Articles and information on Clem Sunter

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Who will champion the entrepreneurs?

By Clem Sunter

I was delighted to see the list of people chosen to serve under the chairmanship of Trevor Manuel on the National Planning Commission. They are a representative group who deserve our full support in the critical task to which they have been assigned.

However, one question leapt to my mind: who among these worthy persons will champion the entrepreneurs? I have argued for many years that the only way to turn our exclusive economy into an inclusive economy, in which citizens broadly participate, is to precipitate an entrepreneurial revolution. This means putting a huge focus on our informal sector and creating conditions that will be conducive to allowing the small businesses that inhabit this sector to graduate into the formal sector. There has to be a bridge.

My contention is that if 20 000 entrepreneurs make the successful transition; they could realistically add 25 jobs each to their respective work forces. In total, that would be the extra 500 000 jobs which President Jacob Zuma made his objective in the short term. Moreover, these jobs would be more sustainable than jobs created by public works programmes funded by taxpayers' money.

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I point to the top four economies in the world to illustrate the validity of my argument - America, Japan, China and Germany. They have one thing in common: a passion for entrepreneurship. America we all know celebrates individual self-sufficiency and achievement. China has over the last 32 years undergone an entrepreneurial transformation, thanks to Deng unleashing the desire for economic self-improvement that was widely suppressed under Chairman Mao. No other country in modern history has leapt 97 places in the international economic rankings and in such a short time.

Germany and Japan lost the Second World War; but their emphasis on the growth of family-owned businesses in the 1950s and 1960s was the platform for their subsequent economic success. Even now, family enterprise is considered a key driver behind the recovery of both their economies.

Yet in South Africa, small business has always been ignored despite all the talk. It is regarded as something you do if you can't get a decent job in big business or the civil service. It is looked down upon by policy-makers, even frowned upon because of the profit motive. Apart from one or two great initiatives linking big business to small business, most formal sector CEOs don't give any thought to promoting an entrepreneurial class. They are too busy making money for themselves. Banks close their doors. The cost of administering small loans is too much to make them.

Very few schools have entrepreneurial programmes, even though part of their mission statement is to prepare young people for life after school. Given the current state of the labour market, the chances are that most school-leavers are either going to have to start their own business or join small businesses started by someone else.

Business schools and universities in the country relegate entrepreneurial courses to the margin of the product offering. I know they will say otherwise, but visit any business school campus and you will see that executive development programmes (to improve the effectiveness of big business management) as well as the standard MBA courses occupy centre stage. At least, I have to concede, they have made a start.

Clem Sunter article continued:

I remember having breakfast with one of the ministers serving in Nelson Mandela's Cabinet and expressing some of these thoughts. His eyes glazed over as his mind wandered to his agenda for the rest of the day. He simply wasn't interested. Nevertheless, when it comes to regulating small business, everybody wants their pound of flesh. Many entrepreneurs will tell you that the South African environment is basically hostile to their ilk. Nobody is cheering them on and perceiving their sector as the birthplace for the next generation of successful listed companies. Nobody sees them as the future of the country.

I thought that a 42-year-career in Anglo American would prepare me for the small business world. Not a chance. You don't understand the risks that entrepreneurs take until you take them yourself – personally. You market your products; you shell out your own capital in advance; you ring up clients and remind them they haven't yet paid you; you calculate your own VAT. In large organisations, you have no conception of these daily demands because other people do it for you. I now realise you have to compensate entrepreneurs for the enormous risks they take by giving them much bigger tax breaks.

So I come back to my opening question. Who on the National Planning Commission has the personal experience of running a small business, which is a vital pre-condition to champion the cause of the entrepreneurs? I've quoted Steve Biko liberally in recent articles because he was absolutely right. For society to be stable, people have to do it for themselves. That's entrepreneurship. It's not a subsidiary issue. It is the issue.

By Clem Sunter

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