Start-ups, key to Economic Growth

Start-ups, key to Economic Growth

Screen Shot 2016-06-28 at 7.51.12 AMPhumlani Nkontwana, an Entrepreneurial Leadership Programme Officer at the Foundation and Programme Manager of Enterprise Development Academy at the Gordon Institute of Business Science (GIBS), shares his views on the importance of small and medium-sized enterprises, also known as startups, in boosting the South African economy. The Foundation believes that strong support is required for startups, equipping young entrepreneurs with the necessary skills and networks to start growing businesses that will have a high impact on the economy in future. The ultimate goal is to create jobs that will reduce poverty and inequality; one that is realised in the Foundation through its Association of Allan Gray Fellows.

Tackling barriers to entry will grow South Africa’s economy and could boost startup entrepreneurial activity

In South Africa small businesses are often treated or viewed as a sideshow – or, worse, as a charity. A closer look at how things work exposes flaws in this viewpoint. In reality innovation and job creation are driven by Small and Medium-sized Enterprises (SMEs). The South African government is trying to push for creating 800,000 jobs per year between now and 2030, a total of 11 million jobs, because of their belief that it will stimulate and develop the economy. SMEs can impact the economy if given a chance, i.e. if supply chain barriers can be removed. The National Development Plan (NDP) envisages that this sector should account for 90% of new jobs.

It is time for a mindset shift in South Africa, especially in corporations that might be reluctant to procure goods and services from startups and other small entities. Many large organisations procure from old peers without opening the door for small businesses.

Truth be told, amid pockets of excellence in the entrepreneurial world, not all SMEs are faultless. Some fail to collaborate as consortia, even when critical mass means either landing or losing new contracts. There are also those who execute unprofessionally. However, this can be corrected by coaching and mentoring.

Excluding SMEs from supply chains instead of empowering them with skills or reducing entry barriers benefits no one; it limits economic growth. How will SMEs be able to prove themselves and present track records unless given the chance to gain experience?

Blue chip companies such as ArcelorMittal, Growthpoint Properties and Woolworths have been commended for building their own timbre by going the extra mile to shore up SMEs. J.P. Morgan is another example of a company stepping in to support SMEs through its fund, the Small Business Boost Programme at GIBS’s Enterprise Development Academy. This new project will offer extensive training, support and mentorship to two cohorts of 50 entrepreneurs. The list of companies that deserve praise for uplifting startups or procuring from small businesses are not short, but there is huge room for improvement.

Statistically, developed nations view the SME sector as a launch pad, which explains the healthy ties between corporations and small businesses, with governments playing supportive roles while universities churn out the relevant skills. A company such as Microsoft comes to mind: it was built by students and grew because of the entrepreneurial and innovative minds behind it combined with the context that nurtured that development.

During 2011, in the 27 European Union countries, as much as 58% of gross value came from SMEs. In OECD countries SMEs accounted for an estimated 99% of enterprises and two-thirds of employment in 2010. These numbers highlight the fact that corporations don’t create jobs to the extent that might be believed. The 2016 OECD report states that “innovative SMEs fuel employment and economic growth and nearly all net job creation in the US between 1997 and 2005 came from firms less than five years old.”

Back home small businesses can support the success of their larger peers. Small Business Development Minister, Lindiwe Zulu, once observed that “the diversification of supply chains assists big businesses to have a wider choice of suppliers from Small, Medium and Micro-sized Enterprises (SMMEs) and promotes innovation within the value chain. The growth and sustainability of big business therefore depends on a strong small business sector, both as consumers and suppliers.”

The benefits of cracking open supply chain management to include the SME sector are apparent. For South Africa to grow, research and development (R&D) should be made a top priority, because it catapults economies. The South African government, which funds projects, academia and the private sector invest a smidgeon – below 1% of its GDP – on R&D, while the Netherlands – whose economy is much bigger than ours – spends twice as much in percentage terms. The average expenditure on R&D in OECD states is 2.5%.

If we are serious about being innovative and unlocking opportunities while improving our competitiveness, we should bolster our R&D budget. We have just averted a credit downgrade, yet our economy, against the backdrop of runaway unemployment, has all the right ingredients for pronounced growth.

Coupled with that, new industries have to be nurtured to complement the entrenched ones such as mining and manufacturing. The question is, where will the magic come from? To quote the NDP: “ the green economy is poised as one of the areas that will support growth.” So let’s start there!

Aggressive investment in transport will bring magic in three ways: it will create jobs, lower input costs and cut travel times, both social and economic benefits. The tourism and telecommunications industries can grow further and so too the medical industry. Traditional medicine, especially, remains untapped in commercial terms and stands out for its potential to help stimulate the economy.

