A voice for small business – Interview with Carl J Lotter

Carl J Lotter : Profile
Carl is a senior associate at the Africa Strategy Group.
Carl specializes in international trade and investments, corporate governance and government relations; providing strategic advisory to both business and governments.
A former diplomat – Carl served as South Africa’s trade & development representative to Australia and the USA – he has extensive international experience in the financial services, energy and water utilities, minerals and other strategic economic development sectors. In recognition of his leadership in developmental economics, Carl was awarded the Hubert Humphrey Fellowship by the USA government; enabling studies at the Boston University School of Management, focusing on finance and investments in developing countries.
Carl is the recipient of the Harvard South African Fellowship and attended Harvard University as a Senior Fellow attached to Elliott House. He also attended Harvard Business School’s Senior Executives Development program. On completion of the program, he undertook an internship at Barclays Bank International Division in New York, USA.
Carl is passionate on issues related to economic development – focusing on developing processes and practices, to promote corporate governance and international best practices in business and government. [/boxleft]
The potential for social media to support activism is hotly debated. Carl J Lotter, is pioneering an approach on social media platforms to provide a “voice” to small business in South Africa. I have joined the groups on Facebook and Linkedin and have found the discussions informative, and having huge potential. We asked a couple of questions to Carl, about the initiative.
How many members have signed up for the “Voice of Small Business in South Africa” across social networks?
My total contacts in Linkedin & Facebook are 3500. Total for Voice for small business 832

carl lotter profile pic on zapreneur
Carl J Lotter --- Amplifying the small business voice

Congrats on the large number of people signing up on the networks. Why do you think such a large number of people have signed up?
Many share my concern that given all that we know about business from studies undertaken and experience at the cold face, government has been unable to deliver support as the voices among small business is a cacophony of many voices and government does not know how to respond.
Why have you started this initiative?
My formation has been in banking and I have seen and continue to see only lip service paid to this vital aspect of economic development even in face of all the research done around the world. One common outcome of this research has been that jobs and wealth can only be created through small business. Government holds the key and ZA government has acknowledged this in policies at the Department of Trade and Industry and in the New Growth Path. I started this initiative to bring this sector and government together just like what happened around the World Cup. It is the only way for success for SMME and for government policy to benefit the economy.
Do current structures in organised business, not already provide a voice for small business? Continue reading “A voice for small business – Interview with Carl J Lotter”

Making Local Government Work for the People: South Africa Far Behind International Trendsetters

[boxleft] This article first appeared on SACSIS

The “toilet wars” have made apparent the ridiculousness of the major political parties in South Africa. The Democratic Alliance (DA) even allowed a legal process to work its way up to the Constitutional Court to defend its decision to build unenclosed toilets. On the other hand, the African National Congress (ANC) was quick to wail “mea culpa” when it was found that one of its municipalities had also built unenclosed toilets. The difference in how both parties responded to the public outcry is important and hides a deeper truth.
Some politician sitting somewhere in an office, who probably never visited the site, facilitated the decision making process. In his or her insulated discussion, they would have justified the decision to build open toilets by arguing that more toilets could be built within the budget, or that an open flush toilet is more sustainable than a pit latrine in the long-term.
The alternative explanation is that local councils, even large metropolitan councils, lack the ability to carefully evaluate project plans and approve projects with an accurate understanding of the details of each project.  It leads to a situation where municipal governments are genuinely surprised to find out that projects are completed “to spec” and that the specification does not specify the building of walls around a toilet. Sadly, any student of “development” will recognise this as another tale of significant silliness by bureaucrats and politicians. It leaves us all with that incredulous feeling asking “What where they thinking?” or responding with acronyms such as “WTF!”
Continue reading “Making Local Government Work for the People: South Africa Far Behind International Trendsetters”

Is Cape Town or Johannesburg the best metropolitan government in South Africa?

