Calls for ministry of entrepreneurship

Cape Town - The formation of an entrepreneurial ministry would be a significant step forward in tackling SA’s unemployment crisis, say industry experts.

Professor Dilip Garach, of Garach & Garach Financial Advisory Services on Thursday added his voice to a call earlier by entrepreneurial leader and Massmart founder Mark Lamberti for the creation of a Ministry of Entrepreneurship in South Africa.

Endorsing the proposal, Nazeem Martin, MD of Business Partners Limited and spokesperson for the 2013 Sanlam / Business Partners Entrepreneur of Year competition, said the formation of an entrepreneurial ministry would be a significant step forward in tackling SA’s unemployment crisis.

He said this is especially necessary following President Jacob Zuma’s State of the Nation speech last week, which referenced government programmes that support small business.

Garach said it is evident that government understands that small and medium enterprises (SMEs) are an important source of jobs. “Minister (Pravin) 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 said 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.”

Garach said 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.

Another step in the right direction could 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 said 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.

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, according to Garach.

“The SA government target was to create five million jobs by 2020. Although it may not be possible to create this number of sustainable jobs in the long-term, the government however can create an enabling environment to set up one million entrepreneurs who then in turn create five million jobs,” said Garach.