Captains of industry and lenders are well-placed to invest in R&D, to improve our competitiveness and to help entrepreneurs chase these dreams. It is through a strong SME sector that South Africa can achieve some if not all of the NDP imperatives and reach its true potential.

 

Unafraid of Failing

Unafraid of Failing

 

AGO(16.04.23 pm) 440What would South Africa look like if its youth took a leaf from the book of Sabelwa Matikinca? They would be a force to be reckoned with. They would be relentless. They would be dissatisfied with mediocrity and strive for excellence. They would be unafraid of momentary suffering and unafraid of failing.

These are all qualities that characterise the young Sabelwa Matikinca. At the age of 21 she already exhibits the makings of what she dreamed of becoming as an 11-year-old – the president of South Africa. While becoming the nation’s leader is no longer her primary focus, a conversation with Sabelwa about her convictions and hope for this country will have you wishing she were already in office.

Learning to believe

At the age of 11 Sabelwa was interviewed by the Allan Gray Orbis Foundation for the Scholarship Opportunity. It resulted in her completing high school with both the financial and developmental support of the Foundation – an experience she describes as “having a community, outside my family, that genuinely cared for my well being in all aspects.” She also recalls that because her Personal Leadership Officer believed in her so much, she started believing in herself too. “It is because I believe in myself that I believe in the future of South Africa.”

4During her time as an Allan Gray Scholar she also learned that “we should not only be proud of ourselves when we reach our goals or destination, but we should also commend ourselves for the daily effort we put into reaching those goals.” It is a belief that she finds especially valuable in her current field of study, BCom Rationum Law, at Nelson Mandela Metropolitan University. Her decision to study a degree that will allow her to qualify as a chartered accountant and as a lawyer was not based on practicality – one cannot practise in both these professions at the same time. It has more to do with the fact that she wants to prove to herself and others what she is capable of. “It’s about pushing the boundaries and showing young boys and young girls in this country that you can achieve anything that you put your mind to as long as you’re willing to put in the hours it requires and ignore those who tell you can’t and those who tell you it’s never been done before.”

It has never been done before 

Sabelwa’s penchant for achieving things that have never been done before is evident not only in her choice of degree but in the fact that she is the first of the Foundation’s 156 Scholars to date who have managed to progress to the Allan Gray Fellowship Programme. If the Scholarship Programme taught her to believe in herself, then the Fellowship Programme has equipped her to find out who she is, what makes her unique, what she is passionate about and what she is called to do. When asked if she would encourage other young South Africans to apply for these programmes, the answer is a resounding yes. She would motivate others to apply because “the Foundation is not just a provider of funding. It offers personal growth programmes that allow you to realise your potential and explore [that] which you did not know you have.”

In fact, Sabelwa would want an opportunity like this to be afforded to every child in Africa. Yet even if this were impossible, her advice to young Africans and South Africans is to:

  • first, have a vision;
  • determine to never let it go;
  • give up on waiting for someone to help you;
  • consider your talents and/or resources;
  • think of how resource a, b or c will connect you to opportunity d or e so that you get closer to your vision;
  • look to those who have gone before you and adapt your plan to incorporate their proven approaches;
  • be unafraid of failing or taking detours;
  • expect greater difficulty as you climb higher; but always
  • remember that the view from the top will be worth it.

Growing up

2When listening to Sablewa’s memories of growing up in Port Elizabeth one is easily convinced that she was set up for greatness. Her parents, both educators, instilled in her a great sense of responsibility. She knew that her homework had to be finished by the time her folks arrived home from work. She knew that when she wanted something she had to work for it. A living example of this was her father who taught history by day, drove taxis by night and delivered pizzas over the weekends all so she and her sister could be taken care of. Her mother too embodied passion for excellence, starting out as a teacher and eventually fulfilling the role of Acting Campus Manager at a TVET College. It comes as no surprise then that eight-year-old Sabelwa thought it normal to get up in the middle of the night to study and prepare for her next school day.

“I grew up in a family where you work for everything that you have; you work and you sweat and you cry and after all of that work, eventually, you reap what you have sown.” Hard work, dedication and picking yourself up after a fall is the mantra Sabelwa lives by and one she hopes the youth of our country can adopt in spite of the many obstacles they face.

