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South Africa is at the crossroads economically and, if no drastic action is taken to put the economy on a sustainable growth footing for the benefit of all South Africans, we risk unprecedented social upheavals reminiscent of the struggle against apartheid, if not worse.
It is with this in mind that we welcome the announcement by the ANC national executive committee calling for an end to unproductive debates about the economy and announcing a presidential task team to decisively deal with economic growth issues.
While the revised gross domestic product (GDP) growth forecast of just 2 percent for 2013, as announced by Finance Minister Pravin Gordhan recently, is mainly due to the slowdown in the global economy, South Africa is yet to fundamentally deal with the bottlenecks in our economy in a similar fashion as other emerging economies.
Countries such as Indonesia with comparable economic features to ours have realised the importance of small businesses in their economy and are giving the sector the support it deserves. According to a recent study conducted by the US Agency for International Development, small businesses account for 99 percent of all firms in Indonesia, employing more than 99 million people (more than 97 percent of total employment) and making up about 57 percent of the Indonesian GDP. This is the type of dramatic change we are calling for.
As the National African Federated Chamber of Commerce and Industry (Nafcoc), we have been calling for a small business revolution with the potential to double our GDP for decades now.
We need drastic “out of the box” ideas to take our economy out of the doldrums. I’m afraid these creative ideas will not come from big business as evidenced by the pre-2008 bull market where big business raked in billions in profits but with very little dent on joblessness, poverty and inequality.
While we acknowledge the serious strides that have been made over the past 20 years to grow the South African economy, these efforts have not resulted in the critical mass of poor South Africans improving their standard of living – specifically black South Africans in the villages and townships of our country.
As part of this change of mindset and way of doing business, Nafcoc is calling for an establishment of a small and medium enterprise ministry to drive the small business revolution in a similar fashion as countries such as Indonesia and others.
To a great extent the National Development Plan (NDP), which was adopted by the ANC as its economic blueprint for the next 20 years, offers some solutions to these challenges. Hence Nafcoc at its 49th conference in Rustenburg in June resolved to support the NDP and is also determined to play an active role in ensuring the realisation of its objectives.
However, the spats over the NDP within the ANC/SACP/Cosatu alliance are not helping economic growth. If we are not careful, Nigeria will outpace South Africa as the biggest economy in Africa sooner than we think. Already, in terms of internet access, economies in both west and east Africa are ahead of South Africa, with access sitting at 30 percent of the population, compared with 17 percent in South Africa.
According to the Global Entrepreneurship Monitor 2012 annual survey, only 14 percent of South Africans intended to open a business in the next three years, which is below the average of 27 percent for countries with similar levels of economic development (Malaysia, Brazil and Russia). Furthermore, only 2 percent of South Africa’s population had established small businesses, with 4 percent of the population closing a business in a year. As Nafcoc, we want to change this picture.
To this end, we are developing a township business study to track the performance of businesses in townships, small towns and rural areas to understand the underlying issues behind the stagnant growth and almost collapse of these local economies. The findings thereof will form part of our recommendations to Nedlac and other multilateral forums.
Embedded in our small business revolution is our vision to grow our membership to 1 million in the next decade. We believe that this envisioned army of small-to-medium business owners will act as catalysts for faster economic growth with the potential to create millions of job opportunities and drastically improve the standard of living of millions of South Africans.
Joe Hlongwane is president of the National African Federated Chamber of Commerce and Industry.