Xenophobia: The Elephant in the room
As South Africa burns with a mixture of Xenophobia and afrophobia and as explanations and blame games pollute the space it is important for the sober mind among us to take a hard look at what is happening in order to help deliver appropriate diagnosis of this sad state of our being. In the midst of the anarchy and mayhem being witnessed there is pressure on both the people and the Government to act. Acting under pressure and tension can easily result to misdiagnosis- one may end up reacting and treating the symptoms and not the virus. The government is doing its best to control the situation on the streets. Furthermore, it has made several policy statements and created inter-ministerial committees to address the ‘’problem”
It is of paramount importance that Government’s and other stake holders’ efforts identify the precise root cause of the problem so as to prescribe the right remedy.
The biggest burden in resolving this problem squarely lies on the shoulders of Lindiwe Zulu the Honorable Minister for Small Businesses. What we are witnessing may be baptized in many names but it all boils down to one word; POVERTY. This is the ghost and the snake hovering among us making us react in all sorts of ways. Globally a majority of violence and criminal incidences can be attested to poverty. It drives people from the comfort of their homes to become economic emigrants and refugees in foreign Nations. Fear of poverty drives leaders to wage wars to gain or maintain resources and in the process drive people from their homes to become refugees in other Countries. Poverty also drives the afflicted persons to fight and kill any one perceived as a threat, as they struggle to possess the little resources availed for them.
Many of the foreigners in South Africa are refugees running away from wars and persecution while others are economic emigrants looking for greener pastures. On the other hand, the majority of black South Africans are engulfed in poverty unable to meet their basic human needs. This creates a scramble over marginal resources between the poor South Africans and the poor emigrants and refugees. It is this scramble that is being hijacked by criminal gangs that are executing the looting and killing we are witnessing. As we address the anarchy and mayhem on the street we must not forget that the problem is poverty and the accompanying scramble over dwindling resources.
Even if we were to chase away all foreigners the poverty being experienced in our townships and locations will not magically disappear. Chasing them is not the silver bullet so desperately needed to solve the problem.
In my view one of the most effective solutions to the widespread poverty ravaging our townships and locations is to support the development of Sustainable entrepreneurship among South African Youths and Women. That is why we must all pray for Honorable Lindiwe Zulu as she is the spin doctor who is expected to deliver the magic healing.
Promoting entrepreneurship among formally disadvantaged communities is a very tall order and not a walk in the park. Due to historical reasons, South Africa suffers from a deficiency in high levels of entrepreneurship. According to the Global Entrepreneurship Monitor (GEM) reports, the perceived availability of business opportunity and business skill levels among South African is well below the international mean and even below most African Countries. In other words in South Africa we have had a low level of entrepreneurship and the result has been unexploited business opportunities in our townships and locations. Soweto has an estimated purchasing power of about Rand 4.5 billion of which Rand 3.5 billion is spent outside Soweto pointing to the absence of certain vital goods and services in the township. Again Soweto is home to 40% of Johannesburg population but has only about 3% of Johannesburg’s retail space!
Simply put, poverty/unemployment in Soweto co-exist with unexploited business opportunities.
It is these unexploited business opportunities (market gaps) that the Somalis, the Pakistanis and other foreign nationals find and bridge. Using their business experience and acumen they have over time, consolidated their position so as to gain comparative advantages in the market. Look at it as a firewall to sustain their businesses in the market.
This is the firewall most South Africans trying to start similar businesses encounter when they attempt to compete with the foreigners. This wall might be what Hon Zulu was alluding to when she asked the foreigners to share their trade secrets with the locals.
Enabling South Africans, in particular those in townships and locations start and/or expand sustainable , growth oriented and market driven micro and small enterprises is the solution to the problem that is now manifesting itself in many ways in our streets. While there are a good number of Government programs providing funding support to South Africans to venture into business, capacity building remains a limiting factor to viable entrepreneurship among South Africans. While training in basic business procedures can be easily delivered to aspiring entrepreneurs and other support services like mentorship and access to market provided, there are vital skills in business that cannot be taught.
These vital inner business skills can only be acquired through exposure and experience. Among these vital skills is business acumen and entrepreneurial mindset. They don’t teach you this in business school.