It is important to consider where people come from and what they’re up against, but that will never be a sufficient excuse. Her empathy and wisdom is revealed when she says, “I understand and acknowledge that our past injustices have bruised us. A lot of black people don’t have computers at home; when they need to do a project they must go to a library. A lot of black people don’t have access to WiFi. They don’t have access to certain resources because of our past injustices. But it is not okay that we justify incorrect acts or incorrect behaviour [because of the] circumstances that someone is in or someone grew up in.”

Suffering is temporary

She goes on to bemoan South Africans’ willingness to accept mediocrity: “We cannot celebrate and find it okay that people always take an easy way out. We need to be a generation that isn’t afraid to suffer. You have to suffer in order to appreciate your success, you have to go through some sort of pain in order for there to be a celebration afterwards.” Quoting Dr Eric Thomas she explains that pain is temporary; it can last for a minute, it can last for an hour, it can last for a month, it can last for a year, but if you continue to persevere it will soon be replaced by something else; it will be replaced by something greater. “You will never suffer for the rest of your life; that is not possible.”

So far BCom Rationum Law has been the purifying fire that has turned her willingness into steely determination; her character into gold. She readily acknowledges that she has been tested academically. During her first two years of study she found that input equaled output – if she studied hard, the marks would always follow. As the workload in her third year increased she realised that if she was going to make it, she needed to fire up her passion for her studies and what it would equip her with. The challenge she currently faces as a fourth-year student is the fact that hard work in itself doesn’t pay off. She realised that what she needs now is resilience: the ability, when she’s on the ground, to dust herself off and try one more time.

3Her encouragement to the youth of South Africa is something that she lives by daily and which originates from our former president, Thabo Mbeki: “Those who complete the course will do so only because they do not, as fatigue sets in, convince themselves that the road ahead is still looking long, the incline too steep, the loneliness impossible to bear and the prize itself of doubtful value.”

In her view society focuses too much on the end product and the success somebody is without giving due recognition to the failures that they’ve had to endure. “What makes a successful person is that when they fail they tell themselves that they still can achieve whatever they put their mind to and number two, they continue – they continue to try again, to work at it; they continue to thrive, they continue to move forward. What really defines failure is when you fail and you stop there.”

“Turn on the hustle” and leave a legacy

“Turn on the hustle” and leave a legacy

At the opening of the 2016 Youth Month, Minister Jeff Radebe reminisced and celebrated the heroes of ’76. Along with quoting the likes of Moses Kotane, Solomon Mahlangu and Franz Fanon, who encouraged young people to “discover their mission” and either “fulfil it or betray it”, he spoke about the Youth Month Programme that has been put in place and will be run across the country throughout the Month of June.

soweto-editedWith 2016 being the 40th Year since the 1976 youth uprisings, it is high time for all young people to reflect on what mark they will leave and how they want to be remembered. Reaching a point of ultimate clarity about what one wants to leave behind is of course dependent on circumstances but need not be dictated by them. It is with this in mind that young people should consider the possibilities, opportunities and resources that are indeed available in South Africa. One such resource is the National Youth Policy 2020 that makes it possible for all youth to participate in skills development, education and economic reform. This policy allows for programmes that promote youth development, access to information and entrepreneurship; they are offered through the National Youth Development Agency (NYDA) and the newly established Youth Development Institute of South Africa (YDISA). The NYDA is the biggest government-driven youth agency, but there are many other private organisations whose sole mandate it is to provide start-up capital, mentoring and incubation to young entrepreneurs.

The born-free generation has taught me that today’s youth is not just standing back and letting things happen. They know how to hustle. There is a kind of fire that burns within them and a willingness to go out there, find and take up opportunities, try things out, take risks, fail, try again and continue asking questions. All these qualities are associated with successful entrepreneurship. All of these can be seen in the way young people are taking ownership of their education through demanding that which is known as a basic right, and being the ones that question what has, for generations, been known as the status quo. Young people are trying out new ways of creating social impact, whether this be through building businesses that employ others or through establishing organisations that promote social change. Although there is still a high number of unemployed youth and although South African youth have been said to be less skilled than their parents were (according to Statistics South Africa), I am hopeful that this new wave of “hustling” will be the one that changes things for the future of our country.

In our 2015 article titled What does the youth of ’76 teach us about entrepreneurship?, young people were encouraged to do three things: boost their educational qualifications, turn stumbling blocks into stepping stones and keep looking. But what happens when you have done all three?  Your next step is to re-evaluate your reasons for doing everything that you have been doing. Why have you placed yourself in the position that you have and what significant mark are you going to make in South Africa?

hqdefaultThis Youth Month, the NYDA will be running a number of programmes throughout the country and I encourage everyone to participate actively. For more information on the NYDA Youth Month Programme, follow the following link: NYDA Youth Month Programme.

