The rise of SA’s women entrepreneurs

Wham colour boxes1By Paul Pereira

For all the improvements in living conditions, income, health and longevity these past 20 years, one thing above all blights our society – unemployment.

The fact of South Africa’s “youth bulge” means that even while this time has seen a rise in jobs, it has also paradoxically seen increased joblessness, and especially since 2008. Although our labour participation rate has improved (that’s the rate at which the potential labour supply is mopped up into jobs) from 48% in 1994 to 55% by last year, Statistics SA still reports total unemployment at more than a third of adults, a rate that is stubbornly consistent.

Two weeks ago government approved the third phase of its Expanded Public Works Programme that aims to create 7.5 million jobs from next year to 2019.

But these are not jobs in the normal sense, but rather “work opportunities” of an often very limited duration, such as in social services where “careworkers” are paid stipends in exemption from usual labour law. In things like road repair, labour-intensive approaches are preferred to the efficiencies of greater mechanisation.

The stop-gap nature of these things comes in their limited duration and their unlikeliness to impart skills for later employability. That may be one reason why government is adjusting to giving established businesses incentives to hire youngsters, and by encouraging small business creation.

In this country, small businessmen are often equated with entrepreneurs although, strictly speaking, these things can be very different. The head of a large business can be that rare bird, the entrepreneur, while someone working on a smaller or stand-alone scale could just be a survivalist. Indeed, many answers may lie in accepting and promoting the virtues of big businesses just as much as smaller ones.

Meanwhile, the National Development Plan to 2030 relies heavily on small business growth, and the Finmark Trust says that we had 5.6 million of these by 2010, of which 95% had four employees or fewer, 83% were black-owned, and most owners were women.

Women are less in command at the next level up, where businesses have five or more owners, says Johannesburg’s Small Business Project in its latest SME Growth Index, issued last week. Looking at 500 such firms, the Project says that while the number of small businesswomen “entrepreneurs” has “risen rapidly in recent years”, these tend to employ fewer people, export less, and find themselves heavily concentrated in tourism, with a relatively small presence in manufacturing and business services.

On average, women only start employing more people than their male counterparts when they’ve run businesses for at least three decades.

Echoing findings of the Global Entrepreneurship Monitor, study author Chris Darroll says that women are mostly constrained from successful entrepreneurship through a general lack of prior managerial experience in the formal sector.

Zazida Institute of Entrepreneurship CEO Vincent Joyner agrees, and points to other weaknesses: “We need to start at early childhood development to give people an equal opportunity. We are constantly trying to find cures and short-cuts, but there are none in entrepreneurship. We must provide good education (primary, secondary and tertiary), good work experience and a friendly entrepreneurship ecosystem of less red tape if we want to see significant entrepreneurship success and growth”

– First published in The Citizen, 13 December 2013.