Political parties have been arguing that the city they govern is the best run in South Africa. A cold hard look at available data shows that there is not much difference between Johannesburg and Cape Town, who occupy the first or second spot in most indices. There is thus no definitive answer to the question, as to which metropolitan municipal government is the best, however voters should be circumspect in assessing the claims of political parties. The argument that Cape Town is exceptional however does not have a solid backing from the data reviewed.
Continue reading “Is Cape Town or Johannesburg the best metropolitan government in South Africa?”

Western Cape local councils perform most productively — ANC 6, DA 4

The Western Cape will be a key battle ground in the 2011 local government elections. The Democratic Alliance (DA) in its manifesto has indicated that the Western Cape municipal governments performance was the best across the country. The latest data (2010) for the Municipal Productive Index (MPI)  supports this argument. The data shows that 9 out of the top 10 local councils are from the Western Cape. It is however important to note that the good performance of the Western Cape has the African National Congress (ANC) performing equally as well as the DA run municipal governments.
[table id=10 /]
The data has the following important findings:

  • Even the most productive local councils score just slightly above the 50% mark.
  • Nine out of ten most productive local councils are in the Western Cape.
  • Five of the top ten local councils are run by coalitions.
  • The DA currently leads or participates in a coalition in four of the ten most productive local councils.
  • The ANC currently leads or participates in a coalition in six of the top ten municipal governments.

There are many ways to interpret the data, and no doubt political parties will seek to spin the results. The most important feature for voters is that a simple message of one party running “good local councils” and another running “bad local councils” is not supported in the data. SL

Methodological Note

The  data is produced by Municipal IQ, which calculates the Municipal Productivity Index (MPI) as follows:

The MPI combines different types of data to measure how productive the average resident of a South African municipality can be. The MPI calculates five factors: poverty levels and the municipal response to poverty; access to a minimum level of municipal services; economic “intelligence” (infrastructure used by residents to participate in the economy); financial governance and expenditure levels by a local council; and vacancy rates in a municipality.

Understanding who runs a municipal government proved an interesting, but not straightforward exercise. The process of finding this information involved:

  1. Reviewing the local government voting results. If there was a clear winner (50 plus 1 percent) then I have assumed that the majority party constituted the council
  2. Where voting did not produce a clear winner, the websites of local councils were reviewed. Where necessary, phone calls to municipal officials were undertaken.


Online retail study shows signs of growth in South Africa in 2010

World Wide Worx has released its latest report on online retail in South Africa in 2010. The press release provides some interesting data. This post covers the following:

  • a snapshot of online retail sales in 2005 and 2010
  • a comparison between physical retail and online retail in 2010
  • chart on the growth rate between physical and online retail between 2009 and 2010

{Ed Note: This post experiments with a way to display charts and data. It may not work in every web browser, and for this reason I have included a PDF version of the document below.}

[download id=”9″]

Online retail grows just under 300%  between 2005 and 2010

The press release got me thinking what does the longer term trend look like. In an article , the value of online spending was R 514 million in 2005, and the estimate is presented by the same research company. The chart below shows formidable growth over three years – using nominal values – of just under 300%. It is estimated that online retail sales in 2010 were R 2,028 billion.

South Africa Online Sales
Online sales grew by almost 300% between 2004 and 2010.

… Online however remains a small percentage of retail spending in 2010

Online still accounts for less that 0,5% of all retail sales in South Africa. This is representative of a growing industry, with internet access still a major issue slowing down the growth of online sales. Importantly, as World Wide Worx point out, it is not just access to the Internet, but rather that more experienced Internet users are leading the growth trends.

Online sales have grown more rapidly than physical retail sales


South Africa - Online versus Physical Retail
Online sales are less than 1% of total retail sales (2010).

The chart shows that online retail sales have grown by 30%, while physical retail sales have grown much more modestly at 7% between 2009 and 2010.

