Whilst South Africa’s unemployment rates remain high at 27.7%, a number of opportunities to generate an income may exist, particularly in the informal sector.
Frank Lenisa, director at credit bureau Compuscan, offers insight as to why entrepreneurship and job creation within the bottom end of the market may present a viable solution to the crisis that the country currently faces.
Quarter-on-quarter, Compuscan’s statistics continue to reveal a negative outlook for consumers as they struggle to manage their debt and stay afloat financially during these challenging economic times.
In addition to high levels of unemployment, a subpar schooling system and weakened economy, SA is faced with an array of socio-economic problems that make it difficult to identify the way out of this predicament.
With unemployment high on the private and public agenda, education seems to be repetitively presented as a Band-Aid solution. Compounding the slow progress which has been made to educate our youth, we are in need of rapid intervention by means of mobilising entrepreneurs to build sustainable businesses and create jobs on a macro-level.
By depending less on the education system as a lifeboat – without neglecting its importance – and shifting our focus to empowering entrepreneurs, these individuals could improve their disposable income and, in turn, empower others. To do so, we need to realise that the developmental aspect of credit is critical to the survival of small, medium and micro enterprises (SMMEs).
According to Compuscan’s latest commercial credit information, approximately 404 000 sole proprietor or commercial loans are currently listed as open on the bureau. The total value of these loans is recorded at approximately R17.6bn.
They noted an 8% increase in the opening of this type of account from Q1 2016 to Q2 2017 and a significant 31.6% increase year-on-year. Rather positively, this points to the fact that more individuals might have been exploring alternative means of generating an income.
Entrepreneurship to accelerate job creation
“If managed well, commercial loans may offer sole proprietors an opportunity to satisfy basic economic needs within their immediate communities, conjointly creating jobs that will enable further collaborations and partnerships,” says Lenisa.
“As it stands, plenty of entrepreneurs are in need of more than developmental funding. Further to accessing the necessary funds to establish a business, the success of an entrepreneur is heavily reliant on professional guidance (mentorship) and access to basic business management tools. After all, it is widely recognised that a high number of entrepreneurs and their startups fail within the first five years following initiation.”
Therefore, this underutilised market needs more support from government and established businesses alike: both the public and private sectors need to work together to foster a healthy environment in which these individuals can obtain, implement and share their knowledge, in his view.
“Entrepreneurial activity, undeniably, lies at the heart of the South African economy. As such, we need to equip individuals with the right tools to succeed and – most importantly – encourage those with experience to impart their knowledge to future employees and business owners,” says Lenisa.
“I truly believe that with the will to succeed and the right support, many unemployed South Africans will be able to harness new opportunities to pave their own way to a financially secure future.”