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Boost SMEs to unlock economic growth, writes Mathews Phosa

Dr Matthews Phosa is a former freedom fighter, activist, political leader and provincial premier. Picture: Bhekikhaya Mabaso / African News Agency (ANA)

Dr Matthews Phosa is a former freedom fighter, activist, political leader and provincial premier. Picture: Bhekikhaya Mabaso / African News Agency (ANA)

Published Jun 23, 2023


By Mathews Phosa

We are currently in a period of unprecedented global turbulence where the balance and security of the old geopolitical order is under newfound stress. But conflicts across the world do not take place in isolation - they carry consequences for foes and allies alike and, unfortunately, for the economies of all nations tying economic trajectory to geopolitical stability.

We are, in Southern Africa, proud of the political independence that we achieved in the early 1990s. South Africa is still a young nation, born from the genesis of apartheid out of the shackles put upon us by political and economic oppressors post the period of colonization. Whilst we have not yet translated this freedom into economic independence, I am of the firm conviction that we have the will and wherewithal to do so.

And yet in 2023, engineering and cross-sector machinery, chemicals, vehicles and aircraft vessels are still chief imports in a country with the prowess to be the masters of our own economic and commercial future. Much like the Maputo Corridor project I started while serving as the Premier of Mpumalanga, intuitively designed to utilise an export route to the Maputo harbour to its fullest and maximise small business and industrial opportunities along the route in the process, we in South Africa at large need to create an enabling environment for small to medium sized enterprises (SMEs) and the start-ups of our future to thrive.

To realise the Maputo Corridor project, we too started locally: We negotiated the buy-in from the Mozambican government, its Gaza and Maputo provinces and the Swaziland government in particular. At the time, Presidents Mandela and Chissano requested I become involved in promoting agriculture in the Niassa province, a project that I and other investors are involved in to this very day. The Corridor initiative still has much potential to create additional opportunities for the participating countries in the region, but there are also lessons to be learned by contemporary leadership here at home - to continue to find paths of least resistance for SMEs and the entrepreneurs of the future to create economic opportunities for themselves and their families.

We cannot undervalue their significance: Emboldening our country’s SME sector particularly will serve as a force multiplier in tackling unemployment for all. 90% of all the jobs lost during the early COVID-19 pandemic years were in the SME space. We must rehabilitate this critical facet of our socio-economy, as anything less undermines their annual GDP contribution of nearly 35%.

A recently carried out African Youth Survey reports that it is the perceived lack of local opportunity to garner a better education or to start a business that is a leading reason why more than 50 percent of young Africans believe their lives would be better if they left their home country. We need maximum deregulation and incentives in their place from our government; to create an enabling environment, and for the private sector to take the lead in mobilising resources to benefit from opportunities, ranging from agriculture, tourism or those evolving from the fourth industrial revolution.

We must also, in an unapologetic fashion, claim our commercial birth right from the international companies who continue to benefit from our rich resources. We must not do so passively. Alongside the policy-making community, we must become active partners and entrepreneurs who bring local knowledge, expertise and experience to play into creating opportunities and jobs for businessmen and women.

Subtle improvements to infrastructure and greater financial support for SME-oriented businesses and even leveraging our own inherent resources, including agribusiness, can drive sustainable transformation and forward-trajectory. We have the opportunity to be the architects of our own destiny, equal partners with the government, contrary to popular belief, in the spirit of shared interest.

Stopping the infighting is yet another way in which we can accomplish this. We must ensure that South Africa's regional structures are transformed from debating societies into dynamic, effective structures that create economic opportunities. Last, but not least, we should strive to strengthen those existing institutions that support our investment initiatives, old and new - in the Sciences, Technologies, Engineering and Mathematics (STEM) arena. One fifth of our future workforce under 25 will need STEM skills to drive our nation's economic transformation and competitiveness.

South Africa ultimately has every right to be a centre of excellence in and of itself with the right support. Let us, as committed citizens of this beautiful region and continent, shape a success story right here and now. The time is right. It is in our hands to create lasting change.

* Dr Matthews Phosa is a former freedom fighter, activist, political leader and provincial premier. He is an attorney, a businessman and an international consultant. An award-winning poet in Afrikaans and English, he is busy writing two books on South Africa’s history, including the road to democracy and the evolution of the South African Constitution. This article is based on a speech he delivered in Maputo, Mozambique, entitled ‘Lessons from South Africa to empower SMEs as key to job creation and economic growth’ on Thursday June 22, 2023.