The rich get richer...
Black Economic Empowerment and small business support, in the view of one owner operating in a rural area, does not serve to foster existing small black-owned family businesses.
Mlungisi Matebese is the founder and owner of Matebese Funeral Services, which has been operating across the Eastern Cape for just less than 30 years.
He notes that there is a difference between family business and business that has been funded by BEE and believes that the whole idea of BEE is in direct conflict with what businesses operating in the townships should do.
‘When you are running a family business within a community, there is no way you can be flashy. There is a different approach with BEE; it’s seen as a way to riches. It is not about the service that one renders,” says Matebese. There is little or no support for family businesses.
On the contrary, they face severe operating difficulties. For instance, Eskom’s plan to raise the electricity price by 45% every year for the next three years will force Matabese’s funeral business to raise its prices to finance its expenditure and this might mean losing clients.
‘It is mainly poor people that we serve. We do very few funeral services for well-off people. Those [poor people] are the people who always complain when we increase prices and this [the rise] affects them.”
The rise in electricity prices might also mean cutting the number of their workers by half, or cutting down on their working days to try to save money.
In addition, Matabese says black-owned firms are still suffering from a lack of information about how to run a business effectively.
In Grahamstown the only business training or education provided by the municipality is geared towards people who still aspire to start their own businesses, rather than catering to those who are already managing their own businesses.
A lot of the courses and training sessions offered are designed to help people who aspire to start their own businesses to write business plans.
‘We have had a municipal office which has been designated to empower emerging business people, but which has not had much effect on the community.
We also had an office of Umsobomvu Youth Fund, which is aligned to the municipality and which has not made much difference,” says Matebese.
This means that even where an emerging business person can secure funding, his or her business
still stumbles because of the lack of training about how businesses should be run.
Because of this, black entrepreneurs end up buying fancy cars instead of investing the money back into their businesses so that they can grow bigger or expand into another industry.
Matebese says that it is easier for an educated, black person with a job and a steady income to start a business than someone who is not working.
What this points to is that business education and training geared towards empowering black entrepreneurs will need to be redesigned to empower people with skills to manage their businesses once they are established.