Entrepreneurship is seen as the gateway to economic emancipation for any nation. Individuals (and I am one of them) believe that entrepreneurship is the only true means of financial freedom. The state sees entrepreneurship as the combater to destroy the two evil twins: unemployment and poverty. It is all good and well to believe what we believe about entrepreneurship but we must take the minute to be real. Who really is the entrepreneur and which entrepreneur benefits from the rewards that entrepreneurship produces? The question arises from the curiosity aroused when I was going to board the bus in Setsing the other day. I heard the market ladies talking with one another, advising one another as to how to sell more, what to sell and where, how to sell and so on and forth. One looks across and there are plenty of containers branded with big corporations that have supplied the aspiring entrepreneur with a location or storage unit from which to operate. These people are clearly entrepreneurs- so it seems. However, why aren’t they living like entrepreneurs?
The fact remains that entrepreneurship in our black communities rarely surpasses the level of it being survivalist. The typical black entrepreneur in our neighbourhoods does enough to generate profits to restock and cover the basic needs to live. The brief and widely used definition to describe the entrepreneur is that the entrepreneur is one who sees an opportunity, takes the risk to initiate a business with the intention of creating profit. Black people understand how to make profit. Quite in fact, the science of making profit is not at all difficult. Purchase a product, sell at mark-up price and the difference therefore is profit. The problem lies there. The equation stated, in basic accounting terms, is simply sales (or revenue) less cost of sales. The profit is gross profit before expenses. To some extent, the survivalist entrepreneur ends there. The profit they generate simply is not enough to cover expenses involved in the operation of the business. This claim is drawn from witnessing how in our black neighbourhoods, there are several spaza shops, barbers and so forth who have operated for years on end but seem never to grow. It seems for the Blackman, entrepreneurship is simply to survive; not to thrive.
Economists say that entrepreneurs are the agents who form the catalyst to produce economic growth by exploiting the factors of production. Factors of production namely being land, labour, technology and capital. The problem with most Black entrepreneurs is that they do not know exactly how to manipulate these factors of production to produce wealth for themselves. The market women who sell the snacks and sweets work hard. To arrive so early at a taxi rank with all your goods wrapped in some huge bag and to leave with the very same bag at night is hard labour. Yet their labour is merely keeping them relevant where they selling and not really bringing in substantial income for themselves. Most of our elders have decent enough land to run an agricultural enterprise yet only but a few can exploit their land for such a use. In addition, most of the land in our country is in the hands of the extremely powerful and wealthy therefore to consider land as a factor of production for the everyday black man is quite ignorant to say the least. Access to capital and technology for the Black man is close to an impossibility. It takes money to make money and technology is a problem for any typical SMME; due to the fact that technology is expensive to acquire and expensive to maintain. With capital as a factor of production well, how can one gain access to external capital when they do not even have person capital to start with?
It is imperative that we never forget that the Blackman is the majority people of this country and in this country of ours; one in every South African is living below the poverty line. Unemployment sits comfortably above 27% and I mention once more, Black people are the majority in this country. Therefore, the two evil twins savagely deter the chances of economic emancipation for the Blackman more than any other race in this country. If entrepreneurship is seen to be the combater of the economic evil twins, why are we the Black people still oppressed by them? There are quite a number of forums, discussions and programs designed to help change the state of entrepreneurship in our communities but they fail to hit the souls of these twins. Going back to the fact that most black people do have an understanding as to what is required for them to generate profit, it is time that the state begins teaching the black entrepreneurs about the expenses that come after gross profit. Those forums, discussions and programs must move away from promoting survivalist entrepreneurial mind-sets and begin to empower big business entrepreneurial mind-sets. The state must intervene in our communities and promote the idea that as black people, we too can transform our spaza shop into a multinational corporation such as ShopRite and the likes. Most of these big corporations, who give a certain community containers to distribute to would-be entrepreneurs to operate from, have no intention to build that entrepreneur to amount to anything higher than being a SMME. It makes no sense why a big corporation would want to groom an entrepreneur to be a potential competitor in the market in the future. Therefore, big corporations continue and will continue to limit the would-be entrepreneurs to the limitations of being a SMME. The role that the big players in the private sector play in the public spectrum in the economy is extremely limited and will always operate from a point of self-interest first and from the point of interest of others second. If having foundations and giving to charity did not reduce tax paid by big corporations, will they still be willing to give money and other forms of economics entities to our communities? The idea that a company that has and does everything in its power to devour competition in the market in order to be a market leader, will willingly build entrepreneurs that will one day operate in their market and potentially pose as a threat, is foolish thinking.
