South Africans should focus on boosting industry-driven entrepreneurship instead of nationalisation or “the institutionalised corruption that is Black Economic Empowerment”, says economic analyst Moeletsi Mbeki.
“Entrepreneurship is first and foremost the freedom of individuals to express themselves in economic terms and thus economic freedom entails entrepreneurship,” Mbeki, the younger brother of former president Thabo Mbeki, told delegates at the Democratic Alliance’s (DA) economic freedom conference in Johannesburg on Monday.
His comments come at a time when South Africa is grappling with the on-going calls for nationalisation of the country’s mines by the African National Congress Youth League, primarily by the youth body’s president Julius Malema.
Mbeki suggested entrepreneurship would create jobs faster than nationalisation.
“Entrepreneurship will bring people employment. The mines are not an obstacle to creating jobs — they facilitate entrepreneurship,” Mbeki said.
That being said, Mbeki also said those trying to enter the South African market as an entrepreneur faced forbidding challenges.
“The issue of nationalisation cannot be excluded when you have an economy run by cartels. We need to make it easier for small businesses to enter without being squashed by big corporates,” Mbeki said.
Government intervention
Mbeki drew on the example of cold-drink maker Pepsi‘s attempts to re-enter the South African market after disinvesting during apartheid, to illustrate this difficulty.
Upon the arrival of political freedom in 1994, Pepsi tried to challenge fellow beverage conglomerate Coca-Cola for a share of the South African cold-drink market but was stymied.
According to Mbeki, Coca-Cola and their affiliates in South Africa successfully manoeuvred Pepsi out of the market by using their monopolies in the bottling and retail sectors.
Pepsi left the South African market in 1997 and re-emerged in 2006.
“We constantly hear of big corporations being fined for uncompetitive behaviour. This [behaviour] needs to stop. Government needs to make it easier for those entering the market so that they can end up creating jobs,” Mbeki said.
Mbeki also slammed the government’s policy of Black Economic Empowerment (BEE), saying it does nothing for the majority of South Africans.
“If the big economic players want to see economic freedom they should support entrepreneurship and not the institutionalised corruption that is BEE,” Mbeki said.
According to the Heritage Foundation‘s index of economic freedom, South Africa weighs in at 74 out of 183 rated countries.
The country’s score of 62.7 on the index indicates a level of “moderately free” in terms of restrictions to free enterprise.
Entrepreneurship works
Mbeki’s comments struck a chord with Professor Brian Kantor of the economics department of the University of Cape Town, who argued that government needed to focus on allowing small business to flourish.
“Entrepreneurship is what makes an economy work. It has become difficult to create a business in South Africa due to all the economic intervention by government,” he said.
Kantor believes government should attempt to strengthen relations with business.
“We are not growing fast enough and we can’t employ enough people going on like this. If government were a lot more respectful of business, they could be left to do what they do best — and that’s to create profits and jobs,” Kantor said.