short-term interventions to boost economic growth. The joint fund is expected to provide funding and support for entrepreneurs. The private sector already committed R1.5bn towards this joint fund and it is expected that government will match this amount to start off this fund with R3bn in total. It is expected that this fund will be expanded to R10bn in the near future.
He acknowledges that entrepreneurship can be daunting, even for those seasoned business men/women with years of business knowledge, and that is the reason such initiatives – as mentioned above – are needed in the country. “While very rewarding, entrepreneurship is also a tough journey, and entrepreneurs need to be supported to grow their businesses to levels at which they can positively contribute to job creation and economic growth. The country needs to be providing the right guidance and infrastructure to motivate and encourage entrepreneurs to embark on their own business.”
Unemployment remains the country’s greatest economic and social challenge
Finance Minister Nhlanhla Nene, 2015 Budget Speech
The 2015 State of the Nation address, presented by President Jacob Zuma on 12 February 2015, referenced unlocking the potential of small enterprises, and identified small business as one of Government’s nine strategic priorities to be pursued this year. It was therefore positive to note that the 2015 Budget Speech echoed this sentiment, as the development of small business can drastically reduce the high unemployment rate South Africa currently faces.
Gugu Mjadu, spokesperson for the 2015 Sanlam / Business Partners Entrepreneur of the Year®, says that Government’s commitment to prioritising measures aimed at generating employment is also a positive step for boosting the level of entrepreneurship in South Africa.
She says that the proposed measures in this year’s budget speech, such as tax incentives for employment and investment, support for enterprise development, skills and development and employment programmes, will provide much needed support to local entrepreneurs.
R3.5 billion was allocated towards the new Ministry of Small Business Development for mentoring and training support of small business. “While very rewarding, entrepreneurship is also a tough journey, and entrepreneurs need to be supported in order to grow their businesses to levels at which they can positively contribute to job creation and economic growth, and we believe with the correct mentorship and training, local business can thrive.”
Gugu adds that the mention of the Jobs Fund’s allocation of R4 billion in partnership with the private sector for projects that create employment is encouraging, and hopes that a portion of this will be spent on entrepreneurial ventures with potential for growth. “Access to finance is an issue for many entrepreneurs, and we hope a portion of the allocated funds will continue to be used to support up and coming entrepreneurs and business concepts that have the potential to sustain job creation.”
Further support for entrepreneurs was also provided in the form of SARS establishing a small business desk in its revenue offices to assist small businesses to comply with tax requirements. “We hope that this additional support will lessen the amount of time small businesses spend complying with the various processes and enable entrepreneurs to exercise more effort in developing their business instead.
“Overall, the budget was entrepreneur and small business-friendly, and we hope that Government’s commitment to small business will drive entrepreneurial development with the country,” concludes Gugu.