Immigration policy in South Africa requires coalition building

On the radio programme The Money Show with Bruce Whitfield, Richard Pike of Adcorp had estimated that there was a vacancy rate of 829 800 high skilled jobs in South Africa that could not be filled, in part because the immigration laws made it difficult to recruit internationally. The report on which the estimate is based can be read here [PDF: Link]
In my mind, somewhere on Empire Road, I did a quick calculation.
There is a truism that every skilled job creates somewhere between 2 and 3 jobs. So in effect if the data at Adcorp is correct, we are potentially losing out somewhere between 1,6 million and 2,4 million jobs.
There is a truism that every skilled job creates somewhere between 2 and 3 jobs. So in effect if the data at Adcorp is correct, we are potentially losing out somewhere between 1,6 million and 2,4 million jobs. Importantly, the call is too fill jobs that currently exist in companies, not a clarion call for igniting entrepreneurial activity. Simply stated, existing companies do not have the skills they need to run their businesses. Adcorp, has far as I can tell not made their methodology for calculating employment rates or the estimates for immigration open to public scrutiny, and as such the claim does not yet pass the tests needed for evidence based public policy. However, even if Adcorp is half correct, then this is an area that requires significant attention. It is safe to assume that Adcorp is correct, even if there methodology still needs scrutiny:

  • The Department of Labour has estimated in 2008 that there are 502 000 skilled vacancies in the South African economy.
  • There are several studies that reach similar conclusions, and are instructively reviewed by Reza Daniels [PDF Link], of the University of Cape Town. Each of these studies reviewed indicate a lack of skilled workers in the South African economy.

The pro-business think-tank, Centre for Development and Enterprise summarises the argument for reviewing immigration policy as follows:

Immigants can spur growth by filling the skilled jobs which firms need in order to expand; providing the entrepreneurial skills needed to start new businesses; and adding the education, training, engineering,medical, and other skills needed to improve service delivery.

CDE then continues to outline a set of proposals to achieve these objectives, which require careful evaluation.
But, this is only half the story. There is another set of compelling arguments around immigration.
First, South Africa has a high rate of graduate unemployment. The Quarterly Labour Force Survey indicates that an estimated quarter million unemployment graduates. (This is the first Chart of the Week that we will produced on Zapreneur). The argument goes that these graduates have under utilised skills that competent and creative companies could utilise to fulfil their own objectives, and in this case contribute to the national goal. Significantly, there are section of organised business that have focussed solely on immigration policy, but have not focussed extensively on the wider issues related to the skills shortage in South Africa.
Second, there is a concern that foreigners would replace South African jobs. Importantly, if there is demonstrable evidence of a link between skilled foreign workers, and the creation of local employment, these concerns need to be addressed. A good example would be the Malaysian attempts to attract skilled workers and entrepreneurs into their economy which matches their national interests with the needs of potential immigrants.
Third, there are genuine concerns that the Department of Home Affairs would not have the capacity to fulfil their role in a new (I should note that I recently applied to replace my stolen Identity Document, and received a skilled, competent and friendly service from the Department of Home Affairs.)
Importantly, the New Growth Path indicates that:

the overall supply of highly skilled labour should be increased by continued efforts to streamline the immigration system in ways conducive to the inflow of skills, linked to a skills-transfer programme and an on-going commitment to upgrade domestic education on a broad basis.

The debate on immigration policy is thus an important area to debate especially as it relates to economic inclusion in South Africa. The debate would be assisted by:

  • Strategies to include unemployed graduates and improve the skills profile of South Africans,
  • A more deliberate strategy on how to deal with attracting skilled migrants into South Africa

It is an area that requires careful attention due to its importance. More to the point, an agreement on the appropriate policy for skilled migrants is possible, requiring building a coalition across business and labour. It requires reframing the debate in a way that speaks to the wider imperatives of economic growth and economic inclusion. The foundations of creating this coalition is the already existing evidence. Immigration policy must be part of the wider policy package to improve skills in the economy. Moving the debate forward requires making the linkages between increasing recruitment of skilled foreigners, and the potential impact on employment in South Africa. It requires turning the truism that jobs will be created as a result of reviews to our immigration policies be developed into a more coherent set of arguments that support public policy proposals.
[Ed Note – This post has focussed on skilled migrants, but recognises that there are wider issues related to asylum seekers and undocumented migrants]