Business acumen and entrepreneurial mindset is the sixth sense that drives entrepreneurs to smell business opportunities before they happen, that enables them take high risks and keeps them focused even when there seems to be no hope. It explains the strange business concepts like ‘’the left out idea’’: the ability to pick up the guts to move your business where other people are closing their businesses or ability to keep starting again whenever your business fails or the ability to leave a comfort zone to venture into the unknown. Great corporates like Microsoft, Walmart, Virgin and the Donald Trump empires were created courtesy of this 6th sense.
This 6th sense born out of exposure, experience, confidence and mindset is in my view the biggest deficiency limiting the ability of South Africans to engage in viable and competitive small businesses. It is perhaps the biggest comparative advantage possessed by foreign entrepreneurs. This is the thing people are referring to as ‘’foreigners selling cheap’’ and ‘’you cannot compete with them’’. Of course you can compete with them. You can even drive them out of business without fighting or even saying a word to them. With proper acumen and mindset you can create a winning business model. It all depends on your mind set. What are you seeing? You cannot achieve more than what you see. Poverty or riches are both in your mind.
If you believe you can make it. Or you believe you cannot make it. You are in both instances RIGHT!
When you say that you cannot compete with the Somalis and the Pakistanis ask yourself this question: What is their business model and what is your business model? What is unique or creative about your model? What market gap am I bridging in the market? Business is about people. It is about bridging market gaps to deliver what the people/market require. Don’t go about copying. Identify gaps and exploit them. People who make serious money in business are those that come up with unique and creative concepts.
I will leave you with one example:
Like South Africans, Kenyans were not an entrepreneurial people when Kenya attained its independence from Britain. Most businesses both big and small were operated by Indians who were referred to as ‘’WaIndi’’ or Asians. They owned all factories and all retail shops. You could walk through a town and not see a single African-owned shop. Kenyans worked as employees in these waindi shops where they gained vital skills including acumenship and entrepreneurial mindset. Kenyans were poor people and even after gaining vital skills from the Waindis they could not start their own retails shops to compete because they did not have access to sufficient funding.
But even without funding Kenyans learnt the most important skill in business- acumen and entrepreneurial mind set. They put this in use and did the unthinkable. Aspiring entrepreneurs started coming together into business groups. They pooled their money together and began renting rental spaces the same size and in the same locations as the waindis. And because the shop belonged to a group each group member was allocated a table (6 fts by 3 fts) to exhibit and sell various types of goods. These shops were called ‘’Exhibitions’’. The exhibitions brought a new shopping experience. Each table trader had different types of goods and together they offered a great variety and one stop shopping experience. The results? Indians were forced to relinquish their dominance and share the cake. Today, the small business sector in Kenya comfortably accommodates various nationalities the majority being the previously marginalized Kenyans.
The big elephant in the room then is how do we support South Africa’s emerging black entrepreneurs to gain these vital business skills and entrepreneurial mindset in order for them to compete and gain comparative advantages in the market? There is no one answer to this question.
Whatever solution advocated, we must remember that giving funding and classroom training will not transform people into successful entrepreneurs. Institutions like the Department of Small Businesses and Small Enterprises Funding Agency (SEFA) must look for creative ways of ensuring skill transfer from experienced foreign entrepreneurs to local entrepreneurs.
Micro Finance Institutions like Siza Capital SA (www.sizacapital.org) have played a paramount roll in bridging gaps into entrepreneurship all over the world and perhaps Hon Lindiwe’s first action plan is to ensure the establishment and growth of innovative Micro Finance institutions. From Asia to East Africa, West Africa to Eastern Europe and even South America, the Micro Finance Institutions are spearheading the revolution that is ushering small business based world economies.
Absence of innovative micro finance institutions is contributing to the low entrepreneurship among South Africans. A lot of effort and resources have been directed into Government owned lending institutions to provide funding to small enterprises but with insignificant impact. Micro Finance institutions, creative financial cooperatives, Rotating Savings and Credit Associations (ROSCAs) and village banks have globally proved as the best way to pull large portions of poor populations out of poverty.
Mr B is from Kenya and is the executive Director at Siza Capital SA a micro finance institution providing funding and capacity building support to new and existing entrepreneurs in Soweto and other townships.