Link Round Up No.1 – The Red Beret And Silk Ties Of South African Economic Competitiveness

This week the issue of South African economic competitiveness came up in several different and related ways.
As we start  a real editorial calendar on Zapreneur, we are introducing a roundup of links that I think is useful. It is a mix of public policy orientated links, plus  actionable links for entrepreneurs at the bottom of the post that helps them immediately. We hope you like the mix. We building Zapreneur one post at a time, and we look forward to your support.

Growth And Unpaid Labour

Economic Growth – The Centre for Development and Enterprise  has released an interesting briefing on economic growth in South Africa. A quote that stood out for me, is this one:

…South Africa’s attitude to growth has been ambiguous and ambivalent. On the one hand, government has repeatedly proclaimed a desire to see the economy grow more quickly; on the other, it has emphasised policy initiatives that undermine growth and has also devoted considerable energy to policies and programmes that are more redistributive than growth-enhancing. (page 2-3)

I have the opposite view, that government has focused too much on growth, and not enough on redistribution, especially on the redistribution of economic opportunities. The economy is not competitive because so few have opportunities, I would argue. (Next article in the NDP series will focus on that.) The briefing however makes for interesting reading and provides a reality check on the differences in our economic policy.
Women Entrepreneurs in South Africa: The Small Business Project (SBP)  runs a very interesting survey of entrepreneurs called the “SME Growth Index”. The most recent alert is on women entrepreneurs, is accessible by clicking here. Note, that you will exchange your email for the download. The report has some counter intuitive findings, including this:

Most commonly, it is argued that women entrepreneurs have to make trade-offs between their work and family responsibilities. Their male counterparts do not face the same pressures, and can make a greater time commitment to their businesses. Studies across the world have demonstrated the link between family responsibility pressures and lower growth patterns among women-owned firms. Studies have also shown the vital importance of a supportive family environment for a successful woman entrepreneur.
It is likely that elements of this argument hold true for South Africa’s women entrepreneurs. However, the SME Growth Index has not thus far recorded any firm evidence of it. Women operating in the formal SME environment do not appear to regard cultural mores or family responsibility as an impediment to their business activities. (page 9)

World Economic Forum Competitiveness Report

World Economic Forum Educational Quality Indicators Questioned: Nic Spaull has an interesting article titled “WEF rankings on education unreliable“. It is an interesting read, especially since much of the drive for this or that economic reform is based on the need to improve our competitiveness ratings and based on the Global Competitive Index. In perspective, some of the education quality ratings  are based on the views of six respondents, all from the business sector. So in our debates when we cite the Global Competitive Index, we must be aware of exactly what it measures and how. We must ask is the methodology for the Global Competitive Index competitive?
Economic freedom is in the mind of the beholder: The Global Competitive Index is widely cited in South Africa.  The report says that :

Furthermore, the  Global Competitive Index (GCI) uses data from the World Economic Forum’s annual Executive Opinion Survey (the Survey) to capture concepts that require a more qualitative assessment or for which internationally comparable statistical data are not available for the entire set of economies. (page 11)

They interview several business leaders and get a ranking based on these perceptions. It is interesting to review the full results, but for South Africa the respondents argue that the economy is competitive..  At Zapreneur, we share a different view of the competitive landscape in South Africa, and have written short article on why this is so.

Red Beret – Too much jargon?

