Entrepreneurs won’t create enough jobs without a rethink in how they are supported

It is no secret that South Africa has an unemployment problem. In recent years, the country’s already tight labor market has been plagued by many problems. Floods, riots, chronic power outages and the Covid-19 pandemic have all left their mark.

According to Statistics South Africa, the unemployment rate in South Africa is less than 34%, and the International Monetary Fund estimates that it will soon exceed 35%, giving the country the dubious distinction of having the highest unemployment rate in the world.

Entrepreneurship has often been touted as the solution to the problems of unemployment, poverty and inequality that continue to hamper South Africa’s development goals. However, in solving complex problems such as job creation, the traditional approach that only focuses on the problem, without considering the power of the forces and the working system, is unlikely to translate business into the progress that is really needed.

For example, in the past 20 years, physical and virtual innovation centers have sprung up across Africa, designed to promote technological and entrepreneurial advancement. But the impact of these centers on collective progress remains elusive.

Because centers tend to be in rich countries and in urban areas, those who are poor, illiterate, lack social networks or live far from cities, struggle to access these resources. As a result, the space tends to perpetuate the status quo, rather than extending the benefits of business to those who need it most.

Similarly, when it comes to business in the South African world, we cannot simply “copy and paste” global models and expect to see real progress. Instead, a more nuanced approach is needed, one based on a realistic assessment of the country’s structural problems and how they lead to an uneven playing field that continues to exclude marginalized groups.

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By looking beyond trying to solve problems in isolation, but by examining the contexts and structures that support them, real social change is possible. This is the power of a systematic approach; it seeks to move the system that causes the problem in the first place, to deal with the main systemic problems, often by first identifying and solving the local challenges in the affected areas.

Systemic change provides opportunities for innovation that actually creates social change, rather than simply reproducing and preserving existing conditions. To put the system together, interdisciplinary thinking is needed; we need to draw on the expertise of people from a wide range of fields and disciplines, expose ourselves to different perspectives, and engage and connect people who are most affected by change in the problem-solving process. , instead of looking at them as a testing ground.

For example, at a recent Business Grow Africa workshop — an initiative led by the Western Cape Economic Development Partnership to grow small businesses and support entrepreneurship and job creation in the province — a group of experts from the region different backgrounds in the small business world met to gather perspectives and explore new and practical solutions to address the gaps in support available to small businesses.

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The entrepreneur held discussions with representatives from local governments, technology centers, academia, the funding community and civil society in an effort to truly understand the problem and then we will match new ideas to help create jobs in companies with high goals and support businesses and communities that are often underfunded.

Many promising pilot ideas emerged from the workshop. For example, the creation of a first-stage start-up fund specifically for women and young entrepreneurs. According to the 2020 Venture Capital and the Gender Financing Gap report, women are systematically excluded from entrepreneurship, with women-led startups in emerging markets receiving only not $1 in funding for $9 per all men’s team.

Unemployment figures also show that almost half of working-age women in South Africa are unemployed, compared to 35% of working-age men. Such financing, therefore, can open up the space for those who are underrepresented in the business sector.

Another pilot idea focused on increasing the support offered to “missing centers” — the term used to describe companies that are “too big” (mid-sized) for early-stage financing. but not growing enough to attract large investors.

In South Africa, most funding is focused on start-ups or large, well-established companies, which means that small businesses cannot access the funding they need to grow. Given that the National Development Plan assumes that by 2030, nine out of 10 new jobs will be created by micro, small and medium enterprises in need, supporting the growth of the missing medium-sized enterprises is very important. important in creating jobs in the country.

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The systems lens helps us see that progress requires a critical examination of various assumptions about what we spend, how we spend money, government and market regulations, as well as the people and interests we prioritize. priority.

There simply isn’t any. It is a chaotic, informal, non-linear process that depends on understanding the situation, developing proposals for establishing business prototypes, learning from social experiments designed well, and attracting the necessary support and resources that can help turn the prototype into a project. bring about social change.

But it is only by daring to immerse ourselves in the “mess” of a complex ecosystem like the Western Cape’s regeneration ecosystem that we have the opportunity to rebuild the systems that have created problems such as extreme poverty and homelessness. job. We need to start thinking and acting differently if we are to empower entrepreneurs to create the quantity and quality of jobs and social progress we so desperately need to achieve our vision of shared prosperity. the country.

Dr Phumlani Nkontwana is an economist and business development specialist. He is co-convener of the University of Cape Town’s GSB’s Bertha Center for Social Innovation and Entrepreneurship Systems Change and Social Impact.

The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.



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