/ 30 March 2022

Private sector must lead the charge on tackling unemployment, and government will follow

State And Private Sector Set To Battle Over Business Bill
There are many ways to support small businesses, such as ensuring that you always buy locally

Many South Africans reacted with shock to the record unemployment rate on Tuesday, but in truth, no one should have been surprised. The shameful, unsustainable unemployment figure of 35.3% is the result of a series of failures and hollow promises. 

The broader unemployment definition, which includes those who aren’t even looking for work, stands at 46.2%, down a paltry 0.4%. If there is anyone left who has not yet internalised these numbers, perhaps this will help: almost one in two people in our country either doesn’t have a job and is trying to get one, or doesn’t have a job and has given up looking for work. 

Today, a solid line should be drawn under this travesty. All our futures are at stake, including the millions who don’t have the means to buy food or shelter. Under this line, we should all accept that the time for talking is over and that the only way this unemployment crisis ends is through action, and by the private sector leading the charge.

The private sector has been pleading with our government to make serious changes to arrest the continued increase in the number of South Africans without work. Yes, we hear the right words, such as: “the government doesn’t create jobs, the private sector does”. But at what point are we going to start treating these platitudes for what they are: soundbytes to buy goodwill, while nothing changes. 

The most crucial of these platitudes is the government’s own stance on small and medium enterprises. In its very own National Development Plan (NDP), our government envisions 90% of new jobs coming from the sector by 2030. Yet, despite this bold statement, and the creation of a department purportedly created for small businesses, entrepreneurs operate in an environment where there’s far more stacked against them than for them.

Imagine what an entrepreneur “hears” when trying to run a business in South Africa. Want to register a business? Please climb through these hoops. Want to try to get funding? Here’s another hoop. Too high? Sorry about that, next time we’ll come up with another grand scheme that doesn’t exclude you. Would you like to hire someone? Here are another few hoops. Fire them? Well, no, it’s probably best not to hire anyone in that case. Tax breaks and incentives? Now, why would we make it easier for you to do what you set out to do when you were brave enough to start a business in the first place; now you want to scale and hire more people?

Perhaps the biggest worry is that the high unemployment rate and the SME sector are linked in more ways than the obvious. Everyone knows that healthy, growing SMEs are the future of job creation, particularly in developing nations. Therefore, we obviously need this sector to flourish if we want to see any meaningful drop in the unemployment rate. But the reverse is also true — the higher the unemployment rate, the higher community tensions rise and the more instability we see, which in turn makes it more challenging to run a growing and healthy business, which threatens the broader economy. 

While we wait for the government to make good on its various promises, we simply have to take the bull by the horns as the private sector. We still believe the president’s intentions are good. So, when the wheels of government finally start moving in favour of the SME sector, we will already have built sustainable momentum in the private sector through the action we take now. 

How do we do this, and what action is required? We educate all SME owners about how fintech has made private sector finance possible for small businesses as young as six months old — something unheard of in the traditional banking sector. The number one obstacle faced by entrepreneurs is a lack of finance to grow. This gap has been filled by innovative and agile private sector alternative lenders. 

Build networks: share knowledge about the power of ecommerce and digital marketing, among other modern tools that exponentially widen a business’s net of potential customers. Buy local: let’s support the women and men in our communities who wake up every day and work to provide goods and services for us despite the odds. The pandemic taught us that we really can kickstart local economies by supporting local supply chains. 

Pay on time. Cash flow is like blood and air to most businesses. Now just take a moment to appreciate how important it is for a small business. Stop forcing small businesses to accept payment terms stacked against them. Settle within a month and give them a chance to fight another day. 

There is resilience and fortitude built into the DNA of South Africans. It is this resilience and self-belief that will see us succeed. So, by the time the government finally comes to the party (for real, with institutional support, and not just saying it wishes to attend the party at some point), the snowball of job creation will already be big enough to have gained serious momentum. Then we can uplift the millions of unemployed people to include them in our nation’s economically active workforce, and grow our economy. 

In our own circles in the private sector, let’s all do everything we can to help entrepreneurs and their small businesses to thrive.