Economic freedom inside the mind of the red beret: The emergence of the Economic Freedom Fighters (EFF) has interested many. Zapreneur carried articles explaining the ANC Youth League economic position, and cautioned that redistributive pressures will not be solved by disciplining Malema. Two of the leading thinkers in the EFF answered some tough questions in an interview with Justice Malala. Watch the video on Youtube. The EFF is described as a having Marxist-Leninist- Fanonian perspective, which is an interesting description, and I am keen to see what the election manifesto says.
A couple of highlights for me include Andile Mngxitama (around 5 minutes ) raises an interesting distinction between the use and exchange value of land in terms of compensation. It is a distinction that potentially helps to improve the redistribution of land, and if linked to smaller farmers could lead to improvements in productivity.
Later, there is a question posed on owning the “means of production” posed to Floyd Shivambu (around 8:20), and he tries to argue that his ownership of a magazine (called Loocha) does not constitute owning the means of production. (This leaves me wondering “Do I as the owner of Zapreneur Media own even the smallest set of the means of production?” I like to think the answer is yes, but that might just be false consciousness.) Andile and Floyd continue to argue the distinction between small ownership and large ownership which harks back to ideas on the “commanding heights of the economy”. The question unanswered by the EFF is what is the role of markets, and can markets be crafted to support greater equality. It is a question that none of the political parties are answering, and yet it is an important and vital question to ask.

Action Step

Adii Has a Free Course: Adii is founder of Woothemes and a successful South African entrepreneur  has a free course for tech startups outside of traditional tech hubs. Like all good entrepreneurs, expect Adii to have offer at some point.  Zapreneur is not affiliated in anyway with this course, we just think it is worth a look. 
Whether you wear a red beret or a red silk tie, we do hope you sign up to our mailing list.

Global Competitiveness Index South Africa – Whose reality counts for small business?

“Global Competitiveness Index South Africa” is a common heading on slides discussing economic policy in South Africa.The data from the Global Competitive Index by the World Economic Forum plays a very important role in South Africa because it is seemingly reputable and rigorous. Motivations for several policy initiatives, in fact,  are directly substantiated by our rankings in the this international league table. The data is however derived from both national surveys (such as those conducted by Stats SA), but also includes a set of questions posed to business leaders. The questions related to perception of business leaders in South Africa (a handful actually) leaves me wondering why my reality is so different from theirs. I found the responses to issues related small business , extremely worrying, as the respondents to the survey share a world very different from that of a startup like Zapreneur.
Three questions stood out for me:

  1. Intensity of local competition: The question asked was “In your country, how intense is competition in the local markets? [1 = not intense at all; 7 = extremely intense] “ . ?The survey placed us at number 45 out of 148 countries, with a score of 5,26.
  2. Extent of market dominance: ?The question asked was “In your country, how would you characterize corporate activity? [1 = dominated by a few business groups; 7 = spread among many firms] “. ?The survey rated South Africa 37 out of 148 countries, with a score of 4.28.
  3. Effectiveness of anti-monopoly policy: The question asked was In your country, to what extent does anti-monopoly policy promote competition? [1 = does not promote competition; 7 = effectively promotes competition]. Wait for it Zapreneur readers, we are ranked number 8 in the world, with a score of 5.32.
GCI - South Africa Competitiveness Index (Zapreneur)
South African Respondents on Competition

Small Business Realities

Over the last two years and nine months since Zapreneur started, I have discussed issues with many small businesses in South Africa. This interaction tells me that there is a wide gap between the business leaders asked to respond to the World Economic Forum survey on the one hand, and the entrepreneurs starting and running businesses in South Africa. The perception I am left with is of an economy that is highly concentrated, where big players have dominance of value chains and where good initiatives on competition policy have yet to yield results in the day-to-day realities of starting and running a small business in South Africa.  I would thus of answered the questions asked in a very different way, and from a very different perspective.
This worries me a great deal, as part of what Zapreneur does is to advocate for easier starting of businesses in South Africa, but also for structural change to support small businesses and the entrepreneurs that run them to run viable opportunity based businesses. Yet, it seems before we can do that, we need a set of common understandings on what the nature of the South African economy in terms of its competitive landscape is. At the core of good public policy making on small business is understanding the nature of the problem we have, and if our business leaders think that we have an economy supportive of startups we are clearly have differences in understanding of the our economy. It raises the question ” Whose reality counts”?
(Perhaps, a useful way to start the discussion would be to better describe my understanding of the challenges we face. I have made a start but more is still needed to develop evidence based policy on small business in South Africa.)