Many years ago when I was at university I used to wonder why the cleverest people in my class at school could study anything other than medicine. To my mind if you were that clever then you might as well do a course that required cleverness - like medicine.
This same sentiment occurs within South Africa, here we don't understand why black people bother with getting a job when there was so much opportunity for them to start their own business. An article in the FM, written by Willie Thabe who is MD of the Black Management Forum Investments Company, puts this whole concept into persepctive.
global statistics tell us that only 5% of all people — black or white — are entrepreneurs at heart.
Empirical evidence from development finance institutions such as the IDC and Khula Finance suggests the failure rates of investee companies are high in spite of the fact that their core mandate is developmental. It’s a well-known fact that 66% of startups survive the first two years of business and only 44% the next two.
He then poses the relevant but politically thorny question
The moral of the story: new businesses carry a level of risk. So what is the economic benefit to a local business of developing a second enterprise purely for a good BEE score?
And he concludes with
we can’t ignore the fact that the type of entrepreneur that emanates from the provisions of BEE policy may qualify for the opportunity due to previous economic displacement but may not have the appropriate background or savvy to operate a successful enterprise despite its size.
Therefore it makes no difference where the BEE emphasis lies. The lack of a strong entrepreneurial culture is the fundamental problem. Government’s expectation of the private sector succeeding where developmental institutions have not makes the new move untenable in practical terms. For corporates and individuals to be bullied by government into a development mind-set can’t possibly be the way to broad-based economic success.
This is very hard-hitting and relevant. And again harks me back to the absolute lack of decent entrepreneurial talent on the BEE council. The same problems are going to continue until the DTI and ZumachineGat actually figure this out.
Well written Willie.
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