A challenge to all youth is to continue to be inquisitive and responsible in the actions that are taken when addressing issues of immeasurable importance. Now is the time for you as a young person to leave your mark. When you look back one day, what will your legacy be?

 

By: Lethabo Tloubata

 

 

Youth Month Series: Mbali Sikakana – Going Her Own Way

Youth Month Series: Mbali Sikakana – Going Her Own Way

The Foundation’s journey to impact starts at a young age. We invest in young people that show the potential to be high impact responsible entrepreneurs in the future. Youth is therefore incredibly important to the Foundation. In the month of June we will celebrate Youth with the rest of the nation. As look back into history, especially our own, we see that youth has played a significant role in shaping and influencing the future. We therefore start this month’s blog series with Mbali Sikakana, the leader our Association of Allan Fellows, a community of young people primed to shape and build the entrepreneurial future of our country.

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Throughout her childhood, youth and even now in adulthood Mbali Sikakana has always chosen to go her own way. She joined the Fellowship Programme in 2007. In the nine years since then she has been admitted as a Fellow, become successful in her career and taken up the helm of the Association of Allan Gray Fellows in her role as President. Her understanding of leadership and her hopes for the Association stirs confidence and great expectation for not only the Association’s future but also that of the country.

Mbali availed herself for the role of president to put to the test certain management skills she had acquired in the workplace. Another motivating factor, she confesses, was injecting a little bit of her own flavour into the Association, which she has been part of since its inception. Besides acting as go-between for the Fellows and the Foundation, she also sees herself as the driver of the Association’s strategic objectives and preferred culture.

She is set on influencing the Association’s culture away from a competitive one that is underpinned by prestige, elitism and self-exceptionalism. While such a climate encourages excellence it goes hand-in-hand with a double consciousness and deep anxiety about failing and operating outside the scope of comfort. “This is not a healthy culture for an entrepreneurial association. This type of driver may work to get people to complete degrees but not to start a business,” she explains. What she hopes to create instead is a culture where failing quickly is encouraged and where an entrepreneurial mindset can be iterated.

Her judicious views on leadership, specifically the lack thereof in South Africa, are grounded in a sense of self and responsibility without which a leader may end up vision-less and lacking follow through. In such circumstances there are no combined values or aims and initiatives become contradictory. Leaders end up holding positions solely for monetary or other gains. For Mbali effective leadership, on the one hand, rests on an understanding of self because a leader’s vision is only compelling when it is tied to his or her sensibility. The leader’s sense of responsibility on the other hand serves as guarantee that the vision will be acted out.

The boldness and confidence that Mbali exudes started taking form when she was a young girl. She remembers being a tomboy who ran the streets of Benoni ragged with her brother and his friends upon whom she imposed her friendship. “They were slightly embarrassed by this, but I did my best to keep up with them,” says Mbali. She believes that these were the first expressions of independence and deviation, which, she points out, “are important in gaining the confidence of others.”

Her journey with the Foundation started when she first heard about the Fellowship opportunity. She was eager to apply because it sounded interesting, but her mother was sceptical since Mbali already had a bursary offer. After reading the promotional material and application form, however, Mbali’s mother encouraged her to apply because the Foundation’s vision and values were a mirror of Mbali’s own.

Reflecting on her four years as Candidate Allan Gray Fellow she says that the opportunity allowed her to explore the idea of a new economy – the opposite of what she had grown up imagining in the formal schooling system. In school we are taught to become employees and do that competitively until retirement age. The new economy that she started pondering would instead teach young people that they can create value in different ways by becoming self-employed and entrepreneurs.

Mbali, who works at Santam Limited in addition to being President of the Association of Allan Gray Fellows, counts a promotion to management level as one of her most significant achievements to date. She explains that its significance lies in “being able to sit on important management committees as a decision-maker. [It] has changed my perspective on the world of work. Leading teams of people of various ethnicities, genders, ages and backgrounds has also tested my ability to integrate diverse perspectives.”

Aside from that promotion she has also attained a BCom Accounting degree from Rhodes University and a CA qualification. Yet, what she is proudest of is not so much these achievements, but her independence. “It is one of the things that brings me great joy when I look at my life. I know that the different things that make it up are coming from and came from my own unique perspective of living. This gets better and better and stronger and stronger with age and I hope it leads me down interesting paths.”

When Mbali is not reflecting on lessons learned in life or thinking of ways to better support her fellow Fellows in the Association, she indulges in literature, visual arts and fashion, which she find expression for on social media.