Entrepreneurial leader, Mark Lamberti, recently called for the creation of a Ministry of Entrepreneurship in South Africa at the recent Sanlam / Business Partners Entrepreneur of Year® competition launch. This was echoed by Professor Dilip Garach, of Garach & Garach Financial Advisory Services who called for a Small Business Ministry to be established locally.
According to Nazeem Martin, MD of Business Partners Limited and spokesperson for the 2013 Sanlam / Business Partners Entrepreneur of Year® competition, following President Jacob Zuma’s State of the Nation speech earlier this month, which referenced government programmes that support small business, the formation of an entrepreneurial Ministry would be a significant step forward in tackling SA’s unemployment crisis.
Martin says that he endorses these proposals and says that the efforts that are currently being made to support and grow entrepreneurship do not seem to be effective enough, as South Africa’s ranking in various entrepreneurial reports still seems to be slipping.
According to Professor Garach, it is evident that government understands that small and medium enterprises (SMEs) are an important source of jobs. “Minister Gordhan said in his Budget speech of 2011 that businesses which employ fewer than 50 workers account for 68% of private sector employment. But the government has shown very little commitment towards solving problems that directly impact on experienced entrepreneurs and small businesses.”
He says that South Africa recorded a 7% total early-stage entrepreneurial activity (TEA) level in 2012, which is a 2 percentage point decrease from the 9% recorded in 2011. “While South Africa is better off than it was in 2004 when the TEA level was at 5,4%, the country still has much to work towards.”
Professor Garach says that an entrepreneurial Ministry will be able to focus on reducing the cost of doing business, simplify the current business registration process and SME tax system, create access to finance and create appropriate incentives for South African entrepreneurs.
He says that a step in the right direction may also be government entering into a public / private partnership in order to set up an entrepreneurial academy. “The academy could develop schools that focus on entrepreneurship, as well as provide education in business skills and promote mentorship and training.”
He says that in 1995 Malaysia formed the Ministry of Entrepreneur Development, which clearly demonstrates the importance that the Malaysian government places upon the issue of entrepreneurship and entrepreneurial development. “The Ministry acts as the lead agency for the development of entrepreneurs as well as to co-ordinate entrepreneurship activities in general.”
Among the specific services currently offered by the Ministry are a one-stop entrepreneurship information centre, franchise and vendor development programs, entrepreneurial training, and subsidised business premises for qualified entrepreneurs.
He says that other examples of economies that have implemented this type of body include the US, which has a Small Business Administration Cabinet position which arranges loans, loan guarantees and other assistance to small businesses, as well as Croatia, which has implemented a Ministry of Economy, Labour and Entrepreneurship, which carries out proactive employment policies.
“The SA government target was to create five million jobs by 2020. Although it may not be possible to create this amount of sustainable jobs in the long-term, government however can create an enabling environment to set up one million entrepreneurs who then in turn create five million jobs,” concludes Professor Garach.