For the black community to stand a chance in the real world of entrepreneurship and escape the survivalist zone (let alone the SMME zone) of entrepreneurship, the state needs to play a more active and dynamic role in our communities. Our country has one of the most savagely brutal histories ever to occur to the Blackman and that past, will continue to haunt Black South Africans in one way or another. The most major problems created for the Black man in South Africa were designed by a system created to pacify and keep the black man dependent on another than on himself and to never rely and trust on himself. Therefore, the importance of the state comes into play. Most black communities continue in this tradition of depending on the state for jobs, wealth and providing of other needs. The state can use this to their advantage in empowering the black man to be better equipped entrepreneurs. The state requires the private sector to play an active role in the economy. The state needs big corporations to invest in the economy inasmuch they need SMMEs to provide employment in the economy. What good is it promoting employment to an economy that is not being flooded with investments? Investments that could come from big corporations circulate in SMMEs. As much as the state is promoting the black man to start SMMEs, it is also key that the state promotes the black man to go beyond being a SMME and become a big corporation. Therefore, the cycle will complete itself. The state sought out investment from a big corporation to initiate a program that will create the entrepreneur who creates a SMME. The state with the investment from a big corporation continues to empower the entrepreneur to exit the SMME in order for the entrepreneur’s business to be a big corporation. With the right policies and economic action from the state, that big corporation that the entrepreneur (that the state created) started, he too now investments in the state and the process begins all over again. Thus, the state literally creates its own investment source within itself.
It is time we re-think what entrepreneurship is and how it affects our economy. Inasmuch entrepreneurship can lead a person outside the clutches of the evil twins, unemployment and poverty; it is important we understand that there is more to entrepreneurship than just making a profit. For economists to call entrepreneurship an agent that brings growth in an economy is very profound. Entrepreneurship is the key that opens the floodgates that will lead people to the land of milk and honey. It makes clear sense why other races strongly encourage their children to be entrepreneurial in their thinking. I have heard of white people say that nothing is different for them. That it is common for them as well for their parents to preach about a good education and degree, a good family and having a good job. However, what I realise about most of these white people is that even though they have been indoctrinated with similar ideologies as us black people; they understand that money is not wealth but a mechanism of wealth creation. Where the Black man is stuck in the form of comfort from a good paying job, the white man usually uses what they get from their job to have a “side hustle” that generates more wealth for him and his family. It is not that the black man does not know about a “side hustle”. Entertain most conversations with young black men at a car wash or a social gathering and almost all of them have “something on the side”. The sad part is that, that “something on the side” was only talk or failed plans merely mentioned to sound relevant in a conversation. Money is synonymous with wealth in black communities and this thinking is leading us backwards rather than forwards.
The need to rethink how we see entrepreneurship is extremely important. Most black people view entrepreneurship the same way most people view financial market traders. We are lured by the great wealth and opulence in luxury that soaks these individuals yet fail to see that most of those traders are fake or that the legit traders took years of trading to obtain the economic benefits they now enjoy. The same with the entrepreneur. Some of the entrepreneurs seen “living the life” are either fake or it took them years of learning to transform factors of production they had at their disposal to reap the economic benefits they now enjoy. Hence the discouragement seen in most Black entrepreneurs when after a year or two of operations they still have not bought a Bentley or a Rolex, cease their businesses. On the other hand, they buy the Bentley or Rolex and then wonder why their business suddenly plummets to the ground. At the other end of the spectrum, the black entrepreneurs becomes so dependent on the state or a big corporation that for them to enjoy the luxury seen on social media, it must be through government funding or big corporation sponsorship and endorsement. This kind of entrepreneur thus becomes stuck in low scale business operations, never amounting to anything higher.
Entrepreneurship is indeed a very powerful tool that the state can use to transform the state of a country. The hope and positive energy from the pledges from various business at the SA Investment Summit gives testimony to this. Some might say some pledges will not be met and others claim that it is just political and that only those at the top will benefit from the investments. The fact however remains that there will be a huge inflow of investments into the country (in one way or another) that will lead to the recovery of our economy. The companies that pledged themselves to their respective investments obviously began somewhere. The head of Aspen said that, the company began in a two-room apartment and now is one of the leading pharmaceutical companies in the country. It went from being a SMME into being a big corporation that plays an active hand in the economy. Thus the importance of the state to promote the creation of big corporations and not just SMMEs. Thus, the importance of the state to promote entrepreneurship as being an active catalyst in the economy and not just as a means of profit creation is paramount. A child selling sweets at school creates profit but role is his profit playing in combating the economic ails of our economy?
A nation can ever fully eradicate unemployment and poverty in its economy. The South African government has done wonders in healing our country from a very brutal and savage history. Indeed our state has worked extremely hard to change the state of the black man in this country. Whether through the few who exploited the benefits of BEE to those given free RDP houses, fact remains that the government has done a wonderful job in leading transformation in the lives of most black people. However, we must now transcend to higher echelons. Not only for us black people, but as a nation as well. The key of our transcendence lies in the proper understanding and utilisation of this economic phenomenon. This radical economic transformer we call- entrepreneurship.