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Government, mind your business

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PN youthunemployed

ING.

The basis of high youth unemployment, says the writer, is the government stifling business through poor policy-making and its terrible payment record.

One of the worst traits of our democracy is the extent to which the economic and the political situation has derailed entrepreneurship.

The total entrepreneurship activity of SA in comparison to elsewhere in the world leaves much to be desired.

Recent statistics show that about 50 percent of young people under the age of 35 are unemployed.

It is clear that the solution to this crisis does not lie with the government. Governments around the world have failed at job creation.

What are often cited as “jobs” by the government consist of short-term employment.

Public works programmes are best classified as poverty relief interventions with no long-term impact.

The solution lies not with the government but with civil society and private business working together.

For this partnership to succeed, there must be no confusion about what limitations exist and what roles must be played.

The job of government is to create an economic environment conducive for job creation.

It is good that business is questioning how the massive new infrastructure drive the government is proposing will benefit poor people.

The debate about economic transformation through black economic empowerment is an important one for the government to get right.

It must avoid the all-too-easy approach of taking coals to Newcastle – that is, foreign players importing their skills and giving local players the crumbs.

There is constant conflict between warring alliance partners when it comes to determining economic policy, and the ruling party has to take a lead in creating a stable policy environment that will encourage direct foreign investments as well as get local players involved in the economy.

The impasse on labour brokers as well as the youth job subsidy is typical of this policy paralysis.

Talks of a “second transition” need to take these issues into account.

There is also a need to remove from the table – rather fast – reckless talk about nationalising land, mines and banks if we are serious about attracting, rather than repelling, foreign investors.

Clumsy policy decisions, such as the e-toll saga, and endemic corruption create a climate of economic despair instead of the business confidence this nation needs.

The building of a culture of entrepreneurship is a solution that stares us in the face but there is a great deal of militancy against it.

The proliferation of development finance institutions has not made things easier for SMMEs.

These institutions see themselves as being in competition with commercial banks and do not honour their public service mandate.

Surely they should have programmes that can help youth-run business to deal with their poor credit ratings instead of simply rejecting them?

And what about the interest rates? It is shocking what some of the development finance institutions want to charge small businesses – this results in a vicious cycle whereby SMMEs exist to repay loans.

I’m certainly not advocating reckless lending – but what is the purpose of creating development finance institutions if they are identical to commercial banks, and use the same funding models?

Of course, there is the danger that they simply exist to provide the politically connected with generous loans on favourable terms.

The scandalous funding of a six-star hotel in Cape Town by the development bank begs the question of what such adventurous funding will achieve other than once again fulfilling the narrow BEE agenda to heap more money on the already rich.

This kind of indiscretion leaves a bitter taste in the mouths of many entrepreneurs who have good ideas but do not have the political connections that seem to turn even the most unlikely dream into a reality.

The support of SMMEs is critical. SMMEs are essential to economic sustainability and real, long-term job creation.

A policy to support them is urgently needed.

It is time to get rid of agencies that only duplicate others.

We need truly professional agencies that truly empower SMMEs and do so with the full backing of the relevant ministers.

This is where the answer to the huge job losses lies.

Of course, we need to be honest about the stark reality that over the past two years alone more than 400 000 businesses went under.

One of the biggest reasons for this was the terrible payment record of the government to half of these businesses. Jobs and hopes have been destroyed in the process and, for those businesses still struggling in this environment, the government’s promises to pay suppliers in 30 days always ring hollow.

No one has ever been dismissed from their comfortable government job for paying suppliers months after the due date.

Until the government puts its money where its mouth is, we are headed for more trouble as young people are stranded by visionless development funding institutions, an inefficient public service and an indifferent private sector.

l Tabane is chief executive of Oresego Holdings and a co-founder of the Youth and Graduate Entrepreneurship Programme (Y-AGE).


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